Eastern District of Kentucky
Press releases recorded for this federal judicial district.
Air Medical Transport Company Agrees to Pay $1 Million to Resolve Allegations of False Claims Act ViolationsRead the Press Release
LEXINGTON, Ky. – Air Methods Corporation, a national provider of air medical transport services, agreed to pay the federal government $1,050,873, to resolve civil allegations that it had failed to return known overpayments received from Medicare, Kentucky Medicaid, Tricare, and the Department of Veterans Affairs.
The United States alleged that Air Methods violated the False Claims Act, by improperly retaining overpayments for more than 100 flights that it knew to be medically unnecessary and, therefore, ineligible for reimbursement by federal healthcare programs. Federal healthcare programs, including Medicare and Kentucky Medicaid, only provide reimbursement for air ambulance transportation if the beneficiary’s medical condition requires air transport, and transport by ground ambulance is not appropriate. The United States alleged that Air Methods’ internal review process identified flights that did not meet these coverage requirements, including instances where patients were flown despite not meeting trauma criteria. The False Claims Act, a federal law that prohibits causing the submission of false or fraudulent claims to the federal government, also forbids knowingly concealing, avoiding, or decreasing an obligation to pay the government. As such, healthcare providers also face False Claims Act liability when they fail to return known overpayments to federal healthcare programs.
“Healthcare providers have a legal obligation to return known overpayments received from the federal government,” said Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky. “It is critically important to all of us that such misapplied funds are returned to their purpose – providing necessary medical care – and that we take the steps necessary to protect the limited resources available to these vital programs.”
"Federal health care programs are an important resource for millions of Americans to receive medical care," said Tamala E. Miles, Special Agent in Charge at the Department of Health and Human Services, Office of Inspector General (HHS-OIG). "HHS-OIG will continue to promote the proper use of federal health care funds and their protection from fraud, waste, and abuse."
The settlement resolves a lawsuit brought by a private citizen under the qui tam provisions of the False Claims Act. Under those provisions, a private party can file a civil action on behalf of the United States, thereby bringing allegations of fraud to the Government’s attention, and share in any financial recovery. As part of this resolution, the individual who filed the qui tam complaint will receive approximately $190,000 from the settlement.
This case was investigated by the U.S. Department of Health and Human Services, Office of Inspector General, the Department of Defense, Defense Criminal Investigative Services, and the Affirmative Civil Enforcement section of the U.S. Attorney’s Office. Assistant United States Attorneys Benjamin Long and Mary Melton represented the United States.
This case is captioned United States ex rel. Scott Crum v. Air Methods Corporation, Case No. 3:18-CV-00043-GFVT. The claims resolved by the settlement are allegations only, and there has been no determination of liability.
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Former Owner of Argillite Family Care Home Sentenced to 18 Months for Wire FraudRead the Press Release
ASHLAND, Ky. – Donna Sue Glass, 53, of Greenup, Kentucky, was sentenced to 18 months in federal prison on Monday by U.S. District Court Judge David L. Bunning. Glass pleaded guilty to two counts of wire fraud, stemming from her conduct as the owner of the Glass Family Care Home, a now closed family care home located in Argillite, Kentucky.
According to court records, Glass became the guardian over two of her residents and an authorized signor on another’s bank accounts, and, as to all three, misappropriated their money while acting as a guardian or caregiver. According to her plea agreement, from September 2015 to April 2018, Glass used one resident’s bank account to purchase items for her personal benefit, including expenses for personal vacations, her daughter’s beauty pageant competitions, monthly tanning salon memberships, veterinary care for her pets, and other miscellaneous items, using a debit card she had no authority to obtain or use.
In her plea agreement, Glass also agreed that she increased the rent of another resident over whom she had Guardianship, identified in the plea agreement as P.M.J., to an amount well in excess of what P.M.J. could afford. Glass, as P.M.J.’s Guardian, accepted the rate increase to generate a debt P.M.J. would owe to her, and then took funds directly from P.M.J.’s savings account to satisfy this debt. When P.M.J. moved to a higher-level nursing facility, Glass admitted she continued to accept and spend P.M.J.’s retirement benefits and failed to pay her new nursing facility, under the pretense that P.M.J. owed her money.
During the sentencing hearing, the Court announced that Glass misappropriated just under $95,000, and ordered restitution in the amount of approximately $87,700, to be paid to the estates of the three victims. As a condition of her sentencing, Glass is required to pay the net proceeds for the sale of the Glass Family Care Home property to the United States to pay off some or all of this restitution amount.
Glass pleaded guilty on March 31.
Under federal law, Glass must serve 85 percent of her prison sentence, and upon her release from prison will be under the supervision of the U.S. Probation Office for 3 years.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky, and Jodi Cohen, Special Agent in Charge, FBI, Louisville Field Office, jointly announced the sentence.
The investigation was conducted by the FBI, with assistance from Adult Protective Services, a division of the Kentucky Cabinet for Health and Family Services, Department for Community Based Services. The United States was represented by Assistant U.S. Attorney Kathryn Dieruf.
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Ashland Man Sentenced to 20 Years for Distribution and Possession of Child PornographyRead the Press Release
ASHLAND, Ky. — An Ashland man, Adam Fonso Childers, 71, was sentenced on Monday to 20 years in prison by U.S. District Judge David Bunning for distributing and possessing child pornography.
The evidence presented at trial established that, between October 5-6, 2020, Childers was found to have distributed multiple files of child pornography, using a peer-to-peer file sharing network. A search warrant was then obtained and revealed that, over a period of decades, Childers had acquired multiple forms of media found to contain child pornography. This media included magazines he acquired in the 1970s, binders of printed materials, multiple disks, seven external hard drives, and a desktop computer. In total, Childers possessed hundreds of thousands of images and videos of child pornography, that included depictions of minors under the age of 12 engaged in sexually explicit activity. He was also identified as being one of the top ten individuals for sharing child pornography in Kentucky, via this particular file sharing program.
A federal jury sitting in Ashland convicted Childers in January 2023.
“This case involved an enormous amount of child sexual abuse material, collected over many years, and involved countless victims,” said Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky. “Protecting our children from this despicable sexual abuse is a core priority for our office and is essential to the safety of our communities. I want to commend our law enforcement partners, whose dedicated and difficult work made this prosecution and sentence possible – and made our children safer.”
“The exploitation of innocent children is one of the most heinous crimes the FBI investigates,” said Jodi Cohen, Special Agent in Charge, FBI Louisville Field Office. “Today’s sentence reinforces that the FBI and our law enforcement partners will continue to aggressively pursue those who prey upon our most vulnerable victims and will stop at nothing to hold them accountable.”
Under federal law, Childers must serve 85 percent of his prison sentence and will be under the supervision of the U.S. Probation Office for life. He was also ordered to pay more than $175,000 in restitution and financial assessments.
U.S. Attorney Shier; FBI Special Agent in Charge Cohen; Col. Phillip Burnett, Commissioner, Kentucky State Police; and Chief W. Todd Kelley, Ashland Police Department, jointly announced the sentence.
The investigation was conducted by FBI, KSP, and the Ashland Police Department. The United States was represented in the case by Assistant U.S. Attorneys Erin Roth and Mary Melton.
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
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Franklin County Man Sentenced to 30 Years for Production of Child PornographyRead the Press Release
FRANKFORT, Ky. — A Frankfort man, Charles Crawford, 53, was sentenced to 30 years in federal prison on Friday, by U.S. District Judge Gregory Van Tatenhove, for production of child pornography.
According to his plea agreement, Crawford admitted that, on March 19, 2022, he was pulled over in a traffic stop because he was observed to have a minor sitting on his lap. During the stop, it was discovered that Crawford had a sexual device strapped to his leg and that he was under the influence of methamphetamine. A search of the car was then performed, which revealed methamphetamine, drug paraphernalia, and a digital camera. A search of the camera revealed three videos of Crawford sexually assaulting a minor victim.
Crawford pleaded guilty in January 2023.
Under federal law, Crawford must serve 85 percent of his prison sentence and will be under the supervision of the U.S. Probation Office for life. He was also ordered to pay restitution to his victim.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky; Rana Saoud, Special Agent in Charge, Department of Homeland Security, Homeland Security Investigation; Daniel Cameron, Kentucky Attorney General; Chief Dustin Bowman, Frankfort Police Department; and Sheriff Chris Quire, Franklin County Sheriff's Office, jointly announced the sentence.
The investigation was conducted by the HSI, the Kentucky Attorney General’s Office, the Frankfort Police Department, and the Franklin County Sheriff's Office. The United States was represented by Assistant U.S. Attorney Erin Roth.
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov
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Four East Tennessee Doctors Convicted in Drug Trafficking and Fraud SchemeRead the Press Release
FRANKFORT, Ky. – A federal jury sitting in Frankfort convicted four Tennessee physicians on Friday of conspiracy to illicitly prescribe controlled substances and related fraud and money laundering offenses.
The defendants worked together in two east Tennessee clinics, called EHC Medical, that purported to offer treatment for opioid use disorder. The evidence presented established that the defendants agreed to unlawfully prescribe buprenorphine (the controlled substance in the drug known by its trade name, Suboxone) and benzodiazepine-class drugs, including clonazepam.
Evann Herrell, Mark Grenkoski, Keri McFarlane, and Stephen Cirelli were each physicians who worked for EHC Medical in Harriman and Jacksboro, Tenn. Robert Taylor, who opened EHC Medical in 2013 and operated it through late 2018, pleaded guilty to a drug trafficking conspiracy charge and was sentenced earlier this year to 30 months in prison. He forfeited $13.8 million and paid an additional fine of $200,000. Lori Barnett, a registered nurse who helped Taylor supervise day-to-day operations, and three other physicians – Matthew Rasberry, Helen Bidwaid, and Eva Misra – also pleaded guilty to related drug or money laundering charges and are awaiting sentencing.
At trial, the United States presented evidence of a wide-ranging conspiracy to provide prescriptions for high doses and dangerous combinations of Suboxone and benzodiazepines to cash-paying customers. These drugs were being sold, traded, and abused throughout southeastern Kentucky. The evidence further established that the Defendants engaged in a conspiracy to falsify medical records, while putatively treating patients, and that Herrell, Grenkoski, and McFarlane conspired to cause millions of dollars in fraudulent submissions to Medicare, Kentucky Medicaid, and other health benefit programs for prescription drugs and urine drug testing.
“These physicians focused on their own greed and self-interests, not the needs of their patients,” said Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky. “Their illegal scheme had a damaging impact on their patients, fraudulently preyed on health benefit programs, and undermined the public’s faith in legitimate medical practices in this field. We, and our law enforcement partners, remain committed to holding those who take advantage of the medical licenses entrusted to them, to profit through unlawful prescriptions, accountable. The opioid epidemic created an acute need for responsible substance abuse treatment. Drug trafficking, operating under the guise of addiction treatment, is another despicable consequence of this problem.”
United States Attorney Shier; J. Todd Scott, Special Agent in Charge, DEA, Louisville Field Division; Bryant Jackson, Special Agent in Charge, Internal Revenue Service – Criminal Investigation; and Tamala E. Miles, Special Agent in Charge at the Department of Health and Human Services, Office of Inspector General (HHS-OIG), jointly announced the guilty verdict.
The Defendants are scheduled to appear for sentencing on December 4, 2023. The statutory maximum penalty for the drug trafficking conspiracy is 10 years, for the conspiracy to falsify documents in connection with delivery of health care services is 5 years, and for the fraud and money laundering counts is 20 years. However, the Court must consider the U.S. Sentencing Guidelines and the applicable federal sentencing statutes before imposing a sentence. The defendants also face potential fines, a forfeiture money judgment, and a judgment of restitution, as ordered by the Court.
The investigation was conducted by the DEA, IRS, and HHS, with support from the Kentucky Office of the Attorney General.
The United States was represented in the case by Assistant U.S. Attorneys Greg Rosenberg, Amanda Huang, and Andrew Smith. The case was prosecuted as part of the Department of Justice’s Organized Crime Drug Enforcement Task Force, an initiative focusing on significant drug trafficking and money laundering criminal organizations.
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Knott County Man Sentenced to 150 Months for Armed Methamphetamine TraffickingRead the Press Release
LONDON, Ky. — A Knott County, Ky., man, Michael Nolan Slone, 37, was sentenced on Friday to 150 months in federal prison, by U.S. District Judge Robert Wier, for possession with intent to distribute 50 grams or more of methamphetamine, possession of a firearm in furtherance of drug trafficking, possession of a firearm as a convicted felon, and possessing a firearm with an obliterated serial number.
Slone, who represented himself at trial, was found guilty by the jury following a two-day trial in March. According to the facts introduced at trial, a Kentucky State Police trooper discovered Slone passed out in the driver seat of his vehicle at a gas station in Hindman. The encounter ended with the location of over 100 grams of methamphetamine and two firearms. One firearm was on Slone’s person and the other, an AR-style rifle, was located directly over the methamphetamine, and had the magazines “jungle-stacked” together for quicker reloading capability.
Slone was prohibited from firearm possession due to prior felony convictions for First Degree Burglary and Attempted Murder, which he obtained after shooting two individuals in August of 2010.
Under federal law, Slone must serve 85 percent of his prison sentence. Upon his release from prison, he will be under the supervision of the U.S. Probation Office for five years.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky; R. Shawn Morrow, Special Agent in Charge, ATF, Louisville Field Division; and Col. Phillip Burnett, Jr., jointly announced the sentence. The investigation was conducted by the ATF and the KSP.
This case was prosecuted as part of the Department of Justice’s “Project Safe Neighborhoods” Program (PSN), which is a nationwide, crime reduction strategy aimed at decreasing violent crime in communities. It involves a comprehensive approach to public safety — one that includes investigating and prosecuting crimes, along with prevention and reentry efforts. In the Eastern District of Kentucky, U.S. Attorney Shier coordinates PSN efforts in cooperation with various federal, state, and local law enforcement officials.
