Northern District of Illinois

CHICAGO ― The United States and the City of Joliet have settled housing discrimination litigation that will preserve affordable housing for low-income residents in the southwest suburb for at least the next 20 years, the United States Attorney’s Office and the Justice Department’s Civil Rights Division announced.

The agreement, which was approved today by U.S. District Judge Charles Norgle, resolves the claims of the United States in two lawsuits in which the government contended that Joliet had discriminated against African-Americans in violation of the Fair Housing Act when it attempted to condemn a federally subsidized affordable housing development. The development, known as Evergreen Terrace, contains 356 units of affordable housing that are currently operated by a private owner pursuant to a 20-year contract with the U.S. Department of Housing and Urban Development. The agreement ensures that if Joliet acquires the property through condemnation or otherwise, any displaced resident will be able to remain in affordable housing in Joliet, and at least 115 low-income housing units will continue to be available for families at the property or, subject to HUD approval, elsewhere in Joliet.

“This settlement guarantees that the United States will attain its major goal in this litigation, namely to preserve the affordable housing rights of low-income residents in Joliet and those at Evergreen Terrace in particular,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois. “Local governments that try to reduce affordable housing opportunities without providing meaningful alternatives risk running afoul of anti-discrimination laws. As a result of this settlement, the low-income residents of Evergreen Terrace will be able to either stay at Evergreen Terrace or move to suitable alternative housing in Joliet,” he said.

“The United States is committed to ensuring that individuals and families, regardless of their race or income, have an opportunity to live in the community of their choosing,” said Jocelyn Samuels, Acting Assistant Attorney General for Civil Rights. “This settlement ensures that, if the city prevails in its eminent domain action, Evergreen Terrace residents will be protected from forced to leave the city and low-income housing opportunities will be preserved in the city.”

Under today’s settlement, if the city acquires the property, consisting of eight buildings on North Broadway and North Bluff streets, it will still be bound by certain restrictions designed to protect residents and preserve affordable housing within the City of Joliet. Among other things, the agreement:

• ensures that tenants who wish to remain in Joliet will not be displaced unless and until Joliet finds suitable housing in the city that will also accept the residents’ federal housing subsidies. The city will also provide relocation counseling to displaced residents through a HUD-approved organization and will provide all assistance required by the Uniform Relocation Act;
• requires the city to preserve at least 115 of the low-income housing units for the next 20 years. The housing units would remain at the property initially, but the city could seek to transfer the subsidy to another development in Joliet pursuant to HUD’s program requirements for such transfers. No such transfer could be carried out until the replacement housing is ready for occupancy, and current and former Evergreen Terrace residents would have first priority for residency;
• provides that to the extent any other housing is developed at the property, it would include the minimum number of affordable units required by the Low Income Housing Tax Credit Program;
• requires the city to construct and maintain a community center to provide services to current and former Evergreen Terrace residents and other low- and moderate-income residents of the city;
• maintains most of the Evergreen Terrace site for use as a public purpose for at least twenty years;
• restores to the city HUD funding under HUD’s Community Development Block Grant and HOME Investment Trust Funds program that HUD had previously withheld because of its conclusion that the city was not complying with the Fair Housing Act and other applicable civil rights laws; and
• ends HUD’s participation in the ongoing trial in the condemnation lawsuit. (City of Joliet v. Mid-City National Bank of Chicago, et al., No. 05 C 6746, and United States v. City of Joliet, No. 11 C 5305.)

The current property owners of Evergreen Terrace and four current tenants had also challenged the city’s condemnation action, and today’s agreement does not resolve their claims. The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at justice.gov/crt. Individuals who believe that they may have been victims of housing discrimination can call the housing Discrimination Tip Line at 1-800-896-7743, email the Justice Department at [email protected], or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.

The government was represented by Assistant U.S. Attorneys Patrick Johnson and Ernest Ling, together with trial attorneys from the Justice Department’s Civil Rights Division.

CHICAGO — A LaSalle County physician was taken into federal custody this morning after being indicted on federal charges alleging that he illegally dispensed prescription narcotics to three patients in 2012 and 2013. The defendant, Dr. CONSTANTINO PERALES, was charged with 17 counts of illegally dispensing Oxycodone and/or Alprazolam in an indictment returned by a federal grand jury on Wednesday and made public today.

Perales, 62, of Peru, Ill., was expected to appear at 2 p.m. today before U.S. Magistrate Judge Sidney I. Schenkier in Federal Court in Chicago. Perales has been in state custody on related charges, which were dismissed today by LaSalle County prosecutors. Perales’ Illinois medical license was suspended, and he surrendered his DEA registration, after federal and local authorities executed a search warrant at his office and he was arrested on state charges in August.

According to the indictment, Perales dispensed Oxycodone and/or Alprazolam outside the scope of professional practice and without a legitimate medical purpose to three different patients on 17 occasions between May 2012 and August 2013.

Each count carries a maximum penalty of 20 years in prison and a $1 million fine. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The arrest and charge were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Shields, Jr., Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation, Jack Riley, Special Agent-in-Charge of the Drug Enforcement Administration; Lamont Pugh, III, Special Agent-in-Charge of the U.S. Department of Health and Human Services Office of Inspector General in Chicago; and the Peru Police Department.

The government is being represented by Assistant U.S. Attorney Lela Johnson.

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

Indictment

CHICAGO — A Chicago man who collected thousands of images and hundreds of videos of child pornography was taken into federal custody after he was sentenced yesterday to 13 years and 4 months in federal prison for transporting and possessing child pornography using his home computers. The defendant, JONATHAN SAINZ, 28, had pleaded guilty in June of this year. He was charged in October 2011 after federal agents searched his residence earlier that year.

Sainz was sentenced to 160 months in prison, followed by five years of supervised release, by U.S. District Judge Samuel Der-Yeghiayan. He must serve at least 85 percent of his federal sentence before he is eligible for release and there is no parole in the federal prison system. Transporting child pornography carries a mandatory minimum sentence of five years and a maximum of 20 years in prison, while possessing child pornography carries a maximum of 10 years in prison.

Sainz was also ordered to pay $8,387 in restitution to a specific child pornography victim, whose image he possessed and who was identified by the National Center for Missing and Exploited Children (NCMEC) as a result of previous unrelated investigations.

According to court records, in December 2010, an undercover law enforcement agent engaged in an online chat with Sainz, during which the agent downloaded approximately eight videos and 44 images of child pornography from files made available for sharing by Sainz. FBI agents subsequently linked the internet account used during the chat to Sainz’s residence. Ultimately, Sainz was found to possess approximately 3,820 images and 222 videos of child pornography on his home computers. The images and videos included depictions of extremely young children, including toddlers, being sexually assaulted.

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.

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

The government was represented by Assistant U.S. Attorney Bolling W. Haxall.

CHICAGO — Four defendants were indicted on federal charges for their alleged roles in a scheme to fraudulently obtain more than $10 million in loan proceeds from a suburban bank through the sales of 26 gas stations in Illinois, Iowa, Nebraska and Wisconsin. Two defendants, CHARNPAL GHUMAN and AGA KHAN, co-owned the gas stations and sold them to purchasers financed by the bank loans and guaranteed in part by the Small Business Administration. They allegedly recruited purchasers and arranged the loans through a bank loan officer, AKASH BRAHMBHATT, based on false financial representations, including false tax returns prepared by SHITAL MEHTA, an accountant, both of whom also were indicted.

A fifth defendant, Khan’s brother, SHABBIR KHAN, was charged separately with tax offenses arising from the bank fraud investigation.

A 23-count indictment returned by a federal grand jury earlier this month was unsealed yesterday following the arrests of Ghuman, 34, of North Barrington, who was charged with 19 counts of bank fraud, three counts of bank bribery, and one count of filing a false federal income tax return, and Khan, 33, of Schaumburg, who was charged with four counts of bank fraud. Both men pleaded not guilty at their arraignment today and remain in federal custody pending a detention hearing at 10:30 a.m. Monday before U.S. Magistrate Judge Daniel Martin in Federal Court.

The indictment seeks forfeiture of approximately $10 million from Ghuman and Khan, as well as $198,180 in proceeds from the sale of Ghuman’s 2005 Porsche Carrera GT Coupe, which was allegedly purchased with fraud proceeds.

Brahmbhatt, 39, formerly of Naperville and currently living in Texas, and Mehta, 47, of Elk Grove Village, were each charged with one count of bank fraud. They were not arrested and will be arraigned on a date to be determined in U.S. District Court.

The arrests and charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Shields, Jr., Acting 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, together with officials of the Small Business Administration Office of Inspector General, and the Federal Deposit Insurance Corporation Office of Inspector General.

According to the indictment, American Enterprise Bank, based in Buffalo Grove, was authorized to process SBA loans on its own if the loan satisfied SBA qualifications and rules, including a requirement that SBA loans could not be used to finance 100 percent of a business investment.

Between 2006 and 2009, the defendants allegedly engaged in the scheme, which involved the sales of 26 gas stations, including stations in the Illinois towns of Macomb, Mendota, New Boston, Rock Island, and Silvis, as well as three states.

As part of the scheme, Ghuman and Khan allegedly recruited purchasers of their gas stations who did not qualify for SBA loans and arranged for loans to be made in whole or in part in the name of the purchaser’s relative or friend who had acceptable credit, even though Ghuman, Khan, and Brahmbhatt knew that this straw purchaser would have no role in the gas station or repayment of the loans. In addition, the same three defendants caused false information and documents to be submitted to the bank, including false information about employment, income, assets, and liabilities; false tax returns allegedly prepared by Mehta; and false information about the purchasers’ contributions of equity.

Ghuman and Khan allegedly gave gifts to Brahmbhatt, including cars, in exchange for his alleged assistance in processing the fraudulent loans. The loan proceeds were paid to Ghuman and Khan as payment for gas stations owned by various business entities they controlled.

Ghuman alone was charged with filing a false federal income tax return for 2006, when he reported total and adjusted gross income of $203,583, and the total tax was $37,260, allegedly knowing that the actual amounts substantially exceeded those figures.

Shabbir Khan, 31, of Schaumburg, was charged separately yesterday with two misdemeanor counts of failing to file federal income tax returns for 2008 and 2009. He allegedly had gross income in 2008 in excess of $55,000 from his employment at a cell phone store and from broker’s fees paid to him by American Enterprise Bank as commissions on the loans, and gross income in excess of $30,000 in 2009 from his cell phone store employment.

Each count of bank fraud and bank bribery carries a maximum penalty of 30 years in prison and a $1 million fine. The tax count against Ghuman alone carries a maximum penalty of three years in prison and a $250,000 fine. The tax charges against Shabbir Khan each carry a maximum penalty of a year in prison and a $100,000 fine. In addition to criminal penalties, including mandatory costs of prosecution, 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. 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 Sheri Mecklenburg.

An indictment contains merely 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.

Ghuman et al Indictment

Kahn Information

CHICAGO — Two facilities of the Forest Preserve District of Cook County, which were spruced up in 2011, became part of an FBI sting investigation that resulted in federal charges against a former assistant engineer for allegedly taking $10,000 in kickbacks from two contracts he steered to a contractor who was cooperating with law enforcement. The defendant, JOSEPH MOLLICA, was indicted yesterday on two counts of federal bribery, law enforcement officials announced today.

Mollica, 52, of Elmwood Park, will be arraigned next Wednesday in U.S. District Court. He was released on his own recognizance after he was arrested on Oct. 3 and charged initially in a criminal complaint. Mollica was an assistant engineer for the Forest Preserve District for more than 20 years until last week, and he and others had authority to influence and award contracts for work under $25,000.

Together, the indictment and complaint allege that on Oct. 14, 2011, Mollica accepted a $6,000 kickback from a $24,900 contract to refinish and refurbish the Forest Preserve District’s headquarters building, where he worked, located at 536 N. Harlem Ave., in River Forest. On Dec. 16, 2011, he allegedly accepted a $4,000 kickback from a $16,500 contract to power wash and stain the building and boardwalk and do caulking at the Sand Ridge Nature Center in Calumet City.

The indictment seeks forfeiture of $10,000 in alleged kickback payments.

In both instances, a cooperating individual, a construction company owner who recorded conversations and meetings with Mollica in which the contracts were arranged and the kickbacks were paid, appeared to perform the work properly and completely, according to the complaint affidavit of an FBI agent. The kickback payments occurred after the Forest Preserve District paid the cooperating individual for the work that was performed.

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

Each count of federal bribery carries a maximum penalty of 10 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 Christopher Hotaling.

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

Complaint

ROCKFORD – A Cary, Ill. business owner was sentenced today in federal court by U.S. District Judge Frederick J. Kapala to 63 months in federal prison for conducting a three and half year, multi-million dollar, international fraud scheme. Judge Kapala also ordered that CLARE THOMAS ANDERSON, 45, serve 3 years of supervised release following his release from prison, and pay restitution of $6,191,155 to the companies he victimized. Anderson, who owned and operated multiple businesses in Cary, Ill., and Florida, pled guilty to a federal wire fraud charge on April 5, 2012.

According to the written plea agreement, Anderson owned and operated the following businesses: Certifibre, LLC; Anderson International Global, LLC, which had an assumed name of Worldwide Paper Company, Inc.; American Surplus Supply; Southernmost Exports, LLC, Southernmost Holdings, LTD; and Sea Consulting, LLC. Through these businesses, Anderson contracted to sell wood pulp and other raw materials to manufacturers, brokers and suppliers, which were usually located in foreign countries.

Anderson obtained payments from his customers before the shipments arrived at their destinations. Often, the customers obtained Letters of Credit from their banks in order to pay for the shipments in advance. Anderson admitted that he obtained these payments by creating and presenting fraudulent documents to his customers. These documents falsely represented the quantity and quality of materials that had been shipped.

Anderson further admitted that, instead of shipping the wood pulp or other raw materials he had agreed to sell, he frequently shipped worthless scrap material to his foreign customers. When the customers called him to complain, Anderson falsely told them that the scrap materials were intended for other customers in different countries.

Anderson also admitted that on some occasions, instead of shipping the agreed upon amounts of wood pulp or other raw materials, he shipped substantially smaller amounts. When the customers called and complained about the short shipments, Anderson falsely told them that the short shipments were caused by clerical errors.

Anderson often failed to pay his own suppliers for the materials he had shipped. In addition, Anderson usually failed to pay the freight shipping charges. Anderson also admitted that he spent the fraudulently obtained funds on his own personal expenses. On a few occasions Anderson refunded some money to his victims in order to avoid detection of his scheme. Anderson paid these refunds only after the victims contacted, or threatened to contact, federal law enforcement officials. Anderson admitted that he obtained the funds used to pay these refunds by defrauding additional customers.

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

The government was represented by Assistant U.S. Attorney Scott A. Verseman.

CHICAGO — A Belgian businessman is scheduled to be arraigned tomorrow on federal charges alleging that he violated U.S. laws by attempting to export aluminum tubes that were controlled for nuclear nonproliferation purposes from a company in Schaumburg, through Belgium, to a company in Kuala Lumpur, Malaysia, without obtaining a license from the U.S. Commerce Department, federal law enforcement officials announced today. The case follows a lengthy undercover investigation in which the Schaumburg company, which was cooperating with law enforcement, actually shipped different non-controlled aluminum tubes to the defendant’s business in Belgium before they were allegedly illegally transshipped to Malaysia.

Court documents allege that the Malaysian business is a front company operated by an individual who is located at times in Iran.

The case involves 7075 T6 aluminum tubing with an outside diameter of 4.125 inches and an ultimate tensile strength of 572 MPa (megapascals), which is used in the aerospace industry, among other applications. As a controlled material, a license was required from the Commerce Department’s Bureau of Industry and Security to export the 7075 aluminum from the U.S. to Malaysia, but not to Belgium.

The defendant, NICHOLAS KAIGA, 36, of Brussels and London, was charged with one count of violating the International Emergency Economic Powers Act (IEEPA) and two counts of making false statements on U.S. export forms in a three-count indictment returned by a federal grand jury last Thursday. Kaiga has been in federal custody since he was arrested on June 25 in New York City, approximately a week after he arrived there. A criminal complaint filed at the time of his arrest was unsealed when he was indicted last week.

Kaiga will be arraigned at 11 a.m. tomorrow before U.S. Magistrate Judge Maria Valdez in U.S. District Court in Chicago.

The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Gary Hartwig, Special Agent-in-Charge of Homeland Security Investigations in Chicago; Robert J. Shields, Jr., Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Ronald B. Orzel, Special Agent-in-Charge of the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, Chicago Field Office. The Justice Department’s National Security Division is providing assistance in the case.

According to the complaint affidavit and the indictment, the Schaumburg company, identified as “Company A” in court documents began cooperating with law enforcement in December 2007. The cooperation began after a person identified as “Individual A,” who was at times located in Iran, attempted to purchase 7075 aluminum from Company A, to be shipped to a company in the United Arab Emirates, but was denied an export license. In late 2009, an undercover agent began posing as an employee of Company A.

Between November 2009 and February 2012, the indictment alleges that Kaiga, who was managing director of a Belgian company, Industrial Metals and Commodities, attempted to export 7075 aluminum from Company A to Company B in Malaysia without an export license. The complaint affidavit alleges that Company B was a front for Individual A in Iran. The false statements charges allege that Kaiga lied on Commerce Department export declaration forms, which stated that the ultimate destination and recipient of the 7075 aluminum were in Belgium.

In November 2011, material that was purported to be 7075 aluminum, but was actually substituted with a different aluminum by Company A in cooperation with law enforcement, was picked up from Company A by a freight forwarding company designated by Kaiga’s Belgian company. The material arrived in the Belgian port of Antwerp on Dec. 1, 2011, and two months later it was shipped by a freight forwarding company to Individual A’s front company in Malaysia.

Violating IEEPA carries a maximum penalty of 20 years in prison and a $1 million fine, while making false statements to government agencies 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 U.S. Attorneys Raj Laud and 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

Complaint

CHICAGO ― Two men who operated various businesses at multiple Chicago area locations since at least 2009 are facing federal fraud charges for allegedly charging thousands of dollars in advance fees, purportedly to help individuals modify their existing home mortgage loans, but then failing to provide the services they promised. The charges allege that the defendants defrauded a handful of known victims, but federal law enforcement officials believe there could be hundreds of potential victims and are appealing for information from anyone with knowledge of the alleged scheme.

The defendants, EVERETT POPE, also known as “Jonathan Pincuss,” 38, of Bolingbrook, and COLBI ANDRY, aka “Richard Lockwell” and “Rich Ingram,” 38, of Chicago, were each charged with wire fraud in a criminal complaint that was filed last week in U.S. District Court. Both men were released on $10,000 unsecured bonds and have a preliminary hearing set for Nov. 13 before U.S. Magistrate Judge Michael Mason in Federal Court.

