Northern District of Illinois
Press releases recorded for this federal judicial district.
East Chicago Detective Indicted in Alleged Private Security Ghost-Payroll SchemRead the Press Release
HAMMOND, IND. – An East Chicago, Ind., police detective was indicted on federal fraud charges for allegedly engaging in a ghost-payroll scheme for nearly three years while he worked three different part-time security jobs in addition to his full-time law enforcement duties. The defendant, ROBERT APONTE, was charged with six counts of mail fraud and six counts of wire fraud in an indictment returned by a federal grand jury in Hammond.
Aponte, 42, of Chesterton, Ind., is scheduled to be arraigned at 9 a.m. on Monday in U.S. District Court in Hammond. Aponte has been an East Chicago police officer for 19 years, and during that time, he also served approximately eight years as an officer with the High Intensity Drug Trafficking Area (HIDTA) task force in Crown Point, Ind.
The charges, returned yesterday, were announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois. The case was investigated by the Federal Bureau of Investigation. The U.S. Attorney’s Office in Chicago is handling the prosecution in the Northern District of Indiana.
According to the indictment, between January 2009 and September 2011, Aponte defrauded his employers by receiving inflated wages from his private security side jobs by submitting time sheets that falsely overstated the hours he had worked. While working full time for the East Chicago Police Department, Aponte also held three part-time jobs as a security officer: at the East Chicago Housing Authority’s West Calumet Housing Complex; at Trillium Properties’ Lakeside Gardens and Harborside Apartments; and at Safety Training and Tracing, controlling and directing traffic at the BP refinery in Whiting, Ind.
Aponte allegedly scheduled shifts at West Calumet that overlapped with his shifts at the two Trillium properties and the BP refinery. He then caused the East Chicago Housing Authority to pay him for security patrols at West Calumet, when, instead, he was actually patrolling at either Lakeside Gardens or Harborside Apartments, or controlling refinery traffic, the charges allege. In addition, Aponte allegedly inflated the hours he worked for the housing authority and Trillium when he actually went off-duty for lengthy periods during his shifts and departed his duty station before his shifts ended.
The government is being represented by Chicago Assistant U.S. Attorney Patrick Otlewski, who is serving as a Special Assistant U.S. Attorney in Northern Indiana.
Each count of mail or wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The public is reminded that an indictment is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Indictment
Suburban Man Sentenced to Five Years in Federal Prison for Receiving Child PornographyRead the Press Release
CHICAGO — A north suburban man was sentenced today to five years in federal prison for amassing a staggering collection of child pornography over a decade. The defendant, DANIEL BERMAN, 49, of Northbrook and formerly of Buffalo Grove, pleaded guilty last July to receiving child pornography, admitting that he had collected more than 100,000 illicit images.
Berman was formerly a police dispatcher in Northbrook and a paramedic in Northfield, however, his public safety employment played no role in the offense. There were no allegations or indications of any sexual contact with minors.
Berman was also fined $85,000 and placed on supervised release for 15 years following his prison term by U.S. District Judge Matthew Kennelly. Berman was ordered to surrender on May 14 and must serve at least 85 percent of his sentence before he is eligible for release. There is no parole in the federal prison system.
“The children depicted in these images experienced immeasurable harm,” Judge Kennelly said, adding “it’s anything other than a victimless crime.”
According to court documents, Berman was charged after U.S. Immigration and Customs Enforcement’s Homeland Security Investigations agents received information from Italian authorities that a website containing child pornography had been accessed by a computer with an internet address located in Buffalo Grove. Agents executed a search warrant at Berman’s Buffalo Grove home in May 2011 and seized computer equipment, including three external hard drives, 14 DVDs containing child pornography and 15 binders containing 611 categorized images of child pornography. The computer hard drives and DVDs were found to contain virtually countless illicit images and videos. Authorities tabulated approximately 100,000 images and videos with known victims identified by the National Center for Missing and Exploited Children.
In addition to the sheer volume of child pornography that Berman accumulated between 2001 and 2011, Assistant U.S. Attorney Andrianna D. Kastanek noted that he maintained his collection in a systematic and organized manner over a lengthy period of time.
In pleading guilty, Berman also admitted that he used peer-to-peer file sharing programs to acquire child pornography from other Internet users, who also had access to images and videos of child pornography stored in shared files on his computer.
The sentence was announced today by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Gary Hartwig, Special Agent-in-Charge of HSI in Chicago.
Rockford Woman Sentenced to 30 Months in Federal Prison for the Robbery of Associated Bank in RockfordRead the Press Release
ROCKFORD C A Rockford, Ill. woman was sentenced today in federal court for bank robbery. LATOYA SHAUNTA BURROWS, 32, of Rockford, was sentenced to 30 months in federal prison by U.S. District Judge Frederick J. Kapala for the robbery of Associated Bank, 612 North Main St., Rockford, Ill., on March 20, 2012.
Burrows pled guilty to the charge on Oct. 29, 2012. According to the written plea agreement, Burrows entered Associated Bank through the west doors at about 10:57 a.m. on March 20, 2012, wearing pink pants and a black t-shirt. Burrows immediately approached the teller counter, by passing the roped off waiting line, and handed the teller a folded piece of paper, which read: APut the money in the bag and nobody will get hurt.@ The teller removed cash from the teller drawer, but told Burrows that he did not have a bag to put the money into. Burrows took the money from the teller=s hand, stuffed the cash into her bra, and walked out of the bank. Shortly after the robbery, Burrows was arrested by the Rockford Police Department in the vicinity of the bank. She has been held in federal custody since her arrest.
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 Scott A. Verseman.
Suburban Chicago Lawyer Who Hosts National Radio Talk Show Indicted in $9.7 Million Mortgage Fraud SchemesRead the Press Release
CHICAGO — A suburban Chicago lawyer who hosts a national radio talk show was indicted on federal charges for allegedly engaging in two mortgage fraud schemes that defrauded lenders of a total of approximately $9.7 million. The defendant, WARREN BALLENTINE, allegedly schemed with others to obtain more than two dozen fraudulent mortgage loans and represented buyers at multiple closings, knowing that they were fraudulently qualified for loans to purchase homes in Chicago and various southern suburbs.
Ballentine, 41, of Durham, N. Car., and formerly of Country Club Hills, owns the Law Office of Warren Ballentine, LLC, in Country Club Hills. He was charged with two counts of bank fraud, two counts of making false statements to lenders, and one count each of mail fraud and wire fraud in a six-count indictment returned last Thursday by a federal grand jury. The indictment also seeks forfeiture of approximately $9,775,000 in alleged fraud proceeds.
Ballentine is scheduled to be arraigned at 9:30 a.m. on Feb. 5 before U.S. District Judge Matthew Kennelly in Federal Court in Chicago.
The indictment 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 Thomas P. Brady, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago.
According to the indictment, between December 2004 and February 2005, Ballentine schemed with others to fraudulently cause various lenders to make at least eight loans totaling approximately $3.6 million by making false statements in loan documents, including applications, HUD-1 settlement statements, and occupancy statements concerning the buyers’ intention to occupy the homes they purchased as a primary residence. Ballentine then represented buyers recruited by others at real estate closings, knowing that they had signed and submitted false documents and had been fraudulently qualified to purchase the properties in Chicago, Monee, Woodridge, and Mokena.
Between February 2005 and May 2006, Ballentine allegedly engaged in a similar, separate scheme with others to fraudulently cause various lenders to make at least 20 loans totaling approximately $6.1 million by making false statements in mortgage documents, including the buyers’ intention to occupy the homes as a primary residence. Ballentine also represented these buyers at closings, knowing that they had been fraudulently qualified for the loans based on false documents, including some that Ballentine advised them to sign at closings. These homes were scattered throughout Chicago and other suburbs, including Country Club Hills, Richton Park, and Markham.
Each count of the indictment carries a maximum penalty of 30 years in prison and a $1 million fine or, as an alternative, the Court may impose a fine of 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 statutes and the advisory United States Sentencing Guidelines.
The government is being represented by Assistant U.S. Attorney Jason Yonan.
The Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.StopFraud.gov.