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Whitley County Man Sentenced to Life in Prison for Federal Murder ConvictionRead the Press Release
LONDON, Ky. - A Woodbine, Ky., man, Daniel Scott Nantz, 33, was sentenced to life in prison on Wednesday, by U.S. District Judge Robert E. Wier, for the first-degree murder of a federal witness, Geri D. (Bays) Johnson.
According to the investigation and plea agreement, Nantz was engaged in multiple methamphetamine trafficking conspiracies throughout Whitley, Knox, and Laurel Counties, from March of 2017 through March of 2019. In the Spring of 2019, some of Nantz’s methamphetamine sources of supply and co-conspirators were charged in federal indictments . One such co-conspirator was Ms. Johnson. Nantz began to grow increasingly concerned that he too would be charged in an indictment.
Prior to the murder, Nantz learned that Johnson had cooperated with law enforcement. Nantz discussed his fears regarding Ms. Johnson’s potential continued cooperation with multiple witnesses, as well as Ms. Johnson herself. At the sentencing hearing, multiple witnesses testified to observing Nantz becoming increasingly violent towards Ms. Johnson, including witnessing Nantz shoot at Ms. Johnson. On March 13, 2019, Nantz texted Ms. Johnson “I’ll kill you [expletive].” On March 14, 2019, Nantz texted Ms. Johnson, “Your very dangerous for me. Very very dangerous.” Then, on the morning of March 16, 2019, Nantz told a witness “Geri is talking to the feds. I think she is telling. If so, I’ll just kill her.” Afterwards, a note, handwritten by Nantz, was recovered from the murder scene, which read “Funeral/fed’s pulled [redacted name] and geri out asking questions.”
Ultimately, on the afternoon of March 16, 2019, Nantz left an armed kidnapping that he was participating in to return to his secluded trailer in Steele Hollow. Ms. Johnson was at Nantz’s residence watching his two minor children and desperately attempting to find a ride out of the area. Text messages from Ms. Johnson’s phone show that she begged two friends for a ride from Nantz’s residence, and even asked Nantz himself for a ride away from the residence.
After he arrived at the residence, Nantz fired the first round at Ms. Johnson in the master bedroom of his trailer. Then, Nantz ordered his children into their bedroom and Ms. Johnson fled outside with her belongings. Nantz followed Ms. Johnson outside into the driveway, where he shot her in the back through her shoulder, with a stolen .38 special revolver. Ms. Johnson continued to flee from the trailer, when Nantz fired a third round that pierced her neck. A blood trail of approximately 127 feet established Ms. Johnson’s attempt to flee. The autopsy revealed the round through Ms. Johnson’s neck ultimately caused her to asphyxiate on her blood. Ms. Johnson was approximately 33 weeks pregnant at the time.
After the shooting, Nantz drove Ms. Johnson’s body back to the kidnapping site, to pickup a friend. Nantz then held up Ms. Johnson’s body while his friend drove the pair back to Nantz’s trailer. Once back at his trailer, Nantz instructed his friend to “get the DVRs.” Multiple witnesses testified that Nantz had a surveillance system connected to a DVR box that would have captured the front driveway where the murder occurred. After instructing his friend on the DVRs, Nantz finally called 911 and started the drive from his residence to Baptist Health Hospital in Corbin, Kentucky. Ms. Johnson was pronounced dead at the hospital. Ms. Johnson’s daughter, Amelia Jo Johnson, was born via emergency Cesarean section, at approximately 33 weeks gestation. Amelia passed away on March 19, 2019, due to brain damage caused by severe oxygen and blood deprivation due to her mother’s injuries.
Nantz received sentencing enhancements for obstructing justice post-murder, for the destruction of the DVR(s), and for murdering a vulnerable victim, a woman in her third trimester.
“The conduct in this case was truly appalling, and certainly warranted the life sentence imposed,” said Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky. “In a disgraceful choice, Daniel Nantz elected to protect his illegal drug trafficking operation and self-interests, over the lives of two people – his girlfriend and her daughter. This brutal act of cruel self-importance underscores how violent and serious the illegal methamphetamine trade has become. I am hopeful that this sentence will provide some measure of justice to the victims and their family; and I want to commend the outstanding work of our law enforcement partners, whose dedicated efforts made this conviction and sentence possible.”
“Today, Daniel Nantz was sentenced to spend the rest of his life in federal prison for murdering Geri Johnson, who was pregnant,” said ATF Special Agent in Charge Shawn Morrow. “We are pleased with the life sentence. Our hope is it brings some sense of justice to her loved ones and sends a message that Kentucky law enforcement is committed to seeking justice for crimes against innocent victims. I want to commend the ATF London Office, Kentucky State Police, prosecutors, and our law enforcement partners who worked tirelessly on this case.”
United States Attorney Shier; ATF SAC Morrow; and Commissioner Phillip Burnett, Kentucky State Police, jointly announced the sentencing.
The investigation was conducted by the ATF and KSP. The United States was represented by Assistant U.S. Attorney Jenna E. Reed.
This case was prosecuted as part of the Department of Justice’s “Project Safe Neighborhoods” Program (PSN), which is a nationwide, crime reduction strategy aimed at decreasing violent crime in communities. It involves a comprehensive approach to public safety — one that includes investigating and prosecuting crimes, along with prevention and reentry efforts. In the Eastern District of Kentucky, U.S. Attorney Shier coordinates PSN efforts in cooperation with various federal, state, and local law enforcement officials.
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New Jersey Man Sentenced to 20 Years for Production of Child PornographyRead the Press Release
LEXINGTON, KY- A man residing in Passaic, NJ, Alfredo Bermejo-Martinez, 24, was sentenced by Chief U.S. District Judge Danny Reeves on Monday to 20 years in prison, after pleading guilty to one count of production of child pornography.
According to his plea agreement, in late 2018 or early 2019, Bermejo-Martinez met a victim, residing in the Eastern District of Kentucky, online while playing a video game, and continued contact over a couple of years. In approximately September 2020, he began asking the victim to take and send him sexually explicit pictures via Snapchat.
The plea agreement further explains that Bermejo-Martinez traveled from New Jersey to Kentucky to see her on four separate occasions from February 2021 through May 2022. In April 2022, the victim ended the relationship with him and Bermejo-Martinez threatened to release nude images of the victim. A search of his phone revealed sexually explicit photos and videos of the victim, who Bermejo-Martinez admitted he knew was a minor.
Bermejo-Martinez pleaded guilty in March 2023.
Under federal law, Bermejo-Martinez must serve 85 percent of his prison sentence. Upon his release from prison, he will be under the supervision of the U.S. Probation Office for 20 years.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky; Rana Saoud, Special Agent in Charge, Department of Homeland Security, Homeland Security Investigations - Nashville; and Lawrence Weathers, Chief of Police, Lexington Police Department, jointly announced the sentence.
The investigation was conducted by HSI and Lexington Police Department. The United States was represented by Assistant U.S. Attorney Erin Roth.
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
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Lexington Man Sentenced to 120 Months for Felon in Possession of Firearm ChargesRead the Press Release
LEXINGTON, KY- A Lexington, Ky., man, Erich Storck, 51, was sentenced by Chief U.S. District Judge Danny Reeves on Friday to 120 months in prison for two counts of felon in possession of a firearm.
Storck was convicted of the charges on April 5, 2023. According to evidence at his trial, Storck had multiple misdemeanor convictions and a felony conviction for Assault Under Extreme Emotional Disturbance. In May 2020, Storck was arrested after being found outside Northpoint Training Center, a medium-security state prison, under the influence of alcohol with a loaded handgun stored in his motorcycle. Storck was released on state bond. While on bond, in November 2021, Storck barricaded himself in his residence in Nicholasville where he discharged over 30 rounds from a 9mm and an assault rifle. Some of the rounds struck a neighbor’s house. After Storck eventually surrendered to law enforcement, officers located two firearms and hundreds of rounds of ammunition in his home.
Under federal law, Storck must serve 85 percent of his prison sentence. Upon his release from prison, he will be under the supervision of the U.S. Probation Office for three years. Storck was also ordered to pay a $20,000 fine and $1,000 in restitution.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky; Shawn Morrow, Special Agent in Charge, ATF, Louisville Field Division; Todd Justice, Chief of Police, Nicholasville Police Department; and Sheriff Taylor Bottom, Boyle County Sheriff’s Department, jointly announced the sentence.
The investigation was conducted by ATF, Nicholasville Police Department, and Boyle County Sheriff’s Office. The United States was represented by Assistant U.S. Attorney Roger West.
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Lexington CEO Sentenced to 10 Months for Distributing Misbranded 3M N95 masksRead the Press Release
LEXINGTON, KY- Nathan Brown, 47, CEO of Old World Timber, a Lexington company specializing in antique wood reclamation, was sentenced by U.S. District Judge Karen Caldwell on Thursday to 10 months in prison for selling misbranded N95 respirator masks during the COVID-19 pandemic.
In the fall of 2020, during the COVID-19 pandemic, Brown directed his company to begin importing and selling medical-grade 3M™ N95 respirators (masks). Old World Timber purchased more than 100,000 alleged 3M N95 masks from a company in China, and resold them to customers throughout the United States. In his plea agreement, Brown acknowledged that by March 2021, information from multiple sources, including 3M’s COVID-19 Fraud and Counterfeit Product Response Team, alerted him to the high probability that the masks he imported from China were counterfeit. Brown deliberately ignored these concerns and directed his company to continue selling the masks, misleading customers as to their authenticity. Between March 3, 2021 and April 9, 2021, Brown caused OWT to sell 57,460 misbranded masks for a total of $129,353.
Under federal law, Brown must serve 85 percent of his prison sentence. Upon his release from prison, he will be under the supervision of the U.S. Probation Office for one year. Brown was also ordered to pay $129,353 in restitution.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky; George A. Scavdis, Special Agent in Charge, U.S. Food and Drug Administration, Office of Criminal Investigations Metro Washington Field Office; and James C. Harris, Special Agent in Charge, Homeland Security Investigations, Baltimore Field Division, jointly announced the sentence.
The investigation was conducted by the U.S. Food and Drug Administration and the U.S. Department of Homeland Security. The United States was represented by Assistant U.S. Attorney Will Moynahan.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
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Scott County Man Sentenced to 294 Months for Role in Money Laundering ConspiracyRead the Press Release
LEXINGTON, Ky. — A Georgetown, Ky., man, Demarkus Nemetz, 24, was sentenced on Monday to 294 months in federal prison, by Chief U.S. District Judge Danny Reeves, for conspiracy to launder drug proceeds and promotional money laundering.
According to his plea agreement, Nemetz admitted to knowingly and voluntarily participating in a conspiracy to launder drug proceeds. After other conspirators distributed controlled substances, including fentanyl and cocaine, Nemetz would collect the proceeds of the drug sales, count and package the money, and then conduct financial transactions with the proceeds by delivering the packages to couriers for the larger drug trafficking organization. Nemetz admitted that he was responsible for at least $1.5 million but less than $3.5 million in drug proceeds.
During the investigation, DEA agents seized 7 kilograms of fentanyl, 2 kilograms of cocaine, 6 firearms and approximately $650,000 in cash drug proceeds.
Eleven defendants were charged in the drug or money laundering conspiracies. Six defendants pled guilty, including Nemetz, who pleaded guilty in November 2022. Three defendants proceeded to trial in April 2023, on conspiracy to launder drug proceeds and promotional money laundering. All three were found guilty by the jury and are pending sentencing. Two others have already been sentenced. Eduardo Hernandez Alfaro, of Lexington, was sentenced to 78 months and Humberto Saucedo-Salgado, also of Lexington, was sentenced to 97 months.
Under federal law, Nemetz must serve 85 percent of his prison sentence. Upon his release from prison, he will be under the supervision of the U.S. Probation Office for three years.
Carlton S. Shier IV, United States Attorney for the Eastern District of Kentucky, and J. Todd Scott, Special Agent in Charge, DEA, Louisville Field Division, jointly announced the sentence.
The investigation was conducted by the DEA. The United States was represented by Assistant U.S. Attorney Todd Bradbury.
This case is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
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Jury Finds Founder of South Carolina Construction Firm Guilty of Charges Related to Kickback Payments, Wire Fraud, and Money LaunderingRead the Press Release
COVINGTON, Ky. – The founder of Berenyi, Inc., headquartered in Charleston, SC, Antoine “Tony” Berenyi, 63, was found guilty late Tuesday, by a federal jury sitting in Covington, following a six-day trial, of one count of conspiracy to commit honest services wire fraud, 14 counts of wire fraud, and 10 counts of money laundering.
According to the evidence at trial, beginning in late 2017, Berenyi entered into an illegal kickback agreement with Jaymin Vinson, an employee of Nucor Steel Gallatin, to deprive Nucor of money and Vinson’s honest services as an employee. Berenyi and Vinson agreed that Vinson would help steer a $14,950,000 construction management contract for a $650 million Nucor mill expansion project to Berenyi’s company and provide other services on behalf of Berenyi within Nucor, in exchange for Berenyi paying Vinson a 15% kickback on the contract, all without Nucor’s knowledge or approval. Berenyi’s secret kickback payments continued into 2019, totaling over $452,000 kicked back to Vinson.
Berenyi was indicted in October 2022.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky, and Jodi Cohen, Special Agent in Charge, FBI, Louisville Field Office, jointly announced the guilty verdict.
The investigation was conducted by the FBI. The United States was represented in the case by Assistant U.S. Attorneys James Chapman and Kyle Winslow.