The business entities that they allegedly used were: EAC Financial LLC; Emergency Debt Relief Center; Dimond Financial LLC; D Financial; The Andry Group, LLC; Family First Home Solutions LLC; The Law Group; Certified Forensic Loan Auditors, LLC; and Integrity Mortgage and Insurance Co., all of which were located, often at retail business sites, in Chicago or south suburban Monee or Matteson.

Anyone who suspects that he or she might be a victim and has not already received a victim survey from the U.S. Attorney's Office should submit their name and address to [email protected]. Persons without internet access may call a toll-free number ― (866) 364-2621 ― and leave a message with the spelling of their name and an address, and a form will be mailed to them.

According to the complaint, Pope and Andry frequently convinced customers who were not experiencing financial hardship that they were eligible for loan modifications. Then, they demanded up-front fees from victims, usually ranging between $2,000 and $3,000. For many of their victims, loan modifications were never completed or were completed with terms that were less favorable and without the customers’ agreement.

To perpetuate the alleged scheme, Pope and Andry have used aliases to conceal their true identities, and they have frequently changed business names to make it more difficult for dissatisfied customers to locate them. As part of the scheme, Pope and Andry falsely represented to victims that their loan modification would be overseen by an attorney, the charges allege. At times, Pope allegedly identified himself as “attorney Jonathan Pincuss.”

After the City of Chicago and the Illinois Attorney General’s Office filed separate civil lawsuits in 2010 and 2011, respectively, against Pope, Andry, and certain business entities that were known at that time, the complaint alleges that the defendants ceased operating under those business names and started up new business entities while continuing to defraud customers.

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

The government is being represented by Assistant U.S. Attorney Sharon Fairley.

Wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, or an alternative fine totaling twice the gross gain or twice the loss, whichever is greater, and restitution is mandatory. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

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

The investigation falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: StopFraud.gov.

Complaint

CHICAGO ― The administrator, medical director, and an employee of a Schaumburgbased in-home visiting physician group were indicted on federal charges for their alleged roles in a $12 million health care fraud scheme, federal law enforcement officials announced today. The defendants operated or were employed by a home visiting physician practice, Medicall Physicians Group, Ltd., that allegedly billed Medicare for patient services that were never provided. The defendants allegedly fraudulently obtained approximately $4.7 million in Medicare payments from January 2007 to December 2011.

A 10-count indictment that was returned by a federal grand jury last Wednesday was unsealed today following the arrest of RICK E. BROWN, 56, of Rockford, the president of Home Care America, Inc., which controlled the daily operations of Medicall. Brown pleaded not guilty and was released on a $10,000 unsecured bond at his arraignment today before U.S. Magistrate Judge Mary Rowland in Federal Court in Chicago.

Also indicted were Dr. ROGER A. LUCERO, 62, of Elmhurst, a physician and the medical director of Medicall, and MARY C. TALAGA, 53, of Elmwood Park, a Medicall and Home Care America employee who submitted claims to Medicare on behalf of Medicall and the medical professionals who were employed by Medicall. Lucero and Talaga were not arrested and will be arraigned on dates yet to be determined.

Brown and Lucero were each charged with one count of conspiracy to commit health care fraud and multiple counts of health care fraud. All three defendants were charged with three counts each of making false statements relating to health care matters. The indictment also seeks forfeiture of more than $4.49 million from Brown and Lucero.

According to the indictment, Brown and Lucero operated Medicall, and Talaga submitted the company’s bills to Medicare, totaling more than $12 million. Brown instructed employees to bill Medicare for patient oversight and other services that were never provided, and Lucero created backdated records in an effort to conceal the fraudulent billings, the indictment alleges. Talaga allegedly billed Medicare for these services, even though she knew they were not documented, a practice that required her to fabricate the information submitted to Medicare.

The arrest and charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; Robert J. Shields Jr., Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Lamont Pugh III, Special Agent-in- Charge of the Chicago Regional Office of the U.S. Department of Health and Human Services Office of Inspector General.

Health care fraud conspiracy and each count of health care fraud each carry a maximum penalty of 10 years in prison and a $250,000 fine, while each count of making false statements relating to health care matters carries a maximum penalty of five years in prison and a $250,000 fine. If convicted, restitution is mandatory and the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

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

The investigation was conducted jointly by the FBI and HHS-OIG and brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office. The case is being prosecuted by Trial Attorney Brooke Harper of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in Chicago and eight other cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: stopmedicarefraud.gov.

Indictment

CHICAGO ― Two former analysts for the Cook County Board of Review were convicted today on federal conspiracy, bribery, and fraud charges for accepting $1,500 to facilitate reducing by more than $10,000 the property taxes on three residential properties identified by an individual who was cooperating with federal agents. The defendants, THOMAS HAWKINS and JOHN RACASI, were captured scheming with others to facilitate reducing property tax assessments in exchange for bribes in undercover recordings that were played at their week-long trial in U.S. District Court. The jury deliberated for a couple of hours Friday before finding both defendants guilty on all counts this morning.

Hawkins was an analyst since December 2004, and Racasi was an analyst since March 2006, and both were on the staff of one of the three Board of Review commissioners in September 2008, when they accepted the $1,500 bribe payment. Each of the three commissioners has analysts who handle residential property tax appeals and at least two of the three commissioners’ analysts must agree in order to reduce the Cook County Assessor’s property tax assessments.

Hawkins, 49, and Racasi, 52, half-brothers and both of Chicago, were convicted of one count each of conspiracy to commit bribery, bribery, mail fraud, and mail fraud conspiracy. They remain free on bond while awaiting sentencing, which U.S. District Judge John Tharp set for 2 p.m. on Feb. 25, 2014.

Mail fraud and mail fraud conspiracy each carry a maximum sentence of 20 years in prison; bribery carries a maximum of 10 years; and conspiracy to commit bribery carries a maximum of five years in prison, and each count carries a $250,000 maximum fine. The Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The guilty verdicts were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Shields, Jr., Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The FBI=s Chicago City Public Corruption Task Force led the investigation with assistance from the Chicago Police Department’s Internal Affairs Division, which is a task force member.

According to the evidence at trial, Ali Haleem, a former Chicago police officer who began cooperating with the FBI in July 2008 and is awaiting sentencing on other federal charges, was introduced to Hawkins, who, in turn, introduced him to Racasi. Haleem recorded numerous meetings and telephone conversations with both defendants in which they discussed facilitating property tax assessment reductions in exchange for bribes.

In September 2008, Haleem, Hawkins and Racasi discussed the specifics of the bribe Haleem would pay for reducing tax assessments on properties in Chicago, Burbank, and Tinley Park. On Sept. 11, 2008, Hawkins and Racasi agreed to reduce the assessed values on properties Haleem owned in Chicago and Burbank, as well as a property in Tinley Park owned by another individual, for three years beginning with the 2008 tax year. Hawkins and Racasi provided Haleem with analysis sheets for these properties, which could be used to calculate the tax savings that a property owner would realize over the three-year period. In return for the $1,500 bribe, Hawkins and Racasi promised Haleem a total tax savings for the three properties over the threeyear period of at least approximately $10,000. The payment was made on Sept. 17, 2008, when Haleem met with Hawkins and Racasi and handed the money to Racasi. Hawkins assured Haleem that Racasi would later provide Hawkins with his share of the money.

Hawkins and Racasi also facilitated a reduction in property tax assessments on 10 condominium units in Chicago, expecting to receive bribe payments that Haleem would collect from the property owners once the reductions were verified.

The government is being represented by Assistant U.S. Attorneys Margaret J. Schneider and Michael T. Donovan.

CHICAGO ― A former securities broker and his associate in a real estate business that converted apartments into condominiums were indicted for allegedly fraudulently raising more than $9 million from approximately 25 investors and misappropriating a substantial portion of the money, resulting in a loss of at least $5.5 million. The defendants, MARCIN MALARZ and ARTHUR LIN, allegedly used the investors’ funds for their own personal use, as well as to make Ponzi-type payments to certain investors.

Malarz, 39, formerly of Lake Forest, and Lin, 48, of Palatine, were each charged with three counts of wire fraud in an indictment returned yesterday by a federal grand jury. Lin will be arraigned on date to be determined in U.S. District Court, while Malarz is a fugitive and is believed to be living in Poland.

According to the charges, Lin was a branch office manager of a securities broker-dealer in Itasca and also an officer of Malarz Equity Investments LLC (MEI), which was managed by Malarz and sold condominiums after purchasing apartment buildings and converting the units. Lin recruited investors for Malarz and MEI from his securities firm’s client pool. In some cases, Lin allegedly convinced his clients to take out home equity loans or liquidate their brokerage investments to generate money to invest with MEI.

Between November 2005 and April 2010, Malarz and Lin fraudulently offered and sold investments in promissory notes and obtained loans personally secured by Malarz, while making false representations about the risks involved in investing and lending money to MEI, the charges allege. Specifically, they made false representations about: the solvency and financial condition of MEI and Malarz; the expected and actual returns on investments and loans, the ways the investors’ funds would be used; and Malarz’s ability to personally guarantee the investments and loans, according to the indictment.

Malarz allegedly misappropriated approximately $2 million for his personal use, including funds to pay outside business expenses, travel and living expenses, such as credit card and home mortgage bills, furniture, clothing, and a Mercedes automobile.

Malarz and Lin allegedly paid hundreds of thousands of dollars from investors’ funds to Lin’s wife, often in amounts approximating 10 percent of the funds that Lin brought to MEI. Lin used these funds to pay personal expenses, including credit card and home equity loan payments.

The indictment seeks forfeiture of alleged fraud proceeds totaling at least $5.5 million as well as Lin’s residence in Palatine and additional homes in Palatine and Barrington.

The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Shields, Jr., Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Securities and Exchange Commission, which filed its own civil enforcement action against the defendants, provided assistance

The government is being represented by Assistant U.S. Attorney Rachel Cannon.

Each count of wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, or an alternative fine totaling twice the gross gain or twice the loss, whichever is greater, and restitution is mandatory. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

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

The investigation falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.StopFraud.gov.

Indictment

ROCKFORD – Three men were sentenced today in federal court by U.S. District Judge Philip G. Reinhard on separate fraud schemes involving the sports memorabilia business and the purchase and sale of equipment and uniforms used by professional and collegiate athletes: BERNARD GERNAY, 39, a resident of Howell, N.J., involved in the business operations of Pro Sports Investments, Inc., a New Jersey business, and JARROD OLDRIDGE, 39, a resident of Las Vegas, involved in business operations of JO Sports, Inc., a Nevada business, were each sentenced to 6 months in federal prison; and BRADLEY HORNE, 41, a Sunset, S.C. resident, involved in the business operations of Authentic Sports Memorabilia, Inc., a South Carolina business, was sentenced to 3 months in federal prison. In addition, each defendant was also ordered to serve 3 years of supervised release following release from prison, and restitution for each defendant will be determined within 60 days of sentencing.

All three men pled guilty to mail fraud charges on Nov. 21, 2011. According to the plea agreements, each case involved the sale, consignment, or auction of jerseys, in which each defendant falsely and fraudulently represented to buyers that the jerseys were “game used,” when they were not. Jerseys worn by professional and collegiate athletes during a game are usually known as “game used” or “game worn,” and are commonly bought and sold by collectors and others. The value of game used jerseys varies based on the popularity of the player that used the jersey and how long it had been since the player had actively played the sport. The value of a jersey was greater if it was game used. The fraud charges also involved the defendants selling what were represented to be game used jerseys to other persons knowing the jerseys were intended to then be sold to sports trading card companies. As stated in the charges, to increase the value and price of packages of sports trading cards, manufacturers frequently purchase game used jerseys, cut the jerseys into small pieces, and insert the pieces into card packages. When game used jerseys were purchased for this purpose, the manufacturers often required that the seller provide a "certificate of authenticity" that the jerseys were authentic game used jerseys.

Gernay, Oldridge and Horne each admitted the jerseys they sold were altered to appear game worn, such as replacing the name and number on a jersey from one player to another more noteworthy player, changing the shape of the jerseys, and adding patches or other identifiable marks on the jerseys. Even though jerseys were not game used, the three men sold the jerseys to other persons they knew intended to re-sell, consign, and auction the jerseys, or to sports trading card companies and others, by falsely representing the jerseys were game used.

A fourth man, Bradley Wells, 32, of St. Petersburg, Fla., was charged in an indictment on Oct. 25, 2011, with a similar fraud scheme between 2005 and 2009 under the name Authentic Sports, Inc., Historic Auctions, LLC, and his own name, to market and sell fraudulent sports memorabilia represented as “game used.” Wells pled guilty to mail fraud on Sept. 6, 2012, and was sentenced on Oct. 16, 2013, to 6 months in federal prison, to be followed by 3 years of supervised release, with restitution to be determined within 60 days of his sentencing.

The sentencings were announced today by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Shields, Jr., Acting Special Agent-In-Charge of the Chicago Office of the Federal Bureau of Investigation

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

CHICAGO — A former Elgin man was sentenced to 30 years in federal prison after being convicted of firearms and narcotics crimes at trial this past summer, federal law enforcement officials announced today. The case is another example of successful cooperation between federal, state and local law enforcement partners in investigating and prosecuting dangerous gun and drug offenders in northern Illinois.

JOEL RIVAS, 35, who resided in Chicago when he was arrested in 2010, was sentenced yesterday by U.S. District Judge Amy J. St. Eve, who said the lengthy sentence was necessary to protect society.

“Although drug trafficking may provide a steady source of income for people unwilling to do the hard work required for legitimate employment, such behavior is reprehensible and should be severely punished,” prosecutors said in a sentencing memo. “The sentence may help to deter others from making the same poor choices as [Rivas].”

Rivas was sentenced as an Armed Career Criminal after being convicted at trial in July of conspiracy to distribute more than five kilograms of cocaine, possession of cocaine and marijuana, and illegally possessing two guns, both as a previously convicted felon and in furtherance of drug trafficking.

Evidence in the case showed that between 2007 and 2010, Rivas and co-defendant ISMAEL MIRANDA, 36, also formerly of Elgin, distributed wholesale amounts of cocaine and marijuana to customers in northern and central Illinois. Rivas and Miranda rented a storage unit in Elgin to conduct their business of storing, packaging, and selling narcotics. In February 2010, Elgin police searched the storage unit and seized cocaine and marijuana, as well as a loaded .357 caliber handgun in a tool box and a 9 mm caliber handgun inside a desk.

Rivas’ lengthy sentence was determined, in part, by his status as an Armed Career Criminal under federal law, based on his previous convictions dating to the 1990s for various state narcotics offenses. Judge St. Eve also found that Rivas lied during his testimony at trial. Miranda previously pleaded guilty and was sentenced to 20 years in federal prison. The case is just one example of lengthy federal prison sentences that defendants face when convicted of serious firearm and narcotics charges. Other recent examples may be found at: www.psnchicago.org/prosecutions.html.

The government was represented by Assistant U.S. Attorneys Joseph Thompson and Erika Csicsila.

The sentences were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Constance Hester, Acting Special Agent-in-Charge of the Chicago Office of ATF. The Elgin Police Department, the Illinois State Police and other state and local law enforcement agencies assisted in the investigation and trial.

CHICAGO ― Zachary T. Fardon, who served as a federal prosecutor for nearly a decade before entering private law practice, returned to government service today as the United States Attorney for the Northern District of Illinois. Mr. Fardon, 47, took his oath of office from Chief U.S. District Court Judge Ruben Castillo after President Obama signed his commission.

“I am honored and excited to serve as United States Attorney for the Northern District of Illinois. I spent my formative years as a prosecutor in this office, so I feel like I am back home. This is a great office, full of smart and passionate people. I look forward to continuing the office’s strong traditions of fairness and excellence in the pursuit of justice on behalf of the nine million residents of the Northern District of Illinois,” Mr. Fardon said.

A public investiture ceremony for Mr. Fardon is planned for the future but no date or details have yet been determined.

Gary S. Shapiro, who served as interim U.S. Attorney after Patrick J. Fitzgerald stepped down nearly 16 months ago, remains First Assistant U.S. Attorney. Mr. Fardon commended Mr. Shapiro for his stewardship of the office.

Mr. Fardon leads an office that is widely recognized for numerous significant investigations and prosecutions involving international terrorism and terrorism financing, public corruption, corporate fraud, violent crime, narcotics, and gangs. As U.S. Attorney, Mr. Fardon manages more than 300 employees, including approximately 170 authorized Assistant U.S. Attorney positions in Chicago and Rockford.

Mr. Fardon became an Assistant U.S. Attorney in Chicago in 1997 and tried several highprofile cases, including the 2005-06 corruption trial against former Illinois Governor George Ryan. From 2003 to 2006, he served as First Assistant U.S. Attorney for the Middle District of Tennessee in Nashville, where he supervised approximately 30 Assistant U.S. Attorneys in all federal criminal and civil matters. In 2007, he became a partner at Latham & Watkins LLP, where he chaired the Litigation Department in Chicago.

Mr. Fardon was born in Kansas City and raised in Knoxville, Tenn. He graduated in 1988 from Vanderbilt University in Nashville, where he also earned his law degree in 1992. He is married and has three children

CHICAGO ― The owner and three other executives of the now-closed Sacred Heart Hospital and four physicians affiliated with the former west side facility were indicted on federal charges alleging that they collectively paid and received hundreds of thousands of dollars in illegal kickbacks in exchange for the referral of hospital patients who were insured by Medicare and Medicaid. Sacred Heart allegedly paid physicians bribes and kickbacks to induce patient referrals and increase the patient census, which, in turn, increased hospital revenue.

Sacred Heart Hospital was a 119-bed acute care facility located at 3240 West Franklin Blvd., in Chicago. The hospital closed and filed for bankruptcy this summer after Medicare payments were suspended in the aftermath of criminal charges that were first filed in April. The indictment charges only conduct involved in the alleged kickback conspiracy while a broader investigation that was outlined in the earlier criminal complaint continues.

The eight defendants were charged in a 17-count indictment that was returned by a federal grand jury late yesterday and announced today by Zachary T. Fardon, United States Attorney for the Northern District of Illinois. Five of the eight defendants were charged and arrested on April 16 this year, while three new defendants were charged in the indictment for the first time. A fifth physician associated with Sacred Heart was indicted separately for illegally prescribing prescription medications. No new arrests occurred in connection with the indictments.

Mr. Fardon announced the charges with Lamont Pugh III, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Health and Human Service Office of Inspector General, and Robert J. Shields, Jr., Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of investigation.