Indictment
Former Chicago Police Officer Charged with Attempted Extortion of Tow Truck Driver and Selling Guns to FelonRead the Press Release
CHICAGO — A former Chicago police officer was charged today with attempting to extort a cash bribe to steer business to a tow truck owner and also with selling three firearms to the same towing operator, who is also a convicted felon. The defendant, ALI HALEEM, was charged as part of Operation Tow Scam, a federal investigation of past bribery and extortion involving police officers and towing operators in several Chicago police districts.
Haleem is the 11th Chicago police officer to be charged in the corruption probe since 2008. So far, seven officers and three civilians, including two tow truck drivers, have been convicted. Charges are pending against three other officers who were charged last fall.
Haleem, 45, of Chicago, a police officer from 1994 to 2012, was assigned to the 8th District, also known as Chicago Lawn. He was assigned to desk duty after being confronted by law enforcement authorities in 2008 until he resigned last September. He was charged with one count of attempted extortion and two counts of selling firearms to a convicted felon in a criminal information that was filed today. No date has been set yet for his arraignment in U.S. District Court.
The charges were 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 the Federal Bureau of Investigation; and Garry McCarthy, Superintendent of the Chicago Police Department.
According to the charges, between March 13 and 20, 2008, Haleem attempted to extort Individual A, who owned a towing business, and who unbeknownst to Haleem was cooperating with law enforcement at the time.
On Dec. 11, 2007, Haleem allegedly sold a .32 caliber semi-automatic pistol and a .25 caliber semi-automatic pistol to Individual A, knowing that Individual A was a convicted felon. On March 13, 2008, Haleem allegedly sold a 9 mm semi-automatic pistol to Individual A, knowing that Individual A was a convicted felon. The indictment seeks forfeiture of the three firearms.
The government is being represented by Assistant U.S. Attorney Michael Donovan.
Attempted extortion carries a maximum penalty of 20 years in prison, while each count of delivering a firearm to a convicted felon carries a maximum of 10 years in prison, and all three counts carry 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 public is reminded that the charges are not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Information
Disbarred Chicago Lawyer Surrenders After More Than Six Years on the Run; Allegedly Skipped Prison TermRead the Press Release
CHICAGO — A disbarred Chicago lawyer was indicted in a new federal case for allegedly failing to surrender to begin serving a federal fraud sentence in 2006. The defendant, STEVEN J. DELLA ROSE, surrendered to authorities in Puerto Vallarta, Mexico, on Dec. 11, 2012, more than six years after he was ordered to self-surrender to begin serving a 41-month sentence for defrauding a client of $64,000.
Della Rose, 61, formerly of Chicago, was charged with failing to surrender to begin serving a sentence in a single-count indictment returned yesterday by a federal grand jury. The indictment was announced today by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Darryl McPherson, United States Marshal for the Northern District of Illinois.
Della Rose was returned to the U.S. and immediately began serving his original sentence once he was in U.S. custody last month. No date has been set yet for his arraignment on the new charge in U.S. District Court.
According to the indictment, Della Rose was released on his own recognizance after he was charged with mail fraud in 2002. After a trial in March 2003, a jury found him guilty of defrauding a client of $64,000 in a worker’s compensation case. On Dec. 5, 2003, a judge sentenced him to serve 41 months in prison. Service of the sentence was delayed by two appeals, and on June 22, 2006, Della Rose was ordered to surrender to a designated U.S. Bureau of Prisons facility on Aug. 7, 2006. He allegedly failed to self-surrender at a prison on that date and he remained a fugitive until he turned himself in to authorities in Mexico last month.
The new charge carries a maximum penalty of 10 years in prison and a $250,000 fine. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines, and any new sentence must be served consecutively to the original sentence.
The Government is being represented in court by Assistant U.S. Attorney Clifford Histed.
The public is reminded that an indictment is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Indictment
David Coleman Headley Sentenced to 35 Years in Prison for Role in India and Denmark Terror PlotsRead the Press Release
CHICAGO — DAVID COLEMAN HEADLEY, a U.S. citizen partly of Pakistani descent, was sentenced today to 35 years in prison for a dozen federal terrorism crimes relating to his role in planning the November 2008 terrorist attacks in Mumbai, India and a subsequent proposed attack on a newspaper in Denmark. Headley pleaded guilty in March 2010 to all 12 counts that were brought against him following his arrest in October 2009 as he was about to leave the country. Immediately after his arrest, Headley began cooperating with authorities.
Headley, 52, was ordered to serve 35 years, followed by five years of supervised release by U.S. District Judge Harry Leinenweber. There is no federal parole and defendants must serve at least 85 percent of their sentence.
“Mr. Headley is a terrorist,” Judge Leinenweber said in imposing the sentence.
“There is little question that life imprisonment would be an appropriate punishment for Headley’s incredibly serious crimes but for the significant value provided by his immediate and extensive cooperation,” the government argued in seeking a sentence of 30 to 35 years.
In pleading guilty and later testifying for the government at the trial of a co-defendant, Headley admitted that he attended training camps in Pakistan operated by Lashkar e Tayyiba, a terrorist organization operating in that country, on five separate occasions between 2002 and 2005. In late 2005, Headley received instructions from three members of Lashkar to travel to India to conduct surveillance, which he did five times leading up to the Mumbai attacks in 2008 that killed approximately 164 people, including six Americans, and wounded hundreds more. Headley’s plea agreement in March 2010 stated that he “has provided substantial assistance to the criminal investigation, and also has provided information of significant intelligence value.”
In consideration of Headley’s past cooperation and anticipated future cooperation, which would include debriefings for the purpose of gathering intelligence and national security information, as well as testifying in any foreign judicial proceedings held in the United States by way of deposition, video-conferencing or letters rogatory, the Attorney General of the United States authorized the U.S. Attorney’s Office not to seek the death penalty.
“Today’s sentence is an important milestone in our continuing efforts to hold accountable those responsible for the Mumbai terrorist attacks and to achieve justice for the victims. Our investigations into Mumbai attacks and the Denmark terror plot are ongoing and active. I thank the many agents, analysts and prosecutors responsible for this investigation and prosecution,” said Lisa Monaco, Assistant Attorney General for National Security.
Headley was convicted of conspiracy to bomb public places in India; conspiracy to murder and maim persons in India; six counts of aiding and abetting the murder of U.S. citizens in India; conspiracy to provide material support to terrorism in India; conspiracy to murder and maim persons in Denmark; conspiracy to provide material support to terrorism in Denmark; and conspiracy to provide material support to Lashkar.
According to Headley’s guilty plea and testimony, he attended the following training camps operated by Lashkar: a three-week course starting in February 2002 that provided indoctrination on the merits of waging jihad; a three-week course starting in August 2002 that provided training in the use of weapons and grenades; a three-month course starting in April 2003 that taught close combat tactics, the use of weapons and grenades, and survival skills; a three-week course starting in August 2003 that taught counter-surveillance skills; and a three-month course starting in December 2003 that provided combat and tactical training.
Mumbai Terror Attacks
After receiving instructions in late 2005 to conduct surveillance in India, Headley changed his given name from Daood Gilani in February 2006 in Philadelphia to facilitate his activities on behalf of Lashkar by portraying himself in India as an American who was neither Muslim nor Pakistani. In the early summer of 2006, Headley and two Lashkar members discussed opening an immigration office in Mumbai as a cover for his surveillance activities.
Headley eventually made five extended trips to Mumbai — in September 2006, February and September 2007, and April and July 2008 — each time making videotapes of various potential targets, including those attacked in November 2008. Before each trip, Lashkar members and associates instructed Headley regarding specific locations where he was to conduct surveillance. After each trip, Headley traveled to Pakistan to meet with Lashkar members and associates, report on the results of his surveillance, and provide the surveillance videos.
Before the April 2008 surveillance trip, Headley and co-conspirators in Pakistan discussed potential landing sites in Mumbai for a team of attackers who would arrive by sea. Headley returned to Mumbai with a global positioning system device and took boat trips around the Mumbai harbor and entered various locations into the device.
Between Nov. 26 and 28, 2008, 10 attackers trained by Lashkar carried out multiple assaults with firearms, grenades and improvised explosive devices against multiple targets in Mumbai, including the Taj Mahal and Oberoi hotels, the Leopold Café, the Chabad House and the Chhatrapati Shivaji Terminus train station, each of which Headley had scouted in advance, killing approximately 164 victims and wounding hundreds more.