Berenyi is scheduled to appear for sentencing on December 13, 2023. He faces up to 20 years in prison on the conspiracy to commit honest services wire fraud count; up to 20 years in prison on each of the wire fraud counts, and not more than 10 years in prison on each count of money laundering. However, the Court must consider the U.S. Sentencing Guidelines and the applicable federal sentencing statutes before imposing a sentence. Berenyi also faces potential fines, a forfeiture money judgment, and a judgment of restitution, as ordered by the Court.
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Two Former Eastern Kentucky Correctional Officers Plead Guilty for Their Roles in Assault of Restrained Inmate and Subsequent Cover-UpRead the Press Release
Two former Eastern Kentucky Correctional Complex (EKCC) officers pleaded guilty for their roles in the assault of a restrained inmate.
According to court documents, Randall T. Dennis, 28, pleaded guilty to one count of deprivation of the inmate’s civil rights and Nathan M. Cantrell, 32, pleaded guilty to four counts of obstruction of justice for attempting to cover up what happened. In their plea agreements, the defendants admitted that on July 24, 2018, EKCC correctional officers assaulted a nonviolent inmate who was lying face-down, wearing handcuffs and leg shackles, and isolated in a prison shower cell. Dennis admitted that he participated in the assault by repeatedly striking the inmate while he was restrained and unresisting. Cantrell, who stood outside of the shower while the assault occurred, admitted that he falsified records by omitting the assault from his occurrence report, and that he later lied to the supervisor assigned to investigate the incident as well as a Kentucky State Police (KSP) detective and a Kentucky Internal Investigations Branch (IIB) investigator.
Four other former officers have pleaded guilty in related cases. On April 10, former EKCC officer James Benish pleaded guilty to one count of deprivation of civil rights based on his failure to intervene to protect the inmate, and former EKCC supervisor Randy Nickell pleaded guilty to three counts of obstruction based on his efforts to cover up the same assault. On Aug. 29, 2022, former EKCC officer Jeffery Havens pleaded guilty to one count of deprivation of civil rights based on his assault of the inmate. On July 11, 2022, former EKCC officer Derek Mays pleaded guilty to four counts of obstruction of justice based on his efforts to cover up the assault.
Dennis and Cantrell are scheduled to be sentenced on Dec. 11. Dennis faces a maximum sentence of up to 10 years in prison. Cantrell faces a maximum of 20 years in prison for each charge. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division; U.S. Attorney Carlton S. Shier IV for the Eastern District of Kentucky; Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division; Special Agent in Charge Jodi Cohen of the FBI Louisville Field Office; and Colonel Phillip Burnett Jr. Commissioner of the KSP made the announcement.
The FBI, the KSP and the Kentucky Justice and Public Safety Cabinet conducted the investigation.
Assistant U.S. Attorney Zach Dembo and Mary Melton for the Eastern District of Kentucky and Trial Attorney Thomas Johnson of the Civil Rights Division’s Criminal Section are prosecuting the case.
Former Eastern Kentucky Correctional Supervisor Indicted for Covering up the Assault of a Restrained InmateRead the Press Release
A former Eastern Kentucky Correctional Complex (EKCC) sergeant was indicted by a federal jury in Lexington, Kentucky, for three counts of obstruction based on his efforts to cover up the assault of a restrained inmate by multiple officers that he supervised.
The indictment alleges that on July 24, 2018, Sgt. Eric L. Nantell, 47, watched lower-ranking EKCC correctional officers assault a nonviolent inmate who was lying face-down, wearing handcuffs and leg shackles, and isolated in a prison shower cell. The indictment specifically alleges that Nantell, who at that time held the rank of sergeant, stood outside of the shower during the assault and that he later attempted to cover up what happened by lying to the EKCC supervisor assigned to investigate the incident, a Kentucky State Police (KSP) detective, and a special agent of the FBI.
Nantell faces a maximum of 20 years in prison for each charge alleging that he lied to Kentucky state officials. Nantell faces a maximum of five years in prison for lying to the FBI. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division; U.S. Attorney Carlton S. Shier IV for the Eastern District of Kentucky; Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division; Special Agent in Charge Jodi Cohen of the FBI Louisville Field Office; and Colonel Phillip Burnett Jr. Commissioner of the KSP made the announcement.
The FBI, the KSP and the Kentucky Justice and Public Safety Cabinet conducted the investigation.
Assistant U.S. Attorney Zach Dembo and Mary Melton for the Eastern District of Kentucky and Trial Attorney Thomas Johnson of the Civil Rights Division’s Criminal Section are prosecuting the case.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Substance Use Recovery Center Agrees to Pay $300,000 to Resolve Alleged False Claims Act ViolationsRead the Press Release
LEXINGTON, Ky. — Recovery Services, LLC, a recovery center that provides outpatient alcohol and drug services in Louisville, Kentucky, agreed to pay $300,000 to resolve civil allegations that it violated the False Claims Act, a federal law that prohibits causing the submission of false or fraudulent claims to the federal government.
According to the settlement agreement, the United States alleged that Recovery Services, formerly known as Recovery Chestnut, billed Kentucky Medicaid for urine drug screens for patients who did not receive individualized medical assessments. Kentucky Medicaid only pays for urine drug screens that are individualized to each patient for their medical diagnosis or treatment. The United States also alleged that Recovery Services billed Kentucky Medicaid for urine drug screens for residential patients, despite only being licensed to provide outpatient services. Kentucky Medicaid does not pay for residential services, including urine drug screens, performed by outpatient providers.
The United States encourages anyone with information about the improper billing of urine drug testing, or about other potential fraud, abuse, or mismanagement of Medicare or Medicaid funds, to please call the U.S. Department of Health and Human Services’ hotline at 800-HHS-TIPS (800-447-8477).
The case against Recovery Services was investigated by the United States Attorney’s Office for the Eastern District of Kentucky; the U.S. Department of Health and Human Services, Office of Inspector General; and the Kentucky Attorney General’s Office of Medicaid Fraud and Abuse Control. Assistant United States Attorney Meghan Stubblebine represented the United States.
The settlement resolves claims alleged by the United States; there has been no determination of liability.
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Dentist Convicted of Unlawfully Distributing Opioids That Caused Patient’s DeathRead the Press Release
A federal jury in the Eastern District of Kentucky convicted a dentist yesterday for unlawfully prescribing opioids, including unlawfully prescribing morphine that caused his patient’s death.
According to court documents and evidence presented at trial, Dr. Jay M. Sadrinia, 60, of Villa Hills, Kentucky, owned and operated dental clinics in Crescent Springs. Despite clear signs – including being told explicitly that his prescribing of controlled substances was dangerous and put his patients’ lives at risk – Sadrinia prescribed powerful opioids to his patients for routine dental procedures.
Sadrinia unlawfully prescribed morphine to one patient, which caused the patient’s death. He charged $37,000 for dental procedures and prescribed the patient medically unnecessary quantities of narcotics, including morphine. Several days later, the patient fatally overdosed on the morphine.
Sadrinia was convicted of one count of unlawful distribution of controlled substances resulting in death and one count of unlawful distribution of controlled substances. He is scheduled to be sentenced on Dec. 13. He faces a mandatory minimum of 20 years in prison and a maximum penalty of life in prison on the unlawful distribution of controlled substances resulting in death count, and a maximum penalty of 20 years in prison on the unlawful distribution count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney Carlton S. Shier IV for the Eastern District of Kentucky, Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division, and DEA Administrator Anne Milgram made the announcement.
The FBI and DEA investigated the case.
Assistant Chief Katherine Payerle and Trial Attorney Thomas D. Campbell of the Criminal Division’s Fraud Section are prosecuting the case.
The Fraud Section leads the Appalachian Regional Prescription Opioid (ARPO) Strike Force. Since its inception in late 2018, ARPO has partnered with federal and state law enforcement agencies and U.S. Attorneys’ Offices throughout Alabama, Kentucky, Ohio, Virginia, Tennessee, and West Virginia to prosecute medical professionals and others involved in the illegal prescription and distribution of opioids. Over the past three years, ARPO has charged over 115 defendants collectively responsible for issuing prescriptions for over 115 million controlled substance pills. To date, more than 84 ARPO defendants have been convicted. More information can be found at www.justice.gov/criminal-fraud/health-care-fraud-unit.
Justice Department Reaches Agreement to Remedy Racial Harassment of Black and Multi-Racial Students in Kentucky School DistrictRead the Press Release
LEXINGTON, Ky. – The Justice Department today announced a settlement agreement with Madison County Schools in Kentucky to resolve its investigation into complaints of serious and widespread racial harassment of Black and multi-racial students. The department opened its investigation in October 2021 under Title IV of the Civil Rights Act of 1964.
The department’s investigation uncovered numerous incidents of race-based harassment in which Black and multi-racial students were called the N-word, among other racial epithets, and subjected to other derogatory racial comments by their peers. The school district did not consistently or reasonably address the harassment, which included racial taunts and intimidation, and was at times reinforced by use of Confederate flags and imagery. When the district did respond, it often failed to follow its own racial harassment policies and its actions were ineffective in addressing the broader hostile environment. This inaction deprived Black and multi-racial students of equal access to the district’s educational opportunities and led them to conclude that the district either condoned the beavior or would not take any action to help them.
“Schools should be safe and supportive environments for all students, not places where they face racist harassment and abuse. Racial harassment inflicts grievous harm on young people and violates the Constitution’s most basic promise of equal protection,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “This agreement will create the institutional changes needed to keep Black and multi-racial students safe and to provide them with a supportive educational environment. We look forward to Madison County Schools demonstrating to its students and school community that it will no longer tolerate racial discrimination in its schools.”
“The principles underpinning this investigation and settlement are straightforward,” said United States Attorney Carlton S. Shier, IV for the Eastern District of Kentucky. “All young people are entitled to seek their educational opportunities without facing racial harassment and abuse, and schools simply must adequately protect those entrusted to their care and instruction from that offensive, harmful behavior. With this settlement, Madison County Schools are now taking an important step consistent with those basic principles.”
Under the agreement, Madison County Schools will retain a consultant to review and revise anti-discrimination policies and procedures and support the school district as it undertakes significant institutional reforms. Among other steps, Madison County Schools will:
- Create a new central office position to process complaints of race discrimination;
- Update its racial harassment and discipline policies to more accurately track and consistently respond to complaints of race-based harassment;
- Train staff on how to identify, investigate, and respond to complaints of racial harassment and discriminatory discipline practices;
- Inform students and parents of how to report harassment and discrimination;
- Update its centralized, electronic reporting system to track and manage complaints and the district’s response to complaints;
- Implement focus groups, surveys, training and educational events on identifying and preventing race discrimination, including discriminatory harassment; and
- Analyze and review discipline data and amend policies to ensure non-discriminatory enforcement of discipline policies.
Protecting the constitutional rights of public school students is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt, and additional information about the work of the Educational Opportunities Section is available at www.justice.gov/crt/educational-opportunities-section.
Members of the public may report possible civil rights violations at www.civilrights.justice.gov/.
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Boyd County Man Sentenced to 262 Months for Armed Drug TraffickingRead the Press Release
ASHLAND, Ky. — An Ashland man, Gary R. Rowe, 49, was sentenced on Monday to 262 months in federal prison, by U.S. District Judge David Bunning for armed drug trafficking charges.
Rowe pleaded guilty in November 2022, to possession with intent to distribute 50 grams or more of methamphetamine, 2 counts; possession of methamphetamine less than 50 grams; possession with intent to distribute 10 grams or more of a fentanyl analogue (fluorofentanyl); possession with intent to distribute 40 grams or more of fentanyl, 3 counts; possession of a firearm by a convicted felon, 2 counts; and possession of a firearm in furtherance of drug trafficking. Rowe qualifies as an Armed Career Criminal and a Career Offender.
In September 2021, law enforcement received information that Rowe was distributing large quantities of narcotics in Boyd County. During the investigation, law enforcement seized 163 grams of methamphetamine, 165 grams of a fentanyl analogue (fluorofentanyl), and 91 grams of fentanyl from Rowe. Law enforcement also seized two firearms and Rowe admitted that he possessed a firearm in furtherance of his drug trafficking crimes. Rowe is a convicted felon and since 2001 has been convicted on eight occasions of trafficking in a controlled substance.
Rowe pleaded guilty in November 2022.
Under federal law, Rowe must serve 85 percent of his prison sentence. Upon his release from prison, he will be under the supervision of the U.S. Probation Office for eight years.
Carlton S. Shier IV, United States Attorney for the Eastern District of Kentucky and Shawn Morrow, Special Agent in Charge, ATF, Louisville Field Division, jointly announced the sentence.
The investigation was conducted by ATF and the Northeast Kentucky Drug Task Force. The United States was represented by Assistant U.S. Attorney Cynthia Rieker.
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Fayette County Man Sentenced to 40 Years for Distributing Fentanyl Resulting in Overdose DeathRead the Press Release
LEXINGTON, Ky. — A Lexington man, Keon Lamont Lee, 32, was sentenced on Friday to 480 months in federal prison, by Chief U.S. District Judge Danny Reeves, for distribution of fentanyl resulting in an overdose death.
According to his guilty plea, in February of 2021, Lee illegally provided fentanyl to an individual identified as F.E., who overdosed and died. Lee had obtained two bags of controlled substances from his dealer – one containing cocaine, the other fentanyl. Lee regularly sold cocaine to the victim. Intending to distribute cocaine, Lee instead distributed fentanyl to the victim, who used the drug, overdosed, and died. Text messages from both the victim’s and Lee’s phones confirmed these events, and Lee provided a full confession to law enforcement.
Lee pled guilty during his jury trial, in January 2023.