The five defendants charged previously in the conspiracy case are: EDWARD J. NOVAK, 58, of Park Ridge, Sacred Heart’s owner and chief executive officer; ROY M. PAYAWAL, 64, of Burr Ridge, executive vice president and chief financial officer; and Drs. PERCY CONRAD MAY, JR., 75, of Chicago, SUBIR MAITRA, 73, of Chicago, and SHANIN MOSHIRI, also known as “Shawni Moshiri,” 58, of Chicago. All five of these defendants remain free on various bonds after they were arrested in April.

The three new defendants are: Dr. RAJIV KANDALA, 41, of Chicago; ANTHONY J. PUORRO, 57, formerly of Chicago, who was Sacred Heart’s chief operating officer; and NOEMI VELGARA, 64, of Chicago, who was Sacred Heart’s vice president of geriatric services and was responsible for overseeing the Golden L.I.G.H.T. medical clinics, including managing employees responsible for marketing, and recruiting and transporting patients.

All eight defendants will be ordered to appear for arraignment in U.S. District Court.

Four defendants ― Novak, Payawal, Puorro, and Velgara ― were each charged with one count of conspiracy to violate the federal healthcare anti-kickback statute by offering and paying kickbacks and bribes, directly and indirectly, from Sacred Heart to Drs. May, Maitra, Moshiri, Kandala, and other physicians to induce them to refer patients to the hospital for services that would be reimbursed by Medicare and Medicaid. Sacred Heart’s chief operating officer before Puorro, identified as “Administrator A,” is named as an unindicted co-conspirator.

In addition, Novak and Payawal were each charged with eight substantive counts of paying kickbacks for patients, while Drs. May, Maitra, Moshiri, and Kandala were charged with two counts each of accepting kickbacks for patient referrals. The indictment also seeks forfeiture of illegal proceeds from Novak, Payawal, and the four physicians, including the unspecified total amount of Medicare and Medicaid reimbursements made on claims submitted on behalf of hospital patients whose referral involved kickbacks, and the total amount of kickbacks paid to the four physicians.

According to the indictment, Sacred Heart’s owner, executives and administrators conspired between 2004 and April 2013 to pay physicians bribes concealed as consulting, employment and personal services compensation, rent, and instructional stipends in return for referrals of Medicare and Medicaid patients. Although styled as payments for legitimate services, the payments actually contained disguised bribes paid to and for the benefit of Drs. May, Maitra, Moshiri, and Kandala in exchange for patient referrals.

The indictment alleges that Novak, Payawal, Puorro, and Administrator A caused Sacred Heart to pay May hundreds of thousands of dollars in bribes disguised as rent, and Moshiri more than $150,000 in bribes disguised as payments for purportedly teaching podiatric surgery residents. Novak, Payawal, and Puorro allegedly caused Sacred Heart to pay Maitra at least $68,000 in bribes disguised as payments for purportedly teaching medical students at the hospital; and Kandala at least $32,000 in bribes disguised as compensation for consulting and instructional services purportedly provided to the hospital and its staff.

Payawal, Puorro, and Velgara allegedly agreed to have Sacred Heart offer to pay bribes to the hospital’s transportation staff to recruit and refer patients to the hospital, and those three defendants, together with Novak, also caused Sacred Heart to pay individuals employed as “marketers” to recruit patients.

As part of the same investigation, a fifth physician associated with Sacred Heart was indicted separately this month for allegedly illegally prescribing hydrocodone or lorazepam to four different patients without having a valid license and registration to prescribe controlled substances. The defendant, Dr. KENNETH S. NAVE, 51, of Chicago, who also was arrested and charged last April, allegedly illegally used the Drug Enforcement Administration registration number of another physician when he prescribed the prescription narcotics between October and December 2012. Nave pleaded not guilty at his arraignment this week.

Each count in the eight-defendant Novak indictment carries a maximum penalty of five years in prison and a $250,000 fine and restitution is mandatory. Each count in the Nave indictment carries a maximum penalty of four 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. Attorneys Joel Hammerman, Ryan Hedges and Terra Reynolds.

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

The case falls under the umbrella of the Medicare Fraud Strike Force, which expanded operations to Chicago in February 2011, and is part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Justice Department and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Dozens of defendants have been charged in health care fraud cases since the strike force began operating in Chicago.

To report health care fraud to learn more about the Health Care Fraud Prevention & Enforcement Action Team (HEAT), go to: stopmedicarefraud.gov.

Indictment

CHICAGO — A California woman was sentenced today to three years in federal prison for illegally transporting hundreds of container loads of Chinese-origin honey through the Chicago area after it entered the country illegally. The defendant, HUNG YI LIN, also known as “Katy Lin,” 42, of Temple City, Calif., pleaded guilty in May to three counts of violating U.S. importation laws by falsely declaring that the honey shipments contained sugars, syrups, and apple juice concentrate to avoid $39.2 million in anti-dumping duties.

Lin, who owns and operates KBB Express Inc., of South El Monte, Calif., and served as the U.S. agent for at least 12 importers that were controlled by Chinese honey producers and manufacturers, was sentenced to a year in prison on each of the three counts, to be served consecutively, by U.S. District Judge Milton Shadur. Lin was ordered to begin serving her sentence on Nov. 12. She was also ordered to pay restitution of $512,852 in unpaid tariffs.

“This sentence is the result of an extensive worldwide investigation that successfully dismantled the largest food fraud scheme in U.S. history,” said Gary Hartwig, Special Agent-in- Charge of HSI Chicago. “Lin’s illegal business practices cheated the U.S. government of nearly $40 million, while also inflicting damage on the domestic honey marketplace. We remain committed to protecting U.S. businesses from fraudulent trade practices, while fostering and facilitating the movement of legitimate trade across our borders that is critical to our economy.”

According to court documents, between 2009 and 2012, Lin schemed to falsify the importation documents for hundreds of containers of Chinese-origin honey by misrepresenting the contents as sugars and syrups. As a result, the honey, which had an aggregate declared value of nearly $11.5 million when it entered the country, avoided antidumping duties and honey assessments totaling $39.2 million.

The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois and Mr. Hartwig, as well as officials with Field Operations for U.S. Customs and Border Protection (CBP) in Chicago, and the Chicago Field Office of the Food and Drug Administration’s Office of Criminal Investigations.

Lin was among a group of individuals and companies who were charged earlier this year in the second phase of an investigation led by agents of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HIS). See: Two Companies and Five Individuals Charged With Roles in Illegal Honey Imports; Avoided $180 Million in AntiDumping Duties

In December 2001, the Commerce Department determined that Chinese-origin honey was being sold in the United States at less than fair market value, and imposed antidumping duties. The duties were as high as 221 percent of the declared value, and later were assessed against the entered net weight, currently at $2.63 per net kilogram, in addition to a “honey assessment fee” of one cent per pound of all honey. In October 2002, the Food and Drug Administration issued an import alert for honey containing the antibiotic Chloramphenicol, a broad spectrum antibiotic that is used to treat serious infections in humans, but which is not approved for use in honey. Honey containing certain antibiotics is deemed “adulterated” within the meaning of federal food and drug safety laws.

In 2008, federal authorities began investigating allegations involving circumventing antidumping duties through illegal imports, including transshipment and mislabeling, on the “supply side” of the honey industry. The second phase of the investigation involved the illegal buying, processing, and trading of honey that illegally entered the U.S. on the “demand side” of the industry.

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

CHICAGO — Nine defendants who allegedly directed or participated in a violent, drugtrafficking street gang known as the Hobos were charged today in a federal racketeering conspiracy (RICO) indictment with engaging in murders, attempted murders, robberies, and narcotics distribution. The five-count indictment returned by a federal grand jury alleges five murders, solicitation of a sixth murder, four attempted murders, three robberies, and the operation of “drug spots” and “drug lines” on the city’s south side among a pattern of criminal activity between 2004 and 2009.

Four of the defendants are charged with personally shooting to death five victims between 2006 and 2009, including one victim who was allegedly killed because he was cooperating with law enforcement.

The indictment charges that the “Hobos Enterprise” allegedly used violence to enrich its members and their associates; to promote and enhance the criminal enterprise; to preserve and protect its power, territory, operations, and proceeds; to keep victims and witnesses in fear; and to prevent law enforcement from detecting its crimes.

“The indictment portrays a gang with virtually no restraint on its ruthless use of violence to further its goals,” said Gary S. Shapiro, United States Attorney for the Northern District of Illinois. “The gang’s alleged murders, robberies and drug dealing invited our employing the federal racketeering laws to prosecute the full scope of their crimes, some extending beyond the normal statute of limitations; and, if convicted, to bring the most severe federal sentences to bear for the terror that plagued the blocks and street corners they allegedly controlled.” The investigation is continuing, Mr. Shapiro added.

“This RICO indictment is the result of a long-term commitment we share with our law enforcement partners to address the dangerous threats facing our communities today. This investigation targeted an exceptionally violent group that used murder, threats, and intimidation to further their agenda. The charges demonstrate our focus and determination to strike at gangrelated criminal enterprises and to eliminate the terror these groups inflict on our neighborhoods,” said Robert J. Shields, Jr., Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

“Through the work of Chicago Police officers and our gang investigators, in close partnership with the FBI, IRS, and the U.S. Attorney’s Office, we are able to announce federal RICO charges against nine dangerous members of the Hobos gang,” said Chicago Police Superintendent Garry F. McCarthy. “Today’s announcement should serve as a warning ― we do not and we will not accept violence in our communities or in our neighborhoods. And we will do everything in our power to hold dangerous criminals accountable for the crimes they commit,” he added.

“Today’s indictment sends a loud message that we are committed to our law enforcement partners and the communities in which we live,” said James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago. “Gang activity and criminal enterprises thrive on financial gain and perpetuate criminal violence on our streets. IRS Criminal Investigation brings its financial expertise to an investigation and we are privileged to be working with the Chicago Police Department and other federal law enforcement partners to keep our communities safe.”

The Illinois Department of Corrections also participated in the investigation. The Chicago Police Department initiated the investigation, which the federal agencies joined later under the umbrella of the Organized Crime Drug Enforcement Task Force (OCDETF) and the Chicago High Intensity Drug Task Force (HIDTA). The case is part of a sustained, coordinated effort by federal law enforcement agencies, working together with the Chicago Police and other state and local departments, to disrupt Chicago’s sophisticated, often violent, drug-trafficking organizations.

Law enforcement has identified the Hobos as a tight-knit, violent crew that originated in the former Robert Taylor Homes and banded together from factions of the much larger Gangster Disciples and Black Disciples street gangs. They allegedly targeted drug dealers and high-value targets to rob and relied upon each other to protect their drug territory, retaliate against rival gangs, and prevent witnesses from cooperating with law enforcement.

All nine defendants were charged with racketeering conspiracy and are currently in state or federal custody. They are: GREGORY CHESTER, ALSO KNOWN AS “Bowlegs,” “Big Homie,” “Pops,” and “Desjuar Anderson,” 36, of Richton Park, identified as the leader of the Hobos; ARNOLD COUNCIL, aka “Armstrong” and “Hobo,” 37; PARIS POE, aka “Poleroski,” 33; GABRIEL BUSH, aka “Louie,” 34; STANLEY VAUGHN, aka “Smiley,” 36; WILLIAM FORD, aka “Joe Buck,” 33; GARY CHESTER, aka “Chee,” 35, (Gregory Chester’s cousin); BYRON BROWN, aka “B-Rupt,” 28; and RODNEY JONES, aka “Milk,” 26, all of Chicago. Byron Brown’s deceased twin brother, Brandon Brown, is named as an unindicted coconspirator.

Poe, Council, Bush, and Byron Brown were each charged with one count of murder in aid of racketeering, and Council was charged with brandishing a firearm during a clothing store robbery. The indictment also seeks forfeiture of an unspecified amount of illegal proceeds.

All nine defendants will be arraigned on later dates in U.S. District Court.

According to the indictment, the murders committed by members and associates of the Hobos Enterprise included:

• Wilbert Moore, who was killed because he was cooperating with law enforcement, by Council and Poe on Jan. 19, 2006;


• Terrance Anderson by Bush and others on Sept. 1, 2007;


• Eddie Moss by Byron Brown and others on Dec. 14, 2007;


• Larry Tucker by Bush, the Brown brothers, and others on Jan. 20, 2008; and


• Kenneth Mosby by Byron Brown and others on May 12, 2008.


•  

Gregory Chester allegedly solicited the murder of Antonio Bluitt, which occurred on Sept. 2, 2007.

The attempted murders included: Victim 1 by Council and Poe on June 11, 2006; Victims 2 and 3 by Bush and Ford on June 5, 2007; Victim 4 by Bush and Vaughn on June 27, 2007; and Victim 5 by Jones on Nov. 5, 2007.

The robberies included: Victim 1 by Council and Poe on June 11, 2006; the Collections Clothing Store by Council and others on Nov. 8, 2008; and Victims 6 and 7 by Poe, Gary Chester, and others on March 25, 2009.

The RICO conspiracy count further alleges that the Hobos and their associates operated drug spots and drug lines where they distributed user quantities of narcotics, at times using nicknames to identify their products. These locations included:

• the building and area located at 4429 South Federal, within the former Robert Taylor Homes, which was controlled and managed by Gregory Chester and Council and drugs were sold under the nicknames “Green Monster” and “Pink Panther;”


• the area around 47th Street and Vincennes Avenue, which was controlled by Bush and Vaughn and operated by Ford;


• the area around 51st Street and Calumet Avenue, which was managed by the Brown brothers and Jones; and


• the area around 51st Street and Martin Luther King Drive, which was controlled by Bush.

As part of the racketeering conspiracy, the defendants allegedly:

• used gang-related terminology, symbols, and gestures, including the slogan “Hobo or Nothing,” and a hand sign known as the “Hobo Horns;”


• shared the proceeds of robberies and the trafficking of narcotics;


• obtained, used, brandished, and discharged firearms in connection with the enterprise’s illegal activities;


• managed the procurement, transfer, use, concealment, and disposal of firearms and dangerous weapons within the enterprise to protect their interests and further their goals;


• monitored law enforcement radio frequencies and acquired radio equipment to detect and avoid law enforcement inquiry into their illegal activities;


• had nominees obtain rental vehicles to conceal their use while committing illegal activities;


• identified victims from whom they could obtain distribution quantities of controlled substances or large sums of money by robbing them;


• conducted surveillance of intended murder and robbery victims, a practice referred to as “lamping” and “doing homework;” and


• restrained and murdered victims and witnesses to prevent their escape, and to prevent identification of themselves and their associates.

The RICO conspiracy count carries a maximum sentence of 20 years in prison, or life for the four defendants charged with committing murders. Those four defendants ― Poe, Council, Bush, and Byron Brown ― also face a mandatory life sentence, or death, if convicted of murder in aid of racketeering. Only the Attorney General of the United States may decide later whether to seek the death penalty. The charge of brandishing a firearm against Council carries a mandatory consecutive sentence of seven years and a maximum of life in prison. If convicted, the Court must determine a reasonable sentence to impose under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant U.S. Attorneys Patrick Otlewski, Erika Csicsila, and Derek Owens.

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 — WILLIAM BEAVERS, a former Cook County Commissioner and, before that, a longtime Chicago alderman and police officer, was sentenced today to six months in prison for obstructing the Internal Revenue Service and failing to report, and pay taxes on, all of his income. Beavers was convicted after a trial in March of concealing his under-reporting of income and underpayment of taxes on thousands of dollars that he converted to personal use from his campaign accounts, as well as from his county discretionary spending account. Between 2006 and 2008, Beavers wrote 100 checks to himself, totaling approximately $226,000, from three separate campaign accounts and used at least a portion of those funds for personal purposes, including gambling. In 2006, he used more than $68,000 from a campaign account to boost his city pension, and between 2006 and 2008, he used his $1,200 monthly county contingency account, totaling $28,800, for personal purposes without reporting any of these funds as income on his federal tax returns.

Beavers, 78, of Chicago, was also fined $10,000 and ordered to pay $30,848 in restitution to the IRS by U.S. District Judge James Zagel. Beavers was ordered to begin serving his sentence on Dec. 2, to be followed by a year of supervised release. During supervised release, the judge ordered Beavers to perform 400 hours of community service and prohibited him from gambling or visiting a casino or racetrack.

“Far from being the victim of others’ poor advice, Beavers was a victim of his own greed,” prosecutors wrote in a sentencing memo. “[H]is public claims that he was charged not because of his tax fraud, but rather as a result of government vindictiveness, were yet another effort to shift blame away from himself and point the finger at others.”

Beavers was elected to the Cook County Board of Commissioners, representing the 4th District, in November 2006 and began serving as a commissioner a month later. Previously, he served as the 7th Ward alderman on Chicago’s City Council from 1983 until November 2006, when he was elected to the commissioner’s post.

According to the evidence at trial, Beavers had sole authority over three campaign committees that supported his political activities ― Citizens for Beavers, Friends of William Beavers, also known as Friends for William Beavers, and 7th Ward Democratic Organization. As part of the corrupt endeavor to obstruct the IRS, Beavers converted campaign funds for his own personal use, provided false information to his campaign treasurers regarding the use of these funds, and understated his income and the taxes he owed in his individual income tax returns for 2006, 2007, and 2008.

While giving Beavers credit at face value for every explanation for the use of campaign funds, no matter how implausible, the government presented evidence at trial showing that between 2006 and 2008 he failed to report income totaling at least $127,747 and failed to pay taxes on that amount totaling $40,463.

During those three years, Beavers caused his campaign committees to issue checks payable to himself and to third parties on his behalf, and he used at least part of the proceeds for personal expenses, including gambling. The checks totaled about $96,000 in 2006, $69,300 in 2007, and $61,000 in 2008, for a total of $226,300.

As part of the corrupt endeavor, Beavers concealed his personal use of campaign funds by maintaining and causing campaign workers to maintain records that falsely reflected the uses of the campaign checks, including records used to prepare semi-annual Illinois campaign finance reports known as D-2s. Beavers caused campaign workers to falsely record, on check stubs and other records, that certain campaign checks written to him and used for personal purposes were instead used for campaign expenses.

In some instances, Beavers attempted to conceal his personal use of campaign funds by telling campaign workers that checks payable to and cashed by him were for paying campaignrelated expenses, even though those expenses were not incurred by the campaign committees until months after Beavers had converted the funds. In other instances, Beavers withheld from his campaign staff any explanation of certain checks payable to him, or he caused workers to falsely record that certain checks were “void” or unused even though he had cashed them.

