Northern District of Illinois
Press releases recorded for this federal judicial district.
Ten Defendants Indicted in Alleged $74 Million Vehicle Financing Fraud Scheme Resulting in $56 Million in Losses to LendersRead the Press Release
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
FBI Arrests Suburban Attorney for Allegedly Stealing $2.34 Million in Clients’ Funds from Her Escrow AccountRead the Press Release
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 Area Man Indicted for Allegedly Obstructing Justice and Soliciting the Murder of an Undercover FBI AgentRead the Press Release
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
McHenry County Man Pleads Guilty to Making A False Declaration in Bankruptcy CaseRead the Press Release
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.
Former Commodities Trader Charged with Causing $5 Million Loss to Bank and Others in Alleged $10 Million Fraud SchemeRead the Press Release
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.Former Chicago White Sox Executive Sentenced for Taking Kickbacks from Latin American Players’ Signing BonusesRead the Press Release
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.
Mobile Doctors’ Chicago CEO and Doctor Arrested on Federal Health Care Fraud Charges; Offices Searched in Three CitiesRead the Press Release
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 Accountant Sentenced to 63 Months in Federal Prison for Stealing $4.3 Million from Clients and Cheating IRSRead the Press Release
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.
Interstate Sex-Trafficker Sentenced to 15 Years in Federal Prison for Prostituting Adult and Minor VictimsRead the Press Release
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 Man Sentenced to 84 Months in Federal Prison for Traveling to California to Engage in Sex with A MinorRead the Press Release
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.
Suburban Man Sentenced to 12½ Years in Federal Prison for Transporting Child PornographyRead the Press Release
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.
Three Area Men Sentenced to Lengthy Federal Prison Terms Under Project Safe Neighborhoods for Gun CrimesRead the Press Release
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.
Two Former Area Business Owners Sentenced to Prison for Failing to Report More Than $22 Million in Income They SharedRead the Press Release
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.
Owner of Addison Seafood Company Sentenced and Fined $100,000 in Federal Court for Mislabeling Frozen Fish and ShrimpRead the Press Release
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.
Two Chicago Men Accused of Violating U.S. Sanctions by Providing Services to Zimbabwean Officials, Including President MugabeRead the Press Release
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
Fourteen Defendants Facing State or Federal Narcotics or Firearms Charges Alleging Sales of Guns and Drugs in ChicagoRead the Press Release
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 ComlpaintNorthwestern University to Pay Nearly $3 Million to the United States to Settle Cancer Research Grant Fraud ClaimsRead the Press Release
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
Former St. Louis Executive of Chicago Area Company Pleads Guilty to $3.9 Million Invoicing Fraud SchemeRead the Press Release
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
Former Freeport Man Sentenced to 20 Years in Federal Prison for Witness RetaliationRead the Press Release
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.
Two Defendants Indicted in Alleged Bank Robbery Attempt in Richmond, Ill., During Which Third Suspect Was Fatally ShotRead the Press Release
CHICAGO – Two defendants who were arrested in May after they allegedly attempted to rob a bank in Richmond, Ill., during which a third suspect was fatally shot, will be arraigned on federal charges tomorrow in U.S. District in Chicago. The defendants, AARON RUSSELL and ROBERTO FAVELA, who were initially charged in Federal Court in Rockford, were indicted last week by a federal grand jury in Chicago, moving the case to the Federal Court in Chicago.
Russell, 40, of Orland Hills, and Favela, 34, of Chicago, are scheduled to be arraigned at 10:30 a.m. tomorrow before U.S. Magistrate Judge Sheila Finnegan. They were indicted last Thursday on one count each of attempted bank robbery, conspiracy to commit bank robbery, and using firearms during a violent crime. Russell alone was also indicted for illegally possessing firearms as a previously convicted felon.
On May 10, Russell, Favela, and Tony Starnes, 45, of Chicago, allegedly traveled from Chicago to Richmond, where they planned to and attempted to rob the Associated Bank on Main Street in the McHenry County village near the Wisconsin border. FBI agents confronted the men when they arrived in the bank’s parking lot in two vehicles, and Starnes, who was driving one of the cars, was shot and killed after he drove his car into an agent’s vehicle. Russell and Favela were arrested at that time.
Between them, Russell and Favela allegedly possessed four loaded guns, and Russell was charged with being a felon-in-possession of three of the firearms.
The charges were 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. Various local police departments and county sheriff’s departments assisted in the investigation and apprehension of the defendants. The government is being represented by Assistant U.S. Attorneys Christopher Stetler and Marc Krickbaum.
Attempted bank robbery carries a maximum penalty of 20 years in prison; conspiracy to commit bank robbery carries a maximum of 5 years in prison; and carrying firearms during a crime of violence carries a mandatory consecutive sentence of 5 years and a maximum of life in prison, and each count carries a $250,000 maximum fine. The felon-in-possession of firearms count against Russell carries a maximum 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 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
Freeport Man Sentenced to 29 Months in Federal Prison for Wire FraudRead the Press Release
ROCKFORD — A Freeport, Ill. man was sentenced today in federal court for wire fraud. U.S. District Judge Frederick J. Kapala sentenced ANTHONY TAYLOR, 44, to 29 months in federal prison, in addition to 3 years of supervised release following his release from prison, and ordered Taylor to pay restitution of $212,542.44
Taylor pled guilty to the charge on April 15, 2013, admitting that between mid-2010 and January 2012 he defrauded large retail chain stores by fraudulently acquiring tens of thousands of dollars of merchandise and returning the items for cash. In the written plea agreement, Taylor admitted that as part of the scheme he and other individuals created and used counterfeit checks and counterfeit identifications to purchase merchandise from large chain stores such as Wal-Mart and Farm and Fleet located in various states. After Taylor and the others purchased merchandise from those stores, they returned the merchandise to a different store location for a cash refund. Taylor admitted he knew at the time that some of the names and addresses on the checks and identification he used, and some of the bank account information, were fictitious and some were real.
Three other individuals have been charged for their roles in the wire fraud scheme with Taylor:
ANTHONY HARDY, 42, of Rockford, pled guilty on Feb. 19, 2013, to one count of wire fraud and one count of identity theft, and was sentenced on June 4, 2013, to 65 months in prison, 5 years of supervised release following imprisonment, and ordered to pay restitution of $212,542.44.
CAMERON LOVE, 28, of Rockford, pled guilty on Feb. 28, 2013, to one count of wire fraud, and was sentenced on June 28, 2013, to 15 months in prison, 3 years of supervised release following imprisonment, and ordered to pay restitution of $212,542.44.
WILLIAM DORN, 25, also of Rockford, pled guilty on May 30, 2013, to one count of wire fraud. Dorn is scheduled to be sentenced on Sept. 9, 2013 at 2:30 p.m.
The sentencing today was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Pete Zegarac, Postal Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. The Rockford Police Department and Freeport Police Department assisted in the investigation.
The government was represented by Assistant U.S. Attorney Michael D. Love.
Rockford Man Sentenced to 85 Months in Federal Prison for Robbery of BMO Harris Bank in RockfordRead the Press Release
ROCKFORD — A Rockford, Ill. man was sentenced yesterday in federal court for robbing the BMO Harris Bank, N.A., 1275 Bennington Road, Rockford, Ill., on July 22, 2010. U.S. District Judge Frederick J. Kapala sentenced Drew Yancy, 33, to 85 months in federal prison for the robbery and ordered that Yancy serve 3 years on supervised release following his release from prison, and pay restitution of $5,905 to BMO Harris Bank. Yancy will not be eligible for parole.
Yancy pled guilty to the charge on April 5, 2013. According to the written plea agreement, on July 22, 2010, Prince Williams, 27, also of Rockford, drove Yancy to Harris Bank in a stolen car where they both entered the bank. Williams stood near the front door of the bank while Yancy approached the tellers and demanded money. Yancy admitted in the plea agreement that he told a teller to give him money or he would shoot and kill her. After obtaining $5,905 from the tellers, Williams and Yancy left the bank and fled in the stolen car.
Williams, who pled guilty on April 19, 2012, to his involvement in the bank robbery, will be sentenced at a future date.
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; 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.
Suspended Doctor Sentenced for Illegally Dispensing Millions of Pills at Area Weight Loss Clinics, as Well as Tax Evasion with WifeRead the Press Release
HAMMOND, Ind. — A suspended physician who owned weight loss clinics in northwest Indiana and south suburban Chicago was sentenced to two years in federal prison for illegally dispensing millions of pills containing amphetamine-based controlled substances to patients, and he and his wife were also sentenced for federal income tax evasion relating to their operation of the clinics. The defendants, DR. RAKESH ANAND and MEENA ANAND, who owned and managed Doctors Weight Loss Clinics in Merrillville, Ind., and Tinley Park and Orland Park in Illinois, were also ordered to pay $745,872 in restitution to the IRS from nearly $5.2 million that was seized from them and ordered forfeited.
Rakesh Anand, 57, a suspended physician in Illinois and who was also licensed in Indiana, and his wife, Meena Anand, 53, both of Tinley Park, were sentenced yesterday by U.S. District Judge Joseph S. Van Bokkelen in Federal Court in Hammond after both defendants pleaded guilty in January. The U.S. Attorney’s Office in Chicago is handling the prosecution in the Northern District of Indiana. Judge Van Bokkelen fined Rakesh Anand $750,000 and ordered him to begin serving his two-year sentence on Aug. 30. Meena Anand was fined $100,000 and ordered to begin serving her 30-day sentence on Sept. 3.
In addition to the fines, forfeiture, and restitution, the Anands remain civilly liable to the Internal Revenue Service for any and all back taxes and a civil fraud penalty of up to 75 percent of the underpayment plus interest.
The Anands had agreed, and the judge ordered them, to pay restitution of $745,872 to the IRS for taxes they owed on nearly $2 million of unreported income between 2005 and 2008. The restitution is to be paid from funds frozen in a brokerage account when the Anands were indicted in August 2011. In addition, they agreed to forfeit more than $4.45 million in additional funds that were frozen or seized during the investigation, bringing to nearly $5.2 million the total amount of funds being applied to forfeiture and restitution.
Rakesh Anand admitted that between January 2002 and February 2010, he and another physician, Dr. Dinesh Saraiya, purchased and dispensed more than 1 million pills containing Phendimetrazine, a Schedule III controlled substance, and more than 3 million pills containing Phentermine, a Schedule IV controlled substance. The Anands grossed more than $5 million from their operation of the three weight loss clinics.
(Saraiya, 75, of Tinley Park, cooperated in the case and pleaded guilty to conspiracy to distribute controlled substances. He is scheduled to be sentenced on July 30 in Federal Court in Chicago.)
According to court records, between 2002 and February 2010, Rakesh Anand hired Saraiya, who agreed with him to illegally dispense the amphetamine-based controlled substances as weight loss medications to patients without performing physical examinations or any medical tests, and without reviewing patients’ records, obtaining a complete medical history, or providing any subsequent monitoring. In return, Rakesh Anand paid Saraiya based on how many patients he saw and how many pills he dispensed to patients on a daily basis. In dispensing the medications, Rakesh Anand and Saraiya failed to determine whether patients had first made a reasonable effort to lose weight through diet and exercise, a prerequisite to prescribing controlled substances for weight loss. In some instances, Rakesh Anand employed clerks to dispense the controlled substances even though he was not present and had not consulted with them.