“This case illustrates the reasons why illicit drug trafficking remains such a threat to our community,” said Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky. “It demonstrates just how dangerous fentanyl is – potentially lethal in the 2mg range – and highlights the common truth that drug users have no idea what they are buying. Whether by mistake, dangerous mixtures with other drugs, or counterfeit pills, users are often seeking one drug but receiving others, with grave results. Fortunately, this case can also illustrate that those who illegally traffic in these dangerous drugs face prosecution and real consequences for their conduct.”
Under federal law, Lee must serve 85 percent of his prison sentence. Upon his release from prison, he will be under the supervision of the U.S. Probation Office for four years.
Carlton S. Shier IV, United States Attorney for the Eastern District of Kentucky; J. Todd Scott, Special Agent in Charge, DEA Louisville Field Division; and Chief Lawrence Weathers, Lexington Police Department, jointly announced the sentence.
The investigation was conducted by the DEA and Lexington Police Department. The United States was represented by Assistant U.S. Attorney Todd Bradbury.
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Coal Company and Agent Sentenced for Submitting False Coal Dust SamplingRead the Press Release
PIKEVILLE, Ky. – Black Diamond Coal Company, LLC and Walter Perkins, a certified dust examiner, were sentenced on Thursday for violating the Mine Safety and Health Administration’s (MSHA) regulations requiring accurate respirable coal-dust-sampling in underground coal mines. Black Diamond was sentenced for submitting false samples and Perkins was further sentenced for lying to MSHA special investigators.
Respirable coal dust causes pneumoconiosis or “black lung” disease in coal workers. Black lung is a progressive and irreversible disease leading to lung failure and death. However, it is preventable, by reducing the levels of respirable coal dust miners are exposed to while in the mines.
According to court documents, on October 6 and 7, 2020, Black Diamond Coal submitted dust-sampling results to MSHA for its required quarterly sampling. Those results were abnormally low and led to inquiries from the MSHA Barbourville District Office. On October 8, 2020, MSHA inspectors and investigators visited the Black Diamond Number 1 mine in Floyd County. There, they found the company’s continuous personal dust monitor (CPDM) running on the surface, in a first aid trailer. The CPDM should be worn by a miner underground, as he worked his normal shift, to accurately sample the coal dust underground.
A forensic analysis of the CPDM confirmed that it had not moved in days, despite Black Diamond submitting dust samples claiming it was conducting its required sampling underground, in accordance with MSHA’s mandatory health and safety regulations.
Perkins was employed by Black Diamond and was certified by MSHA as a dust-examiner. As part of his certification, he was trained by MSHA on how to properly conduct the required dust-sampling. When confronted with the CPDM running in the first aid trailer, Perkins claimed that he had given the CPDM to miner operating the continuous mining machine, but the operator had returned it to him stating that the CPDM had stopped working because of a fault. That was false and Perkins later admitted that he never gave the CPDM to the miner operator and the device never experienced a fault.
“Enforcement of mandatory health standards is a top priority for me and this Administration,” said Assistant Secretary for Mine Safety and Health Chris Williamson. “The Mine Safety and Health Administration can only protect miners from the risk of developing black lung disease if it has accurate sampling results. Given the troubling spike in black lung cases in Appalachia, we must hold accountable those who choose not to comply with the law and put miners’ health and lives at risk.”
Black Diamond was sentenced to pay a fine of $200,000 and to two years of probation. Further, because there is no immediate way of knowing whether any miners may develop black lung because of dust overexposure, Black Diamond was ordered to pay restitution of $400 to any miner who is no longer employed in the mining industry – meaning they no longer have access to free black lung screenings – to obtain their own screenings. This restitution for miners exposed to unknown respirable dust levels, after a company falsified the dust-sampling, is the first of its kind.
Perkins, 45 of Harlan County, was sentenced to a 12-month split sentence, with 6 months to be served in prison and 6 months to be served in home detention, followed by one year of supervised release to follow.
“The purpose of these safety regulations is to prevent a progressive and irreversible disease,” said Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky. “If employers falsify the dust sampling, not only are they are violating the law they are dramatically reducing the safety of their employees. That is simply unacceptable, and compelled us to prosecute this case.”
“Mine operators bear the responsibility for the safety and health of the miners they employ, and when operators avoid their legal obligation, the U.S. Department of Labor will use its enforcement powers to hold them accountable,” said Solicitor of Labor Seema Nanda. “We thank the United States Attorney’s Office for partnering with us to enforce critical health regulations designed to prevent black lung.”
The investigation of the case was conducted by MSHA’s Barbourville District Office. Assistant United States Attorney Emily Greenfield and Special Assistant United States Attorney Jason Grover, from the Department of Labor, represented the United States.
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Madison County Man Sentenced to 30 Years for Production of Child PornographyRead the Press Release
LEXINGTON, Ky.— A Madison County man, Donald Caudy, III, 43, was sentenced to 30 years in federal prison on Friday, by Chief U.S. District Judge Danny C. Reeves, after pleading guilty to one count of using a minor to create visual depictions of a minor engaging in sexually explicit conduct.
The investigation began in May 2022, when the Michigan State Police were investigating an individual suspected to be involved in crimes involving the possession of child pornography. While reviewing evidence obtained in that case, law enforcement discovered that the individual from Michigan had received multiple sexually explicit images of the same child, from another individual, and had been involved in chat conversations involving graphic discussion of the sexual assault of children.
The investigation ultimately revealed that the person responsible for sending the images of the minor and engaging in the graphic chats with the Michigan suspect was Donald Caudy, III, who resided in Madison County, Kentucky. During a search of Caudy’s electronic devices, multiple sexually explicit images of a four-year-old child were discovered. The images were the same images that had been distributed to the suspect in Michigan. Caudy admitted that he was responsible for creating the sexually explicit images and, ultimately, distributing them to the suspect in Michigan.
Caudy pled guilty in February 2023.
Under federal law, Caudy must serve 85 percent of his prison sentence. Upon his release from prison, he will be under the supervision of the U.S. Probation Office for twenty years.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky; Rana Saoud, Special Agent in Charge, Department of Homeland Security, Homeland Security Investigations - Nashville; and Col. Phillip Burnett, Jr., Commissioner of the Kentucky State Police, jointly announced the sentence.
The investigation was conducted by HSI and the KSP. The United States was represented by Assistant U.S. Attorney Erin Roth.
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
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Lexington Couple Sentenced for Participating in a Darknet Marketplace Drug Trafficking OrganizationRead the Press Release
LEXINGTON, Ky.— Benjamin Norman Joseph Flanigan, 27, and Haleigh Breanne Flanigan, 27, of Lexington, were sentenced to federal prison on Thursday, by U.S. District Judge Karen K. Caldwell. Benjamin Flanigan pled guilty to drug distribution and conspiracy to commit drug distribution and was sentenced to 18 months. Haleigh Flanigan also pled guilty to was conspiracy to commit drug distribution and conspiracy to commit money laundering and was sentenced to 48 months.
According to both Flanigans’ plea agreements, they admitted to participating in a darknet market drug trafficking organization, operating under the moniker PartyCrew. The darknet is an overlay of the internet that is only accessible through certain software, configurations, or authorization. Access to the darknet is designed to anonymize the user, and it is mostly used for illicit purposes. Marketplaces on the darknet are used to buy and sell illicit goods and services. The PartyCrew darknet marketplace posting advertised the sale of multiple controlled substances in exchange for cryptocurrencies such as Monero and Bitcoin. For their part, the Flanigans fulfilled orders for controlled substances, by packaging and mailing them through the U.S. mail to customers across the United States. Haleigh Flanigan received payment for her services in cryptocurrencies, which she further attempted to conceal through the use of cryptocurrency anonymizing tools.
The prosecution included a third member of the conspiracy, Joshua Cook, who has pled guilty to the same offenses as Haleigh Flanigan and is scheduled to be sentenced on July 25, 2023. It also amounted to a total dismantling of the PartyCrew drug trafficking organization.
Benjamin and Haleigh Flanigan pled guilty in February of 2023.
Under federal law, the Defendants must serve 85 percent of their prison sentences; and upon their release from prison, they will be under the supervision of the U.S. Probation Office for 3 years.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky, and J. William Rivers, Special Agent in Charge for the Federal Bureau of Investigation-Cincinnati, jointly announced the sentence.
The investigation was conducted by the FBI. The United States was represented by Assistant U.S. Attorneys Kathryn Dieruf and Emily Greenfield.
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Northern Kentucky Man Sentenced to 420 Months for Armed Methamphetamine and Cocaine Trafficking and Illegal Firearm PossessionRead the Press Release
COVINGTON, Ky. – An Alabama man, residing in Ludlow, Ky., Terrill Goods, 45, was sentenced to 420 months in federal prison on Wednesday, by U.S. District Judge David Bunning, for his role in a conspiracy to distribute methamphetamine and cocaine, as well as for possession of a firearm by a convicted felon and possession of a firearm in furtherance of drug trafficking.
In December 2022, a federal jury in Covington found Goods guilty of all charges against him, following a five-day trial. Goods’ co-defendant, Deon Coulter, 38, of Northern Kentucky had previously pled guilty, and was sentenced to 248 months in federal prison, for the same conspiracy, as well as for possession of fentanyl with the intent to distribute and possession of a firearm in furtherance of drug trafficking.
According to evidence presented at trial, between October 2021 and January 2022, Goods and Coulter conspired to distribute large quantities of methamphetamine, as well as cocaine, in the Eastern District of Kentucky. Law enforcement made multiple controlled buys of methamphetamine, as well as one controlled buy of cocaine, from Goods and Coulter. They also seized approximately 2000 pills containing fentanyl and multiple firearms during execution of search warrants on Goods’ and Coulter’s respective residences.
Under federal law, Goods and Coulter must serve 85 percent of their respective prison sentences. Upon their release from prison, they will each be under the supervision of the U.S. Probation Office for 10 years.
Carlton S. Shier IV, United States Attorney for the Eastern District of Kentucky; Orville O. Greene, Special Agent in Charge, DEA Detroit Field Division, and Director Scott Hardcorn, Northern Kentucky Drug Strike Force, jointly announced the sentences.
The investigation was conducted by the DEA and the Northern Kentucky Drug Strike Force. The United States was represented by Assistant U.S. Attorneys Andrew A. Spievack and Elaine K. Leonhard.
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Statement from U.S. Attorney Shier Regarding Monday’s IncidentsRead the Press Release
The U.S. Attorney’s Office for the Eastern District of Kentucky is aware of the Scott County shooting incident involving law enforcement and the related incidents in Fayette County that occurred yesterday afternoon. As the investigation of these incidents progresses, we stand with our local and state law enforcement partners. We are offering our support and federal resources to assist in the investigation. Our thoughts are with everyone impacted by these tragic events, especially the family members, friends, and colleagues of Deputy Caleb Conley and those injured during the incidents.
Lincoln County Man Sentenced to 292 Months for Production of Child PornographyRead the Press Release
LEXINGTON, Ky.— A Stanford, Ky., man, Sean Ryan Reardon, 30, was sentenced to 292 months in federal prison on Monday, by Chief U.S. District Judge Danny Reeves, for enticing a minor to engage in sexually explicit conduct for the purpose of producing child pornography.
According to his plea agreement, Reardon met a minor victim in Fall 2019 and, in early 2020, started communicating with the victim via Snapchat. Reardon admitted that had sexual contact with the victim, at his home and other locations, from July 2021 through March 2022, and that he captured pictures and videos of these encounters. Reardon also admitted that he and the victim exchanged sexually explicit visual depictions through Snapchat and Google Duo.
Reardon pleaded guilty in February 2023.
Under federal law, Reardon must serve 85 percent of his prison sentence. Upon his release from prison, he will be under the supervision of the U.S. Probation Office for 10 years.
Carlton S. Shier IV, United States Attorney for the Eastern District of Kentucky; Jodi Cohen, Special Agent in Charge, FBI Louisville Field Office; and Col. Phillip Burnett, Commissioner, Kentucky State Police, jointly announced the sentence.
The investigation was conducted by the FBI and Kentucky State Police. The United States was represented by Assistant U.S. Attorney Mary Melton.
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
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Lexington Investment Advisor and Attorney Sentenced to 120 Months for Investment FraudRead the Press Release
LEXINGTON, Ky. - A Lexington investment advisor and attorney, Douglas Hawkins, was sentenced to 120 months in prison Tuesday, by U.S. District Judge Karen Caldwell, for investment advisor fraud, securities fraud, and two counts of mail fraud.
According to the evidence at trial, while operating as an investment advisor, Hawkins encouraged his clients to invest in securities that were properties in Jackson, Mississippi. Clients invested over $2 million in the properties. While encouraging these investments, Hawkins withheld vital information about the properties from his clients, including that many were uninhabitable, had burdensome rent collection, and were often subject to theft and vandalism. He also failed to inform his clients that their investment money would be used for purposes other than their properties, including paying other investors and buying a Harley Davidson for an employee.
Hawkins was convicted in February 2023.
In addition to his prison sentence, Hawkins was ordered to pay $1,588,048.50 in restitution. Under federal law, Hawkins must serve 85 percent of his prison sentences. Upon his release from prison, Hawkins will be under the supervision of the U.S. Probation Office for three years.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky; Lesley Allison, Special Agent in Charge, United States Postal Inspection Service; and Justin Malcom Burse, Acting Commissioner, Kentucky Department of Financial Institutions, jointly announced the sentencing.
The investigation was conducted by the United States Postal Inspection Service and Kentucky Department of Financial Institutions. The United States was represented in the case by Assistant U.S. Attorneys Andrea Mattingly-Williams and Will Moynahan.
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Leader of Large-Scale Methamphetamine Distribution Conspiracy Sentenced to 490 Months in PrisonRead the Press Release
LEXINGTON, Ky. — A Lexington man, Craig Dupree Robertson, 34, was sentenced on Monday to 490 months in federal prison, by Chief U.S. District Judge Danny Reeves for his role in a large-scale methamphetamine and fentanyl trafficking conspiracy.