The six Americans killed during the siege were Ben Zion Chroman, Gavriel Holtzberg, Sandeep Jeswani, Alan Scherr, his daughter Naomi Scherr, and Aryeh Leibish Teitelbaum.
In March 2009, Headley made a sixth trip to India to conduct additional surveillance, including of the National Defense College in Delhi, and of Chabad Houses in several cities.
Denmark Terror Plot
Regarding the Denmark terror plot, Headley admitted and testified that in early November 2008, he was instructed by a Lashkar member in Pakistan, to conduct surveillance of the Copenhagen and Aarhus offices of the Danish newspaper Morgenavisen Jyllands-Posten in preparation for an attack in retaliation for the newspaper’s publication of cartoons depicting the Prophet Mohammed. After this meeting, Headley informed co-defendant Abdur Rehman Hashim Syed (Abdur Rehman), also known as “Pasha,” of his assignment. Abdur Rehman told Headley words to the effect that if Lashkar did not go through with the attack, Abdur Rehman knew someone who would. Although not identified by name at the time, Headley later learned this individual was co-defendant Ilyas Kashmiri. Abdur Rehman previously told Headley that he was working with Kashmiri and that Kashmiri was in direct contact with a senior leader of Al Qaeda.
While in Chicago in late December 2008 and early January 2009, Headley exchanged emails with Abdur Rehman to continue planning for the attack and to coordinate his travel to Denmark to conduct surveillance. In January 2009, at Lashkar’s direction, Headley traveled from Chicago to Copenhagen to conduct surveillance of the Jyllands-Posten newspaper offices in Copenhagen and Aarhus and scouted and videotaped the surrounding areas.
In late January 2009, Headley met separately with Abdur Rehman and a Lashkar member in Pakistan, discussed the planned attack on the newspaper, and provided them with videos of his surveillance. About the same time, Abdur Rehman provided Headley a video produced by the media wing of Al Qaeda in approximately August 2008, which claimed credit for the June 2008 attack on the Danish embassy in Islamabad, Pakistan, and called for further attacks against Danish interests to avenge the publication of the offending cartoons.
In February 2009, Headley and Abdur Rehman met with Kashmiri in the Waziristan region of Pakistan, where they discussed the video surveillance and ways to carry out the attack. Kashmiri told Headley that he could provide manpower for the operation and that Lashkar’s participation was not necessary. In March 2009, a Lashkar member advised Headley that Lashkar put the newspaper attack on hold because of pressure resulting from the Mumbai attacks. In May 2009, Headley and Abdur Rehman again met with Kashmiri in Waziristan. Kashmiri told Headley to meet with a European contact who could provide Headley with money, weapons and manpower for the Denmark attack, and relate Kashmiri’s instructions that this should be a suicide attack and the attackers should prepare martyrdom videos beforehand. Kashmiri also stated that the attackers should behead captives and throw their heads on to the street in Copenhagen to heighten the response from Danish authorities, and added that the “elders,” whom Headley understood to be Al Qaeda leadership, wanted the attack to happen as soon as possible.
In late July and early August 2009, Headley traveled from Chicago to various places in Europe, and met with and attempted to obtain assistance from Kashmiri’s contacts and, while in Copenhagen, he made approximately 13 additional surveillance videos. When he returned to the United States on Aug. 5, 2009, Headley falsely told a U.S. Customs and Border Protection inspector in Atlanta that he had visited Europe for business reasons. On Oct. 3, 2009, Headley was arrested at O’Hare International Airport in Chicago, intending ultimately to travel to Pakistan to deliver the approximately 13 surveillance videos to Abdur Rehman and Kashmiri.
One of Headley’s co-defendants, Tahawwur Rana, 52, of Chicago, was sentenced last week to 14 years in prison for conspiracy to provide material support to the Denmark terror plot and providing material support to Lashkar. Headley testified for the government at Rana’s trial in June 2011.
The government is being represented by Assistant U.S. Attorneys Daniel Collins and Sarah E. Streicker, with assistance from the Counterterrorism Section of the Justice Department’s National Security Division. Federal prosecutors in Los Angeles have worked on a broader investigation of the Mumbai attacks. The investigation was conducted by the Chicago Joint Terrorism Task Force, led by the Chicago Office of the Federal Bureau of Investigation, with assistance from FBI offices in Los Angeles, Philadelphia, and Washington, D.C., as well as both U.S. Customs and Border Protection and the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).
Three Chicago Men Indicted in Series of Violent Robberies of Retail Stores and Businesses Last Year in ChicagoRead the Press Release
CHICAGO — Three Chicago men were indicted on federal robbery conspiracy and other charges relating to series of a dozen armed hold-ups of retail stores and businesses last year in Chicago. In all, tens of thousands of dollars were taken in 12 robberies on the city’s northwest side between January and October 2012.
The defendants, ROBERT L. BERRIOS, 45; JULIO RODRIGUEZ, 31; and DAVID REVIS, 32, all of Chicago, were charged in a 19-count indictment that was returned yesterday by a federal grand jury. The charges were announced today by Gary S. Shapiro, Acting 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 Chicago Police Department assisted in the investigation.
The defendants, ROBERT L. BERRIOS, 45; JULIO RODRIGUEZ, 31; and DAVID REVIS, 32, all of Chicago, were charged in a 19-count indictment that was returned yesterday by a federal grand jury. The charges were announced today by Gary S. Shapiro, Acting 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 Chicago Police Department assisted in the investigation.
No date has been set yet for the defendants to be arraigned in U.S. District Court.
Berrios, also known as “Chazzo,” and Revis, aka “Red,” were arrested together on Nov. 6, 2012, as they were about to rob a currency exchange, according to court documents. Rodriguez, aka “Jelly,” was arrested on Dec. 17, 2012. All three were ordered detained in federal custody without bond.
As part of the conspiracy, the defendants allegedly identified commercial establishments as targets, obtained intelligence on the businesses before striking, and brandished firearms during the robberies. They allegedly agreed to, and did, physically restrain some employees of the victim businesses with zip ties, and concealed their identity by wearing masks and gloves.
The indictment seeks forfeiture of a .22 caliber semi-automatic handgun and 94 rounds of .22 caliber long rifle ammunition that were seized.
The indictment alleges the following robberies in which Berrios was charged alone or together with one of the co-defendants, as noted:
Jan 23, 2012 — Walgreens, 5140 W. Diversey;
July 1, 2012 — Walgreens, 5935 W. Addison;
July 28, 2012 — a currency exchange located at 2753 N. Ashland;
Aug. 15, 2012 — a currency exchange located at 2814 N. Milwaukee; Berrios and Revis;
Sept. 2, 2012 — a cellular telephone store located at 5355 W. Diversey;
Sept. 19, 2012 — a cellular telephone store located at 1552 W. Chicago; Berriois and Rodriguez;
Sept. 28, 2012 — a cellular telephone store located at 1958 W. Irving Park;
Oct. 2, 2012 — a cellular telephone store located at 4000 W. Fullerton; Berrios and Revis;
Oct. 13, 2012 — a cellular telephone store located at 3951 N. Kimball; Berrios and Rodriguez;
Oct. 16, 2012 — a cellular telephone store located at 3200 W. Armitage; Berrios and Rodriguez;
Oct. 22, 2012 — a cellular telephone store located at 3935 W. Belmont; Berrios and Rodriguez; and
Oct. 27, 2012 — a cellular telephone store located at 5355 W. Diversey.The robbery conspiracy count and each count of intestate robbery carry a maximum sentence of 20 years in prison. The felon-in-possession of a firearm or ammunition counts carry a maximum sentence of 10 years in prison, and brandishing a firearm during a violent crime carries a mandatory consecutive term of 7 years and a maximum of life in prison, 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.
The Government is being represented in court by Assistant U.S. Attorney Angel Krull.