During the course of the investigation, several undercover law enforcement agents, including two with slight builds and body mass indexes well below the obesity level, purchased controlled substances at the clinics without any of the appropriate medical protocols.
The sentences were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois. The investigation was conducted by the Federal Bureau of Investigation, the Drug Enforcement Administration, the Internal Revenue Service Criminal Investigation Division, the Food and Drug Administration and the Indiana State Police.
The government is being represented by Assistant U.S. Attorneys Matthew Schneider, Diane Berkowitz, and Orest Szewciw.
Chicago Man Sentenced to 5½ Years in Federal Prison for $2.6 Million Investment Fraud SchemeRead the Press Release
CHICAGO – A Chicago man was sentenced to 5½ years in federal prison for cheating about 35 victims of approximately $2.6 million in an investment fraud scheme. The defendant, ROBERT G. NELSON, offered and sold promissory notes, promising investors substantial returns, and instead used the money to pay earlier investors and for personal expenses.
Nelson, 40, who pleaded guilty to mail fraud last December, was sentenced yesterday to 66 months in prison by U.S. District Samuel Der-Yeghiayan. He was ordered to begin serving his sentence on Sept. 17, and the judge also ordered him to pay $2.643 million in restitution.
Nelson admitted that between January 2006 and the middle of 2008, he fraudulently obtained more than $6 million from investors by selling promissory notes personally and through his companies, F.C. Financial, Inc., Future Capital Financial Inc., and RGN Investment Group. He falsely promised that the notes were a safe and secure investment, and that proceeds from the sale of the notes would be used to purchase real estate and make investments that would promptly generate a high interest rate, sometimes as high as 45 percent within three months. He then used the money he obtained to pay earlier investors and for family expenses.
“Again and again, Nelson persisted in his scheme, assuring desperate investors that in exchange for one more investment, he would pay all of the monies that investor was owed. He thus fueled his fraud with more lies and false representations,” the government argued at sentencing.
In 2007, the Illinois Department of Securities prohibited Nelson and his companies from offering or selling promissory notes. The criminal investigation began after he violated the state order by continuing to sell promissory notes into the middle of 2008.
The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois. The investigation was conducted by the U.S. Postal Inspection Service in Chicago and the Illinois Secretary of State’s Securities Division. The government was represented by Assistant U.S. Attorney Kaarina Salovaara.
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.
Former Supervisor Pleads Guilty to Stealing Confidential Computer Files from the Federal Reserve Bank of ChicagoRead the Press Release
CHICAGO — A former supervisor at the Federal Reserve Bank of Chicago pleaded guilty today to a federal misdemeanor for stealing computer files containing confidential information relating to the bank’s responsibility to assess and monitor its credit risk exposure. The defendant, BRIAN MCCARTHY, admitted attempting to download on to his personal thumb drive approximately 300 computer files, and actually downloading 71 computer files, belong to the Chicago Federal Reserve Bank.
McCarthy, 31, of Elmhurst, was a senior credit analyst in the bank’s Statistical and Financial Reporting Department from 2009 to 2010, and in 2011 was a supervisor in the Statistical Support Group where he supervised approximately seven bank employees. He pleaded guilty to theft of property from the Federal Reserve Bank of Chicago at his arraignment after being charged in a criminal information filed last week in U.S. District Court.
Under the terms of his plea agreement, McCarthy is barred from participating directly or indirectly in the affairs of any financial institution insured by the National Credit Union Share Insurance Fund or the Federal Deposit Insurance Corp. without prior written consent. McCarthy faces a maximum sentence of a year in prison and a $100,000 fine, and his plea agreement anticipates a federal sentencing guideline range of 10 to 12 months in prison. U.S. Magistrate Judge Susan Cox set sentencing for Oct. 10.
According to his guilty plea, McCarthy had access to, and was entrusted with, sensitive information, and had signed a Code of Conduct agreement requiring him to leave behind all bank computer files when his employment ended. The theft occurred on Oct. 5, 2011, which was McCarthy’s last day of employment. He admitted taking steps to avoid detection and circumvent the bank’s information security systems, which nonetheless determined that information had been accessed and the Federal Reserve Bank contacted the FBI.
The plea agreement calls for McCarthy to pay $26,400 in restitution to the bank to reimburse it for employee time expended to determine how much information, and the nature of the material, that he downloaded.
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 Chicago Office of the Federal Bureau of Investigation.
The government is being represented by Assistant U.S. Attorney Sunil Harjani.
Plea Agreement
Skokie Businessman Sentenced to Federal Prison for Evading $1 Million in Taxes Related to Secret Offshore Swiss Bank AccountRead the Press Release
CHICAGO — The owner of a cemetery monument business in north suburban Skokie was sentenced today to a year and a day in federal prison for evading more than $1 million in federal taxes on more than $3.3 million in income, including interest on millions of dollars he held in a secret offshore financial account with UBS, a global financial services firm headquartered in Switzerland. The defendant, PETER TROOST, pleaded guilty in March to the felony charge that was filed in February in U.S. District Court.
Troost, 78, of Skokie, has already paid $1,039,343 in back taxes to the Internal Revenue Service, as well as a civil penalty of approximately $3.75 million, but U.S. District Judge John J. Tharp, Jr., said those payments alone would not sufficiently deter wealthy individuals from failing to meet their voluntary tax obligations.
Judge Tharp also fined Troost $32,500 and ordered him to serve 200 hours of community service during a year of supervised release after he is incarcerated. He was ordered to begin serving his sentence on Dec. 2.
“Troost did not evade his taxes out of financial need or desperation. He operated a profitable and successful business; he had more than enough money to pay his taxes. He made a deliberate, conscious decision not to do so,” the government argued at sentencing.
Troost owns and operates Troost Memorials, a closely-held company that designs and sells cemetery monuments and gravestones. The business is located in a strip mall Troost owns at 9853 Gross Point Rd., Skokie, and he owns another strip mall located at 1816-44 Arlington Heights Rd., in Arlington Heights. The defendant is not involved with Peter Troost Monument Company, of Hillside, which is a different company from Troost Memorials.
Troost was the first taxpayer charged in Federal Court in Chicago in connection with an ongoing investigation of U.S. taxpayer clients of 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 Troost’s plea agreement, from at least 1999 until 2009, he transferred hundreds of thousands of dollars from the United States to his individual offshore UBS account for the sole purpose of evading domestic income taxes. He maintained at least one offshore UBS account between 1981 and 2009, while maintaining at least one additional joint account. He managed both accounts with the assistance of a UBS personal banker based on the island of Jersey. In addition to failing to report interest income, Troost admitted that he intentionally failed to report all of his income from his monument business and his rental properties.
Between 1999 and 2009, Troost failed to report income from all sources totaling $3,338,929, on which he owed $1,039,343 in federal taxes. In addition, Troost stated on his returns for each of those years that he did not have an interest in a financial account in a foreign country, when, in fact, he knew he maintained the offshore UBS account.
The sentence was 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.
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. 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 U.S. Treasury Department can result in a penalty of up to 50 percent of the amount in the account at the time of the violation.
The government was represented by Assistant U.S. Attorney Brian Havey.
Rockford Chiropractor Sentenced to 10 Months in Federal Prison for Federal Income Tax EvasionRead the Press Release
ROCKFORD — A Rockford, Ill. chiropractor was sentenced today by U.S. District Judge Frederick J. Kapala for federal income tax evasion. The defendant, Todd R. Cevene, 42, of Caledonia, Ill., was sentenced to 10 months in federal prison. Cevene had been charged on Dec. 14, 2012, with tax evasion by a criminal Information and pled guilty to the charge on Dec. 21, 2012. The court also ordered Cevene to serve 3 years of supervised release following imprisonment, and to pay a fine of $40,000.
According to the Information and plea agreement, Cevene owned or controlled Cevene Care Clinic, S.C., Cevene Management Group, Inc., Cevene Enterprises, LLC, and Todd Cevene Alaska Asset Preservation Trust. Cevene admitted in his plea agreement that for a four-year period between 2004 and 2007, he intentionally evaded payment of his federal income taxes by transferring substantial amounts of Cevene Care Clinic's income to Cevene Management Group, Todd Cevene Alaska Asset Preservation Trust, and Cevene Enterprises. Cevene then used a large amount of the transferred funds to pay for his personal expenses, knowing that these payments would improperly be used as business expense deductions on the federal income tax returns of the entities and that he would not claim those payments as his own personal income. Cevene admitted in his plea agreement that he also caused a large amount of the transferred funds to be transferred directly to him and that he did not include all of those distributions as income on his own personal federal income tax returns.
According to the plea agreement, Cevene admitted that by spreading the income of Cevene Care Clinic among the other entities and using those funds to pay for his personal expenses and make distributions, he intended to diminish the likelihood of discovery of his attempt to evade federal income taxes. Cevene further admitted that he frequently made more than one transfer between the entities in an attempt to avoid detection.
Cevene admitted he owed substantial amounts of income tax for calendar years 2004 through 2007 to the United States that he did not accurately report or pay. Cevene further admitted that his failure to accurately report income and expenses during those years caused a total underpayment of federal income tax of $91,568. Cevene paid these back taxes to the Internal Revenue Service prior to today’s sentencing.
The sentencing was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and James C. Lee, Special Agent-In-Charge of the Chicago Field Office of Internal Revenue Service - Criminal Investigation Division.
The government was represented by Assistant U.S. Attorney Michael D. Love.
Suburban Man Sentenced to 10 Years in Federal Prison for Possessing Child PornographyRead the Press Release
CHICAGO — A former suburban man was sentenced today to one month more than the mandatory minimum of 10 years in federal prison for possessing child pornography. The defendant, BRIAN PERRON, 41, formerly of Wood Dale, pleaded guilty in April 2012, admitting then that he had sexually molested two children he was babysitting when he was 19 years old. He faced the 10-year mandatory minimum sentence because of a 2006 state conviction for possessing child pornography, and he was attempting to obtain additional child pornography depicting sexual abuse when he was arrested on the federal charges.
Perron, who has been in federal custody almost four years, was sentenced to 121 months in prison, followed by five years of supervised release, by U.S. District Judge Robert Gettleman. 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.
Perron was arrested in July 2009 after Homeland Security Investigations agents executed a search warrant at his home and seized an external computer hard drive that contained 97 images and 21 videos depicting child pornography. The search and arrest stemmed from an HSI investigation of a commercial website that advertised and sold videos of children being forced to perform sexual acts with adults.
Perron “not only collected images and videos of child pornography, but he was attempting to purchase a membership to a child pornography library to obtain more material,” the government argued in a sentencing memo.
The sentence was announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Gary Hartwig, Special Agent-in-Charge of Homeland Security Investigations in Chicago.
The government was represented by Assistant U.S. Attorney Tony U. Iweagwu, Jr.