According to court documents, from October 2020 until September 2021, Robertson and his co-defendants conspired to distribute large quantities of methamphetamine and fentanyl in the Eastern District of Kentucky. The defendants maintained “stash” residences, throughout Lexington, to store and distribute the drugs. Law enforcement made multiple controlled buys of methamphetamine and fentanyl from the co-defendants, as well as seizing ounce and pound quantities of the drugs during traffic stops and through search warrants.
On September 23, 2021, law enforcement executed search warrants at several of the “stash” locations. At one such residence, law enforcement agents seized approximately 957 grams of fentanyl, 418 grams of methamphetamine, a money counting machine, two firearms, two digital scales, a metal press used to manufacture controlled substances, vacuum seal bags, and other items pertaining to the manufacturing and distribution of controlled substances. At a second “stash” location, a storage unit, agents seized 15 pounds of methamphetamine. On many of the occasions from October 2020 to August 2021, the defendants would deposit drug proceeds into bank accounts for transfer of those proceeds to other co-conspirators via mobile transfer applications, in order to continue to operate their drug trafficking activities.
Robertson’s co-defendants were sentenced to the following, for their roles in the conspiracy:
- Brenda Nicole Fugate received 165 months;
- Casey Ryan Creech received 180 months;
- Tony Christopher Fugate received 84 months;
- Houston Paul Johnson received 230 months;
- Pamela Smith Baker received 120 months;
- Angela Marie Halsey received 94 months;
- Michael Dustin Johnson received 115 months;
- Patricia Ann Morgan received 96 months;
- Curtis Dewayne Miller received 320 months; and
- Carl Hunt received 188 months.
Under federal law, Robertson and his co-defendants must serve 85 percent of their prison sentences. In addition to their prison sentences, each will be under the supervision of the U.S. Probation Office for five years – with the exception of Morgan, who will be under supervision for three years. Upon his release from prison, Robertson will be under the supervision of the U.S. Probation Office for life.
Carlton S. Shier IV, United States Attorney for the Eastern District of Kentucky; Shawn Morrow, Special Agent in Charge, ATF Louisville Field Division; J. Todd Scott, Special Agent in Charge, DEA Louisville Field Division; Lesley Allison, Special Agent in Charge, United States Postal Inspection Service Pittsburgh Field Division; Commander Kalan Perdue, Gateway High Intensity Drug Trafficking Area (HIDTA); and Chief Lawrence Weathers, Lexington Police Department, jointly announced the sentences.
The investigation was conducted by ATF, DEA, USPIS, and Gateway AHITDA Task Force, with assistance from Lexington Police Department. The United States was represented by Assistant U.S. Attorneys Todd Bradbury and Cynthia Rieker.
This effort is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
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Drug Testing Companies Agree to Collectively Pay $1.7 Million to Resolve False Claims Act AllegationsRead the Press Release
LEXINGTON, Ky. — Two Kentucky-based businesses involved in performing urine drug tests for the family court system have agreed to collectively pay $1,740,620 to resolve civil allegations that they improperly billed those tests to Medicare and Kentucky Medicaid.
Blue Waters Assessment and Testing Services, LLC (“BATS”) is a Lexington-based business that provides services relating to urine drug testing, including the collection of specimens from individuals who were ordered by the Fayette County family courts to receive such testing as part of their court cases. BATS sent the specimens to VerraLab JA, LLC, a clinical laboratory based in Louisville that does business under the name BioTap Medical (“BioTap”). BioTap performed the urine drug tests and billed them to Kentucky Medicaid and Medicare.
Billing these tests to Kentucky Medicaid and Medicare violated the False Claims Act, a federal law that prohibits the submission of false or fraudulent claims for payment to the federal government, because Medicaid and Medicare only pay for laboratory tests used for purposes of medical diagnosis or treatment. Medicare and Medicaid – as federally-funded health insurance programs – do not pay for tests performed for non-medical reasons, such as those that are performed only to satisfy a court order. In fact, Medicaid’s regulations explicitly prohibit reimbursement for laboratory tests, such as urine drug tests, that were ordered by a court.
The Government alleged that BioTap knew that the urine drug tests at issue were court-ordered, and not used for medical diagnosis or treatment, but billed those tests to Medicare and Medicaid anyway. As a result, BioTap received reimbursements from Medicare and Medicaid to which it was not entitled. Under the terms of the Settlement Agreements, BioTap agreed to pay $1,490,620 to resolve allegations it submitted false claims. BATS and its owner, David Waters, agreed to pay $250,000 for their alleged roles in causing the submission of false claims; the settlement with BATS and Waters was pursuant to the Department of Justice’s inability-to-pay policy.
“The federal Medicaid and Medicare programs are designed – and funded – to provide health care benefits to eligible individuals with a medical necessity,” said Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky. “These lab tests were not medically necessary and were improperly billed to these programs. It is important to all of us that steps are taken to return such misapplied funds to their appropriate purpose – providing medical care.”
“Submitting false claims to Medicare or Medicaid wastes taxpayer dollars and undermines the integrity of those programs," said Tamala E. Miles, Special Agent in Charge at the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “HHS-OIG remains committed to ensuring that those who attempt to take valuable resources away from their intended recipients are held accountable.”
The settlements resolve a lawsuit brought by two private citizens under the qui tam provisions of the False Claims Act. Under those provisions, a private party can file a civil action on behalf of the United States, thereby bringing allegations of fraud to the Government’s attention, and share in any financial recovery. As part of this resolution, the individuals who filed the qui tam complaint will receive approximately $295,000 from the settlements.
This case was investigated by the U.S. Department of Health and Human Services, Office of Inspector General and the Affirmative Civil Enforcement section of the U.S. Attorney’s Office. Assistant United States Attorney Christine Corndorf represented the United States.
This case is captioned United States ex rel. Nam Nguyen & Misty Nall v. Blue Waters Assessment & Testing Services, LLC; Crossroads Counseling Services, Inc.; David Waters; and VerraLab JA, LLC, Case No. 5:21-CV-00297-DCR. The claims resolved by the settlements are allegations only, and there has been no determination of liability.
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Scott County Man Indicted for Producing and Possessing Child PornographyRead the Press Release
LEXINGTON, Ky.— A Georgetown, Ky., man, Tyler Brady Lawson, 26, has been indicted by a federal grand jury on two counts of production of child pornography, one count of possession of child pornography, and one count of possession of visual representations of the sexual abuse of children.
The indictment alleges that on March 9, 2023, Lawson knowingly possessed visual depictions that involved minors engaging in sexually explicit conduct, as well as visual representations (e.g., computer-generated images) of the sexual abuse of children. The indictment also alleges that, in February 2022 and again in June 2022, Lawson coerced two minor victims to engage in sexually explicit conduct for the purpose of producing visual depictions of that conduct.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky; Jodi Cohen, Special Agent in Charge, FBI, Louisville Field Office; and Chief Darin Allgood, Georgetown Police Department, jointly announced the indictment.
The investigation preceding the indictment was conducted by FBI Louisville and Georgetown Police Department. The indictment was presented to the grand jury by Assistant U.S. Attorney Mary Melton.
Lawson appeared in court for his arraignment on Wednesday. For each production charge, he faces a minimum of 15 years in prison and a maximum of 30 years. For each possession charge, he faces up to 20 years in prison. However, any sentence following a conviction would be imposed by the Court, after its consideration of the U.S. Sentencing Guidelines and the federal sentencing statutes.
Any indictment is an accusation only. A defendant is presumed innocent and is entitled to a fair trial at which government must prove guilt beyond a reasonable doubt.
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Former Doctor Sentenced to 120 Months for Conspiracy to Distribute Controlled SubstancesRead the Press Release
LONDON, Ky. — A former Clarksville, Tenn., physician, John Stanton, 51, was sentenced on Thursday, April 13, to 120 months in federal prison, by U.S. District Judge Robert Wier, following his conviction for conspiring to unlawfully distribute controlled substances.
According to evidence presented at his trial, Stanton was a licensed physician and Medical Director at Gateway Medical Associates in Tennessee, which was registered as a pain management clinic. Evidence established that Stanton worked with John Maccarone, the owner of GMA, to prescribe controlled substances, often a combination of oxymorphone and oxycodone, to individuals who presented as patients to GMA. These individuals exhibited signs of diversion and abuse, such as repeatedly failing drug tests and displaying mental health issues. In prescribing in this manner, Stanton failed to adhere to accepted professional standards for prescribing controlled substances for the treatment of chronic pain.
Also, testimony at trial established that patients who were being treated by Stanton and Maccarone exhibited obvious signs of drug diversion and abuse, traveling more than four hours each way to GMA, from southern and eastern Kentucky, and waiting 10 hours or more to be seen. Patients often failed urine drug tests and avoided “mandatory” pill counts by paying a “no show fee.” GMA patients often paid more than $400 in fees (typically paid by prepaid debit card) to the clinic for each visit. At trial, the evidence also revealed that GMA served as a source of supply for drug traffickers during the conspiracy.
Stanton was convicted at trial in August 2022.
Stanton’s co-defendants were sentenced to the following, for their roles in the conspiracy:
• Dr. James Maccarone was sentenced to 84 months in prison and ordered to forfeit his GMA property, approximately $204,000 held in bank accounts, to pay a $1.3 million money judgment, and to forfeit his medical license;
• Jeffrey Ghent was sentenced to 60 months in prison and ordered to pay a $150,000 money judgment;
• Terry Prince was sentenced to 68 months in prison, three years of supervised release, and ordered to pay a $250,000 money judgement.
Under federal law, Stanton and his co-defendants must serve 85 percent of their prison sentences. Upon his release from prison, Stanton will be under the supervision of the U.S. Probation Office for three years. In addition to his prison sentence, Stanton was ordered to forfeit $318,300, forfeit his medical license, and pay a $100,000 fine.
Carlton S. Shier IV, United States Attorney for the Eastern District of Kentucky; and J. Todd Scott, Special Agent in Charge, DEA Louisville Field Division; Daniel Cameron, Kentucky Attorney General; Col. Phillip Burnett, Commissioner, Kentucky State Police; and David Rausch, Director, Tennessee Bureau of Investigation; jointly announced the sentence.
This case as investigated, in part, by members Operation UNITE. The investigation was conducted by the DEA, the Kentucky Office of Attorney General, the Tennessee Bureau of Investigation; and the London Police Department, with assistance from the Lake Cumberland Area Drug Task Force, Clarksville, Tennessee Police Department, Clay County Sheriff’s Office; and Knox County Sheriff’s Office. The United States was represented by Assistant U.S. Attorney Andrew Smith.
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Former Administrative Manager for Covington Public Works Department Pleads Guilty to Wire Fraud and Aggravated Identity TheftRead the Press Release
COVINGTON, Ky. – The former administrative manager for the City of Covington Public Works Department, Allison Donaldson, 50, of Covington, pleaded guilty on Friday, before U.S. District Judge David Bunning, to wire fraud and aggravated identity theft.
Donaldson was employed as an administrative manager for the Public Works Department, from 2005 until 2022, and had access to credit card information for the department. Her plea agreement explains that starting in February 2020 and continuing until February 2022, Donaldson knowingly defrauded the City of Covington, by using employee credit cards and making over $150,000 in purchases for herself and her home. Some of the purchases listed in the plea agreement include repairs for a Mercedes Benz, a Louis Vuitton agenda, a Chanel tote, Crate & Barrel furniture, and a remodel to her master bedroom and garage.
Donaldson was indicted in September 2022.
“Any time public servants turn to greed and misappropriate public funds, it does serious damage,” said Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky. “Not only does it deprive communities of necessary – and often very limited – resources, but it severely erodes the trust that communities place in their government. Her conduct was an egregious betrayal, for which she now faces the consequences. The dedicated efforts of our law enforcement partners made this important prosecution possible, and was the first step in repairing the damage to the Covington community.”
United States Attorney Shier; Jodi Cohen, Special Agent in Charge, FBI, Louisville Field Office; Daniel Cameron, Kentucky Attorney General; and Spike Jones, Chief of the Kenton County Police Department, jointly announced the guilty plea.
The investigation preceding the indictments was conducted by the FBI, the Kentucky Attorney General’s Department of Criminal Investigation, and the Kenton County Police Department. The United States was represented by Assistant U.S. Attorney Kyle Winslow.
Donaldson is scheduled to be sentenced on September 8. She faces up to 20 years for the wire fraud charge; she faces up to two years, run consecutively on the aggravated identity theft charge; and she faces criminal judgments for restitution and forfeiture of the property attained through the fraud. Any sentence, however, will be imposed by the Court, after its consideration of the U.S. Sentencing Guidelines and the federal sentencing statutes.
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Martin County Man Convicted of Producing and Receiving Child PornographyRead the Press Release
PIKEVILLE, Ky. - A Beauty, Ky., man was convicted on Wednesday. by a federal jury sitting in Pikeville. of six counts of child pornography-related offenses.
After two hours of deliberation, following a three-day trial, the jury convicted Donald York, 60, for four counts of the production of child pornography and two counts of receiving child pornography.
According to the evidence presented, York used a minor female victim to engage in sexually explicit conduct, for the purpose of producing images of that conduct. The United States further established that York uploaded some of the victim’s photos to a pornographic website.
York was indicted in June 2022.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky; Jodi Cohen, Special Agent in Charge, FBI Louisville Field Office; Col. Phillip Burnett, Commissioner, Kentucky State Police; and Sheriff John Kirk, Martin County Sherriff’s Office, jointly announced the conviction.
The investigation was conducted by FBI, KSP, and the Martin County Sherriff’s Office. The United States was represented in the case by Assistant U.S. Attorneys Justin Blankenship and Jason Parman.