The public is reminded that an indictment is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Indictment
32 Chicago Area Defendants Allegedly Obtained Nearly $874,000 in Fraudulent Unemployment Insurance BenefitsRead the Press Release
CHICAGO — Thirty-two Chicago area defendants have been charged separately with fraudulently obtaining thousands of dollars each in unemployment benefits from the Illinois Department of Employment Security (IDES), federal law enforcement officials announced today. In each case, the defendants allegedly lied about their eligibility for benefits by either falsely claiming to be unemployed or underreporting their income, and fraudulently obtained benefits ranging from $19,399 to $38,798. Altogether, the charges allege that IDES was defrauded out of nearly $874,000.
Twenty-seven of the defendants were charged with felony theft of federal funds, and five were charged with misdemeanor theft counts in 32 separate criminal informations or grand jury indictments filed as recently as yesterday in U.S. District Court in Chicago. According to the charges, each defendant applied for unemployment insurance benefits, falsely certified their continuing eligibility to receive payments, and fraudulently collected benefits to which they were not entitled while gainfully employed in various occupations.
In Illinois, unemployment insurance benefits typically are funded primarily by contributions from employers, with IDES’ administrative costs funded primarily by the federal government. During periods of high unemployment, however, the U.S. Treasury also funds unemployment payments.
The charges were announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois; James Vanderberg, Special Agent-in-Charge of the Chicago Regional Office of the U.S. Department of Labor Office of Inspector General; and Thomas P. Brady, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. The U.S. Postal Service Office of Inspector General assisted with the investigation of one defendant, a mail carrier. The federal agencies conducted the criminal investigations following referrals of suspected fraud from IDES.
“The unemployment insurance program is intended to provide financial assistance to workers who are unemployed due to no fault of their own. We will continue to work with our law enforcement partners to investigate those who allegedly engage in fraudulent schemes against this and other Department of Labor programs,” Mr. Vanderberg said.
“Unemployment insurance benefits provide assistance to families during difficult times. When a person is not entitled to use these benefits, and they mislead and misuse the system, they jeopardize the integrity of a program meant for honest and deserving families. There are consequences for committing unemployment insurance fraud and the U.S. Postal Inspection Service takes this alleged criminal activity very seriously,” Mr. Brady said.
In each case, restitution is mandatory and the felony theft counts carry a maximum penalty of 10 years in prison and a $250,000 fine, while the misdemeanor theft counts carry a maximum penalty of a year in prison and a $100,000 fine. The indictments and informations 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 defendants and alleged fraud amount in each case follow:
KANYA BOOSE, 37, of Chicago, $32,567; (AUSA Philip Fluhr, Jr.);
ANTOINETTE BURRELL, 63, of Chicago, $29,652 (AUSA Naana Frimpong);
ANTHONY COLLINS, 56, of Chicago, $25,280; (AUSA Raj Laud);
ERIC CRIBBS, 40, of Matteson, $20,423; (AUSA Katherine Sawyer);
JEREMIAH DOBINE, 32, of Chicago, $25,600 (AUSA Matthew Hiller);
MARIA GUZMAN, 48, of Chicago, $38,271 (AUSA Ryan Fayhee);
MANUSYA HEINRICHS, 44, of Buffalo Grove, $27,950, misdemeanor (AUSA Paul Tzur);
LASANDRA HERRON, 45, of Chicago, $20,200 (AUSA Boling Haxall);
NICOLE HOLCOMB, 30, of Chicago, $27,168 (AUSA Sawyer);
NICOLE HOWELL, 40, of Park Forest, $25,985 (AUSA Sawyer);
ALLEN JONES, 45, of Kankakee, $21,242. Jones was charged with, and pleaded guilty to, a misdemeanor, and is awaiting sentencing on March 26. (AUSA Nicole Kim);
THEARS JUDKINS IV, 29, of Chicago, $32,831 (AUSA Frimpong);
JOSEPH J. KUBAT III, 51, of Westmont, $28,222, misdemeanor (AUSA Kate Zell);
OLYMPIA LOVE, 31, of Flossmoor, $26,562 (AUSA Hiller);
JAMIE MASTERSON, 26, of Carpentersville, $27,049 (AUSA Tzur);
CHRISTOPHER McDONALD, 34, of Chicago, $20,740 (AUSA Laud);
DARLENE McGEE, 41, of Joliet, $23,560 (AUSA Haxall);
JOSEPH MORGANFIELD, 48, of Bolingbrook, $26,054 (AUSA Zell);
MANUEL NIEVES, 35, of LaGrange, $25,216 (AUSA Haxall);
THEAROS NOU, 40, of Chicago, $27,170 (AUSA Christopher Stetler);
TONY ROBINSON, 50, of Chicago, $25,935 (AUSA Hiller);
CAREY SILLS, 64, of Chicago, $36,615 (AUSA Fayhee);
COURTNEY SMITH, 41, of Lockport, $31,055 (AUSA Fluhr);
CURTIS SMITH, 58, of Chicago, $32,494 (AUSA Laud);
STEVEN STEINBERG, 61, of Buffalo Grove, $19,680. Steinberg was charged with, and pleaded guilty to, a misdemeanor. He paid full restitution and was sentenced to a year’s probation. (AUSA Stetler);
LAUREL STEVENS, 46, of Chicago, $23,392 (AUSA Stetler);
SHAWN SUTTON, 46, of Chicago, $24,257 (AUSA Fluhr);
MICHAEL THORNTON, 47, of Chicago, $35,697 (AUSA Frimpong);
GREGORY THRASHER, 36, of Calumet, $25,240 (AUSA Sawyer);
MARK VANDENBARK, 38, of Naperville, $19,399, misdemeanor (AUSA Zell);
NELDA WARD, 41, of Chicago, $38,798 (AUSA Bill Thomas); and
LORETTA WASHINGTON, 35, of Alsip, $29,685 (AUSA Fayhee).Former Energy Director for City of Rockford Indicted on Public Corruption ChargesRead the Press Release
ROCKFORD — The former Energy Director for the City of Rockford was indicted today on federal charges of public corruption. MARK E. BIXBY, 57, of Rockton, Ill. was charged with two counts of mail fraud, two counts of bribery, two counts of extortion, and one count of making false statements to the Federal Bureau of Investigation.
According to the indictment, Bixby, as the Energy Director, managed the City of Rockford’s Energy Division. The Energy Division operated the Illinois Home Weatherization Assistance Program in Winnebago and Boone counties. The purpose of the weatherization program was to help low-income residents save energy and money by providing services that included repairing and replacing heating systems, windows and doors. The indictment alleges that from at least December 2006 to March 2010, Bixby defrauded a heating contractor and a window contractor, both of whom did work under the weatherization program, out of at least $53,101.33 in funds and benefits. The indictment also charges that Bixby accepted bribes from the contractors and extorted the heating contractor out of $2,980.
According to the indictment, the funds and benefits that Bixby obtained from the two contractors via fraud, extortion, and bribes, included the following: (1) a new 2007 two-door, red convertible Pontiac Solstice; (2) a total of $18,440 in donations to “charities,” which were deposited into bank accounts controlled by Bixby and a family member, and used to pay their personal expenses; (3) $2,980 for the “sale” of cemetery plots by Bixby to the heating contractor, for which Bixby never turned over the titles or deeds to the heating contractor; and (4) a $2,000 “loan” from the window contractor, which Bixby never repaid.
Each count of mail fraud, bribery, and extortion carries a maximum penalty of 20 years in prison. The false statements count carries a maximum penalty of 5 years in prison. All of the counts carry a maximum fine of $250,000 fine, or an alternate fine totaling twice the loss or twice the gain derived from the offense, whichever is greater, and restitution. If convicted, the Court must impose a reasonable sentence under the advisory United States Sentencing Guidelines.
Bixby is scheduled to be arraigned on the indictment on Monday, January 28, 2013, at 11:15 a.m., at the federal courthouse in Rockford. The arraignment will be conducted by U.S. Magistrate Judge P. Michael Mahoney.
The indictment was announced by Gary S. Shapiro, Acting 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 Winnebago County State’s Attorney’s Office and the Rockford Police Department assisted in the investigation.
The government is represented by Assistant U.S. Attorney Scott A. Verseman.