Twenty-three Defendants Charged with Various Roles in Supplying Heroin and Cocaine in Illinois, Indiana and WisconsinRead the Press Release
CHICAGO — Twenty-three defendants are facing federal narcotics charges for their alleged roles in supplying and distributing wholesale quantities of heroin and cocaine in Illinois, Indiana and Wisconsin, local and federal law enforcement officials announced today. An investigation led by the Chicago Police Department and the Drug Enforcement Administration resulted in the charges, as well as accumulated seizures since last fall of approximately three pounds of heroin and nearly nine pounds of cocaine. Additional quantities of heroin, crack cocaine, and ecstasy, as well as approximately tens of thousands of dollars, and two guns were seized this morning.
Chicago police, DEA agents, and other law enforcement partners early today executed 11 search warrants upon nine residences and two vehicles in Chicago, and arrested at least 21 of the 23 defendants, in connection with the investigation that began in September 2012.
All 23 defendants were charged with possession with intent to distribute or distribution of narcotics offenses in an 18-count criminal complaint that was filed Wednesday in U.S. District Court and unsealed following the arrests. The defendants arrested began appearing this afternoon in U.S. District Court and remain in federal custody pending detention hearings scheduled for next week.
“This case is yet another example of the remarkable cooperation among the Chicago Police Department, DEA and other local, state and federal law enforcement agencies, extending back decades,” said Gary S. Shapiro, United States Attorney for the Northern District of Illinois. “While these defendants are not charged in this complaint with committing acts of violence or being involved in organized gang activity, we believe that bringing serious charges such as these is an effective tool in reducing violence in our communities – a goal we all share.” Mr. Shapiro announced the charges with Garry F. McCarthy, Superintendent of the Chicago Police Department, and Jack Riley, Special Agent-in-Charge of the Chicago Field Division of the Drug Enforcement Administration.
“Removing narcotics markets from our communities is an essential part of our strategy to continue reducing violence and crime in Chicago,” said Superintendent McCarthy. “These joint, long-term operations provide a real benefit for our communities and I would like to thank our law enforcement partners for their great work, particularly the men and women of the Chicago Police Department who played a major role in this case.”
The DEA’s Mr. Riley said: “This investigation, which was conducted by the DEA-led Chicago Strike Force, is representative of the commitment that is necessary to dismantle drug trafficking organizations. I’m proud of the work done by these agents and officers, who worked tirelessly to achieve these results, and I’m confident that with our continued partnership, we will have increasing success.”
The investigation was conducted under the umbrella of the U.S. Organized Crime Drug Enforcement Task Force (OCDETF) and the Chicago High-Intensity Drug-Trafficking Area Task Force (HIDTA). The Milwaukee County HIDTA, the DEA in Madison, Wis., the Internal Revenue Service, Criminal Investigation Division in Chicago, the Bureau of Alcohol, Tobacco, Firearms and Explosives in Chicago, and Rockford Police Department, and the Illinois, Indiana and Wisconsin State Police also assisted in the investigation.
According to the allegations in a 262-page complaint affidavit, the investigation determined that:
- MICHAEL WHITING was a wholesale supplier of heroin, working with his brother, ANTONIO WHITING, as well as MICHAEL COLEMAN, COREY MINNIFIELD, and CHARLES JAMES. Investigators also learned that Michael Whiting was supplied heroin by JIMMY SERRANO, and Michael Whiting sold heroin to customers, including VONZAYE DAVIS, of Milwaukee, Wis., and RICHARD HICKS, according to the charges;
- Michael Whiting shared a narcotics stash house at 2437 West Adams St., with Charles James, who was a wholesale supplier of cocaine. Defendants JAMESON HAMLIN, EDUARDO RIVERA, DANIEL VAZQUEZ, and LADELL SMITH supplied cocaine to James, who in turn sold wholesale amounts of cocaine to his customers, including MICHAEL STARNES, MELISSA BELCHER, and MALCOM HARRIS; and
- ERIC PASKON supplied wholesale amounts of cocaine to DANIEL VAZQUEZ, who ran his own wholesale cocaine distribution operation and maintained a stash house in an apartment at 3130 N. Lake Shore Dr. Vazquez employed FRANCISCO MIRELES, ANWER SHABAZ, and ANGEL PEREZ, and supplied wholesale amounts of cocaine to multiple customers, including BRANDON ELSING, NEFTALI FRYTES, and NICOLAS FRANCO.
Between November 2012 and April 2013, the Whiting brothers allegedly sold nearly a half-pound of heroin to a cooperating witness and an undercover agent. During the same time, law enforcement seized an additional 2.5 pounds of heroin and nearly nine pounds of cocaine. On Feb. 22, 2013, Chicago police officers executed a search warrant at the residence of Ladell Smith, in the 300 block of East 125th Street, and seized more than a kilogram of powder and crack cocaine, more than three-quarters of a kilogram of heroin, a .40-caliber Glock handgun, a bullet-proof vest, and more than $20,000. Most of the narcotics and the gun were found behind the radio in the dash board of a vehicle driven by Smith.
The charges against all but five of the defendants carry a mandatory minimum of five years and a maximum of 40 years in prison and a maximum fine of $5 million. Four defendants — Vazquez, Mireless, Shahbaz, and Perez— each face a mandatory minimum of 10 years and a maximum of life in prison and a $10 million fine, while Davis alone faces a maximum penalty of 20 years in prison and a $2 million fine. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The government is being represented by Assistant United States Attorneys Stephen P. Baker, Jeffrey D. Perconte, and Raj P. Laud.
The public is reminded that a complaint contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Complaint
Dakota, Ill., Man Charged in Alleged $120,000 Charity Fraud SchemeRead the Press Release
ROCKFORD — A Dakota, Ill., man was arrested today on federal mail fraud charges relating to his operation of two purported charities. In an indictment filed yesterday, CLIFFORD J. EDWARDS, JR., 33, formerly of Loves Park, Ill., was charged with 20 counts of mail fraud for allegedly defrauding victims out of more than $120,000 in charitable donations that the victims were told would be used to benefit children with cancer, under-privileged children, and children with cleft palates and facial deformities.
Edwards pleaded not guilty at his arraignment today and was released on his own recognizance. A status hearing was scheduled for Aug. 22 in U.S. District Court in Rockford.
According to the indictment, Edwards established and operated two supposed charitable entities: Helping Out, LLC, also known as “Helping Out,” and the Smiles for Kids Foundation, also known as “Smiles for Kids,” “the Smiles for Kids Foundation, Inc.,” “the Smiles 4 Kids Foundation,” and “Smiles 4 Kids.” Edwards ran these entities from locations in Rockford, Loves Park, and Dakota, Ill. The indictment alleges that Edwards and his agents made telemarketing type phone calls on behalf of Helping Out and Smiles for Kids. During these phone calls, Edwards and his agents solicited donations by claiming that Helping Out and Smiles for Kids provided benefits to children with cancer, under-privileged children, and children with cleft palates and facial deformities. It is further alleged that Edward mailed pledge statements, sponsor confirmations, and return envelopes addressed to Helping Out and Smiles for Kids, to the individuals who agreed to make donations. These individuals then mailed their personal checks back to Helping Out and Smiles for Kids in the return envelopes.
The indictment charges that, instead of using the donated funds to benefit children as promised, Edwards used the funds to pay his own personal expenses and to pay fund-raising costs. According to the indictment, Edwards conducted this fraud from at least June 2010 through June 2013.
Each count of mail fraud carries maximum penalties of 20 years in prison and a $250,000 fine, or an alternate fine totaling twice the loss or twice the gain, whichever is greater, a period of supervised release of up to 3 years following imprisonment, and restitution. If convicted, the Court must impose a reasonable sentence under the advisory United States Sentencing Guidelines, as well as restitution.
The case was investigated by the United States Postal Inspection Service in Chicago. The investigation was conducted under the auspices 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.
The arrest and indictment were announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Pete Zegarac, Inspector-in-Charge of the Chicago Division of the United States Postal Inspection Service.
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 Scott A. Verseman.
Indictment
Former Chicago Alderman and Nebraska Executive Among Three Convicted After Federal Bribery Conspiracy TrialRead the Press Release
CHICAGO — A former Chicago alderman, the head of a $1 billion Nebraska-based prescription medication provider, and another man were convicted today of conspiracy to commit bribery of a fictitious public official to purportedly obtain business from the Los Angeles County hospital system after a two-week trial. A federal jury deliberated approximately several hours today before returning guilty verdicts against all three defendants.
The defendants, AMBROSIO MEDRANO, 59, of Chicago; JAMES BARTA, 71, of Fremont, Neb.; and GUSTAVO BUENROSTRO, 50, of Arlington Heights, were each convicted of the single count against them. They each face a maximum penalty of five years in prison and a $250,000 fine. They remain free on bond pending sentencing, which U.S. District Judge John J. Tharp, Jr., scheduled for 1p.m. on Sept. 24.
According to the trial evidence, 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 allegedly 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 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 guilty verdict was announced today 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 is being represented by Assistant U.S. Attorneys Christopher J. Stetler and Steven Grimes.
Former Suburban Police Chief and Husband Charged with Hiding Business Income and $500,000 from State Grant in False Tax ReturnsRead the Press Release
CHICAGO — REGINA EVANS and her husband, RONALD EVANS, the former police chief and the former inspector general, respectively, of suburban Country Club Hills, were each charged today with three counts of filing false federal income tax returns for allegedly failing to report all of their income during calendar years 2007-09. They were charged in a felony information filed today in U.S. District Court in Chicago.
Regina Evans’ attorney has authorized the government to disclose that she will be pleading guilty to the tax charges after the government files a request to transfer the case against her to the Central District of Illinois in Springfield for disposition. Regina Evans, 50, who was Country Club Hills police chief from 2009 to 2011, and Ronald Evans, 46, are scheduled to appear in U.S. District Court in Springfield on June 18.
The defendants were charged with failing to report all of their income in 2009, when they allegedly converted to personal income more than $500,000 of a $1.25 million state grant. They also allegedly failed to report all of their income in 2007, 2008, and 2009 from Prime Time Limousine, a Chicago transportation and security services company that they jointly owned and operated.
According to the charging document, Regina Evans founded and ran an organization called We Are Our Brother’s Keeper that, in 2009, received a $1.25 million employment opportunities grant from the Illinois Department of Commerce and Economic Opportunity to provide pre-apprenticeship educational and vocational training for people employed in building trades, such as bricklayers and electricians. The couple allegedly used more than $500,000 for non-grant-related personal purposes, making that money personal income.
On their federal income tax return for 2009, the couple stated that Prime Time’s gross receipts were approximately $150,000, knowing that its gross receipts totaled more than $201,297. They also allegedly stated that they did not have any other income, knowing that they had converted at least $500,000 in grant money.
In 2007, the defendants allegedly filed a false tax return by reporting Prime Time’s gross receipts were approximately $205,290, when the business actually had gross receipts totaling more than $360,649, and they allegedly filed a false 2008 tax return stating Prime Time’s gross receipts were approximately $150,630, when it actually had gross receipts of more than $291,414.
The charges 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. The Chicago Office of the Federal Bureau of Investigation participated in the investigation.
Filing a false federal income tax return carries a maximum penalty of three 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. 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 Joel Hammerman.