On Nov. 14, 2006, Beavers caused a check for $68,763.07 to be paid from Citizens for Beavers to the Municipal Employees’ Annuity and Benefit Fund of Chicago, a pension plan for certain City of Chicago employees including Aldermen, to increase his monthly pension from $2,890 to $6,541. The check was for personal use and should have been, but was not, reported as income on his 2006 income tax return.

The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago; and Robert J. Shields, Jr., Acting Special Agent-in- Charge of the Chicago Office of the Federal Bureau of Investigation.

The government was represented by Assistant U.S. Attorneys Matthew Getter, Samuel B. Cole, and Carrie Hamilton.

CHICAGO ― Ten defendants, including five licensed loan originators, were indicted for allegedly participating in a scheme to fraudulently obtain approximately 52 residential mortgage loans totaling at least $14.5 million from various lenders. The indictment alleges that the mortgages were obtained to finance the purchase of various properties, primarily on the west and south sides of Chicago, by straw buyers who were fraudulently qualified for loans while the defendants allegedly profited. As a result, various lenders and their successors incurred losses of at least $8 million because the mortgages were not fully recovered through subsequent sale or foreclosure.

An 11th defendant who worked as a closing agent for a title company in suburban Westchester was indicted separately as part of the same investigation.

Both indictments were returned yesterday by a federal grand jury and announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Robert J. Shields, Jr., Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Barry McLaughlin, Special Agent-in-Charge of the U.S. Department of Housing and Urban Development Office of Inspector General.

KEITH AUSTIN, 41, of Broadview, who controlled companies called Icy Investments, Inc., and Kesha & Icy Investments, Inc., allegedly directed the fraud scheme. He was charged with six counts of wire fraud, three counts of bank fraud, one count of aggravated identity theft, and one count of obstruction of justice.

The obstruction of justice count alleges that Austin and co-defendants CESAR MARIN, 30, of Schaumburg, and MARK PETTIS, 57, of Chicago, both licensed loan originators, prepared and provided false documents in response to federal grand jury subpoenas issued last year. Marin was also charged with three counts of wire fraud, while Pettis was also charged with one count of bank fraud.

Three other licensed loan originators indicted were JOSEPH BATEAST, 40, of Bolingbrook, one count of bank fraud; ROBERT BROWN, 37, address unknown, one count of wire fraud; and CONSTANCE PAEK, 34, of Glenview, one count of wire fraud. Also charged were: WILSON TITUS, 64, of Broadview, three counts of wire fraud and two counts of bank fraud; CLYDE BANKS, also known as “Charles Barksdale,” 36, address unknown, one count of wire fraud; STEVEN GAWLIK, 41, of Chicago, one count of wire fraud; and MICHAEL THILL, 54, of Park Ridge, one count of wire fraud.

The indictment also seeks forfeiture of more than $8 million from Austin, Marin, Titus, Banks, and Bateast, as well as $6,800 seized from Austin’s home during the execution of a search warrant in October 2012, and Austin’s 2007 Lexus LS460, which was seized today. BRANDIE ROBERTS, 34, of Brookfield, formerly a closing agent for a title company in Westchester, was indicted separately on two counts of wire fraud, and her indictment seeks forfeiture of at least $68,366.

All 11 defendants will be arraigned on dates yet to be determined in U.S. District Court.

Austin, Titus, Paek, Pettis, and Thill allegedly recruited property owners to sell their homes, knowing they intended to falsely inflate the sales price so they and others could obtain the proceeds of the mortgage. Austin, Titus, Banks, and Paek allegedly recruited individuals to act as straw buyers by promising that they would not have to use any of their own money, would be paid to attend closings, and would not have to make any subsequent mortgage payments.

The indictment alleges that Austin, Marin, Titus, Brown, and Paek received the proceeds of the fraudulent loans and used the funds to enrich themselves.

The government is being represented by Assistant U.S. Attorneys Yasmin N. Best and Kenneth E. Yeadon.

Each count of wire fraud affecting a financial institution and bank fraud carries a maximum penalty of 30 years in prison and a $1 million fine, and restitution is mandatory. The Court may impose an alternate fine totaling twice the loss or twice the gain, whichever is greater. The aggravated identity theft count against Austin carries a mandatory consecutive sentence of two years in prison, and the obstruction of justice count carries a maximum of 20 years in prison. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

The 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.

Since 2008, more than 200 defendants have been charged in Federal Court in Chicago and Rockford with engaging in various mortgage fraud schemes involving more than 1,000 properties and approximately $300 million in potential losses, signifying the high priority that federal law enforcement officials give mortgage fraud in an effort to deter others from engaging in crimes relating to residential and commercial real estate.

Today’s announcement is part of efforts by the Financial Fraud Enforcement Task Force (FFETF), which wages an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force facilitates increased investigation and prosecution of financial crimes; enhanced coordination and cooperation among federal, state and local authorities; addresses discrimination in the lending and financial markets, and conducts outreach to the public, victims, and financial institutions. For more information on the task force, visit stopfraud.gov.

Indictment

CHICAGO — The head of a large Nebraska-based prescription medication provider was sentenced today to 21 months in federal prison for conspiring with a former Chicago alderman and another man to commit bribery of a fictitious public official to purportedly obtain business from the Los Angeles County hospital system. The defendant, JAMES BARTA, 71, of Fremont, Neb., and two co-defendants were convicted of conspiracy to commit bribery following a twoweek trial in June in U.S. District Court.

Barta was also fined $125,000 and ordered to begin serving his sentence in early January by U.S. District Judge John J. Tharp, Jr. Co-defendants, AMBROSIO MEDRANO, 59, of Chicago, GUSTAVO BUENROSTRO, 50, of Arlington Heights, are scheduled to be sentenced, respectively, on Nov. 4 and Nov. 25.

“This offense involves bribery to influence governmental action,” Judge Tharp said, adding that Barta was a “paradigm of what a businessman should be, and yet . . . he readily agreed to pay a bribe to get a contract.” The judge noted a recording that was played at trial of Barta saying that he expected to pay a bribe and doing so was “business as usual.”

“It is not business as usual to bribe public officials,” Judge Tharp said, adding that this message “must be repeated to avoid the cynicism that overtook Mr. Barta.”

According to the evidence and court records, which included numerous audio and video recordings of conversations with the defendants, Medrano introduced an undercover FBI agent, who was posing as a purchasing agent, to Barta, the president of family-owned Sav-Rx, and Buenrostro, an associate of Barta and a former Sav-Rx employee. Barta, Buenrostro, and Medrano agreed to bribe the undercover agent and the fictitious Los Angeles County hospital official — with Barta handing a $6,500 check to the undercover agent at a restaurant in Omaha on June 22, 2012 — to do business with Sav-Rx, a Fremont, Neb.-based national provider of managed care prescription medication services.

Between December 2011 and March 2012, Medrano, Buenrostro, and a cooperating witness discussed the scheme, resulting in a meeting attended by those three, Barta, and the undercover agent at a Chicago restaurant on March 21. During the meeting, Barta discussed Sav-Rx’s business, including a contract with Cook County. The undercover agent explained a kickback arrangement for him and the fictitious Los Angeles County hospital official, if they were to succeed in expanding Sav-Rx’s services into the Los Angeles County hospital system. Barta replied that the arrangement was okay with him. In subsequent conversations, Medrano allegedly assured the cooperating witness and undercover agent that Barta and Buenrostro wanted to do a deal with the agent and were willing to provide an initial $10,000 payment in good faith.

The same group of individuals met again on May 9 at a Chicago restaurant and continued discussing steering Sav-Rx’s services to Los Angeles County, including using Medrano and Buenrostro to be the minority participants in a contract, with Barta endorsing that idea. Barta directed Buenrostro to do research on Los Angeles County and paid the lunch bill. The undercover agent said that the fictitious hospital official was not going to take any action until there was an agreement and the official saw some money. “We understand that and that’s not the problem,” Barta replied.

On June 22, 2012, Barta, Buenrostro, and Medrano met with the undercover agent at a restaurant in Omaha. The undercover agent explained that half of the good faith money they had been discussing was for his role in brokering the contract and half was for the fictitious Los Angeles County official. The undercover agent assured Barta that the good faith payment would be refunded if Sav-Rx did not obtain a contract from the hospital system. After further discussion about the indirect manner that Barta’s payment would be funneled to the fictitious official, Barta wrote a check on a Sav-Rx operations account, payable to the undercover agent for $6,500, and gave it to the undercover agent.

The sentence was announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Robert J. Shields, Jr., Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

The government was represented by Assistant U.S. Attorney Christopher J. Stetler.

CHICAGO ― The owner of multiple area outpatient surgery centers pleaded guilty today to federal fraud and tax charges, admitting that he paid bribes and kickbacks to physicians for patient referrals and impeded the Internal Revenue Service in the collection of federal income taxes. The defendant, RAGHUVEER NAYAK, was scheduled to stand trial starting Oct. 1 in U.S. District Court, but the trial was stricken following today’s guilty plea.

Nayak, 58, of Oak Brook, entered a conditional plea of guilty to one count of mail fraud and also pleaded guilty to one count of impeding the IRS. The conditional plea allows Nayak to appeal a legal issue pertaining to the mail fraud count and, if he prevails, he may withdraw his plea to that count alone. U.S. District Judge Robert Gettleman scheduled a sentencing hearing for Jan. 22-23, 2014.

Nayak faces a maximum sentence of 20 years in prison on the mail fraud count and a maximum fine of $250,000, or an alternate fine totaling twice the loss or twice the gain, whichever is greater, as well as mandatory restitution. Impeding the IRS carries a three-year maximum prison term and a $250,000 fine. The Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

According to a written plea agreement, Nayak opened Rogers Park One-Day Surgery Center in about 1998, and he opened Lakeshore Surgery Center about seven years later. Both facilities are privately-owned one-day surgery centers, where surgeons performed outpatient surgeries not requiring an overnight stay, ranging from urological to podiatric to orthopedic procedures. Nayak’s profits depended upon doctors bringing patients for surgery to his outpatient facilities, rather than to a traditional hospital, or to one of the many other surgery centers in the Chicago area.

As part of the scheme, Nayak paid, or offered to pay, physicians money in exchange for referring patients to or conducting surgeries at Rogers Park and Lakeshore, rather than at a hospital or competing surgery center. Nayak paid some physicians cash in exchange for patients they brought or referred to Rogers Park and Lakeshore, in amounts that reflected the volume of surgeries they conducted at the surgery centers or the number of patients they referred there. Nayak paid these physicians cash in exchange for referrals to his surgery centers, intending that the money would influence their medical motives and further intending that the physicians would not disclose the cash payments to their patients. Nayak did not intend to cause the medical patients any physical or monetary harm by his cash payments to their physicians.

Nayak admitted that he paid one physician, a podiatrist, approximately $200-300 in cash per surgery he conducted at Rogers Park or Lakeshore, in addition to the professional fees the doctor billed separately to his patients’ insurance companies. Nayak gave the podiatrist the cash when they were alone, including at the doctor’s office, and Nayak acknowledged that the doctor did not disclose the cash payments to his patients. In total, this physician conducted approximately 142 surgeries at Rogers Park between 2004 and 2009, for which Nayak paid the doctor cash.

In impeding the IRS, Nayak admitted that he paid physicians money in exchange for referrals of patients the physicians had made or would make to Rogers Park and Lakeshore. Nayak paid these physicians in cash, in an attempt to actively conceal the payments, knowing that the natural consequence would be a lack of documentation of the cash payments in Rogers Park’s and Lakeshore’s business records if the IRS were to audit or question the transactions. Nayak did not disclose the cash payments to his bookkeeper and outside tax preparer, and he did not file, issue, or cause to be issued Forms 1099 for physicians to whom he paid cash in exchange for patient referrals for tax years 2002 through 2010. Nayak knew that a foreseeable consequence of his actions was that the federal income tax returns filed by the physicians to whom he made cash payments would be false. Nayak also instructed the podiatrist to not deposit the cash Nayak gave him in his bank account, and to not report those cash payments on his federal tax returns, intending that the doctor would file federal tax returns that would be false.

The government also contends, but Nayak disputes, that in approximately 2002, he engaged in a scheme to obtain cash, including to make cash payments to physicians in exchange for patient referrals, by giving Individual A more than $2 million in checks drawn on Nayak’s medical facilities from about 2002 through December 2008. In exchange, at Nayak’s direction, Individual A gave Nayak cash in an amount equal to approximately 70 percent of the value of the checks that he gave Individual A. As part of this scheme, Nayak hid the true purpose of the checks that he provided to Individual A by indicating to his tax preparer that the checks to Individual A were for advertising, and should be treated as advertising expenses on the tax returns that Nayak signed and caused to be filed for himself and for his facilities.

In addition to those two facilities, Nayak owned and/or controlled the following health care-related businesses in Illinois and Indiana: Lakeside Surgery Center LLC, Merillville Plaza Surgery Center LLC, Lincoln Park Open MRI, Delaware Place MRI LLC, Paulina Anesthesia, Inc., Illiana Anesthesia, Western Touhy Anesthesia, Inc., and Division Medical Diagnostics, Inc., according to the indictment.

The government is being represented by Assistant U.S. Attorneys Carrie Hamilton, Andrianna Kastanek, and Jeffrey Perconte.

Plea Agreement

CHICAGO ― A federal jury today convicted a south suburban man of buying hundreds of high-powered firearms at guns shows in Indiana and illegally transporting them to Chicago where he sold them without a federal firearms dealer license. The defendant, DAVID LEWSIBEY, was found guilty by jurors who deliberated several hours yesterday and today after a two-week trial in U.S. District Court.

Lewisbey, 23, of South Holland, was convicted of dealing firearms without a federal license and two counts each of illegally transporting firearms across state lines, and interstate travel to sell guns without a license. He faces maximum penalties of 10 years in prison on each count of interstate travel, and five years in prison on each of the other three counts, and a maximum $250,000 fine on each count. U.S. District Judge Ronald Guzman scheduled sentencing for Dec. 10. The judge must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

“This is one of the most significant gun-trafficking cases we have prosecuted and one that effectively ended a steady supply of potentially lethal weapons from Indiana to Chicago,” said Gary S. Shapiro, United States Attorney for the Northern District of Illinois. He announced the verdict with W. Larry Ford, Special Agent-in-Charge of the Chicago Office of the Bureau of Alcohol, Tobacco, Firearms, and Explosives. The Chicago Office of the Federal Bureau of Investigation, the Chicago Police Department, and the Illinois State Police assisted in the investigation.

Evidence at the trial showed that between January 2008 and September 2012, Lewisbey, who had no criminal record that disqualified him from buying firearms, routinely traveled to various gun shows in Indiana and purchased duffle bags full of guns that he brought back to Chicago. A government witness testified that he personally observed Lewisbey buy more than 100 firearms, as well as dozens of high-capacity magazines, at Indiana gun shows.

The evidence further showed that during just one 48-hour period, on April 22-23, 2012, Lewisbey bought 43 guns in Indiana and brought them to Chicago, where he delivered them to co-defendant LEVAINE TANKSLEY, who with two other co-defendants, sold them to an individual who was cooperating with ATF agents. All of those guns were recovered by law enforcement.

Tanksley, 28; CHARLES LEMLE, 27; and MICHAEL HALL, 28, all of Chicago, each pleaded guilty to illegally possessing firearms as previously convicted felons, and are awaiting sentencing.

The government was represented by Assistant U.S. Attorneys Christopher Parente and Bethany Biesenthal.

CHICAGO — A former south suburban Dolton police officer was sentenced today to 75 months in federal prison for violating the civil rights of two men by using excessive force against them with his baton outside a Dolton nightclub in May 2009. The defendant, KEVIN FLETCHER, 36, of South Holland, who was convicted at trial in May, was sentenced on two counts of violating the victims’ civil right to be free from the use of unreasonable force by a person acting under color of law. The judge and the jury had the benefit of video surveillance recordings that captured most of the scene.

“There was only one person who was out of control that night and that was Mr. Fletcher,” U.S. District Judge Elaine Bucklo said in imposing the sentence in Federal Court in Chicago. The judge said she took into account Fletcher’s anger that night, that he lied when he testified at trial, and had expressed no contrition, while also noting that “being a policeman is a hard job.”

Fletcher joined the Dolton Police Department in October 2006. The evidence at trial showed that at approximately 2 a.m. on May 17, 2009, he and other officers were working crowd control outside the former Mr. Ricky’s 141 Club, as it and other bars along Chicago Road near 141st Street in Dolton were closing. While performing his duties as a police officer, Fletcher used an expandable metal police baton as a dangerous weapon to strike two victims, Michael McPherson and Laurence Williams, once each in the head. The jury found that both victims suffered bodily injury, and the evidence showed that both required hospital treatment and staples to close their head wounds.

Fletcher “had used lethal force against two unarmed victims who had merely mouthed off to him,” Assistant U.S. Attorney Megan Cunniff Church argued at sentencing. “With each of these baton strikes [Fletcher] gave the community reason to doubt law enforcement, reason to challenge its authority, reason to believe that law enforcement cannot be trusted. He inflicted violence into the community that he had sworn to protect.”

Ms. Church, together with former Assistant U.S. Attorney Tinos Diamantatos, argued during the trial that Fletcher was offended by the victims cursing at him as he directed them to depart the Chicago Road area after leaving the nightclub, and then abused his authority by striking them each over the head with his baton to “teach them a lesson.” Fletcher made no effort or attempt to arrest either victim and departed the scene after striking them with his baton, without rendering or summoning any medical aid. Both victims, as well as Fletcher, testified at the trial.

The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Robert J. Shields, Jr., Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Justice Department’s Civil Rights Division assisted in the investigation.

CHICAGO — The creator of Beanie Babies and other plush animal toys was charged today with federal tax evasion for allegedly failing to report income he earned in a secret offshore financial account he held with UBS, a global financial services firm headquartered in Switzerland. The defendant, H. TY WARNER, was charged in a felony information filed this morning in U.S. District Court.

Warner, 69, of west suburban Oak Brook, is the sole owner of TY Inc., a Westmont-based company that designs and sells plush toy animals including Beanie Babies. Warner, who also owns other business interests, will be arraigned in U.S. District Court on a date yet to be determined.

Through his attorney, Warner authorized the government to disclose that he is cooperating with the Internal Revenue Service and will plead guilty to the charge.

“Regardless of wealth, everyone must pay taxes on all of their income, not just the amount they choose to report. The charge alleges that Warner went to great lengths to hide from his accountants and the IRS more than $3.1 million in foreign income generated in a secret Swiss account. Such conduct invites federal prosecution,” said Gary S. Shapiro, United States Attorney for the Northern District of Illinois.