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
Joliet Man Pleads Guilty to Setting Fire in 2007 to Home of Neighboring African-American FamilyRead the Press Release
CHICAGO — A Joliet man is facing an agreed maximum 10-year prison sentence after pleading guilty today to a federal civil rights crime for setting fire to the home of an African- American family on his street in 2007. The defendant, BRIAN JAMES MOUDRY, admitted 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 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 housing rights on the basis of race under the terms of an agreement that, if accepted, provide he will be sentenced to the maximum of 10 years on that count. U.S. District Judge Robert Gettleman scheduled sentencing for 10 a.m. on April 26.
Moudry has remained in federal custody without bond since he was arrested on May 30, 2012.
“One of our most important responsibilities is to protect members of all racial and ethnic groups from intimidation and violence,” said Gary S. Shapiro, Acting United States Attorney for 2 the Northern District of Illinois, who announced the guilty plea with Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
According to the plea agreement, Moudry was upset that an African-American family rented a house at 318 South Reed St., 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 is being represented by Assistant U.S. Attorneys Nancy DePodesta and Steven Dollear.
Plea Agreement
Former Chicago Man Sentenced to 12 Years in Prison for $8 Million Investment Fraud and $1.5 Million Tax FraudRead the Press Release
CHICAGO — A former Chicago man was taken into custody after he was sentenced today to 12 years in federal prison for an investment and tax fraud scheme in which he swindled 57 investors, some of whom he had purported to befriend, of just under $8 million and failed to pay nearly $1.5 million in federal income taxes. The defendant, RANDY M. CHO, falsely caused investors to believe they were buying discounted shares of stock in well-known companies. He then misused a significant portion of the $9.6 million he raised from investors for his own personal benefit, while using approximately $1.68 million he fraudulently obtained from new investors to make Ponzi-type payments to previous investors. Cho pleaded guilty to wire fraud and tax fraud last August, resolving an indictment that was returned in December 2010 in U.S. District Court.
Cho, 41, of Seattle, and formerly of Chicago and Newton, Mass., was ordered to pay $7,995,707 in restitution to investors, and $1,496,339 to the Internal Revenue Service by U.S. District Judge James Zagel, who ordered Cho to begin serving his sentence immediately. Cho was also placed on three years of supervised release following his sentence.
In imposing sentence, Judge Zagel noted the unlikelihood that victims will receive any restitution. The judge heard from two investors, and received letters from numerous others, who said that Cho’s crimes had irreparably damaged their lives and retirement security. Cho used the misappropriated funds for himself and his business by making payments for his home and furnishings, automobiles, and jewelry, among other things. He never invested in any shares of stock on behalf of any of his investors.
The sentence was announced by Gary S. Shapiro, Acting 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 Thomas Jankowski, Acting Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.
“There was no good reason for this fraud, and the defendant, who was skilled in the world of finances, could have gotten a legitimate job,” the government argued at sentencing. “The defendant caused enormous pain and suffering to many of the victims. Cho took life savings, retirement funds, business funds, and other money that victims could not afford to lose.”
Cho held himself out as a self-employed securities trader, who, from approximately 2001 to 2009, falsely represented that he would purchase at least $9.6 million in shares of stock in well-known companies for U.S. and foreign investors, including some in the Chicago area. Cho claimed to have access to sell stock in these companies, which he offered as part of a “friends and family” investment pool, often in anticipation of purported initial public offerings. Cho misrepresented that he had a special relationship with Goldman Sachs and was able to purchase discounted shares, and further misrepresented the timing or existence of public offerings, the potential profitability and safety of investments, and the use of the funds obtained from investors.
At various times, Cho falsely told investors that he could purchase specially-discounted shares of companies, including AOL/Time Warner, Inc., Google, Inc., Rosetta Stone, Inc., and Facebook, Inc., prior to their initial public offerings. For example, Cho falsely lulled an investor into believing that the victim had made a $1 million profit by investing in shares of Google stock when no such investment or profit existed.
During the investment fraud scheme, Cho failed to report approximately $4.8 million of additional income between 2004 and 2007, resulting in an underpayment of just under $1.5 million in federal income taxes.
The government was represented by Assistant U.S. Attorney Jacqueline Stern. The U.S. Securities and Exchange Commission, which brought a civil enforcement lawsuit against Cho, assisted in the investigation.
The Financial Fraud Enforcement Task Force 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.
Tahawwur Rana Sentenced to 14 Years in Prison for Supporting Pakistani Terror Group and Terror Plot in DenmarkRead the Press Release
CHICAGO — A Pakistani native who operated a Chicago-based immigration business was sentenced today to 14 years in prison for conspiracy to provide material support to a terrorist plot in Denmark and providing material support to Lashkar e Tayyiba, a terrorist organization operating in Pakistan that was responsible for the November 2008 attacks in Mumbai, India. The defendant, TAHAWWUR HUSSAIN RANA, was convicted of the charges on June 9, 2011, following a three-week trial in U.S. District Court.
Rana, 52, a Canadian citizen, was ordered to serve 14 years, followed by five years of supervised release by U.S. District Judge Harry Leinenweber. “This certainly was a dastardly plot,” Judge Leinenweber said in imposing the sentence.
Rana was convicted of conspiracy to provide material support to a plot from October 2008 to October 2009 to commit murder in Denmark, including a horrific plan to behead employees of Morgenavisen Jyllands-Posten, a Danish newspaper, and throw their heads on to the street in Copenhagen, as well as providing material support, from late 2005 to October 2009, to Lashkar, a militant jihadist organization operating in Pakistan. Lashkar planned and carried out the November 2008 attacks in Mumbai that killed more than 160 people, including six Americans, before initially planning the terrorist attack in Denmark in retaliation for the newspaper’s publication of cartoons depicting the Prophet Mohammed. Rana was acquitted of conspiracy to provide material support to the Mumbai attacks.
“This serious prison sentence should go a long way towards convincing would-be terrorists that they can’t hide behind the scenes, lend support to the violent aims of terrorist organizations, and escape detection and punishment,” said Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois.
“Today’s sentence demonstrates that, just as vigorously as we pursue terrorists and their organizations, we will also pursue those who facilitate their violent plots from a safe distance. As established at trial, Tahawwur Rana provided critical support to David Headley and other terrorists from his base in the United States, knowing they were plotting attacks overseas. I thank the many agents, analysts and prosecutors who helped bring about today’s result,” said Lisa Monaco, Assistant Attorney General for National Security.
“It is my hope that the judge’s decision today sends a message to those who plot attacks and those who provide the support to make the plots possible, both here and abroad, that you will be held accountable for your actions. Our mission, detecting and preventing terrorist acts and eliminating the enabling support provided by terrorist sympathizers, remains our top priority,” said Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
Rana is one of two defendants to be convicted, among a total of eight defendants who have been indicted, in this case since late 2009. Co-defendant David Coleman Headley, 52, pleaded guilty in March 2010 to 12 terrorism charges, including aiding and abetting the murders of the six Americans in Mumbai. Headley, who is scheduled to be sentenced next Thursday, has cooperated with the Government since he was arrested in October 2009, and testified as a Government witness at Rana’s trial. He is facing a maximum of life in prison.
The evidence at Rana’s trial showed that he knew he was assisting a terrorist organization and murderers, knew their violent goals, and readily agreed to play an essential role in achieving their aims. The government contended that Rana knew the objective of his co-conspirators was to retaliate against and influence the Danish government for its perceived role in the publication of the Prophet Mohammed cartoons, and he knew that the goal of Lashkar was to retaliate against and influence the Indian and Danish governments and intended that the support he provided – enabling Headley’s activities – would be used toward that purpose.
In a post-arrest statement in October 2009, Rana admitted knowing that Lashkar was a terrorist organization and that Headley had attended training camps that Lashkar operated in Pakistan. Headley testified that he attended the training camps on five separate occasions between 2002 and 2005. In late 2005, Headley received instructions from members of Lashkar to travel to India to conduct surveillance, which he did five times leading up to the Mumbai attacks three years later that killed more than 160 people and wounded hundreds more.
In the early summer of 2006, Headley and two Lashkar members discussed opening an immigration office in Mumbai as a cover for his surveillance activities. Headley testified that he traveled to Chicago and advised Rana, his long-time friend since the time they attended high school together in Pakistan, of his assignment to scout potential targets in India. Headley obtained approval from Rana, who owned First World Immigration Services in Chicago and elsewhere, to open a First World office in Mumbai as cover for his activities. Rana directed an individual associated with First World to prepare documents supporting Headley’s cover story, and advised Headley how to obtain a visa for travel to India, according to Headley’s testimony, as well as emails and other documents that corroborated his account.