York will appear for sentencing on August 24, 2023. He faces a minimum of five years, up to 20 years in prison, on each count of conviction. However, the Court must consider the U.S. Sentencing Guidelines and the applicable federal sentencing statutes before imposing a sentence.
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
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Eleven Kentuckians Sentenced to Federal Prison for Animal Fighting OffensesRead the Press Release
LEXINGTON, Ky. - Two additional individuals, Jerrard McVey, 48, and Linda McVey, 42, both of Carlisle, Ky, were sentenced on Tuesday to 12 months and a day in federal prison, by U.S. District Judge Karen Caldwell, for conspiracy to knowingly sponsor and exhibit animals in an animal fighting venture, in connection with the Valley, a chicken pit on the border of Nicholas and Fleming Counties.
According to their plea agreements, the McVeys, conspired with others, including Walter Mitchell, 48, of Ewing, Ky., to organize multiple animal fighting ventures in the form of cockfights at The Valley, located on the border of Nicholas and Fleming Counties. Specifically, on July 30, 2021, the McVeys and others organized and managed an animal fight that included at least a dozen entries in a 5-cock fight, and approximately 100 attendees.
Jerrard McVey pleaded guilty in December 2022. Linda McVey pleaded guilty in November 2022. Mitchell was sentenced in March 2023, and he received six months in prison and one year of supervised release.
In total, eleven individuals have now been sentenced to federal prison for their participation in animal fighting offenses in the Eastern District of Kentucky. Four other individuals were sentenced to home detention or federal probation.
In March 2023, Cruz Alejandro Mercado-Vazquez, 43, of Maysville, Ky, was sentenced to 15 months incarceration, 3 years supervised release, and a $10,000 fine, for attempting to bribe the Mason County Sheriff to influence the Sheriff in connection with a planned animal fighting venture.
Timothy Sizemore, 43, of Manchester, Ky, was sentenced to 26 months incarceration, 2 years supervised release, and a $1,000 fine, for his role in running an animal fighting venture in Manchester, Ky, called Riverside, and an animal fighting venture in Pike County, Ky, called Blackberry. His co-defendant in running Riverside, Millard Oscar Hubbard, 73, of Manchester, Ky, was sentenced to 12 months and one day incarceration, 2 years supervised release, and a $95,000 fine. A referee at Riverside, Justin Smith, 34, of Manchester, Ky, was sentenced to 1 month incarceration, 18 months supervised release, and a fine of $250. The owner of the property on which Blackberry operated, Perry Hatfield, 58, was sentenced to 8 months home detention and 2 years supervised release. Individuals who worked at Riverside, Beachel Collett, 30, of Oneida, KY, and Lester Collett, 26, of Manchester, Ky, were sentenced to 4 months home detention and 18 months supervised release.
In another case involving an animal fighting operation in London, Kentucky, called Bald Rock, Rickie Johnson, 56, of London, Ky, was sentenced to 2 months in prison, followed by 8 months home incarceration, 2 years of supervised release, and a $1,000 fine, for his role in running Bald Rock. Several individuals who fought roosters at Bald Rock were also sentenced. Joshua Westerfield, 36, of London, Ky, was sentenced to 3 months in prison, 6 months home detention, and 2 years supervised release. Dallas Cope, 35, of Livingston, Ky, and Bradley Cye Rose, 43, of Parkers Lake, Ky, were each sentenced to 14 days in prison, 9 months home detention, and 18 months supervised release. Hiram B. Creech, Jr., 47, of East Bernstadt, Ky, was sentenced to a year of probation and a $2,000 fine for causing a minor to attend the animal fighting venture at Bald Rock.
"Animal fighting ventures are cruel and illegal,” said Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky. “We will continue to enforce federal animal cruelty laws and we commend the valuable assistance of all our law enforcement partners, whose dedicated work made these important convictions possible.”
United States Attorney Shier; Salina Walker, Acting Special Agent in Charge, United States Department of Agriculture Office of Inspector General; Jodi Cohen, Special Agent in Charge, FBI Louisville Office; Colonel Phillip Burnett, Jr., Commissioner, Kentucky State Police; and Superintendent Rob Townsend, Indiana Gaming Commission, jointly announced the sentencings.
The investigation was conducted by USDA, FBI, KSP, and the Indiana Gaming Commission. The United States was represented by Assistant U.S. Attorneys Kate Smith and Andrea Mattingly-Williams.
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Boyle County Man Pleads Guilty to Agricultural Loan FraudRead the Press Release
LEXINGTON, Ky. – A Danville, Ky., man, Peter Alex Cox, 33, entered a guilty plea on Monday, before Chief U.S. District Judge Danny Reeves, to unlawful conversion of loan collateral.
According to his plea agreement, starting in 2013, Cox obtained a line of credit from Central Bank Agricultural Credit Association, secured by the Farm Service Agency, part of the United States Department of Agriculture. Between 2013 and 2018, Cox applied to increase his line of credit, until it reached $1,057,140.35 in 2018. Cox pledged 800 beef and dairy cattle that he owned, as collateral to secure the loan.
Cox admitted in the plea agreement that, between May and October 2019, he sold his cattle to unapproved sellers, using a fictitious farm name, and did not apply the proceeds from the cattle sold to his debt. He further admitted that his intention in using the fictious farm name was to prevent Ag Credit from receiving any of sales or profits of the sales. Cox’s cattle sales totaled $1,106,701.17, without any payments made toward his loan and without providing any notice of the sales.Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky, and Salina Walker, Acting Special Agent in Charge, United States Department of Agriculture Office of Inspector General, jointly announced the guilty plea.
The investigation was conducted by USDA. The United States was represented by Assistant U.S. Attorney Kate K. Smith.
Cox is scheduled to be sentenced on July 14, 2023. He faces a maximum of five years in prison and a maximum fine of $250,000. However, any sentence will be imposed by the Court, after its consideration of the U.S. Sentencing Guidelines and the federal sentencing statutes.
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Two Doctors Convicted for Unnecessary Urinalysis Testing SchemeRead the Press Release
A federal jury convicted two doctors today for their involvement in a scheme to commit health care fraud.
According to court documents and evidence presented at trial, Dr. William Lawrence Siefert, 69, of Dayton, Ohio, and Dr. Timothy Ehn, 50, of Union, Kentucky, orchestrated their health care fraud scheme through Northern Kentucky Center for Pain Relief, a pain clinic in Florence, Kentucky. Siefert, a medical doctor, was employed by the clinic, and Ehn, a chiropractor, was the clinic’s owner. Siefert and Ehn engaged in a scheme to bill Medicaid for millions of dollars in medically unnecessary urinalysis testing for their patients, which included urinalysis testing purportedly conducted on faulty machinery.
Siefert and Ehn were each convicted of health care fraud. Ehn was additionally convicted of conspiracy to commit health care fraud. Siefert and Ehn are both scheduled to be sentenced on Sept. 20. Siefert faces a maximum penalty of 10 years in prison. Ehn faces a maximum penalty of 10 years in prison on each of the health care fraud conspiracy and health care fraud counts. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney Carlton S. Shier IV for the Eastern District of Kentucky, Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division, DEA Administrator Anne Milgram, Special Agent in Charge Tamala E. Miles of the Department of Health and Human Services Office of Inspector General (HHS-OIG), and Kentucky Attorney General Daniel Cameron made the announcement.
The FBI, DEA, HHS-OIG, and Kentucky Medicaid Fraud Control Unit investigated the case.
Trial Attorneys Dermot Lynch, Lindsey Carson, and Assistant Chief Lauren Kootman of the Criminal Division’s Fraud Section are prosecuting the case.
The Fraud Section leads the Appalachian Regional Prescription Opioid (ARPO) Strike Force. Since its inception in late 2018, ARPO has partnered with federal and state law enforcement agencies and U.S. Attorneys’ Offices throughout Alabama, Kentucky, Ohio, Virginia, Tennessee, and West Virginia to prosecute medical professionals and others involved in the illegal prescription and distribution of opioids. Over the past three years, ARPO has charged over 115 defendants collectively responsible for issuing prescriptions for over 115 million controlled substance pills. To date, more than 60 ARPO defendants have been convicted. More information can be found at https://www.justice.gov/criminal-fraud/health-care-fraud-unit.
Whitley County Man Pleads Guilty to Federal Murder ChargeRead the Press Release
LONDON, Ky. - A Woodbine, Ky., man, Daniel Scott Nantz, 33, entered a guilty plea on Thursday, before U.S. District Judge Robert E. Wier, to the intentional murder of a federal witness, Geri D. Johnson.
According to the investigation and plea agreement, Nantz was engaged in methamphetamine trafficking throughout Whitley County from March of 2017 through March of 2019. In the Spring of 2019, some of Nantz’s methamphetamine sources of supply and co-conspirators were indicted by a federal grand jury. One of these co-conspirators was Johnson, who was pregnant, and with whom Nantz had a romantic relationship.
Prior to the murder, Nantz learned that Johnson had provided a statement to law enforcement and had been offered the opportunity to cooperate against him. Nantz discussed the fact he was a target of the federal methamphetamine trafficking investigation with Johnson. A handwritten note, written by Nantz, was recovered from the murder scene, which read “Funeral/fed’s pulled geri out asking questions.” Nantz had grown increasingly concerned that he too would be indicted for methamphetamine trafficking and that Johnson would cooperate against him. He also sent text massages to Johnson in the days leading up to the murder. On March 13, 2019, Nantz texted Johnson “I’ll kill you [expletive].” And on March 14, 2019, Nantz texted Johnson, “Your very dangerous for me. Very very dangerous.”
Then, on March 16, 2019, Johnson was home, with Nantz’s minor children, at Nantz’s trailer in Woodbine. Nantz arrived, ordered his children into their bedroom, and followed Johnson outside the residence. Nantz then shot the victim twice with a .38 revolver. One round struck the victim in the back right shoulder and the other pierced the victim’s neck. The autopsy revealed the round through the victim’s neck ultimately caused her to asphyxiate on her blood.
After the shooting, Nantz drove Johnson to the hospital in Corbin, Kentucky, where she was pronounced dead. Johnson’s daughter was born, via emergency Cesarean section, at seven months gestation. The child died several days later, due to the damage she suffered from the loss of oxygen and blood caused by her mother’s injuries.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky; Shawn S. Morrow, Special Agent in Charge, ATF, Louisville Field Division; and Commissioner Phillip Burnett, Kentucky State Police, jointly announced the guilty plea.
The investigation was conducted by the ATF and KSP. The United States was represented by Assistant U.S. Attorney Jenna E. Reed.
Nantz is scheduled to be sentenced on July 17, 2023. Nantz faces a mandatory minimum of Life in prison and a $250,000 fine.
This case was prosecuted as part of the Department of Justice’s “Project Safe Neighborhoods” Program (PSN), which is a nationwide, crime reduction strategy aimed at decreasing violent crime in communities. It involves a comprehensive approach to public safety — one that includes investigating and prosecuting crimes, along with prevention and reentry efforts. In the Eastern District of Kentucky, U.S. Attorney Shier coordinates PSN efforts in cooperation with various federal, state, and local law enforcement officials.
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Former Kentucky Federal Prison Lieutenant Convicted of Covering up the Assaults of Two Federal Inmates by Corrections OfficersRead the Press Release
After a six-day trial, a federal jury convicted former Bureau of Prisons Lieutenant Kevin Pearce, 38, on two counts of obstruction for writing false reports about the assaults of two federal inmates by corrections officers under Pearce’s command. The defendant is a former supervisor at U.S. Penitentiary Big Sandy in Inez, Kentucky. Two former officers, Samuel Patrick and Clinton Pauley previously pleaded guilty for their roles in the two assaults and testified for the government at trial.
The evidence at trial established that the defendant was the supervising lieutenant responding to an incident at Big Sandy in which his co-defendants, former officers Patrick and Pauley, assaulted an inmate by pepper spraying him in the face and kicking him in the head. Witnesses, including those who assaulted the inmates, testified that the inmate was not a threat and was compliant, and was assaulted for walking too slowly to his cell, rather than for any legitimate penological purpose. The defendant attempted to cover up the assault by writing a false report which untruthfully described the inmate as violent and omitted that the inmate had been kicked in the head while he was prone and unresisting.
The evidence further established that, one month later, the defendant again covered up an unrelated assault also initiated by officers Patrick and Pauley. The victim of that assault was taken to the defendant’s office in order to request protection from other inmates. When the victim, who is white, revealed that he used to affiliate with Black gangs, the defendant’s fellow officers repeatedly struck him in the head and body while one of the officers referred to him as a “race traitor.” The defendant wrote a false report about the assault in which he claimed that the inmate agreed to go to his housing unit “without incident,” and, as the cover-up expanded, he supervised efforts to discredit the inmate by recruiting another officer who was not present to write a report which falsely corroborated the agreed-upon cover story.
“This defendant abused the trust given to him as a federal correctional officer and supervisor when he attempted to cover up the assaults of two inmates in his custody,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The Justice Department will vigorously prosecute correctional officers who abuse inmates, and this mission includes the prosecution of supervisory officials who enable civil rights violations by protecting abusive officers. We are committed to using our civil rights laws to ensure that the rights of all people, including those detained inside jails and prisons, are fully protected.”
“The defendant betrayed the public trust placed in him, abused his authority, enabled the violation of other’s rights, and did a grave disservice to all law enforcement,” said U.S. Attorney Carlton S. Shier IV for the Eastern District of Kentucky. “Instead of enforcing the law and protecting those in his care, he chose to cover up disgraceful abuses and to discredit those who faithfully discharge their public service. His conviction is the next step in the process of restoring the public’s trust.”