“We encourage taxpayers to think of the serious consequences, including possible criminal penalties, for willfully presenting false information on their federal tax returns. All taxpayers must honor their obligation to report all of their income and pay all of the taxes they owe,” said James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.

Warner is the second taxpayer charged in Federal Court in Chicago in connection with an ongoing investigation of U.S. taxpayer clients of Union Bank of Switzerland (UBS) and other overseas banks that hid foreign accounts from the Internal Revenue Service. In February 2009, UBS entered into a deferred prosecution agreement with the United States, admitting that it helped taxpayers hide accounts from the IRS. As part of the agreement, UBS provided the government with the identities of, and account information for, certain customers of UBS’ U.S. cross-border banking business.

According to the charging document, Warner maintained a secret offshore account with UBS starting in 1996. In late 2002, Warner transferred the assets in his UBS account to a second Swiss financial institution, Zürcher Kantonalbank, when the account had a balance of approximately $93,630,083.

In 2002, Warner earned approximately $3,161,788 in gross income through investments held in his UBS account, according to the charge. Warner allegedly committed tax evasion for that year by failing to tell his accountants about that income and by failing to report that income or the existence of the UBS account in his 2002 form 1040 filed with the IRS in October 2003, as well as failing to report that same income on an amended 2002 form 1040 filed in November 2007. The charge states Warner initially failed to pay $1,257,064 in income tax on the unreported income, but his amended 2002 return reduced the amount of additional tax that he failed to pay to $885,300. By omitting his UBS income, Warner falsely reported his total income in 2002 was $49,124,095, according to the charge.

Tax evasion carries a maximum penalty of five years in prison and a $250,000 fine. In addition, a defendant convicted of tax offenses faces mandatory costs of prosecution and remains civilly liable to the government for any and all back taxes, as well as a potential civil fraud penalty of up to 75 percent of the underpayment plus interest. Federal tax law requires U.S. taxpayers pay taxes on all income earned worldwide. Taxpayers must also report foreign financial accounts if the total value of the accounts exceeds $10,000 at any time during the calendar year. A deliberate failure to file a Report of Foreign Bank and Financial Accounts (FBAR) with the IRS can result in a civil penalty of up to 50 percent of the amount in the account at the time of the violation. If convicted, the Court must determine a reasonable sentence to be imposed under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant U.S. Attorney James Conway.

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

Information

CHICAGO ― A federal jury today convicted a former Cook County official of steering four county contracts, each just under $25,000, to four acquaintances and then taking a portion of the contract payments as kickbacks from each of them, totaling $34,700. The defendant, EUGENE MULLINS, who was director of the Cook County Department of Public Affairs and Communications between March 2008 and November 2010, was found guilty by jurors who began deliberating Monday afternoon after a week-long trial in U.S. District Court.

Mullins, 49, of Chicago, a former Chicago police officer, was convicted of three counts of wire fraud and four counts of accepting kickbacks. He was acquitted of one count of wire fraud. He faces a maximum penalty of 20 years in prison on each count of wire fraud and 10 years in prison on each count of accepting a kickback, and a maximum $250,000 fine on each count. U.S. District Judge Amy St. Eve scheduled sentencing for Dec. 19. The judge must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The four individuals who received county contracts and returned a portion of the payments to Mullins were each charged with misprision of a felony for concealing Mullins’ fraud and kickback scheme. Each of them entered into pretrial diversion agreements and were placed on probation, were ordered to pay full restitution to the county, and testified as government witnesses at Mullins’ trial. They are: Gary Render, Michael L. Peery, and Clifford Borner, all of Chicago, and Kenneth Gregory Demos, of Oak Park.

The verdict was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Anita Alvarez, Cook County State’s Attorney; Robert J. Shields, Jr., Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Patrick Blanchard, Cook County Inspector General. The case stemmed from a state and federal corruption investigation that resulted recently in the state court conviction of Carla Oglesby, a former Cook County official, who also illegally steered county contracts under $25,000.

Evidence at Mullins’ trial showed that between January 2010 and January 2011, he used his county position to submit and cause others to submit false documents to the county to assist the four vendors in obtaining professional and managerial service contracts and payment from the county. Mullins then solicited the individuals who obtained contracts for payments from the proceeds for his own benefit.

Cook County contracts for professional and managerial services under $25,000 required approval only by the county purchasing agent and did not require approval by the county Board of Commissioners. In 2010, Mullins’ public affairs and communications department, as well as other county departments, had access to federal funds and county money to promote awareness and increase response rates by county residents for the 2010 U.S. Census, to promote awareness and assist residents impacted by floods in 2008, and to promote and increase energy efficiency and conservation.

During 2010, Mullins schemed to fraudulently steer the following contracts: a $24,980 disaster grant contract to Render, who kick-backed $9,000 to Mullins; a $24,985 energy grant contract to Peery, who kick-backed $12,000; a $24,995 census contract to Borner, who kickbacked $5,000; and a $24,997 census contract to Demos, who kick-backed $8,700.

Evidence also showed that Mullins steered an additional census contract for $24,390 to another individual, and then solicited a portion of the proceeds. However, this individual instead returned the uncashed vendor check to the county. In each instance, Mullins told the individuals who received the contracts that he could arrange for a subcontractor to perform some of the work in exchange for a portion of the county payments they received. In fact, the money that Mullins received from the individuals was not used for any subcontracts. Instead, Mullins used it for his own benefit, while Render, Peery, Borner, and Demos performed little or no work for the county.

To conceal the scheme, Mullins advised the contract recipients to falsely deny the circumstances surrounding the contracts if questioned by investigators. For example, he advised Peery not to say anything about paying him a portion of the contract in cash, and advised Borner to claim ownership of the invoice submitted in support of his census contract.

The government was represented by Assistant U.S. Attorneys Lindsay Jenkins and Sarah E. Streicker.

CHICAGO ― A Milwaukee man was arrested on a federal charge of sex-trafficking a minor and the alleged 15-year-old victim, from Madison, Wis., was returned to her home, federal law enforcement authorities announced today. The defendant, DAJUAN KEY, also known as “Dejuan Key,” 30, was scheduled to return to Federal Court in Chicago at 2:30 p.m. today for a detention hearing before U.S. Magistrate Judge Daniel Martin.

Key was taken into federal custody by FBI agents on Saturday and charged with sextrafficking a minor for allegedly transporting the 15-year-old girl from Madison to Chicago to engage in prostitution. He appeared before Magistrate Martin on Saturday and was ordered to remain in custody pending today’s hearing.

Transporting a minor across state lines to engage in prostitution carries a mandatory minimum sentence of 10 years and a maximum of life in prison and a $250,000 fine. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

According to a criminal complaint affidavit, the victim was found last Tuesday by Romeoville police at a fast food restaurant in the far southwest suburb after the girl’s mother reported that her daughter had called her crying, and told her that she was at a motel in Romeoville, and did not have a way home. Romeoville police responded to the motel where they located Key with a woman identified as an adult victim, who then accompanied police to the nearby restaurant and identified the minor victim.

The minor victim told FBI agents that she met a man, who she identified as Key, at an apartment complex in Madison on Sept. 8. Key told the girl that he was going to take her to Milwaukee and would return her to Madison. Instead, Key allegedly drove the girl to Chicago and they eventually arrived at a motel in Romeoville, where Key introduced the girl to a woman he told her was working for him as a prostitute. Key allegedly told the girl that if she worked for him, she would be able to keep all of the money she made. The victim told Key that she wanted him to take her home, but Key got the victim a motel room and took photographs of her, which he then apparently posted in online advertisements because her cell phone began to receive calls from unidentified numbers.

The victim repeatedly told Key that she wanted to go home, but she had no way to do so on her own, was tired, and agreed to spend the night believing Key would take her home in the morning. On Sept. 9 and 10, the victim engaged in commercial sex acts, believing that she would get to keep the money and use it for a bus ticket home. However, in each instance, Key demanded the money and the victim gave it to him because she was afraid of what he might do if she did not comply.

The arrest and charges were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Robert J. Shields, Jr., Acting Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation. They commended the assistance and cooperation of the Romeoville Police Department.

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. The case also falls under the umbrella of the Cook County Human Trafficking Task Force.

The government is being represented by Assistant U.S. Attorney Katherine A. Sawyer.

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.

CHICAGO ― Two Chicago area men have been arrested on separate, unrelated federal charges alleging that they manufactured child pornography, federal law enforcement officials announced today.

In one case, JOHN GABRIEL, 77, of Joliet, was arrested early today at his home without incident by FBI agents. Gabriel was charged with one count of manufacturing child pornography and one count of obstruction of justice in a two-count federal grand jury indictment that was returned yesterday and unsealed upon his arrest. Gabriel pleaded not guilty today before U.S. Magistrate Judge Geraldine Soat Brown in Federal Court in Chicago, and he remains in custody pending a detention hearing at 1:30 p.m. on Monday.

In the second case, MARK BARRETO, 35, of Elmwood Park and formerly of Chicago, was arrested yesterday at his home without incident by U.S. Postal Inspection Service agents. Barreto was charged with two counts of manufacturing child pornography, three counts of transporting child pornography, and one count of possessing child pornography in a six-count federal grand jury indictment that was returned on Tuesday. Barreto pleaded not guilty today before U.S. District Judge Charles Kocoras, and he remain in custody pending a detention hearing next week.

Manufacturing child pornography carries a mandatory minimum sentence of 15 years and a maximum of 30 years in prison and a $250,000 fine.

Gary S. Shapiro, United States Attorney for the Northern District of Illinois, announced the Gabriel case with Robert J. Shields, Jr., Acting Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation, and the Barreto case with Tony Gómez, Special Agent-in-Charge of the U.S. Postal Inspection Service in Chicago.

In the Gabriel case, the indictment alleges that he manufactured child pornography with a minor female in July 2012 in Will County. The obstruction count alleges that Gabriel destroyed computer files when FBI agents executed a search warrant his residence on Aug. 14, 2012.

The Gabriel 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 representatives from the Chicago Police Department, the Cook County Sheriff's Office, and the Cook County State’s Attorney’s Office.

In the Barreto case, the indictment alleges that he manufactured child pornography with two different minor females, one in February through July 2012, and the other in June and July 2012. It further alleges that he transported images depicting child pornography on dates in April and July 2012, and that he possessed child pornography on his computer when postal inspectors executed a search warrant at his residence in Chicago last October.

The Barreto investigation was conducted by the U.S. Postal Inspection Service, together with the Bolingbrook and Naperville police departments and the Will County State’s Attorney’s Office.

In addition to the penalties for manufacturing child pornography, if convicted, Gabriel also faces a maximum sentence of 20 years in prison for obstruction of justice. Barreto, if convicted, also faces a mandatory minimum of five years and a maximum of 20 years in prison on each count of transporting child pornography, and possessing child pornography carries a maximum of 10 years in prison. Both defendants also face a maximum fine of $250,000 on each count. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

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.

Barreto Indictment

Gabriel Indictment

ROCKFORD — A Rockford, Ill. man was sentenced today in federal court before U.S. District Judge Frederick J. Kapala to 77 months in prison without parole, to be followed by 3 years of supervised release, for illegally possessing a firearm as a convicted felon. Jeffrey L. Lottie, 27, pled guilty to the charge on June 3, 2013.

According to the written plea agreement, at approximately 1:31 a.m., on February 23, 2013, Lottie was a front seat passenger in a red Chevy Monte Carlo being driven by his girlfriend on West State Street in Rockford. A Winnebago County Sheriff's Deputy on patrol on West State Street in Rockford stopped the vehicle for a traffic violation. Lottie admitted that after the car was stopped, he placed a Highpoint .45 caliber semi-automatic handgun into his girlfriend's purse on the rear seat of the Monte Carlo. During the traffic stop, the deputy observed the open purse on the backseat and saw the Highpoint handgun. The magazine of the gun, which was seized by the police, was loaded with 5 rounds, although there was not a round in the chamber. Lottie admitted that he illegally possessed the firearm as a convicted felon and that he possessed the gun when he entered the vehicle.

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

The sentencing was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; W. Larry Ford, Special Agent-in-Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives; Chet Epperson, Chief of the Rockford Police Department; and Richard Meyers, Winnebago County Sheriff.

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

CHICAGO ― An Aurora man was sentenced today to nine months in federal prison for sexually groping the inner thigh of a Chicago area woman while they were seated next to each other aboard an airplane from Las Vegas to Chicago in June 2011. The defendant, SRINIVASA S. ERRAMILLI, who was convicted of abusive sexual contact by a federal jury last December, has two previous convictions for nearly identical crimes.

Erramilli, 46, a software consultant, was fined $5,000 and placed on court supervision for a year after he is released from custody by U.S. District Judge Joan H. Lefkow. The judge set a hearing for next Wednesday on the government’s request to revoke Erramilli’s bond. He is prohibited from airline travel while he is on supervised release and he is subject to deportation to India after being released from custody.

Erramilli’s advisory federal sentencing guidelines was found by the judge to be 10 to 16 months in custody. The judge said she would have imposed a 13-month sentence but reduced that by four months to give Erramilli credit for the time he spent in immigration custody following the assault.

Judge Lefkow agreed with the government that a custodial sentence was necessary to deter Erramilli and others from invading an individual’s bodily integrity and also to ensure that victims of abusive sexual contact will be heard and given protection.

Evidence at the trial showed that Erramilli was the last passenger to board a Southwest Airlines flight to Chicago’s Midway Airport on June 14, 2011, and was seated in the only open seat available between the victim, who had chosen a window seat to sleep during the flight, and her husband, who had chosen an aisle seat to enable easier access during the flight. The couple had traveled to Las Vegas for their 34th wedding anniversary.

The victim, now 65, who was wearing shorts during the flight, testified that Erramilli groped her three times aboard the plane. The first time she awoke to feeling something brush against her thigh; the second time, she testified that she awoke to feeling “pressure” on her thigh. The third time, the victim testified that Erramilli placed his hand up the leg of her shorts and then rubbed and grabbed her inner thigh. She struck Erramilli and yelled at him after realizing that he had been groping her. Other passengers and flight attendants also testified during the trial.

The jury also heard testimony from another victim who was seated in the row in front of Erramilli when he fondled her breast on a flight from Detroit to Chicago in August 1999. Erramilli pleaded guilty to battery in Cook County in 2000 and was sentenced to two years’ probation and five days’ community service. In 2002, Erramilli was sentenced in Federal Court in Detroit to three years’ probation after he was convicted of abusive sexual contact for groping the breast of yet another woman aboard a flight from San Jose, Calif., to Detroit.

The government was represented by Assistant U.S. Attorneys Bolling W. Haxall and Heather K. McShain.

The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Robert J. Shields, Jr., Acting Special- Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Chicago Police Department assisted in the investigation.

CHICAGO — Two defendants who were convicted at trial earlier this year were sentenced today to federal prison for fraudulently running a sham minority-owned cable television installation business that obtained $8.3 million in subcontracts from a cable company that serves residents on the city’s north side. The defendants, GUY POTTER, and MATTHEW GIOVENCO, neither a minority, actually controlled and operated the now-defunct ICS Cable, Inc., which they and others fraudulently disguised as a minority-owned business to obtain citymandated minority sub-contracts under the lakefront cable franchise held by RCN Telecom Services of Illinois LLC.

Potter, 67, of Versailles, Ky., and formerly of Bensenville, was sentenced to 4½ years beginning on Oct. 31, and Giovenco, 43, of Grayslake, was sentenced to three years in prison beginning on Dec. 2. The sentences were imposed by U.S. District Judge Rebecca Pallmeyer, who also ordered both defendants to forfeit $2.2 million in profits and to pay $217,580 in restitution to RCN.

The defendants engaged in a “cynical manipulation of this program . . . designed to enhance business opportunities for minorities,” Judge Pallmeyer said in sentencing Potter.

Potter and Giovenco, along with two co-defendants, were indicted in April 2011 and they were both convicted of six counts of mail fraud last April after a jury trial in Federal Court. Two co-defendants, JERONE BROWN, who served as the sham minority owner and president of ICS, and his mother, CHERONE MAYES, both of Chicago, who paid a $500 bribe to a city employee to expedite the minority-owned business (MBE) certification for ICS, testified as government witness after pleading guilty and both are awaiting sentencing.

“The defendants engaged in a lengthy fraud scheme that resulted in millions of dollars of contracts being diverted from legitimate minority- and women-owned businesses,” Assistant U.S. Attorney Jessica Romero argued at sentencing.

According to the trial evidence and court records, RCN’s cable franchise agreement required it to sub-contract 40 percent of the cable installation and disconnection services to citycertified minority-owned businesses. Between April 2003 and October 2006, Potter and Giovenco, assisted by Brown and Mayes, fraudulently obtained at least $8.3 million from RCN by falsely representing that Brown owned and operated ICS. All four defendants supported the false representations to RCN with an MBE certification for ICS that they obtained by making false representations to the city regarding Brown’s purported ownership and control of ICS, when, in fact, Potter and Giovenco alone controlled ICS and made most, if not all, financial and managerial decisions for the business.

The sentences were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Robert J. Shields, Jr., Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Joseph Ferguson, Inspector General for the City of Chicago.

ROCKFORD — A former Machesney Park, Ill. man was indicted today by a federal grand jury in Rockford on charges of bankruptcy fraud. ROBERT J. YONKEE, JR., 54, now of Lake Geneva, Wisconsin, filed a Chapter 7 Bankruptcy Petition on September 15, 2008. The indictment alleges that Yonkee fraudulently concealed property from the bankruptcy trustee, creditors, and the United States Trustee, including his ownership interest in: a business that sold auto parts, automobiles, and motorcycles; the United States Super Truck Racing Series; Bobby Yonkee Racing; as well as other inventory, merchandise, capital, vehicles, and motorcycles. The indictment further charges that Yonkee made false statements on a bankruptcy schedule and a Statement of Financial Affairs, both of which were filed under penalty of perjury. In addition, Yonkee was charged with making material false statements under oath in a bankruptcy proceeding during a meeting of creditors.

Each charge in this case carries 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.

The indictment was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Robert J. Shields, Jr., Acting Special Agent-In-Charge of the Chicago Office of Federal Bureau of Investigation.

Members of the public are reminded that a criminal 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 of the defendant beyond a reasonable doubt.

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

Indictment

CHICAGO — A former area motorcycle and recreational vehicle dealer and his accountant, together with eight other defendants who allegedly acted as straw buyers in sham vehicle sales, were indicted on federal charges alleging a nearly $74 million fraudulent financing scheme that resulted in approximately 20 lenders losing more than $56 million. All 10 defendants were charged with at least one count of bank fraud, and eight of them were also charged with federal tax offenses, in a 36-count indictment that was returned by a federal grand jury yesterday, federal law enforcement officials announced today.