Between Nov. 26-28, 2008, 10 attackers trained by Lashkar carried out multiple assaults with firearms, grenades and improvised explosive devices against multiple targets in Mumbai, some of which Headley had scouted in advance.
Regarding the Denmark terror plot, Headley testified that in the fall of 2008, he met with a Lashkar member in Karachi, Pakistan, and was instructed to conduct surveillance of the Jyllands-Posten newspaper offices in Copenhagen and Aarhus.
In late 2008 and early 2009, after reviewing with Rana how he had performed surveillance of the targets attacked in Mumbai, Headley testified that he advised Rana of the planned attack in Denmark and his intended travel there to conduct surveillance of the newspaper’s facilities. Headley obtained Rana’s approval and assistance to identify himself as a representative of First World and gain access to the newspaper’s offices by falsely expressing interest in placing advertising for First World in the newspaper. Headley and Rana caused business cards to be made that identified Headley as a representative of the Immigration Law Center, the business name of First World, according to the evidence at trial.
The trial evidence also included transcripts of recorded conversations, including those in September 2009, when Headley and Rana spoke about reports that a co-defendant, Ilyas Kashmiri, an alleged Pakistani terrorist leader, had been killed and the implications of his possible death for the plan to attack the newspaper. In other conversations, Rana told Headley that the attackers involved in the Mumbai attacks should receive Pakistan’s highest posthumous military honors. In the late summer of 2009, Rana and Headley agreed that funds that had been provided to Rana could be used to fund Headley’s work in Denmark, and the evidence showed that Rana, pretended to be Headley in sending an email to the Danish newspaper.
The government is being represented by Assistant U.S. Attorneys Daniel Collins and Sarah E. Streicker, with assistance from the Counterterrorism Section of the Justice Department’s National Security Division. Federal prosecutors in Los Angeles have worked on a broader investigation of the Mumbai attacks. The investigation has been conducted by the Chicago Joint Terrorism Task Force, led by the Chicago Office of the Federal Bureau of Investigation, with assistance from FBI offices in Los Angeles, New York and Washington, D.C., as well as both U.S. Customs and Border Protection and the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).
North Suburban Man Sentenced to 10 Years in Prison for $4 Million Fraud of 50 Investors in Sleep Disorder BusinessesRead the Press Release
CHICAGO — A north suburban man with a history of multiple bankruptcies, financial schemes and civil lawsuits that twice resulted in contempt findings, was sentenced today to 10 years in federal prison for fraudulently obtaining more than $4 million from 51 investors in a now-defunct sleep disorder businesses that he operated in Northbrook. The defendant, KENNTH A. DACHMAN, pleaded guilty without a plea agreement last October to 11 counts of wire fraud. The government established that Dachman misappropriated at least $2 million of comingled funds from investors and the companies to benefit himself and his family.
Dachman, 52, of Glencoe and formerly of Lake Forest, was ordered to pay both restitution and forfeiture totaling just over $4 million each by U.S. District Judge James Zagel, who set a hearing for Jan. 30 to decide when Dachman will begin serving his sentence. Judge Zagel also placed Dachman on three years of supervised release following his sentence.
“His business was not sleep apnea but putting money in his pocket,” Judge Zagel said in imposing the sentence. Three investors spoke at the sentencing hearing and told the judge that Dachman’s crimes had seriously affected their lives and retirement security. The sentence was announced by Gary S. Shapiro, Acting 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.
Dachman operated Central Sleep Diagnostics, LLC, which purported to treat sleep apnea and sleep-related illnesses by conducting diagnostic studies in a patient’s own home instead of a hospital or clinic, and Advanced Sleep Devices, LLC, which purported to sell equipment used to treat sleep disorders to patients. He also operated Key Partners, LLC, to handle marketing for both businesses.
Between June 2008 and September 2010, Dachman fraudulently obtained funds from investors by misrepresenting the use of the funds, the expected return on and risks involved in investments, his business background, the financial condition of Central Sleep and Advanced Sleep and the status of investments. Instead of using the funds to operate the businesses as he promised, Dachman used a significant amount of the investors’ funds to purchase a two-acre mansion in Lake Forest, to operate a tattoo parlor in Chicago that was co-owned by his son-inlaw, to purchase vacations and cruises for himself and his family to Italy, Nevada, Florida and Alaska, to purchase a new sport utility vehicle, to fund personal gambling in Las Vegas and stock trading, and to purchase rare books and antiques.
According to the indictment, Dachman and an individual he retained as director of investor relations offered and sold at least three forms of investments in Central Sleep and Advanced Sleep to the public: an “Assignment of Units” agreement which gave investors units or shares in Central Sleep or Advanced Sleep; a “Convertible Debt Agreement” in which Dachman personally guaranteed he would repay investors’ principal, as well as monthly payments equal to between 5 and 24 percent annually; and an agreement which enabled investors to purchase various sleep-related equipment and lease it back to Central Sleep Diagnostics. Dachman told prospective investors and investors that the funds he raised would be used to purchase sleep-related equipment, to rent office space, to set up the companies’ offices, to hire and pay administrative personnel, and to retain and pay physicians to review sleep diagnostic studies.
From July 2008 through January 2009, Dachman falsely represented to the first 15 investors in Central Sleep that their combined funds of approximately $1.4 million would be used to open and operate Central Sleep. In fact, he intended to and did use almost $1 million of these funds for his own use and benefit, including more than $200,000 for personal stock trading, more than $180,000 to operate the tattoo parlor, Windy City Ink, and more than $160,000 to fund checks made payable to himself and his wife, even though at the time, Central Sleep had not received any income from the operation of its business.
Dachman personally guaranteed to repay certain investors’ principal without disclosing that he had almost no assets to fund the guarantees and that he had declared personal bankruptcy on seven prior occasions. Dachman falsely told victims that he had a PhD from Northwestern University, and that he had invested his own funds in Central Sleep, knowing that he had not done so. To induce additional investments as late as March 2010, Dachman represented to investors that Central Sleep was a successful company and was “on pace to be the most important and largest sleep diagnostic firm in the world,” despite knowing that he was draining the financially-troubled business of previous investor funds.
The government is being represented by Assistant U.S. Attorney Sunil Harjani. The U.S. Securities and Exchange Commission assisted the investigation conducted by the FBI.
The Financial Fraud Enforcement Task Force 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 Owner of Commercial Mortgage and Finance Company Convicted of FraudRead the Press Release
ROCKFORD — Anthony F. D’Agostino, 79, the former owner, CEO and President of Commercial Mortgage and Finance Co., in Rockford, was found guilty today by U.S. District Judge Frederick J. Kapala on seventeen counts of mail fraud, one count of wire fraud, and one count of securities fraud, in connection with a scheme to defraud investors in Commercial Mortgage. The decision was filed today in U.S. District Court in Rockford, following a six-day bench trial in September 2013.
According to the decision, D’Agostino raised capital for his business by selling instruments known as Promissory Notes and Certificates of Participation to investors. The evidence showed that D’Agostino concealed from the investors the fact that Commercial Mortgage had a negative net worth that steadily increased during the years that D’Agostino owned the company. Specifically, by year-end 2003, when Commercial Mortgage’s net worth had fallen to -$12,860,653 and it had been six years since Commercial Mortgage had made a profit, it became clear to D’Agostino that Commercial might not recover and D’Agostino engaged in a scheme to defraud investors by utilizing Commercial Mortgage’s long-standing good will and reputation in order to obtain and retain money from investors. From the end of 2003 through October 8, 2008, D’Agostino’s fraud scheme exposed the investors to losses of more than $20 million.
Judge Kapala found that D’Agostino made specific false statements to several of the investors. Specifically, defendant told Commercial Mortgage customers that Commercial Mortgage was “doing well,” “doing great,” “very fine,” or “wonderful.” According to the decision, D’Agostino made these statements about Commercial Mortgage’s financial circumstances and the statements were false.