The public is reminded that an information contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Information
Rockford Man Sentenced to 65 Months in Federal Prison for Wire Fraud and Identity TheftRead the Press Release
ROCKFORD — A Rockford, Ill. man was sentenced today in federal court by U.S. District Judge Frederick J. Kapala for wire fraud and identity theft. ANTHONY HARDY, 42, was sentenced to 65 months in federal prison, in addition to 5 years of supervised release following his release from prison, and ordered to pay restitution of $212,625.13. Hardy guilty to the charges on Feb. 19, 2013, admitting that between mid-2010 and January 2012 he defrauded large retail chain stores by fraudulently acquiring tens of thousands of dollars of merchandise and returning the items for cash.
In the written plea agreement, Hardy admitted that as part of the scheme he and other individuals created and used counterfeit checks and counterfeit identifications to purchase merchandise from large chain stores such as Wal-Mart and Farm and Fleet located in various states. After Hardy and the others purchased merchandise from those stores, they returned the merchandise to a different store location for a cash refund. Hardy admitted he knew at the time that some of the names and addresses on the checks and identification he used, and some of the bank account information, were fictitious and some were real. Hardy also admitted in the plea agreement that he unlawfully possessed and used the Social Security Number of another person as part of his fraud scheme to purchase merchandise from the large chain stores.
Three other individuals have been charged in a separate indictment for their roles in the wire fraud scheme with Hardy: William Dorn, 24, and Cameron Love, 28, both of Rockford, Ill., and Anthony Taylor, 44, of Marietta, Ga., each of whom have pled guilty to one count of wire fraud.
The sentencing was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Pete Zegarac, Postal Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. The Rockford Police Department and Freeport Police Department assisted in the investigation.
The government was represented by Assistant U.S. Attorney Michael D. Love.
Joliet Man Sentenced to 10 Years in Prison for Setting Fire in 2007 to Home of Neighboring African-American FamilyRead the Press Release
CHICAGO — An admitted white-supremacist was sentenced today to the maximum of 10 years in federal prison for violating the civil rights of an African-American family whose home he set on fire after they moved onto his block in 2007. The defendant, BRIAN JAMES MOUDRY, pleaded guilty in January of this year and agreed to the 10-year sentence, admitting that at approximately 4 a.m. on June 17, 2007, he carried a can containing gasoline to the home, splashed the gasoline on the residence and ignited it. No one was injured, although the home was occupied by eight children, ranging in age from 4 to 14, and an adult at the time of the fire.
Moudry, 36, formerly of the 300 block of South Reed Street, Joliet, pleaded guilty to using fire to interfere with the victims’ housing rights on the basis of race. He has been in federal custody since he was arrested on May 30, 2012. U.S. District Judge Robert Gettleman imposed the agreed maximum sentence and ordered Moudry to undergo mental health and substance abuse treatment. He also ordered Moudry to pay $7,108 in restitution to cover damage to the residence and to reimburse the Joliet Fire Department.
“This was an exceptionally despicable crime motivated by hate. The victims of the arson did nothing, but move into a new residence in Joliet. Unbeknownst to the victims, several houses down lived a white supremacist who never knew the victims but hated them because they were African American,” the government argued in a sentencing memo.
“There is nothing we do as federal prosecutors that’s more important, not to mention more satisfying, than vindicating the rights of our fellow citizens, whatever their race, ethnicity, or religious background, to live in peace and security,” said Gary S. Shapiro, United States Attorney for the Northern District of Illinois.
“One of the FBI’s top priorities is safeguarding the rights of all Americans. This case demonstrates our commitment to investigate and bring to justice those whose hatred of others leads them to violate civil rights,” said Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
In pleading guilty, Moudry admitted that he was upset that an African-American family rented a house at 318 South Reed St., in May 2007 on the same block as his house. He admitted that he set the fire because African-Americans were occupying the home, and that he intended to interfere with their continued ability to rent the residence and to intimidate the owner from continuing to rent to African-Americans.
The government was represented by Assistant U.S. Attorneys Nancy DePodesta and Steven Dollear.
Two Attorneys Among Four Defendants Indicted in Two Separate Mortgage Fraud Schemes Involving South Side PropertiesRead the Press Release
CHICAGO — Two attorneys are among four defendants who have been indicted in two separate mortgage fraud cases, federal law enforcement officials announced today. In one case, an attorney, a real estate investor, and a loan originator were charged with allegedly participating in a scheme to fraudulently obtain at least five residential mortgage loans totaling approximately $1.5 million from various lenders. In the second case, an attorney was charged with allegedly participating in a scheme to fraudulently obtain at least 12 residential mortgage loans totaling nearly $3.75 million from various lenders.
Both indictments allege that the mortgages were obtained to finance the purchase of properties on Chicago’s south side, stretching from the Back of the Yards to Englewood and West Englewood neighborhoods, at inflated prices by buyers who were fraudulently qualified for loans, or were being paid, while the defendants allegedly profited. As a result, various lenders and their successors incurred losses because the mortgages were not fully recovered through subsequent sale or foreclosure.
Three defendants were charged together in a five-count indictment that was unsealed on Friday following the arrest of STEVEN BARTLETT, 42, of Chicago, a part owner of SSB Re, Inc., also known as SSB Real Estate Solutions, Inc., through which Bartlett bought and sold residential properties in Chicago. Bartlett, ROBERT LATTAS, 36, of Oak Brook, an attorney who represented SSB Re in real estate closings, and NICHOLAS BURGE, 34, of Bloomington, Ill., a loan originator for two different lenders, were each charged with one count of mail fraud and four counts of wire fraud. The indictment seeks forfeiture of $1,494,248.
Bartlett remains in custody pending a detention hearing at 10 a.m. tomorrow before U.S. Magistrate Judge Sheila Finnegan. Lattas and Burge were ordered to appear voluntarily for arraignment at 11:30 a.m. Thursday before Magistrate Judge Finnegan in U.S. District Court.
Between January 2008 and January 2009, Bartlett allegedly used SSB Re to sell properties at inflated sales prices to buyers that he knew were fraudulently qualified for mortgage loans. Bartlett and Burge prepared and submitted loan applications to lenders that they knew contained false information about buyers’ qualifications, including information about buyers’ income, assets, liabilities, employment, source of down payment, and intention to occupy properties as a primary residence, the indictment alleges.
Bartlett and Lattas allegedly prepared and submitted to lenders HUD-1 settlement statements that they knew contained false information, including the true source of the buyers’ down payments. Lattas allegedly represented, or had his associates represent, SSB Re at closings in which properties were sold to buyers, knowing that Bartlett had recruited individuals to provide funds that were falsely represented to lenders as the buyers’ down payments. Lattas knew individuals other than the buyers were providing cashier’s checks representing the buyers’ down payments and falsely listed them as the remitters, the charges allege.
The charges were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Barry McLaughlin, Special Agent-in-Charge of the U.S. Department of Housing and Urban Development Office of Inspector General in Chicago; and Pete Zegarac, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. The Federal Housing Finance Agency Office of Inspector General assisted in the investigation. The government is being represented by Assistant U.S. Attorney Jason Yonan.
In a separate, unrelated case, ANTHONY CAMPANALE, 58, of Oak Park, an attorney who represented SNAP Holdings, LLC and affiliated entities at real estate closings, was charged with three counts of mail fraud and five counts of wire fraud in an eight-count indictment returned on May 16. Campanale pleaded not guilty on May 24 at his arraignment in Federal Court. The indictment seeks forfeiture of $3,733,250.
According to the indictment, between October 2007 and November 2008, Campanale knew that he was representing SNAP Holdings and its affiliates at closings for properties that were being sold at inflated sales prices to buyers whom he knew were being paid by his clients to purchase the properties. Campanale allegedly caused sales contracts to be submitted to lenders that he knew contained false information, including inflated sales prices, and he submitted to lenders HUD-1 settlement statements that he knew contained false information about the true source of the buyers’ down payments and about payments provided to the buyers for purchasing the properties.
The charges result from the same investigation that led to the July 2012 indictment of seven defendants for allegedly participating in a scheme to fraudulently obtain more than 20 residential mortgages totaling approximately $8.5 million from various lenders. Three of those defendants, including Thomas Hyland, 40, of Glen Ellyn, who co-owned SNAP Holdings, have pleaded guilty while charges remain pending against the other four defendants.
Mr. Shapiro announced the Campanale charges with Cory B. Nelson, Special Agent-in- Charge of the Chicago Office of the Federal Bureau of Investigation; James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor’s Office of Inspector General; and Pete Zegarac, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. The government is being represented by Assistant U.S. Attorneys Jason Yonan and Ryan Hedges.
Each count of wire fraud and mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory. If convicted, the Court may impose an alternate fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. The Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.
The public is reminded that indictments 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.
Since 2008, several hundred 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 more than $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 underway by the Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has facilitated increased investigation and prosecution of financial crimes; enhanced coordination and cooperation among federal, state and local authorities; addressed discrimination in the lending and financial markets, and conducted outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants. For more information on the task force, visit stopfraud.gov.
Bartlett Indictment
Campanale IndictmentRockford Man Pleads Guilty to Fraud SchemeRead the Press Release
ROCKFORD — A Rockford, Ill. man pleaded guilty today in federal court before U.S. District Judge Frederick J. Kapala to one count of wire fraud. WILLIAM DORN, 24, who was charged in a superseding indictment along with three other men, admitted that between March 2011 and January 2012 he defrauded large retail chain stores by fraudulently acquiring tens of thousands of dollars of merchandise and returning the items for cash.
In the written plea agreement, Dorn admitted that as part of the scheme he and his co-defendants ANTHONY HARDY, 42, and CAMERON LOVE, 28, both of Rockford, and ANTHONY TAYLOR, 44, of Marietta, Georgia, created and used counterfeit checks and counterfeit identifications to purchase merchandise from large chain stores such as Wal-Mart and Farm and Fleet located in various states. After he and the others purchased merchandise from those stores, they returned the merchandise to a different store location for a cash refund. Dorn admitted he knew at the time that some of the names and addresses on the checks and identification he used, and some of the bank account information, were fictitious and some were real.
Dorn is scheduled to be sentenced on Sept. 9, 2013, at 2:30 p.m. Taylor, who pleaded guilty on April 15, 2013 to one count of wire fraud, is scheduled to be sentenced on July 24, 2013, at 2:30 p.m. Sentencing for Cameron Love, who pleaded guilty on Feb. 28, 2013, to one count of wire fraud, is not currently scheduled.
Anthony Hardy, who was also charged in a related case, pleaded guilty on Feb. 19, 2013, to one count of wire fraud and one count of identity theft, is scheduled to be sentenced on June 4, 2013, at 2:30 p.m. In addition to Hardy admitting he participated in a wire fraud scheme with Dorn and others, Hardy admitted he unlawfully possessed the identification of another person used to purchase merchandise from the stores in the wire fraud scheme.
Wire fraud carries a maximum penalty of up to 20 years in prison, a term of up to 3 years of supervised release following imprisonment, a $250,000 fine, and mandatory restitution. The Court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendants, whichever is greater. For Hardy, the charge of identity theft carries a mandatory sentence of 2 years imprisonment, which must run consecutive to any sentence on the wire fraud charge, as well as a fine of up to $250,000. The actual sentence will be determined by the United States District Court, guided by the advisory United States Sentencing Guidelines.