The alleged bank fraud scheme involved two prongs: in one, the dealership 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 some 200 fraudulent loans totaling nearly $42.4 million, which resulted in some 18 financial institutions losing more than $29.5 million. At least 62 of these individual loans were made to the eight defendants who allegedly acted as straw buyers.

The charges allege that all 10 defendants 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. The tax offenses against eight of the defendants include one or more counts each of tax evasion, failing to file an income tax return, or filing a false federal tax return.

Lead defendant RUSSELL S. OTT, 50, of Oswego, was the owner of Emily, Inc., which did business as Pro Source Motorsports, which was last located 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. Ott was charged with one count each of bank fraud and tax evasion.

Defendant BRIAN McMAHON, 54, of Naperville, was Ott and Emily, Inc.’s certified public accountant, who also owned Triumph Suzuki in Naperville between 2001 and 2004 when he sold it to Ott. McMahon was charged with one count of bank fraud and two counts of filing false tax returns.

All 10 defendants will be ordered to appear for arraignment on dates to be determined in U.S. District Court.

Direct Lending Fraud

According to the indictment, Ott and McMahon fabricated false personal and business tax documents and financial statements and provided them to Fifth Third Bank, which between May 2007 and October 2008, extended Pro Source approximately $31,368,457 through five different credit lines, which funded traditional “floor plan loans.” As part of the scheme, 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.

Straw Borrower Fraud

According to the indictment, Ott enlisted the other eight defendants as straw borrowers so they could obtain fraudulent loan proceeds to share with Ott 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 who financed these loans generally deposited the 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 allegedly made personal use of the fraudulently obtained funds to operate Pro Source, which operated at a loss from approximately 2001 through 2008; and to make the following purchases – a house in Elburn for approximately $679,491 and make subsequent improvements which 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 other eight defendants, who allegedly acted as straw buyers, and details of their charges and alleged personal use of the funds are as follows:

ANDREW W. STACY, 51, of Elburn, a parts manager at Pro Source between 1998 and 2000. In late 2005, with financial assistant from Ott, Stacy acquired TUF Powersports, a motorcycle dealership in DeKalb, which he operated until it closed in late 2008. Stacy acted as a straw borrower on six fraudulent loans totaling more than $2.5 million, and after making certain periodic payments, used a portion of the funds to operate TUF Powersports and for personal expenses;

SCOTT F. DARVILLE, 48, of Racine, Wis., who owned and operated Pro Source of Woodstock, in 1998 and 1999. In 2000, DARVILLE became the owner of Racine MotorSports, Ltd., a motorcycle dealership he operated until it closed in 2009. Darville acted as a straw borrower on nine fraudulent loans totaling nearly $2.5 million, and after making certain periodic payments, retained more than $2 million, which he used to operate Racine Motorsports and for personal expenses;

F. PETER MIGNIN, 63, of Geneva, who owned and operated Northwest Investment Company, Inc., which formerly did business as Schaumburg Honda, a new and used motorcycle dealership. Mignin also owned RPM Management, LLC, doing business as Liberty Cycle, which he agreed to sell to Ott in 2007, and Mignin held an ownership interest with Ott in 2007 and 2008 in Huntley Chevrolet. Mignin acted as a straw borrower on 10 fraudulent loans totaling more than $3.8 million, and after making certain periodic payments, retained more than $3.4 million, which he used to operate Schaumburg Honda, Liberty Cycle, and for personal investments and expenses, including $450,000 toward the construction of his home, residence, and an $863,000 investment in Huntley Chevrolet;

KEVIN D. HANSON, 43, of Louisville, Ky., and formerly of Chicago, who owned and operated Safety First Racing, LLC, of Arlington Heights, a professional motorcycle racing team that competed at events throughout the United States between 2003 and 2008. Hanson acted as a straw borrower on seven fraudulent loans totaling more than $2.8 million, and after making certain periodic payments, retained more than $2.4 million, which he used to operate Safety First Racing, and for personal expenses;

OWEN A. WEICHEL, 48, of Huntington Beach, Calif., a former professional motorcycle racer who owned and operated Center of Gravity, LLC, which imported motorcycle parts from Japan and resold them in the United States. Weichel acted as a straw borrower on five fraudulent loans totaling more than $2.1 million, and after making certain periodic payments, retained more than $1.9 million, which he used to operate Center of Gravity and for personal expenses, including foreign investments in Costa Rica, Italy, and Canada of approximately $1,261,200;

JOHN MATERYN, 50, of Ypsilanti, Mich., who worked for Ott at Pro Source in 1998 and later at Liberty Cycle. Materyn acted as a straw borrower on seven fraudulent loans totaling more than $2.3 million, and after making certain periodic payments, he used a portion of the funds to operate Pro Source Motorsports in Michigan and for personal expenses;

JILL A. PLUTA, 55, of LaPorte, Ind., Ott’s former sister-in-law who was formerly known as Jill Ott, and who worked at Pro Source in 2005. She acted as a straw borrower on five fraudulent loans totaling nearly $1 million, and after making certain periodic payments, retained approximately $680,334, which she used for personal expenses; and

JOAN M. QUICK, 52, of Walworth, Wis., the office manager for Pro Source who was responsible for Pro Source’s day-to-day bookkeeping and accounting. Quick acted as a straw borrower on seven fraudulent loans, and she later wrote checks and directed electronic transfers from Emily, Inc. accounts totaling more than $1 million, which she used for personal expenses, including her residence, automobiles for at least three of her children and college tuition for at least two of them, and credit card payments totaling approximately $550,125.

The charges were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Robert J. Shields, Jr., Acting 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.

Each count of bank fraud carries a maximum penalty of 30 years in prison and a $1 million fine, or an alternative fine totaling twice the gross gain or twice the loss, whichever is greater, and restitution is mandatory. Tax evasion carries a maximum penalty of five years in prison and filing a false tax return carries a maximum of three years in prison, and both carry a maximum fine of $250,000, while failure to file a tax return carries a maximum of a year in prison and a $100,000 fine. In addition, defendants convicted of tax offenses face mandatory costs of prosecution and remain civilly liable to the government for any and all back taxes, as well as a potential civil fraud penalty of up to 75 percent of the underpayment plus interest. If convicted, the Court must determine a reasonable sentence to be imposed under federal statutes and the advisory United States Sentencing Guidelines.

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

Indictment

CHICAGO ― A suburban attorney whose law license was suspended in May was arrested today on federal fraud charges for allegedly misappropriating approximately $2.34 million from a couple who were her clients. The defendant, KATHLEEN NIEW, was charged with 10 counts of wire fraud in a federal grand jury indictment that was returned on Tuesday and unsealed today following her arrest. FBI agents took Niew into custody without incident at her office in Oak Brook.

Niew, 57, of Burr Ridge, operated Niew Legal Partners, LLC, in Oak Brook. She was scheduled to be arraigned at 3 p.m. today before U.S. Magistrate Judge Young B. Kim in U.S. District Court.

According to the indictment, Victims A and B, a husband and wife who were Niew’s clients, transferred approximately $2.34 million into Niew’s attorney escrow account to be used for closings on commercial real estate transactions. Between January 2010 and December 2012, Niew allegedly used the funds for her own benefit, contrary to the false representations she made to the couple and others.

Without the couple’s knowledge, Niew used their funds to finance the purchases of various mining operations and not to purchase any commercial property for the victims, the charges allege. As part of the fraud scheme, Niew arranged to receive a 20 percent finder’s fee for herself from a mining operation in exchange for providing it approximately $1.5 million in funds that belonged to her clients. She falsely told the couple that their funds were available in her escrow account and were to be used for closings when they were not. She further concealed her fraudulent conversion of funds by telling her clients that the bank had erroneously sent the funds intended for closings to the wrong bank accounts, even though she had not directed any such wire transfer of the clients’ funds to the title companies to purchase real estate, the indictment alleges.

The arrest and charges were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Robert J. Shields, Jr., Acting Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.

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

Each count of wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, or an alternative fine totaling twice the gross gain or twice the loss, whichever is greater, and restitution is mandatory. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

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

Indictment

CHICAGO ― A Hillside man was indicted today on federal charges for allegedly soliciting the murder of an undercover FBI agent after the defendant was arrested last September and charged with attempting to detonate a purported bomb outside a bar in downtown Chicago. The defendant, ADEL DAOUD, was charged with one count each of solicitation of murder or attempted murder of a federal agent, murder-for-hire, and obstruction of justice in a three-count indictment returned by a federal grand jury.

Daoud, 19, will be arraigned on today’s charges on a date to be determined in U.S. District Court. He has pleaded not guilty to terrorism-related charges stemming from his arrest on Sept. 14, 2012, when he allegedly attempted to detonate a purported explosive device. His trial on those charges is scheduled for April 7, 2014.

According to today’s indictment, in July 2012, Daoud was introduced to Individual A, an undercover FBI agent posing as a terrorist residing in New York, who would supply Daoud with an explosive device to use in a terrorist attack in Chicago. After he was arrested, Daoud learned that Individual A was an FBI agent. Between Oct. 26 and Nov. 29, 2012, Daoud allegedly solicited another person to use physical force to murder or attempt to murder the undercover agent.

The murder-for-hire count alleges that on Nov. 28, 2012, Daoud caused another person to use a telephone with the intent of committing the murder Individual A in return for payment. The obstruction count alleges that between Oct. 26 and Nov. 29, 2012, Daoud attempted to kill Individual A to prevent the agent from attending and testifying in court.

The indictment was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Robert J. Shields, Jr., Acting Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.

The government is being represented by Assistant U.S. Attorneys Barry Jonas and William Ridgway.

The solicitation count carries a maximum penalty of 20 years in prison; murder-for-hire carries a maximum of 10 years; and the obstruction of justice count carries a maximum of 30 years, and each count carries a maximum fine of $250,000. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

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

Indictment

ROCKFORD — A Wonder Lake, Ill. man pleaded guilty today in federal court before U.S. District Judge Frederick J. Kapala to one count of making a false declaration under penalty of perjury in a bankruptcy case filed in the United States Bankruptcy Court in Rockford. JAMES GROSSMAYER, 51, filed a Chapter 7 Bankruptcy Petition on September 19, 2008. As he admitted in his Plea Agreement, Grossmayer also filed a Schedule B listing his personal property on which he intentionally omitted his ownership interest in a New York Life Annuity. Grossmayer further admitted he signed his bankruptcy schedules under penalty of perjury, knowing that Schedule B was false, and that his interest in the annuity at that time was approximately $25,000.

The charge in this case carries 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. Grossmayer is scheduled to be sentenced on December 5, 2013, at 9:30 a.m.

The guilty plea was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Robert J. Shields, Jr., Acting Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation.

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

CHICAGO ― A former Chicago commodities trader was charged today with allegedly fraudulently raising more than $10 million and misappropriating a substantial portion of the money for his personal commodities futures trading, to make Ponzi-type payments to investors, and to benefit himself and his family, resulting in a loss of at least $5 million. The defendant, BRADLEY SCHILLER, allegedly used some of the funds to pay for personal and family expenses, including a Range Rover, jewelry, condominium fees, housing rental fees for his mother-in-law, and country club fees.

Schiller, 37, of Chicago, was charged with three counts of wire fraud in an information filed today in U.S. District Court. He will be arraigned on a date to be determined.

According to the charges, Schiller, who represented himself as a successful commodities future trader, raised more than $10 million between 2007 and 2012 from various sources, including The PrivateBank and Trust Company, in connection with his futures trading. In raising the funds, Schiller allegedly lied to sources and prospective providers of funds about the profitability of his futures trading, the use of money he raised, the risks involved in providing him with money, his financial condition and the status of the funds. He misappropriated a substantial portion of the money raised and concealed the scheme by making Ponzi-type payments to victims and by creating and distributing fraudulent documents, including phony commodities brokerage and bank account statements, false financial statements, and false tax forms, the charges allege. During the scheme, Schiller had trading losses of more than $1.5 million and need to continually raise new funds to repay earlier providers of funds.

In obtaining a $2 million line of credit from The PrivateBank, for example, Schiller allegedly falsely represented that he had a net worth of about $2.6 million and an overall balance in his commodities accounts in April 2009 of approximately $5.5 million. Schiller allegedly knew, however, that he had a negative net worth at the time and his overall balance in his commodities accounts was nearly zero.

The charges were announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Robert J. Shields, Jr., Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Commodity Futures Trading Commission provided assistance.

Each count of wire fraud affecting a financial institution carries a maximum penalty of 30 years in prison and a $1 million fine, or an alternative fine totaling twice the gross gain or twice the loss, whichever is greater, and restitution is mandatory. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines. An information contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

The government is being represented by Assistant U.S. Attorney Edward Kohler.

The investigation falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.StopFraud.gov.

CHICAGO — A former Chicago White Sox scouting executive was sentenced today to two years in federal prison for accepting approximately $440,000 in kickbacks from the signing bonuses and contract buyouts that two of the team’s Latin American scouts paid to secure 23 prospective players between December 2004 and February 2008. The defendant, DAVID S. WILDER, the White Sox farm system director from late 2003 to 2006, when he became the team’s senior director of player personnel until May 2008, had pleaded guilty to mail fraud in February 2011.

Wilder, 52, of San Francisco, was ordered to begin serving his sentence on Oct. 31 by U.S. District Judge Charles Norgle. Wilder was also ordered to pay $440,781 in restitution to the White Sox.

Wilder admitted that he defrauded the White Sox of money and his honest services while concealing the kickbacks from the team and its more senior executives. He later cooperated with the investigation, leading the government to ask for a reduced sentence.

Two former White Sox scouts, JORGE L. OQUENDO RIVERA, 52, of Puerto Rico, the team’s Latin American scout between November 2004 and October 2007, and VICTOR MATEO, 42, of the Dominican Republic, a Sox scout in the Dominican Republic between November 2006 and May 2008, were also charged and pleaded guilty to mail fraud. Oquendo Rivera is scheduled to report to prison this Friday to begin serving a sentence of a year and a day that Judge Norgle imposed in June. Mateo is scheduled to be sentenced on Sept. 18.

According to court documents, the White Sox relied on Wilder, as well as Oquendo Rivera and Mateo, to recommend and approve signing bonus and related payments, depending on a player’s talent, necessary to induce a player to sign with the White Sox, or to induce another team to release the player to the White Sox, without being inflated for kickbacks. Instead, Wilder and the other defendants facilitated, solicited, or obtained more than $440,000 in kickbacks from at least 23 Latin American players signed by the White Sox.

The White Sox reported findings of an internal investigation to Major League Baseball and baseball officials referred the matter to federal authorities. Both the team and Major League Baseball were instrumental in launching the investigation and provided continuing cooperation.

The government is being represented by Assistant U.S. Attorneys Christopher K. Veatch and Michelle Nasser.

The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Robert G. Shields, Jr., Acting Special Agent-in-Charge of the Federal Bureau of Investigation.

CHICAGO — The chief executive officer of Chicago-based Mobile Doctors, which manages physicians who make house calls in six states, and one of its physicians in Chicago were arrested today on federal health care fraud charges. At the same time, federal agents executed search warrants at Mobile Doctors’ offices in Chicago, Detroit, and Indianapolis, as well as warrants to seize up to $2.568 million in alleged fraud proceeds from various bank accounts. The charges allege a scheme to fraudulently increase (also known as “upcoding”) Medicare bills for in-home patient visits that Mobile Doctors falsely claimed were more complicated and longer than they actually were. The charges also allege that Mobile Doctors’ physicians falsely certified that patients were confined to their homes, enabling home health care agencies to claim fees for additional services for patients who were not actually qualified to receive them.

Agents from the FBI, the U.S. Department of Health and Human Services Office of Inspector General, and other law enforcement agencies executed the arrest, search, and seizure warrants in connection with the charges and also a broader ongoing investigation that includes allegedly illegal billing practices for medically unnecessary tests and services not performed by a physician.

Arrested were DIKE AJIRI, 42, of Wilmette, CEO of Mobile Doctors, which he has effectively owned since 1996, and BANIO KOROMA, 63, of Tinley Park, a physician who has worked for Mobile Doctors since approximately 2007. Mobile Doctors, located at 3319 N. Elston Ave., in Chicago, arranges patient home visits and contracts with doctors who perform the visits. The physicians assign their rights to bill and collect payment to Mobile Doctors, in return for being paid directly by the company. Mobile Doctors’ website claims that its associated physicians have made more than 500,000 house calls since its inception. In addition to Chicago, the company has branches in Detroit and Flint, Mich., San Antonio and Austin, Tex., Indianapolis, Kansas City, Phoenix, and St. Louis.

Ajiri was charged with health care fraud and Koroma was charged with making false statements relating to health care benefits in a criminal complaint that was filed yesterday and unsealed today after the arrests. Both were scheduled to appear at 3 p.m. today before U.S. Magistrate Judge Mary Rowland in U.S. District Court.

The arrests and charges were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Robert J. Shields, Jr., Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Lamont Pugh III, Special Agent-in- Charge of the Chicago Regional Office of the HHS-OIG. The Railroad Retirement Board Office of Inspector General is also participating in the investigation.

According to a 75-page affidavit in support of the arrest, search and seizure warrants, agents have interviewed several current and more than 25 former employees of Mobile Doctors, including some who reported allegedly fraudulent billing practices to Medicare before they were contacted by agents. Investigators have also reviewed emails and documents, claims data, patient files, and have conducted interviews with patients of Mobile Doctors and their primarycare physicians, whose statements contradict Mobile Doctors’ billing and patient records.

Mobile Doctors physicians do not perform tests such as echocardiograms, but do order such tests, which are done on Mobile Doctors’ patients by employees of In Home Diagnostics, doing business as Ultrasound2You. According to Medicare records, Ajiri is a minority partner in In Home Diagnostics, which is located in the same building as Mobile Doctors, and Mobile Doctors bills the echocardiograms so that they appear to have been done by Mobile Doctors’ physicians.

The complaint affidavit states that Ajiri signed a personal financial statement on Dec. 31, 2012, stating that he received $1.5 million in annual partnership income from a corporate entity, Mobile Doctors LLC, which has a complex ownership structure involving Ajiri and over time, one or both of his parents. Between 2008 and January 2013, bank records show that approximately $4.365 million was transferred from Mobile Doctors to an account in the name of Ajiri and his wife.

Upcoding patient visits

According to interviews with former and current Mobile Doctors physicians, branch managers, clinical coordinators, employees and patients, a typical visit that a Mobile Doctors physician has with an established patient lasts 10 to 30 minutes and is routine in nature. In contrast to those interviews, claims data shows that from 2006 through February 2013, approximately 99 percent of all established-patient visits by Mobile Doctors physicians were billed to Medicare using either of the two highest codes indicating the visits involved medical decision-making of moderate to high complexity, detailed or comprehensive interval histories or medical examinations, and/or visits that typically last at least 40 minutes.