No sentencing date has been set at this time. Each count of mail fraud and wire fraud carries a maximum penalty of 20 years in prison, and a maximum fine of $250,000, or an alternate fine totaling twice the loss or twice the gain derived from the offense, whichever is greater. Securities fraud carries a maximum penalty of up to 5 years in prison, and fine of up to $10,000. The Court must impose a reasonable sentence under the advisory United States Sentencing Guidelines, as well as restitution.
The conviction was announced today by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of investigation; and Illinois Secretary of State Jesse White.
The government is being represented by Assistant U.S. Attorneys Scott A. Verseman and Scott R. Paccagnini.
Former Law Firm IT Chief and Contract Employee Vendor Indicted in $4.8 Million Billing Fraud and Kick-back SchemeRead the Press Release
CHICAGO — The former chief information officer of a Chicago-based international law firm who was charged previously, and the president of a company that provided contract technology workers who was charged for the first time and arrested today, were indicted for allegedly engaging in a fraudulent billing and kickback scheme that netted each of them more than $2 million. NICHOLAS DEMARS, the president of NS Mater, a defunct firm that provided contract employees and technology to assist in office automation, web and database development, and general information technology, was arrested today and indicted with DAVID TRESCH, the former law firm officer who supervised the work and billing related to the contract employees.
For the first six years of the scheme that began in 2004, Demars allegedly paid Tresch a portion of the profits that NS Mater made from work its contract employees performed at the victim law firm. During the last two years ending in June 2012, Tresch allegedly received kickbacks totaling nearly all of the false billings that the law firm paid NS Mater for work that was not performed.
Tresch, 51, and Demars, 57, both of Itasca, were each charged with 10 counts of mail fraud in an indictment that was returned by a federal grand jury yesterday and unsealed today after Demars was arrested. Demars was released on bond after appearing this morning before U.S. Magistrate Judge Sidney Schenkier in U.S. District Court. Tresch, who was released on bond after he was arrested in August, will be arraigned at a later date in Federal Court.
The indictment also seeks forfeiture of $4,819,253 representing the combined net proceeds that both men allegedly obtained from the scheme, as well as their respective homes, Demars’ condominium in Chicago, and a residence in Lake Geneva, Wis., and more than $225,000 that was seized from Tresch along with his camping trailer, a van, and a luxury automobile.
The charges were announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Thomas R. Trautmann, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
According to the initial complaint, the victim law firm, which was not identified by name, reported Tresch’s alleged criminal activity and cooperated in the investigation. The firm, which has offices worldwide, hired Tresch in May 2004 and he held several positions in the information technology department before he was promoted in July 2011 to chief information officer.
The indictment alleges that between November 2004 and March 2011, the law firm issued checks totaling approximately $7.68 million to NS Mater, and Demars, in turn, kicked back $1.14 million to Tresch. In 2004 and 2005, Demars allegedly paid kickbacks directly to Tresch after paying legitimate NS Mater contract employees and payroll administrators for work they had performed for the law firm. Beginning in April 2006, allegedly to conceal the kickbacks, Demars began paying Tresch by issuing checks to Tresch’s wife and treating her as an employee of NS Mater, even though both defendants knew that she was not an employee and had not performed any work, according to the indictment. Tresch’s wife is not a defendant.
Subsequently, in late 2010, Tresch learned that that the law firm would soon stop using NS Mater contract employees, and, in February 2011, the firm directed Tresch to no longer permit NS Mater to provide personnel for the information technology department. Between November 2011 and June 2012, Demars allegedly continued submitting invoices to Tresch totaling more than $1.1 million, falsely representing that NS Mater performed work that both defendants knew was not performed. Tresch submitted the false invoices, which the firm paid, and of the $1.1 million paid during this period, Demars kicked back approximately $970,000 to Tresch, while retaining the remainder for himself, the indictment alleges.
Each count of mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory. The Court may impose an alternative fine totaling twice the loss to the victim or twice the gain to the defendant, whichever is greater. 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 Terra Reynolds.
The public is reminded that an indictment is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Indictment
Chicago Man Pleads Guilty to Bringing Minor to Illinois for Prostitution; Admits Forced Sex-Trafficking of Four VictimsRead the Press Release
CHICAGO — A Chicago man is facing a mandatory minimum of 10 years and a maximum sentence of life in prison after pleading guilty today to transporting a minor from Wisconsin to Illinois for prostitution. The defendant, CARL BRANDON SMITH, also admitted that he engaged in forced sex-trafficking of the victim, as well as a second minor and two young adult women. Between 2010 and early 2012, Smith forced his victims to engage in commercial sex acts, used physical violence, and threatened to kill them if they ever left him. The guilty plea was announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Thomas R. Trautmann, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
Smith, also known as “Moo,” 25, of Chicago, is scheduled to be sentenced on April 5 by U.S. District Judge Amy St. Eve. Smith has remained in federal custody since he was arrested last April last and charged with two counts of sex-trafficking of a minor and by force, two counts of sex-trafficking by force, and one count of transporting a minor across state lines to engage in prostitution.
According to a plea agreement, Smith met Victim B in December 2010 and began contacting her via phone, text, and social media, asking her to move to Chicago, intending that she be his “girlfriend” and also engage in prostitution. In February 2011, Smith drove from Chicago to Victim B’s residence in Wisconsin, and then drove her from Wisconsin to his apartment in Chicago, acknowledging that she was under 18 at the time.
Once in Chicago, Smith “dated” Victim B for approximately a week before Victim B began working as a prostitute under his employ. Between February and July 2011, Victim B engaged in commercial sex acts at Smith’s direction. Smith acted as Victim B’s pimp, advertised her for commercial sex on internet sites, and instructed her to have sex with customers in his apartment and in area motels. Victim B had sex with numerous men per week and gave a portion of the money she earned to Smith.
As part of the guilty plea, Smith stipulated that he acted as a pimp for Victim A, also a minor, and forced her to engage in prostitution during 2010. Smith inflicted physical violence on Victim A when she gave him “attitude” or when she indicated that she no longer wanted to work as a prostitute. On one occasion, Smith beat Victim A so severely that one eye swelled shut.
Similarly, Smith stipulated to using and threatening violence against both Victims C and D, both adults, while acting as their pimp and forcing them to engage in commercial sex acts in 2011 and early 2012.
The DuPage County Sheriff’s Office, the Naperville and Aurora police departments, and the Cook County Human Trafficking Task Force assisted in the investigation. The government is being represented by Assistant U.S. Attorney Christopher Grohman and Felicia Manno Alesia.
Plea Agreement
Rockford Man Sentenced to 10 Years in Federal Prison on Gun ChargeRead the Press Release
ROCKFORD — A Rockford, Ill. man was sentenced yesterday in federal court before U.S. District Judge Frederick J. Kapala to 10 years in prison without parole, to be followed by 3 years of supervised release, for illegally possessing a firearm as a convicted felon. NICHOLAS STENSON, 29, was convicted on October 3, 2012, after a jury trial in Rockford.
According to the indictment and evidence at trial, on July 10, 2011, shortly after 2:00 am, members of the Rockford Police Department's M3 Unit observed Stenson on Rock Street standing next to a green Pontiac. When officers parked their squad car near the Pontiac and activated the emergency lights, Stenson ran to the back of the Pontiac, reached into his waistband and threw a gun underneath the Pontiac. Officers recovered the gun thrown by Stenson - a black Colt .45 handgun loaded with six rounds of Blazer .45 caliber ammunition.
Stenson was originally charged in state court and was transferred to federal court where he was charged under tough federal firearms laws as part of the Project Safe Neighborhoods program. Project Safe Neighborhoods is an intensive, cooperative effort between local, state, and federal law enforcement to attack gun crimes. The cornerstone of the program is that every defendant committing an offense involving a gun will be reviewed for possible federal prosecution in order to obtain the harshest penalties for the worst offenders. Additional information about Project Safe Neighborhoods may be found at www.psn.gov.
The sentencing was announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois; W. Larry Ford, Special Agent-in-Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives; Joseph Bruscato, Winnebago County State's Attorney; and Chet Epperson, Chief of the Rockford Police Department.
The government was represented by Assistant U.S. Attorneys Scott R. Paccagnini and Monica V. Mallory.