The guilty plea was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; and Pete Zegarac, Postal Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. The Rockford Police Department assisted in the investigation.
The government is being represented by Assistant U.S. Attorney Michael D. Love.
Plea Agreement
Former Illinois Prison Guard Charged with Illegally Selling Assualt Rifles and Other Firearms to Cooperating Former InmateRead the Press Release
CHICAGO – A former Illinois prison guard living in Arkansas was arrested on federal charges for allegedly illegally selling eight firearms, including five assault rifles, to an individual he knew was a convicted felon because they met when the individual was an inmate and they later remained in contact. The defendant, DWAYNE MEEKS, was arrested yesterday by FBI agents following an undercover investigation in which the former inmate, posing as a firearms trafficker, was cooperating with federal agents.
Meeks, 48, of Little Rock, Ark., and formerly of Chicago and Joliet, was charged with one count each of dealing firearms without a federal license and selling firearms to a convicted felon in a criminal complaint that was unsealed following his arrest. He was ordered to remain in federal custody pending a detention hearing at 1:15 p.m. Monday before U.S. Magistrate Judge Sidney I. Schenkier in Federal Court in Chicago.
According to the complaint affidavit, Meeks and the former inmate met in Chicago in May 2012 and Meeks began discussing selling various firearms and showing the cooperating individual photos of the weapons on his cell phone and via emails. They continued their discussions about arranging a deal involving multiple firearms through the next two months. On July 14, 2012, Meeks and the cooperating former inmate met in a suburban Cook County Forest Preserve where Meeks allegedly sold eight high-powered firearms to the individual for $18,000, consisting of $15,000 for the weapons from Meek’s supplier and $3,000 for Meeks’ delivery fee. FBI agents conducted surveillance and monitored audio and video-recorded transmissions of the alleged transaction, including during the transfer of the weapons from the back of Meeks’ truck to the trunk of a car driven by the cooperating individual.
On more than one occasion, Meeks described the assault rifles as “tact’d out,” meaning they included such features as night scopes and laser sights, the affidavit states. The weapons Meeks allegedly sold and were seized were: two .223 caliber assault rifles, a 5.56 caliber assault rifle, a .50 caliber assault rifle with an ammunition drum attached, a 7.62 caliber assault rifle, a .45 caliber semi-automatic pistol, a 9 mm semi-automatic pistol, and a .22 caliber rifle.
Meeks allegedly discussed selling additional firearms to the former inmate but a deal planned for the end of July 2012 did not occur following the mass shooting at a theater in Aurora, Col. They allegedly discussed another future firearms transaction but Meeks consistently reported the difficulty he was having finding firearms, according to the complaint. In early January of this year, Meeks allegedly complained to the former inmate about the continued difficulty finding firearms after the school shooting in Newtown, Ct., in December.
During the last two weeks, Meeks and the former inmate allegedly discussed Meeks arriving in Chicago yesterday to sell the cooperating individual at least eight additional firearms. Meeks was arrested yesterday when he arrived at the same Forest Preserve location where they met last summer and three AR15 assault rifles that he allegedly brought to sell were seized.
The arrest and charge were announced today 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. Chicago Police Department task force officers assisted in the investigation.
Dealing firearms without a federal license carries a maximum sentence of five years in prison, and selling firearms to a convicted felon carries a maximum of 10 years, and each count carries a $250,000 maximum fine. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines. The Government is being represented by Assistant U.S. Attorney Ronald DeWald.
The public is reminded that a complaint is not evidence of guilt and that the defendant is presumed innocent and entitled to fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Complaint
Chicago Man Sentenced to 23 Years in Prison for Attempted Bombing on Crowded Street Near Wrigley Field in September 2010Read the Press Release
CHICAGO — A Chicago man was sentenced today to 23 years in federal prison for placing a backpack that he thought contained a powerful explosive device into a curbside trash container on a crowded street near Wrigley Field in September 2010. The defendant, SAMI SAMIR HASSOUN, pleaded guilty in April 2012 to one count each of attempted use of a weapon of mass destruction and attempted use of an explosive device, and faced between 20 and 30 years in prison under the terms of his plea agreement.
Hassoun, 25, a Lebanese citizen and permanent resident alien who formerly resided on the city’s north side, has remained in federal custody since he was arrested during the very early morning on Sept. 19, 2010. The purported bomb was actually an inert device that was provided by undercover FBI agents, who were investigating and monitoring Hassoun’s proclaimed determination to commit acts of violence in Chicago for monetary gain and to cause local political instability.
“The thought of what might have happened if it was real is horrific,” said U.S. District Judge Robert Gettleman, who ordered Hassoun placed on five years of supervised release following his prison term and noted that he will be subject to deportation when he is released.
As a result of the undercover investigation, Hassoun never posed any actual imminent danger, but his guilty plea made clear that he intended to cause mass casualties and had rejected opportunities to walk away from the plot. He chose the particular location and time of the proposed attack – the 3500 block of North Clark Street and late on a Saturday night – because it presented the opportunity to inflict a greater number of casualties. There was a concert at Wrigley Field on Saturday night, Sept. 18, 2010, just before he was arrested.
“If the bag that Hassoun left in that Clark Street trash receptacle had contained the type of explosive device that he thought it did, the results would have been horrific,” said Gary S. Shapiro, United States Attorney for the Northern District of Illinois. “In conversation after conversation, Hassoun made clear that he was willing to bomb innocents and shoot police officers as part of a bizarre effort to destabilize the City of Chicago. And his actions demonstrated that his words were more than empty bravado,” Mr. Shapiro said.
“I am proud of the work done by a talented investigative team in preventing Hassoun from carrying out his intended act of great violence. I am also grateful to the dedicated prosecution team for their role in bringing Hassoun to justice. We remain vigilant in our mission to prevent attacks against Americans and to identify and hold accountable individuals and groups involved in the planning and execution of such attacks,” said Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The investigation was conducted by the Chicago FBI’s Joint Terrorism Task Force, which consists of FBI special agents, Chicago police officers, and other federal, state and local law enforcement agencies.
In pleading guilty, Hassoun admitted telling a law enforcement cooperating source (CS) in early June 2010 that he wanted to commit acts of violence in Chicago and suggested bombing the commercial area surrounding Wrigley Field as one option. Hassoun said that an attack against such an entertainment center could “paralyze” Chicago commerce. The CS told Hassoun that he/she had friends willing to help Hassoun to perpetrate such an attack. Hassoun and the CS continued to discuss Hassoun’s terrorist attack ideas during the following weeks, and Hassoun indicated that he wanted to meet the CS’s contacts and was anxious to act against Chicago.
On July 8, 2010, the CS introduced Hassoun to an undercover FBI task force officer posing as one of the CS’s purported contacts, and Hassoun said that he believed that a series of escalating violent acts could be used to undermine the city’s political establishment. When asked what he was personally willing to do, Hassoun indicated that he was willing to facilitate a car bombing or attacks against Chicago police officers. When asked later if he was concerned about the victims of such violence, Hassoun said that casualties were the inevitable result of what he termed “revolution.”
On July 21, 2010, an undercover FBI agent was introduced to Hassoun as a “good friend” and “brother,” and Hassoun discussed his idea of a series of escalating violent attacks to damage Chicago’s sense of security, its economy, and trust in leadership. He identified Chicago entertainment establishments, civic buildings, commercial high-rises, and transportation infrastructure as potential targets, the plea agreement states.
During this meeting, the undercover agents gave Hassoun a digital camcorder to videotape potential targets. Hassoun traveled to the area around Wrigley Field and filmed potential targets on Aug. 8, 12 and 14, 2010, focusing on the bars, restaurants and potential security in the area. As he filmed, Hassoun commented on the potential tactical advantages and risks of perpetrating an attack at the various locations he observed. Also during the July 21 meeting, Hassoun asked the undercover agents effectively to employ him planning the bombing, and from July 21 to Sept. 18, 2010, they paid Hassoun $2,700.
On Aug. 16, 2010, Hassoun met with the agents and debriefed them on his reconnaissance efforts. He gave them the camcorder and after reviewing the videos, they all discussed the areas that could be targeted to cause maximum casualties with minimum operational difficulty and risk. On Aug. 31, 2010, Hassoun and the undercover agents traveled to Hassoun’s chosen location, which Hassoun said would be crowded with bar patrons.
At a prearranged meeting on the night of Sept. 18, 2010, at a hotel in Rosemont, the undercover agents provided Hassoun with a shopping bag and a backpack that contained the purported bomb. While driving together to the target area, one of the agents explained to Hassoun that the bomb was surrounded by ball-bearings and that its blast could destroy up to half a city block. As they approached the area, one of the agents told Hassoun that he was setting the bomb’s timer for 20 minutes, but Hassoun said that was too long. The agent and Hassoun then set the timer together and activated the purported bomb’s arming mechanism in Hassoun’s presence. They arrived near the target location at approximately 12:10 a.m. on Sunday Sept. 19 and parked about a block away. As planned, Hassoun exited the vehicle with the shopping bag containing the backpack and purported explosive device, walked a short distance, and deposited what he thought was the armed bomb into the trash container on the crowded sidewalk.
The government was represented by Assistant U.S. Attorneys Joel Hammerman and Tinos Diamantatos.
Former Lake County Man Sentenced to More Than Six Years in Prison for $1.6 Million Investment Fraud SchemeRead the Press Release
CHICAGO – A former Lake County man was sentenced today to more than six years in federal prison for cheating at least 20 victims of approximately $1.6 million in an investment fraud scheme. The defendant, WILLIAM BLOCK, promised investors substantial profits, in some cases up to 300 percent returns over just six months, and instead used the money to finance a lavish lifestyle.
Block, 54, formerly of Lake Forest, who has been in custody since he was arrested in November 2008, was sentenced to 75 months in prison by U.S. District Judge Harry Leinenweber. Block was also ordered to forfeit approximately $1.6 million, as well as to pay restitution totaling approximately $1.9 million, which also includes the proceeds of a separate $300,000 bank fraud. Block did not admit guilt but was found guilty by Judge Leienweber earlier this month after conceding that the government could provide him guilty.
The government’s proof established that between May 2002 and November 2008, Block operated an investment fraud scheme in which he falsely told at least 20 individual investors that if they gave him money, ranging from tens of thousands to hundreds of thousands of dollars, he could pay fees and costs to recover certain monies to which he was entitled and the investor would reap a financial reward. As a result, Block fraudulently obtained about $1.6 million from his victims.
In fact, Block’s representations were bogus, and he converted the victims’ funds for a variety of personal and living expenses, including cigars, limousine services, clothing, travel, wine, and a trip on a private plane to view a yacht that he represented he was considering for purchase.
As relevant conduct at sentencing, the government also established that Block engaged in a separate bank fraud scheme in 2007, by using a $300,000 check that he knew had ‘bounced,’ and then using at least $190,000 of the proceeds to obtain an official check from AmCore Bank. He used the proceeds from that official check for a variety of personal expenses, including cigars, a $2,600 watch, rounds of golf, and payments to a girlfriend.