“Pearce lied in an attempt to cover up an egregious assault of an inmate by his fellow officers,” said Special Agent in Charge William J. Hannah of the Justice Department’s Office of the Inspector General (DOJ-OIG) Chicago Field Office. “This verdict sends a message that there is no room in the federal corrections system for civil rights violations nor any corrupt attempt to conceal such acts. Today, Pearce will be held accountable. I would like to thank the jury for their time, attention and careful consideration in this case.”
“While serving their sentence, inmates are entitled to equal protections under the law,” said Special Agent in Charge Jodi Cohen of the FBI Louisville Field Office. “When a few correctional officers choose to violate those protections, either by physical abuse or by orchestrating a cover-up, the integrity of all officers is questioned. The FBI stands ready to bare all of its resources in order to bring to justice law enforcement officials who take advantage of their position of power.”
The maximum penalties for the false report offenses are 20 years of imprisonment. The sentencing is scheduled for July 5.
Assistant Attorney General Clarke, U.S. Attorney Shier, Special Agent in Charge Hannah and Special Agent in Charge Cohen made the announcement.
DOJ-OIG and the FBI the investigated the case.
Assistant U.S. Attorney Zachary Dembo for the Eastern District of Kentucky and Trial Attorney Thomas Johnson of the Civil Rights Division’s Criminal Section are prosecuting the case.
Rowan County Man Sentenced to 45 Years for Production and Distribution of Child Sexual Abuse MaterialRead the Press Release
ASHLAND, Ky.— A Morehead, Ky., man, Johnathan Clay Davenport, 31, was sentenced to 540 months in federal prison on Wednesday, by U.S. District David Bunning, for production of child pornography and distribution of child pornography.
According to his plea agreement, law enforcement received information that a subject had distributed child abuse material on Kik Messenger, along with messages that indicated that he had been sexually abusing three minor children. Law enforcement located Davenport, and Davenport admitted he was responsible for distributing the image of child sexual abuse material and he also admitted that he was part of a group related to the sexual exploitation of children. Upon search, law enforcement found that Davenport had produced additional sexually explicit images of three minor children and attempted to produce images of a fourth minor victim, and he admitted to taking the explicit images in his home.
Davenport pleaded guilty in November 2022.
Under federal law, Davenport must serve 85 percent of his prison sentence. Upon his release from prison, he will be under the supervision of the U.S. Probation Office for 15 years.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky; Jerry Templet, Special Agent in Charge of Homeland Security Investigations (HSI); and Col. Phillip Burnett, Commissioner, Kentucky State Police, jointly announced the sentence.
The investigation was conducted by the DHS-HSI and KSP. The United States was represented by Assistant U.S. Attorney Erin Roth.
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
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Lexington Man Sentenced to 151 Months for Fentanyl Trafficking and Possession of a Firearm by a Convicted FelonRead the Press Release
FRANKFORT, Ky.— A Lexington, Ky., man, Isaiah Wimberly, 30, was sentenced to 151 months in federal prison on Wednesday, by U.S. District Judge Gregory Van Tatenhove, for possession with intent to distribute 40 grams or more of fentanyl and possession of a firearm by a convicted felon.
According to his plea agreement, an arrest warrant was issued for Wimberly in September 2021. Upon executing the warrant, after Wimberly had exited his vehicle, a search of the vehicle discovered two, loaded firearms. A search of his residence then uncovered 90 grams of fentanyl, scales, and an unloaded firearm. Thereafter, in April 2022, law enforcement received information that Wimberly was selling narcotics at a local hotel. Wimberly was arrested and law enforcement seized an additional 191 grams of fentanyl. Wimberly admitted that he possessed the narcotics seized on both occasions and that he intended to distribute it. Wimberly also admitted that he knew he was prohibited from possessing a firearm, due to prior felony convictions.
Wimberly pleaded guilty in September 2022. Wimberly was previously convicted, in June of 2019, of being a convicted felon in possession of a firearm and possession of a controlled substance in the first degree, in Fayette Circuit Court.
Under federal law, Wimberly must serve 85 percent of his prison sentence. Upon his release from prison, he will be under the supervision of the U.S. Probation Office for four years.
Carlton S. Shier IV, United States Attorney for the Eastern District of Kentucky; Shawn Morrow, Special Agent in Charge, ATF Louisville Field Division; Jodi Cohen, Special Agent in Charge, FBI Louisville Field Office; and Chief Lawrence Weathers, Lexington Police Department, jointly announced the sentence.
The investigation was conducted by ATF, FBI, and the Lexington Police Department. The United States was represented by Assistant U.S. Attorney Cindy Rieker.
This case was prosecuted as part of the Department of Justice’s “Project Safe Neighborhoods” Program (PSN), which is a nationwide, crime reduction strategy aimed at decreasing violent crime in communities. It involves a comprehensive approach to public safety — one that includes investigating and prosecuting crimes, along with prevention and reentry efforts. In the Eastern District of Kentucky, U.S. Attorney Shier coordinates PSN efforts in cooperation with various federal, state, and local law enforcement officials.
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Owner of Lexington Tax Preparation Service Indicted on 31 Counts of Tax FraudRead the Press Release
LEXINGTON, Ky. - On Thursday, a federal grand jury sitting in Lexington returned an indictment charging 41-year-old Tiffany Williams, of Georgetown, Ky., with 31 counts of aiding and assisting in the preparation and presentation of false and fraudulent tax returns, statements, or other documents.
The indictment alleges that Williams owned a tax preparation business in Fayette County, Quality Tax Services. It further alleges that, while operating that business from 2014 through April 2018, Williams prepared several fraudulent tax returns for presentation to the IRS. According to the indictment, the returns were false and fraudulent because they represented that the taxpayers were entitled to claim certain tax deductions, when Williams knew the taxpayers were not entitled to claim the deductions.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky, and Bryant Jackson, Special Agent in Charge, IRS – Criminal Investigations, jointly announced the indictment.
The investigation was conducted by IRS - Criminal Investigations and the indictment was presented to the grand jury by Assistant U.S. Attorney Andrea Mattingly-Williams.
Williams is scheduled to appear in court for her initial appearance on March 14, 2023. She faces up to three years in prison and a $250,000 fine, on each count. However, any sentence following a conviction would be imposed by the Court, after its consideration of the U.S. Sentencing Guidelines and the federal sentencing statutes.
Any indictment is an accusation only. A defendant is presumed innocent and is entitled to a fair trial at which government must prove guilt beyond a reasonable doubt.
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Medical Equipment Company Pays $7 Million to Resolve False Claims Act AllegationsRead the Press Release
LEXINGTON, Ky.— United Seating and Mobility, LLC, d/b/a Numotion (Numotion) has paid $7 million to resolve civil allegations that it made false statements in connection with claims for reimbursement it submitted to Kentucky Medicaid, two of Kentucky Medicaid’s Managed Care Organization contractors (MCOs), MO HealthNet (Missouri Medicaid), and D.C. Medicaid.
Numotion is a national supplier of durable medical equipment (DME), such as hospital beds, manual wheelchairs, power wheelchairs and accessories, and gait trainers. The investigation involved DME that was “manually priced” by Medicaid payors in Kentucky, Missouri, and D.C. Those Medicaid programs reimbursed manually priced DME based on the cost Numotion actually paid the manufacturer for the equipment. Specifically, in Kentucky, reimbursement is based on “a manufacturer’s actual charges” billed to Numotion, or the “invoice price;” in Missouri, reimbursement is based on the “actual invoice of cost;” and in D.C., reimbursement is based on “original documentation reflecting all discounts.”
In the Settlement Agreement, the United States alleged that Numotion did not disclose all discounts Numotion received from, or the cost Numotion actually paid to, DME manufacturers when submitting claims for manually priced DME to Kentucky Medicaid, two Kentucky Medicaid MCOs (Aetna Better Health of Kentucky and WellCare of Kentucky), MO HealthNet, and D.C. Medicaid. Numotion’s failure to disclose all discounts, or the actual cost paid, resulted in these Medicaid programs paying Numotion higher reimbursements than it was entitled to receive. The United States contended that the conduct violated the False Claims Act, 31 U.S.C. § 3729(a)(1)(B), a federal law that prohibits knowingly making or using a false statement material to a false claim for reimbursement.
As part of the settlement, Numotion also entered into a 5-year Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services Office of Inspector General. The CIA requires, among other things, that Numotion implement a centralized risk assessment program, as part of its compliance program, and hire an Independent Review Organization to complete annual reviews of some of its Medicare and Medicaid claims.
“By hiding or failing to disclose discounts, to receive higher reimbursement from Medicaid programs across the country, Numotion prioritized its financial incentives, to the detriment of these Medicaid programs,” said Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky. “Whenever the valuable resources of government health care programs are improperly dissipated to those who are not entitled, it diminishes the ability of these programs to meet the needs of their beneficiaries. We remain committed to doing our part to protect these programs from fraud, waste, and abuse and to preserve the taxpayer money that supports them.”
“When health care companies do not follow federal health care billing requirements, the integrity of those safety net programs can be undermined,” said Special Agent in Charge Tamala E. Miles of the U.S. Department of Health and Human Services Office of Inspector General. “Working with our law enforcement partners, the dedicated work of OIG’s investigators and attorneys has again resulted in the recovery of taxpayer dollars and better protection against improper billing in the future.”
The settlement resolves a lawsuit originally brought by L. Richard Parkey, a former Numotion employee, under the qui tam, or whistleblower, provisions of the False Claims Act. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. As part of this resolution, Parkey will receive approximately $1.05 million of the settlement amount.
This case was investigated by the U.S. Department of Health and Human Services, Office of Inspector General. Assistant United States Attorney Jennifer A. Williams handled the matter for the United States.
The case is United States ex rel. L. Richard Parkey v. United Seating and Mobility, LLC d/b/a Numotion, Case No. 3:17-cv-53-GFVT. The claims resolved by the settlement are allegations only, and there has been no determination of liability.
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Former Winchester Man Sentenced to 41 Months for Bank FraudRead the Press Release
LEXINGTON, Ky.— Christopher “Rusty” Custer, 55, formerly of Winchester, Ky., but now residing in Conroe, Texas, was sentenced to 41 months in federal prison on Wednesday, by Chief U.S. Judge Danny C. Reeves, after pleading guilty to bank fraud.
According to Custer’s plea agreement, he admitted to lying to Traditional Bank to obtain two loans, totaling more than $1.5 million, for the purchase of a home and property to be used for an equine business. He also admitted to lying to victim P.H., to obtain a $75,000 personal loan. Custer conceded that he provided the bank and P.H. with false personal financial statements, supported by falsely manipulated documentation from well-known financial institutions, suggesting he was worth more $6 million. Actual records from these financial institutions showed at most a $100.00 closing balance in one account. He also exaggerated the value of his personal assets, claiming to own roughly $300,000 in household goods and furniture, when seeking loans from Traditional Bank and P.H.; but he then admitted he owned roughly $20,000 worth of these same items in his bankruptcy filing.
After repaying P.H. and the foreclosure on the property he bought with the proceeds of the Traditional Bank loans, Custer still owes more than $500,000 in restitution.
Custer pleaded guilty on October 21, 2022.
Under federal law, Custer must serve 85 percent of his prison sentence, upon his/her/their release from prison will be under the supervision of the U.S. Probation Office for five years.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky, and Kathy Enstrom, Special Agent in Charge, Office of Inspector General, Federal Deposit Insurance Corporation, jointly announced the sentence.
The investigation was conducted by the FDIC Office of Inspector General. The United States was represented by Assistant U.S. Attorneys Kathryn Dieruf and Kate Smith.
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Textile Converter Pays $344,516.80 to Resolve False Claims Act AllegationsRead the Press Release
LEXINGTON, Ky.— Tabb Textiles Co., Inc. (“Tabb”), and individuals affiliated with the company, have paid $344,516.80 to resolve allegations that Tabb improperly billed Federal Prison Industries, Inc. for fabric that was sourced overseas, in violation of contract requirements.
Federal Prison Industries, Inc., also known as “UNICOR,” is a corporation wholly owned by the United States that allows inmates of the Bureau of Prisons to obtain occupational skills and work experience prior to their release. UNICOR’s operations include the manufacturing of apparel and other textile goods at twenty-three locations across the United States. Through these operations, UNICOR also strives to support the domestic economy, acquiring its manufacturing supplies from American companies.
On April 1, 2016, UNICOR awarded Tabb a contract for the provision of domestic fabric for use in UNICOR’s textile operations. Under the contract, Tabb supplied over six million yards of fabric to UNICOR. Of these six million yards of fabric, approximately 200,000 yards of fabric came from a foreign source, an error that arose from Tabb intermingling foreign and domestic fabric after the bleaching process.
A qui tam complaint prompted the United States’s investigation. A qui tam is a lawsuit under the False Claims Act that is brought by a private citizen on behalf of the United States, allowing the private citizen to share in the financial recovery. Although the investigation demonstrated that Tabb purchased domestic fabric for the contract, an internal investigation by Tabb revealed the intermingling of foreign and domestic white fabric, causing UNICOR to accept delivery of foreign-sourced fabric. Tabb cooperated with the United States’ inquiries, disclosing the results of its internal investigation and agreeing to compensate the United States for its error. The private citizen who brought the qui tam suit will receive approximately $65,000 from the settlement.
The case was investigated by the U.S. Department of Justice, Office of Inspector General. Assistant United States Attorney Mary Melton represented for the United States. The case is United States ex rel. Perlstein v. Tabb Textiles Co., Inc., et al., Case No. 21-cv-70-REW. The claims resolved by the settlement are allegations only, and there has been no determination of liability.