In 2009 in Chicago, the local Medicare fee for a visit using the second-highest home visit code was approximately $122.82, while the fee for the highest code was approximately $171.25. According to a review of claims data for Railroad Retirement Board patients, every single established-patient visit Mobile Doctors billed to Medicare between January 2007 and June 2008 used the highest fee code. Between January 2007 and November 2012, approximately 93 percent of such visits were billed using the highest fee code.

The former manager of Mobile Doctors’ Chicago branch until she was terminated in 2008 told agents that Ajiri told her that the second-highest fee code was the default code for a patient visit so that it would be worth the gas and time spent. The manager said Ajiri told physicians, “I don’t pay for ones or twos,” referring to the two lower of the four applicable fee codes. At the end of one day, she said she saw Ajiri in his office “automatically” altering the billing codes and marking visits at the highest fee level on patient records submitted by physicians and assistants who accompanied them on home visits. A physician told agents that in late 2007, Ajiri did not respond to his concerns about Mobile Doctors’ billing practices and instead told the doctor that he could earn more money if he would order more tests such as electrocardiograms, according to the affidavit.

The complaint alleges that the vast majority of payments made on established-patient visit claims using the highest fee code were the result of fraudulent upcoding. From 2006 through 2012, Mobile Doctors received approximately $21.4 million in payments on claims using the second-highest code, and approximately $12.6 million in Medicare payments on claims using the highest fee code.

Falsely certifying patients as confined to their homes

The charges further allege that Mobile Doctors physicians, including Koroma, falsely certified patients as confined to their homes and requiring home health services when they were not home-bound and did not require such care. By referring patients to home health agencies that did not warrant Medicare payments, Mobile Doctors received more referrals from those agencies for services provided by its physicians. According to Medicare data, from August 2010 through July 2013, more than 200 home health agencies submitted Medicare claims for services allegedly rendered to patients for whom Koroma was identified as the referring physician. These home health agencies have been paid more than $10 million for services listing Koroma as the referring physician.

Between January 2006 and March 2013, Mobile Doctors physicians have certified or recertified for 60-day periods approximately 15,598 patients as confined to their homes and requiring home health services a total of approximately 83,133 times, many of which were allegedly false. Approximately 6,057 of these certifications were attributed since August 2007 to Koroma, with Mobile Doctors billing Medicare for approximately 17,439 patient visits he made during that time, more than any other Mobile Doctors physician.

The health care fraud count against Ajiri carries a maximum penalty of 10 years in prison and a $250,000 fine and restitution is mandatory. The false statements count against Koroma carries a maximum 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 U.S. Attorney Stephen C. Lee and Catherine Dick, assistant chief in the Fraud Section of the Justice Department’s Criminal Division. The U.S. Attorney’s Offices in Detroit, Indianapolis, and Phoenix also have assisted in the investigation.

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

The Medicare Fraud Strike Force began operating in Chicago in February 2011, and consists of agents from the FBI and HHS-OIG, working together with prosecutors from the U.S. Attorney’s Office and the Justice Department’s Fraud Section. The strike force is are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Scores of defendants have been charged locally in health care fraud cases since the strike force began operating in Chicago.

To report health care fraud to learn more about the Health Care Fraud Prevention & Enforcement Action Team (HEAT), go to: StopMedicareFraud.gov.

Complaint

CHICAGO – A former Chicago accountant was sentenced today to more than five years in federal prison for embezzling more than $4.3 million from trust accounts that he was supposed to be managing for the benefit of clients and also cheating the government of more than $1.7 million in federal taxes on the money he stole. The defendant, ROBERT ROME, spent the money he stole to pay extravagant personal expenses, including cars, a boat, vacation homes in Florida, and jewelry for himself and his family.

Rome, 66, of Chicago, was the managing partner of the former Rome Associates LLP accounting firm in downtown Chicago. One of his largest clients was a family that owned a group of plumbing wholesale supply companies and he provided accounting and tax services to the family members and their businesses. Rome had sole authority to sign checks, transfer funds, and sign tax returns for the trusts he managed. He used his unlimited access to embezzle money between 2003 and 2007 by writing checks payable to himself or his firm. In addition to the trust funds, he stole money from a family investment partnership account and an account of the estate of a deceased family member.

Rome pleaded guilty to wire and tax fraud in September 2012. U.S. District Judge James Zagel sentenced him to 63 months in prison, telling Rome that his betrayal of the family’s trust made his crime worse than if he had invaded the victims’ homes and stolen their money. Rome was ordered to begin serving his sentence on Oct. 30, and was ordered him to pay $1,786,053 in restitution to the Internal Revenue Service. Rome filed false federal income tax returns between 2004 and 2006 and failed to file a return for 2007. The judge also placed Rome on three years of supervision following his release from prison and barred him from working as an accountant or financial advisor.

There was no restitution ordered to the victim family members because they eventually recovered the stolen funds from third parties.

The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Robert G. Shields, Jr., Acting Special Agent-in-Charge of the Federal Bureau of Investigation in Chicago; and James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division.

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

CHICAGO — A Oregon man who engaged in interstate sex-trafficking of two adult women and a teenage girl from the West Coast to the Midwest was sentenced today to 15 years in federal prison. The defendant, ERIK SHAMSUD-DIN, 46, was sentenced after a hearing at which the minor victim, now 23, testified in U.S. District Court.

Shamsud-din, who pleaded guilty in May to interstate prostitution, was sentenced to 180 months in prison, followed by three years of supervised release, by U.S. District Judge Amy J. St. Eve. He must serve at least 85 percent of his federal sentence before he is eligible for release and there is no parole in the federal prison system. The sentence resolved federal charges against Shamsud-din in Oregon and northern Illinois. Shamsud-din previously served a 112-month sentence after a 1991 conviction for rape and prostituting two teenage girls.

Shamsud-din “was a predator who targeted vulnerable women, including a minor, sent them out to have sex with strangers, and took all the money they made for himself,” the government argued in seeking the 20-years sentence.

According to court records, in late 2006, Shamsud-din was engaged in prostituting two adult women in California when he met Victim A, a 16-year-old homeless runaway, and he began prostituting her as well. Shamsud-din and his victims left California and traveled to Arizona, New Mexico, and Texas, where he engaged in prostituting them, before traveling in late January 2007 from Texas to Illinois to further engage in prostitution. On Jan. 27, 2007, Skokie police responded to a fight between the minor and an adult victim. The minor was rescued and Shamsud-din was arrested, which later resulted in the federal charges in Chicago.

The investigation was conducted by the Chicago Office of the Federal Bureau of Investigation after Shamsud-din was arrested in 2007 by the Skokie Police Department. The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the FBI.

The government was represented by Assistant U.S. Attorneys Margaret Schneider and Heather McShain.

ROCKFORD — A Rockford, Ill. man was sentenced today by U.S. District Judge Frederick J. Kapala to 84 months in federal prison for traveling from Illinois to California to engage in sex with a minor, of which 48 months are to be served consecutive to imprisonment on an Illinois state sentence. The defendant, DONALD TROTTER, 58, who pled guilty to the federal charges on Aug. 14, 2012, was also ordered by Judge Kapala to pay a fine of $25,000, as well as the cost of his representation by the Federal Public Defender.

Trotter has been in custody since his arrest on Aug. 5, 2009, in Long Beach, California, where he was ordered to be returned to Illinois to face both federal and state charges. According to the written plea agreement filed in federal court, Trotter had a sexual relationship with a 13 year old victim during and prior to 2009. During the relationship, Trotter told the victim that his true name was “Daniel Black” and that he was a government agent. After renting an apartment in Long Beach, California, intending to cohabit with the victim, Trotter arranged for the victim to travel to California on Aug. 1, 2009. On Aug. 3, 2009, Trotter traveled by plane from Illinois to California intending to engage in sexual acts with the minor victim.

Trotter was previously convicted in Illinois of state charges, including three counts of criminal sexual assault and one count of child abduction. He was sentenced to a total of 45 years in state prison and is presently serving that sentence. Following his release from Illinois state prison, Trotter will be taken into federal custody to serve the sentence imposed by the federal court. He will not be eligible for parole on his federal sentence.

The sentencing was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation; and Chet Epperson, Chief of the Rockford Police Department.

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

CHICAGO — A La Grange Park man who had amassed a collection of tens of thousands of images and videos of child pornography was sentenced today to 12½ years in federal prison for transporting child pornography via computer. The defendant, NATHAN ARGER, 34, who was arrested in September 2011 when federal agents searched his residence, has remained in federal custody since he pleaded guilty in August 2012.

Arger was sentenced to 151 months in prison, followed by five years of supervised release, by U.S. District Judge Amy J. St. Eve. He must serve at least 85 percent of his federal sentence before he is eligible for release and there is no parole in the federal prison system. Transporting child pornography carries a mandatory minimum sentence of five years and a maximum of 20 years in prison.

Arger was a part-time employee of Lyons Township High School in La Grange. There were no allegations that he engaged in any illegal activity involving students or the school’s technology equipment.

According to court records, in July 2011, an undercover FBI agent signed onto an account on a peer-to-peer computer network, and observed that an individual using the screen name “Mrdizzle420” was logged into the file-sharing network. The agent browsed Mrdizzle420’s shared directories and downloaded files, which depicted child pornography, including numerous images involving known child victims identified by the National Center for Missing and Exploited Children (NCMEC) as a result of previous unrelated investigations.

FBI agents subsequently linked the shared files to an internet account at Arger’s residence. Ultimately, Arger was found to possess approximately 66,895 images and 2,943 videos of child pornography on a desktop computer and an auxiliary hard-drive. Agents also found non-pornographic photographs of a prepubescent girl who was partially nude and videos that depicted Arger with a different girl.

“[Arger] cataloged and stored a staggering number of images and videos of child pornography, the majority of which involved prepubescent children and some of which were clearly sadistic or masochistic in nature,” the government wrote in a sentencing memo.

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.

The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

The government was represented by Assistant U.S. Attorney Naana Frimpong.

CHICAGO — Three Chicago area men were sentenced to lengthy federal prison terms after being convicted in three separate cases of federal firearms charges. Each case demonstrates the constant efforts of federal agencies – in these three instances, the Bureau of Alcohol, Tobacco, Firearms and Explosives – working together with the Chicago Police Department, to investigate and prosecute firearms-related crimes throughout the city.

NORVELL MOORE, 31, and MICHAEL BOBO, 32, both of Chicago, and ARCADIO HERNANDEZ, 42, of Northlake, were sentenced yesterday in three separate cases in U.S. District Court to 20, 15, and 10 years in federal prison, respectively. All three cases fall under the umbrella of Project Safe Neighborhoods, and were investigated by the Chicago Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives. For more information about PSN Chicago, see www.psnchicago.org.

Details of three cases follow:

• U.S. District Judge John Grady sentenced Moore to 20 years in prison for using a firearm during a crime of violence and for being a felon-in-possession of a firearm. Moore was convicted by a jury in July 2012 of illegal possession and use of a firearm on July 14, 2010. Evidence showed that Moore approached a woman who was sitting in her car in the 7200 block of West Foster Avenue in Chicago, placed a firearm to her head, and told her to get out of the car or he would shoot her. When the victim fled from her car, Moore got in and drove away. Chicago police officers, who responded to the carjacking call, quickly found Moore driving on the Kennedy Expressway. Moore sped away, crashed the victim’s car on the Ohio Street ramp, and then ran up the embankment and down a street where he was caught by the police, who later found Moore’s loaded 9mm pistol in the victim’s car. Moore has several prior felony convictions, including robbery, aggravated robbery and gun related offenses. The government was represented by Assistant U.S. Attorney Barry Jonas.



• U.S. District Judge Elaine Bucklo sentenced Bobo as an armed career criminal to 15 years in prison for being a felon-in-possession of a firearm. Bobo pleaded guilty in October 2012 to illegally possessing a firearm on Nov. 16, 2010. Evidence showed that Bobo kept a loaded .32 caliber revolver in the pocket of his jacket, which was hanging in his closet in his residence in the 500 block of North St. Louis Avenue in Chicago. Chicago police officers executed a court-authorized search warrant at Bobo’s residence and recovered the firearm. Bobo has several prior felony convictions for drug trafficking and other narcotics-related offenses. The government was represented by Assistant U.S. Attorney Paul Tzur.



• U.S. District Judge Samuel Der-Yeghiayan sentenced Hernandez to 10 years in prison for being a felon-in-possession of a firearm. Hernandez was convicted by a jury in December 2012 for illegally possessing a firearm on Nov. 23, 2010. Evidence showed that Hernandez was walking in an alley near the 1100 block of North Ridgeway Avenue in Chicago, and when he noticed that Chicago police officers were looking at him, he dropped the red plastic bag that he was carrying. The officers found a loaded .38 caliber revolver among the items inside the bag. Hernandez later admitted to the officers that he had just stolen the gun from drug dealers who had previously beat him up. Hernandez has several prior felony convictions, including residential burglary, criminal sex abuse, and drug trafficking offenses. The government was represented by Assistant U.S. Attorney Derek Owens.

The sentences were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Larry Ford, Special Agent-in-Charge of the Chicago Office of ATF; and Garry McCarthy, Superintendent of the Chicago Police Department.

CHICAGO — A day after together paying more than $10 million in restitution to the Internal Revenue Service, two former business owners were sentenced to federal prison for failing to report as income and pay taxes on more than $22 million they diverted from the business and divided equally. The defendants, MICHAEL H. MARTORANO and WILLIAM S. SEFTON, were sentenced yesterday to 3½ and four years in prison, respectively, after each pleaded guilty in March to three counts of filing false federal income tax returns.

The defendants were the majority owners of the former Consumer Benefit Service, Inc., or Cbsi, a Naperville business that provided membership and consumer discount programs to businesses and associations worldwide.

Martorano, 66, of Ft. Atkinson, Wis., and formerly of Naperville, who was Cbsi’s president, and Sefton, 62, of Scottsdale, Ariz., and formerly of the Chicago area, who was vice president/secretary of Cbsi, under-reported or failed to report the income they diverted over a period of five years. The government argued at sentencing that both men were motivated by greed, and, despite the payment of restitution, urged incarceration to punish them and deter others from committing tax crimes.

U.S. District Judge Edmond E. Chang yesterday imposed the 42-month sentence for Martorano and the 48-month term for Sefton, and ordered both to begin serving their sentences on Nov. 5. Judge Chang also fined both defendants $12,500 and ordered them to pay the mandatory costs of tax offense prosecution.

In addition, Judge Chang ordered restitution, which both defendants paid on Monday. Martorano paid approximately $1.494 million and Sefton paid approximately $1.441 million for individual income taxes they owed the IRS, and together they paid approximately $7.308 million in corporate taxes owed by their business, for a total of $10,244,144.

The sentences were announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.

Martorano and Sefton, who were charged in September 2012, admitted that on a number of occasions between December 2005 and December 2009, they caused Cbsi to transfer more than $21.656 million into bank accounts in the name of a consulting firm they controlled. Both defendants used some of this money to pay personal expenses and moved other amounts in approximately equal portions into other accounts they controlled individually. As a result, they each obtained approximately $10.828 million. In 2008, Martorano and Sefton equally divided an additional $641,975 that paid for a “muscle car” for Sefton. Neither defendant disclosed the receipt of any of this money to their individual tax return preparer.

The government was represented by Assistant U.S. Attorneys Kaarina Salovaara and Joseph Stewart.

CHICAGO — The owner of an Addison seafood distributor received a maximum $100,000 fine and was sentenced to five years’ federal probation, with the first six months in home confinement, for mislabeling certain products by substituting cheaper fish for more expensive fish and misstating the weight of shrimp to charge customers more for a lesser quantity. The defendant, PATRICK A. BRUNO, president and owner of Gourmet Express Marketing, Inc., was sentenced after he pleaded guilty in April to a misdemeanor violation of the Federal Food, Drug, and Cosmetic Act.

Bruno, 71, of Addison, must pay the costs of electronic monitoring during home confinement. U.S. Magistrate Judge Sheila Finnegan, who imposed the sentence yesterday in Federal Court in Chicago, also ordered Bruno to obey the terms of a civil consent decree as a condition of his probation. That decree, which Bruno and Gourmet Express entered in April and settled a parallel civil lawsuit filed by the government, permanently enjoins any future violations. Bruno admitted that he mislabeled and sold swai as “catfish,” and perch as “red snapper” or “pacific snapper,” and also misstated the weight of ice-glazed shrimp.

The mislabeling has not resulted in any known illnesses or danger to public health, officials said.

In pleading guilty in the criminal case, Bruno admitted that between 2007 and 2010, he knew that seafood he sold was mislabeled and that the packages of frozen shrimp overstated the weight of that ice-glazed product. The civil consent decree, which lasts at least five years, enjoins him and his company from committing any future violations, requires the hiring of an independent expert at the company’s expense to ensure compliance with the agreement and federal laws, and provides for civil damages of $5,000 a day and $10,000 for each shipment in the event violations occur.

The sentence was announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Scott MacIntire, district director of the FDA’s Chicago District Office, and John Redmond, Acting Special Agent-in-Charge of the FDA’s Office of Criminal Investigations.

According to court documents, Gourmet Express purchases, processes and repacks frozen seafood and sells its products to retailers and wholesalers in Illinois and other states. The Food and Drug Administration issued a warning letter to Bruno and Gourmet Express in February 2010 after inspections in 2009 found that they misrepresented the weight of frozen shrimp after adding an ice glaze to the products, and mislabeled perch as “red snapper,” or “pacific snapper.” A subsequent inspection in March and April 2010 documented continuing and additional violations.

The FDA tested samples of Bruno and Gourmet Express’s frozen cooked shrimp during some inspections in 2009 and 2010 to evaluate the net weight stated on the product labels. The tests revealed that the actual weight of the products was at various times, respectively, 21.5 and 14.4 percent under the labeled weight. The FDA conducted DNA testing to determine the true species of the fish.

The government was represented by Assistant U.S. Attorneys Kaarina Salovaara and Donald Lorenzen.

CHICAGO — Federal charges were unsealed today against two Chicago men for allegedly violating U.S. sanctions in late 2008 and 2009 by agreeing to assist Zimbabwe President Robert Mugabe and others in an effort to lift economic sanctions against them in exchange for $3.4 million. The defendants, PRINCE ASIEL BEN ISRAEL and C. GREGORY TURNER, allegedly met multiple times in the United States and 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. During these meetings, Ben Israel and Turner allegedly agreed to engage in public relations, political consulting, and lobbying to have sanctions removed by meeting with and attempting to persuade U.S. federal and state government officials, including Illinois members of Congress and state legislators, to oppose the sanctions.