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. Attorneys Kaarina Salovaara and Jessica Romero.
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.
Iowa Man Sentenced to 37 Years in Prison for Mailing Pipe Bombs and Threats to Investment Firms in Bid to Raise Stock PricesRead the Press Release
CHICAGO — A former Dubuque, Iowa, machinist was sentenced today to 37 years in prison for mailing a dozen threatening letters from the Chicago area and elsewhere, and mailing two pipe bombs from a Chicago suburb, between 2005 and early 2007 to investment firms and advisors as part of terror campaign to drive up the value of stock he owned in two companies. The defendant, JOHN P. TOMKINS, who signed some of his letters “THE BISHOP,” was convicted in May 2012 after a two-week trial in U.S. District Court.
Tomkins, 48, received a mandatory minimum sentence of 30 years for using a destructive device while mailing a threatening communication, which was imposed consecutively to seven years on other counts. He was convicted of two counts of possessing a unregistered destructive device and nine counts of mailing a threatening communication.
Tomkins “taunted” and “terrified” a dozen victims, who could have been seriously injured or killed, in committing “a series of horrific crimes,” U.S. District Judge Robert M. Dow, Jr., said in imposing the sentence after conducting a hearing last month. Tomkins has remained in federal custody without bond since he was arrested on April 25, 2007, following an investigation led by the U.S. Postal Inspection Service.
“Tomkins took these terrifying and secretive actions because he was greedy – because he did not like the financial and life situation in which he found himself. To remedy those perceived problems, he decided to terrorize people to get what he wanted. He was indifferent to whether he killed people in the process. For these horrific choices, that he repeatedly made over the course of two years, Tomkins received the lengthy sentence imposed today,” said Gary S. Shapiro, United States Attorney for the Northern District of Illinois.
“Through an intensive investigation, the U.S. Postal Inspection Service identified Tomkins before his behavior led to victims sustaining severe physical injuries or even death. Although this sentencing brings Tomkins’ acts of terror to a close, his victims will live forever with the pain they suffered because of him. The Postal Inspection Service takes any crime involving the mail very seriously and we will continue to investigate individuals who misuse the U.S. mail to commit crime,” said Pete Zegarac, Inspector-in-Charge of the Chicago Division of the U.S. Postal Inspection Service.
The evidence at trial showed that the two unregistered destructive devices were each mailed on Jan. 26, 2007, at the Rolling Meadows Post Office, northwest of Chicago. One package was addressed to an individual at Janus Small Cap at an address in Denver, where it was forwarded unopened by Janus to a related investment entity in Chicago. The second parcel was addressed to an individual at American Century at an address in Kansas City, Mo. Upon delivery, authorities were notified and both parcels were recovered by Postal Inspectors.
Each parcel contained an improvised explosive weapon, commonly known as a pipe bomb. Expert testimony at trial showed that they were functional, even though the firing circuit was not fully connected, and they were capable of exploding as a result of jostling or impact and causing serious injury or death to persons near the explosion. Each parcel contained a letter stating, in part: “BANG!! YOU’RE DEAD.”
Tomkins was convicted of mailing a dozen threatening letters to investment companies and individuals associated with them between May 23, 2005, and July 17, 2006. The typewritten letters bore postmarks from Chicago, Palatine, Milwaukee, Des Moines and Orlando, Fla., and some were signed “THE BISHOP,” while others ended with the words “TIC TOC.” The first letter, for example, stated how easy it is to kill someone, citing “The Unibomber” (sic) and “Salvo,” a reference to convicted sniper Lee Malvo. In addition to threatening language, some of the letters demanded that the price of the former 3Com Corporation (COMS) stock be raised to $6.66 by a certain date. Other demands were made for a rally in the stock price of Navarre Corporation, a publicly-traded technology and entertainment company that traded under the ticker symbol NAVR.
Evidence also included U.S. Securities and Exchange Commission records showing individuals with positions of at least 200 option contracts. Two reports each obtained for 3Com and Navarre identified Tomkins as the only investor whose account appeared in those reports at certain times dating back to 2005. Trading records showed that Tomkins held financial interests in 3Com and Navarre that would have increased in value had the securities moved in the directions demanded in the threatening letters and when the pipe bombs were mailed.
One the day he was arrested, law enforcement officials searched storage garages rented by Tomkins in Dubuque and recovered two additional assembled pipe bombs similar to the ones that were mailed, as well as all of the components used in making the mailed devices. For example, inspectors discovered store receipts for shotgun shells containing the explosive powder that was used in the mailed pipe bombs and was purchased in Madison, Wis., 23 days before the two package bombs were mailed. Inspectors also found a receipt for end caps used to assemble the devices that were purchased in Dubuque just two days before they were mailed in January 2007.
The government was represented by Assistant U.S. Attorneys Patrick C. Pope and Paul H. Tzur.
The investigation was led by the U.S. Postal Inspection Service, joined by agents from the Federal Bureau of Investigation’s Joint Terrorism Task Force and the Bureau of Alcohol Tobacco Firearms and Explosives. The SEC, the Illinois State Police, the Iowa Department of Public Safety, the Dubuque, Kansas City and Chicago police departments, the Quad Cities Bomb Squad, and the U.S. Attorney’s Office in the Northern District of Iowa also assisted in the investigation.
Roscoe Man Pleads Guilty to Transporting Child PornographyRead the Press Release
ROCKFORD — A Roscoe, Ill. man pleaded guilty today in federal court to two counts of transporting child pornography via the internet. In pleading guilty, JASON NICOSON, 35, admitted before U.S. District Court Judge Frederick J. Kapala that in December 2011 and January 2012, he used the internet to transport images and videos contained multiple visual depictions of minors engaging in sexually explicit conduct. Nicoson’s sentencing hearing is scheduled for Sept. 6, 2013, at 2:30 p.m.
Nicoson faces a mandatory minimum sentence of 5 years and a maximum of 20 years in prison, a term of supervised release following imprisonment of at least 5 years and up to life, and a fine of up to $250,000 on each count. The Court must impose a reasonable sentence guided by the advisory United States Sentencing Guidelines.
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 the Federal Bureau of Investigation. The Illinois State Police and the Illinois Internet Crimes Against Children Taskforce assisted in the investigation.
The government is being represented by Assistant U.S. Attorney Michael D. Love.
Plea Agreement
Retired Chicago Police Officer Sentenced to 18 Years in Prison for Role in Violent Drug Distribution ConspiracyRead the Press Release
CHICAGO — A retired Chicago police officer was sentenced today to 18 years in federal prison for his lengthy participation in a drug-trafficking conspiracy that involved the distribution of hundreds of kilograms of cocaine, murder, violent kidnappings, robberies, home invasions, and obstruction of justice. The defendant, GLENN LEWELLEN, a Chicago police officer from 1986 until he resigned in 2003, was one of five co-defendants who were convicted following a two-month trial in late 2011 and early 2012. There was no allegation that Lewellen participated in any murders.
Lewellen, 57, formerly of Chicago, Las Vegas, and south suburban Frankfort, was taken into custody following his conviction on Jan. 31, 2012. He faced a maximum sentence of life and a mandatory minimum of 10 years in prison. The government sought a sentence of 30 years from U.S. District Judge Joan Gottschall, who, in imposing the sentence, said that public interest in general deterrence and respect for the law, as well as the seriousness of Lewellen’s crimes, called for the 18-year sentence, even though she did not believe that he posed any risk of personal recidivism. The jury that convicted Lewellen of a narcotics distribution conspiracy did not reach a verdict on whether he also participated in a racketeering (RICO) conspiracy, and the government today dismissed that count because it would not have added any time to Lewellen’s sentence.
The evidence at trial showed that from 1998 to 2006, after he had retired, Lewellen, together with brothers Hector and Jorge Uriarte and others, participated in the drug conspiracy with Saul Rodriguez, who Lewellen had arrested in 1996 and enlisted as a Chicago police informant while allowing him to continue buying, selling and stealing cocaine. Lewellen personally participated in violent kidnappings and robberies of drugs and money, and obstructed justice by providing information to his cohorts and interfering with criminal investigations into their activities.
“Lewellen decided that he could make more money breaking his oath and the law than he could by serving and protecting,” the government argued in a sentencing memo. He “ruthlessly kidnapped victim after victim at gunpoint, restrained them, and threatened them until cocaine or money was provided to secure their release.”
A total of 11 defendants were charged in the case. Rodriguez and three co-defendants pleaded guilty and testified as government witnesses at the trial of Lewellen and four codefendants. The case began when Rodriguez and others were arrested in April 2009 after they conspired to steal hundreds of kilograms of purported cocaine from a warehouse in southwest suburban Channahon as part of an undercover sting operation.
Rodriguez is awaiting sentencing and is expected to receive 30 to 40 years in prison under the terms of his plea agreement. Jorge Urirate was sentenced to 60 years in prison; Hector Uriarte received 50 years in prison, and trial defendants, Tony Sparkman and Robert Cardena, received 42 years and 10 years, respectively.
Lewellen’s sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Jack Riley, Special Agent-in-Charge of the Chicago Field Division of the Drug Enforcement Administration, and James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago. The investigation was conducted under the umbrella of the Organized Crime Drug Enforcement Task Force (OCDETF).
The government is represented by Assistant U.S. Attorneys Terra Reynolds, Steven Block and Tiffany Tracy.
McHenry Man Arrested for Allegedly Threatening US Embassy Officials in Serbia and Serbians in Chicago over Visa DisputeRead the Press Release
CHICAGO – RUSSELL K. GORDON, 48, of rural McHenry, Ill., was arrested at his home Saturday night by special agents of the U.S. State Department Diplomatic Security Service (DSS) and the Federal Bureau of Investigation for allegedly making threatening communications to kill State Department officials, including the U.S. Ambassador in Serbia, as well as Serbians in Chicago, apparently due to a visa dispute involving his wife in Serbia. Gordon is scheduled to have his initial court appearance at 2:30 p.m. today before U.S. Magistrate Judge Susan Cox in the Dirksen Federal Courthouse in Chicago.
According to a criminal complaint affidavit, Gordon, a U.S. citizen, lived in Serbia from 1996 to November 2012, and married a Serbian woman who had a child whose father was a Serbian national. In September 2012, Serbian courts awarded custody of the child to the biological father.
Starting in February 2013, Gordon allegedly sent threatening or intimidating text messages to a U.S. Embassy consular assistant in Belgrade, Serbia. On April 15, and again on May 12, the FBI in Chicago received an email, purportedly from Gordon, at a publicly available email account that allegedly was consistent with his prior threatening messages, which are detailed in the complaint affidavit. Last Friday, Gordon’s wife went to the U.S. Embassy in Belgrade to request a visa for entry into the U.S., and told embassy officials that Gordon had developed detailed plans to shoot Serbian citizens in Chicago, including diplomats at places he believed Serbians routinely congregated. On Saturday, Gordon’s wife told the consulate chief at the U.S. Embassy in Belgrade that Gordon was enraged upon learning that his wife would receive only a two-week guest visa, and that he was going to kill the U.S. Ambassador, his wife, their two daughters and another State Department employee.