Doctor and Wife Guilty of Tax Evasion; Millions of Amphetamine-based Pills Illegally Dispensed at Area Weight Loss ClinicsRead the Press Release
HAMMOND, Ind. — A physician who owned weight loss clinics in northwest Indiana and south suburban Chicago pleaded guilty to illegally dispensing millions of pills containing amphetamine-based controlled substances to patients, and he and his wife also pleaded guilty to federal tax evasion relating to their operation of the clinics, federal law enforcement officials announced today. 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, also agreed to forfeiture and restitution totaling nearly $5.2 million.
Rakesh Anand, 57, a licensed physician in Indiana and Illinois, and Meena Anand, 53, both of Tinley Park, entered their guilty pleas yesterday before U.S. District Judge Joseph S. Van Bokkelen in Federal Court in Hammond. The U.S. Attorney’s Office in Chicago is handling the prosecution in the Northern District of Indiana. Judge Van Bokkelen accepted the couple’s guilty pleas to tax evasion and deferred accepting Rakesh Anand’s guilty plea to conspiracy to distribute controlled substances until sentencing, which was scheduled for March 20. The defendants remain free on bond while awaiting sentencing, but the judge yesterday added electronic monitoring to the conditions of Rakesh Anand’s release.
Rakesh Anand’s plea agreement contemplates an advisory federal sentencing guidelines range of 46 to 57 months in prison, while Meena Anand’s plea agreement contemplates a range of 30 to 37 months. Tax evasion carries a maximum penalty of five years in prison and a $250,000 fine, as well as mandatory costs of prosecution. Defendants convicted of tax offenses also remain civilly liable to the Government for any and all back taxes and a civil fraud penalty of up to 75 percent of the underpayment plus interest. Rakesh Anand also faces a maximum of 10 years in prison and a $500,000 fine for conspiracy to distribute controlled substances. On both counts, the court may impose an alternative fine totaling twice the gross gain or loss resulting from the crimes, whichever is greater.
As part of their plea agreements, the Anands agreed to pay restitution of $745,872 to the Internal Revenue Service 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, and 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 is awaiting sentencing after pleading guilty in Federal Court in Chicago to conspiracy to distribute controlled substances.)
According to Rakesh Anand’s plea agreement, between 2002 and February 2010, he 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 guilty pleas were announced by Gary S. Shapiro, Acting 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.
Meena Anand Plea Agreement
Rakesh Anand Plea AgreementTwelve Defendants Indicted for Alleged Roles in Scheme to Obtain More Than $1 Million from Counterfeit ChecksRead the Press Release
CHICAGO — Twelve Chicago and area defendants were indicted on federal bank fraud charges, and five of them were also charged with aggravated identity theft, for their alleged roles in a scheme to obtain more than $1 million from counterfeit personal and corporate checks, and actually obtaining more than $700,000, by cashing the bogus checks at various local banks and sharing the proceeds among themselves.
The defendants were charged in a 37-count federal grand jury indictment that was unsealed last Thursday after the lead defendant, KENNTH PEARSON, was arrested by U.S. Secret Service agents who conducted the investigation with assistance from the Downers Grove Police Department and other suburban police departments. Pearson, 39, of Chicago, was charged with 32 counts of bank fraud and one count of aggravated identity theft. He remains in federal custody pending a detention hearing at 10:30 a.m. tomorrow before U.S. District Judge Virginia Kendall.
A co-defendant, DAVID KOTLICKY, 23, of Downers Grove, was ordered detained without bond after he was arrested on Nov. 27, 2012, on a criminal complaint, which preceded the indictment that was returned under seal last month charging Kotlicky, Pearson and 10 other defendants. Defendant ANTIONE MAHONE, 24, of Chicago, was arrested on Friday and released on bond, and an arrest warrant is outstanding for ERIC JACKSON, 24, of Chicago.
The eight remaining defendants will be arraigned on various dates this month before Judge Kendall in Federal Court.
The indictment was announced today by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Frank Benedetto, Special Agent-in-Charge of the Chicago office of the Secret Service.
According to the indictment, between August 2010 and December 2012, the defendants created hundreds of counterfeit checks, with face values totaling more than $1 million, presented them to various banks to be cashed, usually in amounts of approximately $2,500, and kept and shared the proceeds.
Defendant LATRESE LESHORE, 30, of Chicago, through her employment processing individuals’ health insurance applications and payments, allegedly stole bank customers’ authentic checks and account information by making copies at work, and providing them to a codefendant in exchange for cash, knowing that the victims’ accounts would be compromised.
The indictment alleges that Pearson, Kotlicky and Jackson then used the stolen checks and account information to create counterfeit checks. Pearson and Kotlicky then made and caused others to falsely make changes to the bank customers’ account information so that they could monitor the customers’ accounts, intercept bank employees’ questions about account activity, and prevent immediate detection of the alleged scheme.
Pearson, Kotlicky, Jackson, STACEY SANDERS, 38, of Chicago, and DEANGRIA WELLS, 27, of Chicago, allegedly recruited runners to take the counterfeit checks to branches of American Chartered Bank, Chase Bank, Citibank, Fifth Third Bank, First Midwest Bank, BMO Harris Bank, and U.S. Bank to be cashed. Those same defendants then allegedly collected proceeds of the cashed counterfeit checks from runners, paid the runners a fee for cashing the checks, and distributed the remaining proceeds to Pearson.
Also indicted were: ROGER ELAM, 48; his sister, ROSIE ELAM, 59; LYNADA MAHONE, 34, (Antione Mahone’s cousin); TOVISE STONE, 34; and STARLINDA STUBBS, 21, all of Chicago.
All 12 defendants face at least one or more counts of bank fraud. In addition, Pearson, Kotlicky, Jackson, Sanders, and Leshore were each charged with one count of aggravated identity theft, and Kotlicky alone was charged with one count of passing $80 in counterfeit currency. The indictment also seeks forfeiture of approximately $1 million from Pearson and Kotlicky.
Each count of bank fraud carries a maximum penalty of 30 years in prison and a $1 million fine. Aggravated identity theft carries a mandatory consecutive sentence of two years in prison and a maximum $250,000 fine, and passing counterfeit currency carries a maximum of 20 years in prison and a $250,000 fine. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The government is being represented by Assistant U.S. Attorney Julie Porter.
The public is reminded that an indictment is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Indictment
Rockford, Illinois Woman Admits to Embezzling Almost $200,000 from Local Labor UnionRead the Press Release
ROCKFORD — A Rockford, Ill. woman pleaded guilty today in federal court before U.S. District Judge Frederick J. Kapala to having embezzled almost $200,000 from a local labor union. GRACE RATHKE, 57, Rockford, pleaded guilty to embezzling monies and funds belonging to Local 32 of the Laborers International Union of North America.
Rathke had been indicted on August 2, 2011, and charged with embezzling approximately $200,000 from Local 32. According to the written plea agreement, Rathke admitted that beginning in November of 2004 and continuing until March 2009, she had embezzled over $190,000 from Local 32, including $1,352 on September 25, 2006. In her plea agreement, Rathke admitted that she had been the office manager of Local 32. Members and apprentices of Local 32 had paid their dues and initiation fees to Local 32. As the office manager, Rathke was to enter the amounts received in the records of Local 32 and deposit the funds in the bank account of Local 32. In November of 2004, she began to secretly embezzle dues and fees from Local 32 and to use those monies for her own purposes. In so doing, Rathke failed to credit union members and apprentices with paying their dues and fees.
The guilty plea was announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and James Vanderberg, Special Agent-In-Charge of the Chicago office of the United States Department of Labor, Office of Inspector General, Office of Fraud and Labor Racketeering Investigations, and Mary Kebisek, District Director of the Chicago office of the United States Department of Labor – Office of Labor-Management Standards.
Sentencing has been set for April 9, 2013, at 2:30 p.m. before Judge Kapala. Rathke faces a maximum sentence of 5 years in prison to be followed by up to 3 years on supervised release. Rathke may also be sentenced to pay a fine of up to $250,000 and must be sentenced to pay restitution of over $190,000 to Local 32.
The government has been represented by Assistants U.S. Attorney John G. McKenzie and Monica V. Mallory.
Plea Agreement