The sanctions against President Mugabe and other specially designated individuals in Zimbabwe were initially imposed in 2003 by President George W. Bush, and have been continued annually by President Obama, starting in March 2009, through the most recent 2 extension in March 2013. President Mugabe and his ruling ZANU-PF party have governed Zimbabwe since its independence in 1980. President Mugabe uses funds from Zimbabwe’s industries, particularly the diamond trade, to enrich himself and his family and to purchase the loyalty of subordinates, according to reports cited in the charges. 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 lobbying, public relations, and media consulting services on behalf of or for the benefit of specially designated nationals.

Ben Israel, 72, appeared today before U.S. Magistrate Judge Arlander Keys in U.S. District Court in Chicago, and was released on his own recognizance with certain conditions. Turner, 71, also known as “Greg Turner,” of Chicago, is believed to be living in Israel and a warrant was issued for his arrest. Both defendants were charged with violating the International Emergency Economic Powers Act (IEEPA) in a criminal complaint filed last month and unsealed today.

The arrest and charges were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; John Carlin, Acting Assistant Attorney General for National Security; Cory B. Nelson, 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, which is continuing.

According to the charges, in early November 2008, Ben Israel and Turner began having discussions with Mugabe, Gono, and other ZANU-PF leaders regarding the influence Ben Israel and Turner 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. Ben Israel and Turner allegedly violated IEEPA by engaging in public relations, political consulting, and lobbying efforts on behalf of President Mugabe and other Zimbabwe officials pursuant to a Nov. 26, 2008, “Consulting Agreement” that called for an initial payment of $90,000 and three subsequent equal installments of $1,105,000. 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.

According to the complaint affidavit, Ben Israel and Turner:

• 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, August, 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 November 2008, the defendants allegedly arranged for Illinois State Senator A to meet with President Mugabe, after which Turner wrote an email to an associate stating that Turner and State Senator A “now understand the issues and will convey back to the President Elect.” Later that month, Turner sent an email to Ben Israel’s assistant stating they should see if State Senator A could “get 2 to 3 members of the House” and others to travel to Harare, Zimbabwe’s capital, in the coming weeks for a “fact finding vacation.” The defendants’ planning for a delegation of Illinois legislators to visit Zimbabwe included Turner asking Ben Israel to have State Senator A issue a letter to Gono, and Turner provided a draft of the letter to Gono, stating that State Senator A hoped the U.S. presidential election would cause the U.S. to take a fresh look at the sanctions. It also mentioned a potential State of Illinois trade office in Zimbabwe. The defendants and another individual allegedly arranged for Ben Israel, Illinois State Senator A and Illinois State Representative A to travel to South Africa in early December 2008. Travel records show the two legislators traveled to Israel but did not return as scheduled and extended their overseas stay.

Three days after they returned, a scheduler for President-Elect Obama’s transition team sent an email to another transition team member stating that State Representative A “wants a phone call from [transition team officials] regarding a meeting he had last week in Zimbabwe. I am not sure who to pass this on to but it’s the second time they have called.” The transition team forwarded this email to the FBI based on its concerns that State Representative A may have violated sanctions by traveling to Zimbabwe.

Ben Israel and Turner further planned for State Senator A and State Representative A to travel to Zimbabwe in January 2009, with additional emails indicating that Ben Israel would arrive with them, and wanted to provide Gono with an update on their progress to oppose and remove the sanctions. State Senator A cancelled his trip but travel records show that State Representative A traveled to South Africa and returned to the U.S. from Senegal in late January 2009.

Throughout 2009, Ben Israel and Turner allegedly continued to pass communications between Zimbabwean leaders and U.S. public officials while seeking payment for their services from Gono. In June 2009, Turner sent an email to Ben Israel and attached a letter Gono had written to U.S. Senator A. The letter stated that Gono had been “fully briefed about your [U.S. Senator A’s] current efforts on the sanctions issue by the very able” Turner. In the email to Ben Israel, Turner asked for a similar letter from State Senator A on the intent to solicit the support of national elected officials regarding the sanctions.

In September 2009, Turner emailed a Zimbabwean official letters that the two Illinois state legislators had written in July 2009, expressing their commitment to assist President Mugabe and Gono. State Senator A’s letter stated that he would use his leadership position with the international committee for the National Black Caucus of State Legislators to organize a delegation to travel to Zimbabwe.

In August 2009, an individual forwarded to Turner two official letters that U.S. Representative A, from Chicago, wrote to President Mugabe and Gono, stating that U.S. Representative A had been briefed by Ben Israel, and requesting a meeting with them in Harare in late August or early September. About the same time, Turner forwarded to a Zimbabwean official an itinerary for U.S. Representative B, also from Chicago, to travel to Africa as part of an official Congressional delegation that stopped in South Africa.

The affidavit further describes details of an effort by Ben Israel and Turner to have Gono speak at an issues forum hosted by then U.S. Representative C from California in September 2009. Turner allegedly attempted to assist Gono, as well as two other Zimbabwean officials, obtain visas to ensure that they could attend and participate in the forum.

Ben Israel and Turner also allegedly lobbied a caucus of state legislators to advocate for the removal of sanctions: Ben Israel spoke at the caucus’s convention in December 2009; they sought for the caucus to pass a resolution asking for the removal of sanctions; and they made plans to take caucus members to Zimbabwe as part of a December 2009 delegation before that trip was cancelled.

The government is being represented by Assistant U.S. Attorneys Barry Jonas and William Ridgway, and David Recker, a trial attorney with the Justice Department’s Counterespionage Section.

Violating IEEPA carries a maximum penalty of 20 years in prison and a $1 million fine. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

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

Complaint

CHICAGO —Fourteen defendants are facing state or federal narcotics and/or firearms charges that, again, link drugs and illegal gun possession in Chicago. An investigation led by the Federal Bureau of Investigation, together with the Chicago Police Department and other state and federal law enforcement agencies, has resulted in federal charges against five defendants, while nine others are facing state charges. The investigation resulted in seizures of various retail amounts of powder and crack cocaine and marijuana, and 18 firearms, including an Intratec TEC-22 .22 caliber pistol and two high capacity magazines loaded with ammunition.

The investigation moved up and down an alleged drug supply chain as a result of FBI agents and Chicago police officers, from CPD’s Gang Investigations Division and 9th District tactical team, using federal wiretaps on multiple phones to intercept conversations and deliveries of narcotics and firearms.

In a telephone conversation on Jan. 7, 2013, one federal defendant, JOSE M. LOPEZ, also known as “Baby J,” a self-admitted member of the Latin Saints street gang, allegedly told an individual that they “should just get it for the block,” referring to the TEC-22 pistol so the weapon could be used by the Latin Saints to defend their territory, according to the charges against Lopez.

In all, five defendants are facing federal charges in four separate criminal complaints that were unsealed following the arrests of four of those five yesterday. The fifth defendant, ROCO CERVANTES, is a fugitive and a warrant was issued for his arrest. Eight of the nine state defendants were also arrested yesterday.

The arrests and charges were announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, together with Anita Alvarez, Cook County State’s Attorney; Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Garry F. McCarthy, Superintendent of the Chicago Police Department.

“These charges demonstrate the continued efforts of the FBI and our law enforcement partners to address the violence that plagues many Chicago neighborhoods. For too long, the families of those neighborhoods have been denied a sense of safety and security. We remain committed to working as a unified front to pursue those who bring guns and drugs and the attendant violence into those areas,” Mr. Nelson said.

“This complex joint operation focused on preventing a cycle of violence and, in addition to the arrests made, we recovered 18 illegal guns. Joint investigations like this one are an effective way for police to work with our state and federal law enforcement partners to address drug and gun crimes,” Superintendent McCarthy said.

“This operation marks another example of our focused and coordinated efforts to get weapons off the streets of Chicago and to eradicate the ongoing plague of drug and gun violence in our neighborhoods,” Ms. Alvarez said.

The Chicago offices of the Internal Revenue Service Criminal Investigation Division and the Homeland Security Investigations (HSI) also participated in the investigation, which was conducted under the umbrella of the U.S. Organized Crime Drug Enforcement Task Force (OCDETF).

The nine state defendants face various charges, including gunrunning, unlawful sale of a firearm, and delivery of a controlled substance. The eight state defendants who are in custody are: Darrell Mullins, 19; Omar Sanchez, 22; Daniel Nunez, 20; Esteban Rincon, 33; Richard Rocha, 30; Ashley Guzman, 24; Lino Padilla, 26; and Alejandro Guerra, 33.

Details of the four separate federal complaints follow:

United States v. Cervantes, Pulido, and Lopez, 13 CR 622

ROCO CERVANTES, aka “Rock,” 41, and his half-brother, DANNY PULIDO, 26, both of Chicago, were charged with conspiracy to possess and distribute more than 500 grams of cocaine. JOSE M. LOPEZ, aka “Baby J,” 26, was charged with distribution of cocaine.

Pulido and Lopez appeared yesterday before U.S. Magistrate Judge Arlander Keys, while Cervantes remains a fugitive. Pulido was released on bond pending a preliminary hearing on Aug. 19. Lopez remains in federal custody pending detention and preliminary hearings on Aug. 6.

According to the complaint affidavit, Lopez sold 248.7 grams, or nearly nine ounces, of cocaine to a confidential source for $9,300 in the 4500 block of South Hermitage on Dec. 2, 2012. Lopez allegedly obtained the cocaine from Cervantes, who was his upstream source of supply, while Cervantes and Pulido allegedly conspired to distribute cocaine to Lopez. On Dec. 15, 2012, Cervantes and Pulido supplied nine additional ounces of cocaine to Lopez, who then distributed the cocaine to an individual who fled without paying Lopez, the affidavit alleges. On April 26, 2013, Cervantes and Pulido allegedly sold approximately 167.6 grams, or nearly six ounces, of cocaine to a different confidential source working with law enforcement.

If convicted, Cervantes and Pulido face a mandatory minimum sentence of five years and a maximum of 40 years in prison and a $5 million fine, while Lopez faces a maximum of 20 years in prison and a $1 million fine.

United States v. Lopez, 13 CR 621

Lopez was also charged in a separate complaint with being a felon-in-possession of a firearm in connection with the TEC-22. After Lopez and another individual allegedly acquired the weapon on Jan. 8, 2013, Chicago police officers attempted to stop Lopez’ vehicle but he failed to stop and led police on a brief high-speed chase. Police located Lopez’ abandoned vehicle in an alley in the 4500 block of South Hermitage, and found a black plastic high capacity .22 caliber magazine containing 30 live rounds of ammunition and five $100 bills. On Jan. 17, Lopez allegedly sold the TEC-22 pistol, a flash suppressor, two magazines loaded with 48 rounds of .22 ammunition, and a hard black plastic gun case to a confidential source for $500. On March 7, 2013, Lopez sold a .45 caliber handgun to the same confidential source for $500, according to the complaint affidavit.

The felon-in-possession count carries a maximum penalty of 10 years in prison and a $250,000 fine, if convicted.

United States v. Rincon, 13 CR 620

RICHARD C. RINCON, aka “Suds,” 31, of Chicago, was charged with being a felon-inpossession of a .25 caliber handgun on July 3, 2013. Rincon allegedly sold the gun and ammunition for $125, as well as a bag containing cocaine for $575, to a confidential source.

Rincon remains in federal custody and waived a detention hearing. A preliminary hearing was scheduled for Aug. 7. He faces a maximum penalty of 10 years in prison and a $250,000 fine if convicted of being a felon-in-possession of a firearm.

United States v. Sanchez, 13 CR 619

ESGAEL SANCHEZ, aka “Negro,” 27, of Chicago, was charged with being a felon-inpossession of a nine millimeter handgun on March 7, 2013. On that date, Sanchez allegedly sold a nine millimeter handgun and 12 rounds of ammunition for $500 to a confidential source. A month earlier, on Feb. 8, 2013, he allegedly sold a different nine millimeter handgun and eight rounds of ammunition for $350 to the confidential source. The affidavit further alleges that Sanchez sold three ounces of cocaine to the confidential source for $3,300 on March 29, 2013.

Sanchez remains in federal custody and waived both detention and preliminary hearings. He faces a maximum penalty of 10 years in prison and a $250,000 fine if convicted of being a felon-in-possession of a firearm.

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

The government is being represented by Assistant United States Attorneys Matthew Burke and Peter Flanagan.

Cervantes Comlpaint

Lopez Comlpaint

Rincon Comlpaint

Sanchez Comlpaint

CHICAGO — Northwestern University will pay the United States $2.93 million to settle claims of cancer research grant fraud by a former researcher and physician at the university’s Robert H. Lurie Comprehensive Center for Cancer in Chicago. Northwestern agreed to the settlement in a federal False Claims Act lawsuit that was unsealed today after the government investigated the claims made by a former employee and whistleblower who will receive a portion of the settlement.

Northwestern allegedly allowed one of its researchers, Dr. Charles L. Bennett, to submit 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, subcontracts, food, hotels, travel and other expenses that benefited Dr. Bennett, his friends, and family from Jan. 1, 2003, through Aug. 31, 2010.

The allegations were 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, and who will receive $498,100 in settlement proceeds. The suit named as defendants Northwestern, the Lurie Cancer Center, Dr. Steven T. Rosen, and Dr. Bennett. It alleged that the defendants submitted false claims to the United States when Drs. Rosen and Bennett 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 contends that it has certain civil claims against Northwestern arising out of Northwestern’s improper submission of 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.

Northwestern, which fully cooperated during the investigation, did not admit liability as part of the settlement. The agreement releases the university and all of its affiliates and employees, other than Dr. Bennett, from the claims made in the whistleblower lawsuit. The case remains pending against Dr. Bennett alone. United States, et al., ex rel. Melissa Theis v. Northwestern University, Dr. Charles L. Bennett, et al., No. 09 C 1943 (N.D. Ill.).

“Allowing researchers to use federal grant money to pay for personal travel, hotels, and meals, and to hire unqualified friends and relatives as ‘consultants’ violates the public’s trust,” said Gary S. Shapiro, United States Attorney for the Northern District of Illinois. “This settlement, combined with the willingness of insiders to report fraud, should help deter such misconduct, but when it doesn’t, federal grant recipients who allow the system to be manipulated should know that we will aggressively pursue all available legal remedies,” he added.

“The mismanagement or improper expenditure of grant funds is unacceptable and will not be tolerated,” said Lamont Pugh III, Special Agent-in-Charge of the U.S. Department of Health and Human Services, Office of Inspector General – Chicago Region. “The OIG will continue to diligently investigate allegations of this nature to ensure that taxpayer dollars are being properly utilized.”

Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation said: “The FBI takes allegations of fraud seriously, especially those allegations from insiders who are often in the best position to detect wrongdoing long before it would otherwise come to the attention of law enforcement.”

Northwestern agreed to pay the settlement within 14 business days. The agreement covers allegations that the university submitted false claims 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. At Dr. Bennett’s request, Northwestern also allegedly improperly subcontracted with various universities for services that were paid for by the NIH grants.

The United States was represented by Assistant U.S. Attorney Kurt N. Lindland.

Under the federal False Claims Act, defendants may be liable for triple the amount of actual damages and civil penalties between $5,500 and $11,000 for each violation. Individual whistleblowers may be eligible to receive between 15 and 30 percent of the amount of any recovery.

Settlement Agreement

CHICAGO – A former vice president of a company that was based in west suburban Downers Grove pleaded guilty today to engaging in a fraudulent invoicing scheme in which he obtained more than 100 company checks totaling more than $3.9 million and stole the money for himself. The defendant, STEVEN M. BRAZILE, admitted the fraud at his arraignment after being charged earlier this month in U.S. District Court.

Brazile, 52, of St. Louis, was a vice president in the unnamed company’s St. Louis office where he managed the information technology functions in that office. He pleaded guilty to one count of interstate transportation of fraudulently obtained securities. He was released on his own recognizance pending sentencing, which U.S. District Judge Elaine Bucklo set for Nov. 13.

Brazile faces a maximum sentence of 10 years in prison and a $250,000 fine, although his plea agreement with the government anticipates an advisory federal sentencing guidelines range of 57 to 71 months in prison. Brazile also agreed to restitution and forfeiture orders in the amount of $3,902,880, including approximately $126,000 seized from Brazile’s bank accounts, an antique1959 Ford F100 pickup truck seized from Brazile, and $79,545 in proceeds from the sale of a 1965 Ford Tudor classic automobile.

Brazile, who had authority to approve company payments to vendors up to $100,000, admitted that between December 2006 and December 2009 he approved false invoices purporting to be from vendors for goods and services that were never provided to the corporation. He caused the company to issue approximately 104 checks totaling slightly more than $3.9 million. Brazile took those checks and stole the proceeds by depositing them into a bank account he controlled. He then deposited the fraud proceeds into other accounts, including $250,000 placed into a brokerage account which he agreed to forfeit.

The guilty plea was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent-in-Charge of the Federal Bureau of Investigation. The government is being represented by Assistant U.S. Attorney Sarah E. Streicker.

The case falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement, who working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: StopFraud.gov.

Plea Agreement

ROCKFORD — A former Freeport, Ill. man was sentenced today in federal court to 20 years in federal prison for retaliating against and causing bodily injury to a witness. The defendant, DAMON RUCKER, 36, was also ordered by U.S. District Judge Frederick J. Kapala to serve 3 years on supervision following his release from prison. Rucker had been charged with causing bodily injury to the witness on Dec. 20, 2012.

Rucker was found guilty of the charge by a federal jury in Rockford, on April 23, 2013, following a two-day jury trial. According to the indictment and evidence at trial, Rucker was initially convicted in federal court in Rockford on July 31, 2012, of a drug trafficking crime. A co-defendant, who also pled guilty in that case, agreed to cooperate with the government and testified against Rucker during Rucker’s sentencing hearing. On Dec. 20, 2012, Rucker, with intent to retaliate against the co-defendant for testifying, slammed the witness’s head against a concrete wall while both were in custody. At the time, the victim was in the process of being transported to a different jail and was in hand and leg shackles. Rucker was not shackled at the time.

Judge Kapala ordered that today’s sentence of 20 years must be served consecutive to the 87 months in prison that Rucker was sentenced to on the drug trafficking conviction. Rucker will not be eligible for parole.

The sentencing was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation. The United States Marshals Service and the Ogle County Sheriff’s Office assisted in the investigation.

The government was represented by Assistant U.S. Attorneys Scott R. Paccagnini and John G. McKenzie.