The arrest and charge were announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Cornell Chasten, Special Agent-in-Charge of the DSS Field Office in Chicago; and Cory B. Nelson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation. DSS Offices in Belgrade and Washington, D.C. provided significant assistance in the investigation. The McHenry Police Department, the McHenry County Sheriff’s Office and the Kane County Bomb Squad assisted in Gordon’s arrest on Saturday and with the execution of a search warrant at his home on Friday.
If convicted, Gordon faces a maximum penalty of five years in prison and a $250,000 fine. The Government is being represented by Assistant U.S. Attorney William Ridgway.
The public is reminded that a complaint is not evidence of guilt and that the defendant is presumed innocent and entitled to fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Complaint
Oregon, Illinois Man Sentenced to 121 Months in Federal Prison for Distributing Child PornographyRead the Press Release
ROCKFORD — An Oregon, Ill. man was sentenced today in federal court for distributing child pornography. JONATHAN LONG, 51, who was originally charged in federal court in Alaska, was sentenced by U.S. District Judge Philip G. Reinhard to 121 months in federal prison for distributing child pornography, in addition to 10 years of supervised release following his release from prison.
Long pled guilty to the charge on Nov. 16, 2012. According to the written plea agreement, Long admitted that in March 2012 he distributing visual images of a minor engaging in sexually explicit conduct via email to an individual in Alaska. Long was arrested on July 24, 2012, and has since been in federal custody.
The sentencing was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Gary J. Hartwig, Special Agent-in-Charge of Homeland Security Investigations in Chicago.
The government was represented by Assistant U.S. Attorney Michael D. Love.
Hanover Man Sentenced to 18 Months in Federal Prison for Fraud Scheme Involving EBay SalesRead the Press Release
ROCKFORD — A Hanover, Ill. man was sentenced today by U.S. District Judge Philip G. Reinhard in federal court in Rockford for wire fraud. ANTHONY F. DEFILIPPO, 56, of Hanover, was sentenced to 18 months imprisonment, to be followed by 3 years of supervised release, 9 months of which DeFilippo must spend in home confinement, in addition to restitution in the amount of $53,664.61. DeFilippo pled guilty to wire fraud on Nov. 21, 2012, admitting that from 2009 to 2011 he devised and engaged in a scheme to defraud and obtain money, funds, and property from Wal-Mart.com, Inc., credit card issuers, and credit card holders by means of materially false and fraudulent pretenses, representations, and promises.
According to the written plea agreement, DeFilippo admitted that he used his eBay account to sell various types of merchandise, such as vacuum cleaners and sewing machines, that another participant in the scheme then fraudulently obtained from Wal-Mart.com, Inc. through the unauthorized use of names and credit cards numbers of other credit cardholders. The merchandise was then shipped to the address of the person that had purchased the item through DeFilippo’s eBay account, but containing the name of the victim credit cardholder. DeFilippo further admitted that he arranged for the money eBay received from the eBay buyers to be paid to DeFilippo through PayPal debit cards. DeFilippo periodically withdrew money from the debit cards, keeping a portion for himself and sending the rest to other persons, including persons in foreign countries such as the Ukraine.
The sentencing was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Frank Benedetto, Special Agent-in-Charge of the Chicago Field Office of the U.S. Secret Service; Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Hiram Grau, Director of the Illinois State Police.
The government was represented by Assistant U.S. Attorney Michael D. Love.
DeKalb and Sterling Doctor and His Wife Charged with Illegally Dispensing Prescription Drugs and Income Tax FraudRead the Press Release
ROCKFORD C A DeKalb, Ill. doctor and his wife were arrested today on charges of illegally dispensing controlled substances and federal income tax fraud. RICHARD H. NG, 61, a doctor of osteopathic medicine, and President and sole shareholder of Sauk Medical Clinic with offices located in Sterling and DeKalb, Ill., was charged by a federal grand jury in Rockford yesterday in an 89 count indictment, including one count of conspiracy to dispense controlled substances outside the course of professional practice and without a legitimate medical purpose, 81 counts of dispensing controlled substances outside the course of professional practice and without a legitimate medical purpose, and 7 counts of income tax fraud. LEE LEE FOONG, 54, also known as “Audrey,” who was married to Ng, was charged with one count of conspiracy to illegally dispense controlled substances outside the course of professional practice and without a legitimate medical purpose, 5 counts of dispensing controlled substances outside the course of professional practice and without a legitimate legal purpose, and one count of income tax fraud.
According to the indictment, Ng owned and operated the Sauk Medical Clinic, and Foong was the office manager for the Clinic. Beginning in January 2007 and continuing through October 2011, Ng and Foong allegedly dispensed Oxycodone, Methadone, Morphine, and other prescription pain medications outside the course of professional practice and without a legitimate medical purpose, the dispensation of which in some cases resulted in death and other bodily injuries. During the course of the conspiracy, Ng saw patients at Sauk Medical Clinic’s offices in Sterling and DeKalb on at least a monthly or bi-weekly basis to dispense large quantities of prescription controlled substances. The indictment alleges Ng failed to conduct adequate medical evaluations, increased the dosage amounts, and required patients to return frequently to Ng to obtain excessive amounts of the controlled substances. According to the indictment, Ng continued to issue prescriptions despite obvious “red flags” that his patients were abusing or misusing the controlled substances. The indictment alleges that Ng continued to prescribe excessive amounts of controlled substances knowing that these dispensations resulted in the death of three of his patients.
The indictment also alleges that Ng filed false U.S. corporate income tax returns for Sauk Medical Clinic for 2008–2010, knowing the returns underestimated gross receipts of Sauk Medical Clinic by a total of $922,850 over those years, which would have resulted in additional federal income tax due of $320,738. It is further alleged that false federal individual tax returns were filed by Ng for the calendar years 2008–2010, and by Ng and Foong for 2011, the year they were married, which failed to report a total of $1,256,486 in cash received from Sauk Medical Clinic and rental receipts. The indictment charges that the unreported income would have resulted in additional federal income tax due of $270,873.
Depending on the controlled substance involved, each charge of illegally dispensing a controlled substance carries a maximum penalty from up to 5 years in prison to a maximum penalty of life imprisonment in cases of death or serious bodily injury, in addition to a fine ranging from $250,000 to $1 million. Each count of filing a false income tax return carries a maximum penalty up to 3 years in prison, or a fine of up to $100,000 for an individual ($500,000 for a corporation), or both, as well as the costs of prosecution. If convicted, the Court must impose a reasonable sentence under the advisory United States Sentencing Guidelines.
The public is reminded that an indictment contains only charges and is not evidence of guilt. Each defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
The arrests were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Jack Riley, Special Agent-in-Charge of the Chicago Field Division of the Drug Enforcement Administration; and James C. Lee, Special Agent-in-Charge of the Chicago Field Office of the Internal Revenue Service - Criminal Investigation Division. The Sterling, Ill. Police Department assisted in the investigation.
“Those in the medical profession, like Dr. Ng and his wife, who allegedly abused their position of trust and prescribe drugs without any legitimate medical purpose, will be prosecuted to the fullest extent of the law,” said Jack Riley, Special Agent-in-Charge of the Chicago Field Division.
The government is being represented by Assistant U.S. Attorney Scott R. Paccagnini.
Indictment
Federal Medicare Fraud Strike Force Charges Chicago Area Defendants with Defrauding Medicare and Other Health InsurersRead the Press Release
CHICAGO — Two area physicians and three health clinic co-owners are among seven defendants charged here with engaging in five separate, unrelated health care fraud schemes to defraud the Medicare program and/or private health insurers of millions of dollars, federal law enforcement officials announced today.
Four of the five cases here are part of a nationwide takedown by Medicare Fraud Strike Force operations in eight cities, announced today by the Departments of Justice and Health and Human Services, resulting in charges against 89 defendants, including doctors, nurses, and other licensed medical professionals, for their alleged participation in Medicare fraud schemes collectively involving approximately $233 million in false billings.
In Chicago, the defendants were charged in two criminal complaints and two informations filed today and yesterday, and an indictment that was unsealed today following the arrest of one defendant in Miami. All seven defendants were charged with health care fraud for allegedly defrauding the Medicare program, or violating the anti-kickback statute, which makes it illegal to offer, pay, solicit, or receive payments in exchange for referrals of Medicare patients. The charges involve various medical treatments and services, as well as durable medical equipment.
“Today’s announcement marks the latest step forward in our comprehensive efforts to combat fraud and abuse in our health-care systems,” said Attorney General Eric Holder. “These significant actions build on the remarkable progress that the HEAT has enabled us to make – alongside key federal, state, and local partners – in identifying and shutting down fraud schemes. They are helping to deter would-be criminals from engaging in fraudulent activities in the first place. And they underscore our ongoing commitment to protecting the American people from all forms of health-care fraud, safeguarding taxpayer resources and ensuring the integrity of essential health-care programs,” he added.
“Today’s charges are part of our continuing efforts not only to deprive dishonest healthcare providers of their illegal profits, but to demonstrate to the broader medical services community that healthcare fraud will be found out and prosecuted with all of our resources. In short, we will not tolerate medical professionals and providers who abuse our healthcare system,” said Gary S. Shapiro, United States Attorney for the Northern District of Illinois.
Details of the Chicago cases follow:
United States v. Ankur Roy, Akash Patel, and Dipen Desai
ANKUR ROY, AKASH PATEL, and DIPEN DESAI, who owned and operated Selectcare Health, Inc., which provided outpatient physical and respiratory therapy in Park Ridge and Skokie, were charged with submitting more than $4 million in false billings to Medicare between March and July 2011. Each defendant was charged with six counts of health care fraud in an indictment that was returned by a federal grand jury last Wednesday and unsealed today.
Roy, 36, of Miami was arrested today in south Florida, while Patel, 33, of Morton Grove, and Desai, 33, of Chicago, will be ordered to appear for arraignment on a later date in U.S. District Court in Chicago.
According to the indictment, the defendants submitted false claims to Medicare and Blue Cross Blue Shield on behalf of Selectcare patients for respiratory therapy services that were never provided. The alleged false billings sought reimbursement for services purportedly provided on days that Selectcare’s sole respiratory therapist was not working; for time periods in which the patients were not receiving care from Selectcare; and for treatment seven days a week for three hours per day, a schedule well in excess of any schedule prescribed for patients at Selectcare.
Roy, Patel and Desai used a third-party billing service to forward the alleged false claims to Medicare, as well as to private insurers such as Blue Cross if the patient had supplemental private insurance, including insurance funded by labor union health and welfare plans.
Between March and July 2011, the defendants allegedly submitted $4,009,094 in false billings for services that were purportedly provided between April 2010 and April 2011, resulting in payments totaling approximately $2,214,424 from Medicare and $320,881 from Blue Cross Blue Shield. The indictment seeks forfeiture of $2,535,305 in alleged fraud proceeds, including $446,974 in funds withdrawn by cashiers’ checks that were seized by the FBI in July 2012.
The government is represented by Assistant U.S. Attorney Maureen Merin. The case was investigated by the FBI, the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), and the U.S. Department of Labor Office of Inspector General (DOL-OIG).
United States v. Cecilia Ibrahim
Dr. CECILIA IBRAHIM, an internal medicine physician who operated Sunrise Medical Center in Flossmoor, was charged with one count of health care fraud for allegedly engaging in a $1.7 million Medicare and private insurance false billing scheme.
Ibrahim, 50, of Frankfort, was charged in an information filed today in U.S. District Court. She will be arraigned on a date to be determined.
Between March 2006 and August 2009, Ibrahim allegedly submitted more than 3,200 false claims to Medicare and Blue Cross Blue Shield using a billing code for spinal decompression neuroplasty, a surgical procedure that she did not perform, when she only performed intervertebral differential dynamics therapy (IDD), a non-surgical procedure. As a result, she allegedly caused a loss of at least $300,000 to Medicare and $550,000 to Blue Cross Blue Shield. The indictment seeks forfeiture of at least $882,500 in alleged fraud proceeds.
The government is represented by Assistant U.S. Attorney Samuel B. Cole. The case was investigated by the FBI, HHS-OIG, and the Railroad Retirement Board Office of Inspector General.
United States v. Ellyse Lamon
ELYSSE LAMON, an account executive at a company that sold durable medical equipment, including back braces and transcutaneous electrical nerve stimulation units, also known as tens units, was charged with one count of health care fraud for allegedly engaging in a $350,000 Medicare false billing scheme.
Lamon, 30, of Elmhurst, was charged in an information filed today in U.S. District Court. She will be arraigned on a date to be determined.
Between October 2010 and May 2011, Lamon allegedly caused her company to submit false claims to Medicare representing that a physician had prescribed back braces and tens units when she knew that no physician had done so and the items were not medically necessary. In order to provide written support for the false claims, Lamon allegedly obtained patient records without a physician’s permission and added false information reflecting that a physician had ordered the equipment for the patients. She allegedly forged doctors’ signatures on documents, including false treatment records she created. Lamon further used patient information she had inappropriately accessed at a pain medicine center in Chicago to set up patient meetings where she falsely told patients that doctors had prescribed the equipment for them, according to the charges.
Lamon allegedly submitted false claims to Medicare totaling $352,685, resulting in payment of at least $206,233 to her medical equipment company. She allegedly profited from these false claims by receiving increased commissions and other benefits from her company.
The government is represented by Assistant U.S. Attorney Kruti Trivedi. The case was investigated by the FBI and is not part of the Medicare Fraud Strike Force operation.
United States v. Nalini Ahluwalia
Dr. NALINI AHLUWALIA, was charged with one count of violating the anti-kickback law for allegedly receiving $1,000 in exchange for referring two patients to a home health care agency in August 2012.
Ahluwalia, 58, of Burr Ridge, was charged in a complaint filed today in U.S. District Court. She will be ordered to appear on a date to be determined.
According to the complaint, a confidential informant who worked at a home health care company in Chicago, told agents that the CI had previously paid kickbacks to Ahluwalia of $400 to $500 per patient in exchange for her referral of Medicare patients to the home health care company.
On Aug. 23, 2012, at the direction of agents, the confidential informant met with Ahluwalia at the doctor’s office in Chicago, and paid her $1,000 for the two Medicare patient referrals in an exchange that was reflected on an audio/video recording, according to the complaint affidavit. In October 2012 and February 2013, the informant allegedly made two additional $500 payments to Ahluwalia in exchange for Medicare patient referrals.
The government is represented by Assistant U.S. Attorney Samuel B. Cole. The case was investigated by the FBI and the HHS-OIG.
United States v. Joseph Dickson
JOSEPH DICKSON, the president and owner of JD Medical Consultants, Inc., a medical marketing company, was charged with one count of violating the anti-kickback law for allegedly receiving $4,200 in exchange for referring patients to a home health care agency in October 2012.
Dickson, 65, of Lansing, was charged in a complaint filed yesterday in U.S. District Court. He will be ordered to appear on a date to be determined.
According to the complaint, a confidential informant who owned a home health care company in the Chicago area, told agents that the CI had previously paid kickbacks to Dickson, among others, for referring Medicare patients to another home health care company where s/he previously worked. Dickson was described as a “middle man” who arranged the referral of patients from a physician to a home health care company, and the confidential informant told agents that the CI had paid Dickson approximately $15,000 for referring about 30 patients between 2006 and 2008.
On Oct. 3, 2012, at the direction of agents, the confidential informant met with Dickson at his office in Chicago, and paid him $4,200 for seven Medicare patient referrals, at $600 each, in an exchange that was reflected on an audio/video recording, according to the complaint affidavit. In December 2012, the informant allegedly made an additional $1,800 payment to Dickson in exchange for Medicare patient referrals and re-certifications.
The government is represented by Assistant U.S. Attorney Joseph H. Thompson. The case was investigated by the FBI and the HHS-OIG.
The charges in these cases carry the following maximum penalties on each count: health care fraud — 10 years in prison and a $250,000 fine, or an alternate fine totaling twice the loss or twice the gain, whichever is greater; and violating the anti-kickback statute — 5 years in prison and a $250,000 fine. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The 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.
Since their inception in March 2007, Strike Force operations in nine locations have charged more than 1,500 defendants who collectively have falsely billed the Medicare program for more than $5 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
The nationwide takedown was announced today by Attorney General Holder, HHS Secretary Kathleen Sebelius and other federal law enforcement officials. Mr. Shapiro announced the Chicago charges with Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; Lamont Pugh III, Special Agent-in-Charge of the Chicago Regional Office of the HHS-OIG, and James Vanderberg, Special Agent-in-Charge of the Labor Department Office of Inspector General in Chicago. The Railroad Retirement Board Office of Inspector General assisted in the Ibrahim investigation.
The public is reminded that indictments, informations, and 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.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: StopMedicareFraud.gov.
Ibrahim Information
Ahluwalia Complaint
Lamon Information
Dickson Complaint
SelectCare IndictmentCary Business Owner Pleads Guilty to $1 Million International Fraud SchemeRead the Press Release
ROCKFORD — A Cary, Ill. business owner pleaded guilty to wire fraud today in federal court before U.S. District Judge Frederick J. Kapala. CLARE THOMAS ANDERSON, 44, who owned and operated multiple businesses in Cary, Ill, and Florida, admitted that between April 2009 and January 2013, he schemed to defraud over $1 million from more than 10 victims that did business with the companies he operated.
According to the written plea agreement, the businesses Anderson owned and operated were 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 caused payments to be disbursed under these Letters of Credit to bank accounts he controlled by creating and presenting fraudulent Bills of Lading, Certificates of Origin, and packing lists. These documents falsely represented that the agreed upon quantity and quality of materials had been shipped.
Anderson admitted that instead of shipping the wood pulp or other raw materials he had agreed to sell, on various occasions he shipped worthless scrap materials to his foreign customers. When the customers called him to complain about the worthless scrap materials they had received, Anderson falsely told them that the scrap materials were intended for another customer in a different country.
Anderson further admitted that on some occasions, instead of shipping the agreed upon weights and volume of wood pulp or other raw materials, he instead shipped substantially smaller amounts of wood pulp or other raw materials. When the customers called and complained about the short shipments, Anderson falsely told them that short shipments were caused by clerical errors.
Anderson acknowledged that, in order to maximize the profits from his scheme to defraud, he often failed to pay for the materials he obtained and for the freight shipping charges. Anderson also admitted that he spent the funds that his customers sent to him on his own personal expenses.
As he acknowledged in the Plea Agreement, 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.
Anderson is scheduled to be sentenced on Aug. 22, 2013, at 2:30 p.m. Wire fraud carries a maximum penalty of up to 20 years in prison, a term of up to 3 years of supervised release following imprisonment, a $250,000 fine, and mandatory restitution. The Court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. The actual sentence will be determined by the United States District Court, guided by the advisory United States Sentencing Guidelines.
The guilty plea was announced by 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 is being represented by Assistant U.S. Attorney Scott A. Verseman.
Plea Agreement
Chicago Police Officer Convicted of Attempted Extortion for Steering Vehicle Tows from Accident Scenes to DriverRead the Press Release
CHICAGO — A Chicago police officer was convicted today of obtaining two extortion payments totaling $3,200 from a cooperating tow truck driver, in exchange for steering vehicle tows from accident scenes, during an undercover investigation. The defendant, DEAVALIN PAGE, who was assigned to the South Chicago District at the time, was relieved of his police powers and assigned to desk duty following the payments that occurred in late 2007 and early 2008. Page was convicted on two counts of attempted extortion by a federal jury that deliberated a little more than two hours this morning after being presented with video recordings and other evidence of the payments during a trial that began Monday in U.S. District Court.
Page, 46, of Chicago, an officer since 1995, faces a maximum penalty of 20 years in prison and a $250,000 fine on each count of attempted extortion. He remains free on bond pending sentencing, which U.S. District Judge John Darrah scheduled for 1 p.m. on Oct. 23.
Page was indicted last October as part of the Federal Bureau of Investigation’s Operation Tow Scam, a corruption probe of police officers who steered vehicle tows at accident scenes to favored tow drivers in exchange for extortion payments. Page is the eighth police officer to be convicted, along with four civilians – three of them tow truck drivers, and charges are pending against two additional police officers.
Evidence at the trial showed that Page obtained two payments from a cooperating tow truck driver, Brian Chandler, in exchange for steering him various tows. Chandler has pleaded guilty to wire fraud and bank larceny and is awaiting sentencing. The first payment, on Nov. 28, 2007, was $2,000 in the bathroom of a coffee shop at 79th Street and Stoney Island. The second payment, on Jan. 28, 2008, was $1,200 in the parking lot of a bank while Page was in his private vehicle. The latter payment, in part, was in exchange for towing three cars, at least one of which did not require towing, from an accident scene at 86th and Burnham involving a teenager who was driving her parents’ insured car.
The guilty verdict was announced today 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 the Federal Bureau of Investigation; and Garry F. McCarthy, Superintendent of the Chicago Police Department.
The government is being represented by Assistant U.S. Attorneys Michael Donovan and Steven Grimes.
Dolton Police Officer Convicted of Civil Rights Violations for Using Excessive Force with BatonRead the Press Release
CHICAGO — A south suburban Dolton police officer was convicted today of federal civil rights charges for using excessive force against two victims outside a Dolton nightclub in May 2009. The defendant, KEVIN FLETCHER, who is on administrative leave from the department, was found guilty 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. Jurors, who had the benefit of a video recording that captured most of the scene, deliberated less than an hour today after a trial that began Monday in U.S. District Court.
Fletcher, 35, of South Holland, faces a maximum penalty of 10 years in prison and a $250,000 fine on each count. He was ordered to return to court at 9:45 a.m. Monday for a hearing on the government’s motion to revoke his bond before U.S. District Judge Elaine Bucklo. Sentencing was set for 10:30 a.m. on Aug. 16.
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.
Assistant U.S. Attorneys Tinos Diamantatos and Megan Cunniff Church argued to the jury today 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.
Before trial, the government dismissed an obstruction of justice count that was contained in the November 2011 indictment against Fletcher.
The guilty verdict 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 Justice Department’s Civil Rights Division assisted in the investigation.