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Pike County Man Sentenced to Life for Distributing Fentanyl that Resulted in Overdose DeathRead the Press Release
PIKEVILLE, Ky.— A Shelbiana, Ky., man, Justin Bryant, 38, was sentenced to life in federal prison on Tuesday, by U.S. District Judge Robert Wier, for distributing fentanyl and para-flurofentanyl that caused death of a victim, and for conspiring with others to distribute heroin, fentanyl, and para-fluorofentanyl.
Bryant was convicted by a federal jury in October 2022. According to evidence at trial, on October 12, 2021, Bryant smuggled drugs into the Pike County Detention Center and distributed them. The drugs contained fentanyl and para-fluorofentanyl, and their use resulted in the death of another individual in the jail.
At sentencing, Judge Wier made a finding that there was reliable evidence connecting Bryant to another overdose death in August of 2021. The evidence also documented that, even after the overdose death of the victim on October 12, 2021, staff with the Pike County Detention Center and Pikeville Police Department prevented Bryant from bringing drugs into the jail on two additional occasions. The conviction in this case is the most recent of 30 prior criminal convictions, which Bryant has received over the past 20 years.
Carlton S. Shier IV, United States Attorney for the Eastern District of Kentucky; J. Todd Scott, Special Agent in Charge, DEA Louisville Field Division; and Mike Riddle, Chief of the Pikeville Police Department jointly announced the sentence.
The investigation was conducted by the DEA and the Pikeville Police Department. The United States was represented by Assistant U.S. Attorney Andrew H. Trimble.
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Jury Finds Lexington Investment Advisor and Attorney Guilty of Charges Related to Investment FraudRead the Press Release
LEXINGTON, Ky. - A Lexington investment advisor and attorney, Douglas Hawkins, of Richmond, Ky., was found guilty late Friday, by a federal jury sitting in Lexington, of investment advisor fraud, securities fraud, and two counts of mail fraud.
According to the evidence at trial, while operating as an investment advisor, Hawkins encouraged his clients to invest in securities, which were properties in Jackson, Mississippi. Clients invested over $2 million in the properties. Hawkins withheld vital information about the properties when advising his clients to invest, including that many were uninhabitable, rent collection was burdensome, and that the properties were often subject to theft and vandalism. He also failed to inform his clients that their investment money would be used for purposes other than their properties, including paying other investors and buying a Harley Davidson for an employee.
Hawkins was indicted in October 2021.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky; Kyle Erhardt, Special Agent in Charge, United States Postal Inspection Service; and Justin Malcom Burse, Acting Commissioner, Kentucky Department of Financial Institutions, jointly announced the guilty verdict.
The investigation was conducted by the United States Postal Inspection Service and Kentucky Department of Financial Institutions. The United States was represented in the case by Assistant U.S. Attorneys Andrea Mattingly-Williams and Will Moynahan.
Hawkins is scheduled to appear for sentencing on April 24, 2023. He faces up to five years in prison on the investment advisor count; up to 20 years in prison on the securities fraud count, and up to 20 years in prison on each count of mail fraud. However, the Court must consider the U.S. Sentencing Guidelines and the applicable federal sentencing statutes before imposing a sentence. Hawkins also faces potential fines and a judgment of restitution, as ordered by the Court.
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Lexington Man Sentenced to 35 Years for Conspiring to Traffic in FluorofentanylRead the Press Release
LEXINGTON, Ky.— A Lexington man, Michael Byrd, 34, was sentenced to 35 years in federal prison on Monday, by Chief U.S. District Judge Danny Reeves, for conspiracy to distribute fluorofentanyl, possession with intent to distribute 100 grams or more of fluorofentanyl, and possession with intent to distribute 10 grams or more of fluorofentanyl.
Byrd was charged in a second superseding indictment, along with Je’Von Byrd, 22, and Savannah Asberry, 27. Byrd pleaded guilty to conspiring with others to distribute the drugs, from January 2021 to May 2022, in Fayette County. During the investigation, large quantities of illegal drugs were seized, following searches of a vehicle and Lexington residence – as well as from items collected from a foot pursuit, where a police canine overdosed from exposure to drugs. At his sentencing hearing, the Court determined that Byrd’s role in the conspiracy involved more than 4.6 kilograms of fluorofentanyl, as well as enhancements for firearm possession and maintaining a premises for drug distribution.
Byrd had previously been convicted in Louisville, of first degree robbery, first degree burglary, kidnapping, wanton endangerment, and first degree fleeing or evading police, in 2008, and of being convicted felon in possession of a handgun, in 2017.
Byrd pleaded guilty to the charges in October 2022. Asberry pleaded guilty and was sentenced in November 2022, to 120 months in prison, followed by five years of supervised release. Je’Von Byrd has pleaded guilty and is scheduled to be sentenced on February 24, 2023.
Under federal law, Byrd must serve 85 percent of his prison sentence. Upon his release from prison, he will be under the supervision of the U.S. Probation Office for 10 years.
“In addition to his extensive and violent criminal history, the defendant was illegally dealing in massive amounts of fluorofentanyl, a powerful opioid analogue of fentanyl,” said Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky. “This drug is particularly dangerous and frequently fatal – and he was responsible for more than four and half kilograms. In this case, a police canine was exposed to it, overdosed, and needed veterinary care. Clearly, the risk to the public from his conduct was enormous. His sentence is certainly warranted and would not have been possible without the dedicated efforts of all our law enforcement partners.”
“Drug dealers with guns are criminals who pose an increased threat to the safety of our communities,” said ATF Acting Special Agent in Charge Robert Maynard of the Louisville Division. “The sentencing of Michael Byrd is another example of the ongoing efforts of ATF and the Lexington Police Department working together to make our communities safer for everyone.”
United States Attorney Shier; ATF Acting SAC Maynard; and Chief Lawrence Weathers, Lexington Police Department, jointly announced the sentence.
The investigation was conducted by the ATF and Lexington Police Department. The United States was represented by Assistant U.S. Attorney Cindy Rieker.
This case was prosecuted as part of the Department of Justice’s “Project Safe Neighborhoods” Program (PSN), which is a nationwide, crime reduction strategy aimed at decreasing violent crime in communities. It involves a comprehensive approach to public safety – one that includes investigating and prosecuting crimes, along with prevention and reentry efforts. In the Eastern District of Kentucky, U.S. Attorney Shier coordinates PSN efforts in cooperation with various federal, state, and local law enforcement officials.
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Texas Woman Indicted for Money Laundering, Bank Fraud, and Identity TheftRead the Press Release
LEXINGTON, Ky. – A Houston woman, Shimea Maret McDonald, 24, has been indicted by a federal grand jury, on one count of conspiracy to commit money laundering, one count of providing fraudulent statements to a federally insured financial institution, and three counts of identity theft.
As alleged in the federal indictment, McDonald conspired with others to engage in business email compromise scams. More specifically, the conspirators targeted business or municipal entities, which had ongoing financial relationships with other vendors who were owed current of future payments by the entities. The conspirators then impersonated the vendors in email communications with the targeted entities and requested wire payments to a new bank account, one opened in the name of Gretson Company LLC. McDonald and her co-conspirators opened three bank accounts under Gretson Company LLC, which was a shell company established in Texas by managing member K.N., whose identity had been stolen. McDonald and her co-conspirators would then attempt to withdraw the funds in a variety of payment methods, to quickly move the funds elsewhere.
The indictment further alleges that, in August 2022, the conspirators impersonated a nonprofit organization having business with the City of Lexington over email and convinced a City official to wire funds owed to the non-profit organization to a bank account at Truist Bank. The City wired a total of $3,905,837.05 to the Gretson Company LLC bank account at Truist Bank. Prior to the August 2022 wire transfer, McDonald, using the identity of K.N., had requested eight counter checks from Truist Bank, which would be funded from wires fraudulently received from the City. Then, when the money was placed in the fraudulent account at Truist Bank, McDonald, using the identity of K.N., attempted to deposit a portion of these funds into another account in the name of Gretson Company LLC, at another financial institution.
Ultimately, Truist Bank and the City of Lexington were able to recover all the funds that were transmitted.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky; Jodi Cohen, Special Agent in Charge, FBI, Louisville Field Office; and Lawrence Weathers, Chief of the Lexington Police, jointly announced the indictment.
The investigation preceding the indictment was conducted by the FBI and Lexington Police. The case is being prosecuted by Assistant U.S. Attorney Kate Dieruf.
McDonald will appear in Court on Tuesday, February 7 at 10 a.m. She faces up to 20 years on the count of wire fraud; she faces up to 30 years for the count of bank fraud; she faces up to two years, to run consecutively on each count of aggravated identity theft; and she faces judgments for restitution and forfeiture of the property attained through the fraud. However, any sentence following a conviction would be imposed by the Court, after its consideration of the U.S. Sentencing Guidelines and the federal sentencing statutes.
Any indictment is an accusation only. A defendant is presumed innocent and is entitled to a fair trial at which government must prove guilt beyond a reasonable doubt.
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U.S. Attorney’s Office Secures Settlement with Kenton County Officials to Ensure Polling Place AccessibilityRead the Press Release
LEXINGTON, Ky.— The U.S. Attorney’s Office for the Eastern District of Kentucky, in partnership with the Justice Department’s Disability Rights Section, has secured an agreement. under Title II of the Americans with Disabilities Act (ADA), with the Kenton County Board of Elections to ensure that the Board’s polling places are accessible to individuals with disabilities.
The U.S. Attorney’s Office identified architectural barriers at numerous polling places after it reviewed the Kenton County Board’s voting program for compliance with the ADA. These barriers included inaccessible parking, ramps that were too steep, walkways that had steep cross slopes or had gaps and bumps in the path of travel, and voting machines that could not be accessed by voters with mobility disabilities. The Office also identified instances where the Kenton County Board did not provide voters with disabilities privacy and independence while voting.
Under the ADA, state and local governmental entities that conduct elections may not select polling places that are inaccessible to individuals with disabilities for use during elections, and they must make reasonable modifications to ensure that voters with disabilities have equal opportunity to participate in voting programs.
Under the terms of the agreement, the Kenton County Board of Elections will begin remediating its voting program. The Board will employ measures such as portable ramps, signage, and propped-open doors to ensure that its selected polling places are accessible to voters with disabilities. In addition, the Board will train its poll workers and other elections staff on the requirements of the ADA and how to use temporary measures to ensure each polling place is accessible during elections. The Board will also survey polling locations for accessibility and maintain the accessibility of each polling place it uses on election days. When selecting future polling places, the Board will select locations that will be accessible during elections.
This settlement is part of the department’s ADA Voting Initiative, which focuses on protecting the voting rights of individuals with disabilities. A hallmark of the ADA Voting Initiative is its collaboration with jurisdictions to increase accessibility at polling places. Through this initiative, the Department of Justice has surveyed more than 2,500 polling places and increased polling place accessibility in more than 50 jurisdictions, including Jefferson County, Kentucky; Newton County, Arkansas; St. Louis, Missouri; Travis County, Texas; and Lackawanna County, Pennsylvania.
For more information about the ADA, please visit http://www.ada.gov or call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY). For information about the Eastern District of Kentucky’s civil rights enforcement efforts, please visit https://www.justice.gov/usao-edky/civil-rights
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Madison County Man Sentenced to 180 Months for Armed Methamphetamine TraffickingRead the Press Release
LEXINGTON, Ky.— A Richmond, Ky., man, Jacob Tyler Hensley, 28, was sentenced to 180 months in federal prison on Monday, by U.S. District Judge Karen Caldwell, for possession with intent to distribute 50 grams or more of methamphetamine and possession of a firearm in furtherance of drug trafficking.
According to Hensley’s plea agreement, on September 17, 2020, law enforcement conducted a search warrant on Hensley’s residence and recovered approximately 705 grams of methamphetamine that he admitted he intended to distribute to others. The search of Hensley’s residence also uncovered a safe containing $8,008 in cash and a total of 16 firearms. Hensley also admitted that possessed a firearm for protection of his drugs and drug proceeds.
Hensley pleaded guilty in October 2022.
Under federal law, Hensley must serve 85 percent of his prison sentence. Upon his release from prison, he will be under the supervision of the U.S. Probation Office for five years.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky; J. Todd Scott, Special Agent in Charge, DEA, Louisville Field Division; and Sheriff Mike Coyle, Madison County Sheriff’s Department, jointly announced the sentence.
The investigation was conducted by the DEA, Madison County High Intensity Drug Trafficking Area (HIDTA) Task Force, and Madison County Sheriff’s Office. The United States was represented by Assistant U.S. Attorney David Kiebler.
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Lexington Man Sentenced to 120 Months for Armed Fentanyl TraffickingRead the Press Release
LEXINGTON, Ky.— A Lexington Antuan Lamont Jackson, Jr., 32, was sentenced to 120 months in federal prison on Monday, by U.S. District Judge Karen Caldwell, for conspiracy to distribute 400 grams of fentanyl, possession with intent to distribute 40 grams or more of fentanyl, and possession of a firearm in furtherance of drug trafficking.
According to Jackson’s plea agreement, on December 14, 2021, law enforcement conducted a traffic stop on his vehicle, recovering a 9-milimeter pistol and three wrapped baggies of fentanyl. An additional search of Jackson’s residence found three additional firearms and 120 grams of fentanyl, digital scales, various drug trafficking paraphernalia, and $50,000 in cash. Jackson admitted to conspiring to distribute 400 grams of fentanyl, possessing fentanyl with the intent to distribute, and possessing a firearm in furtherance of his drug trafficking.
Jackson pleaded guilty in October 2022.
Under federal law, Jackson must serve 85 percent of his prison sentence. Upon his release from prison, he will be under the supervision of the U.S. Probation Office for five years.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky; J. Todd Scott, Special Agent in Charge, DEA, Louisville Field Division; and Chief Lawrence Weathers, Lexington Police Department, jointly announced the sentence.
The investigation was conducted by the DEA and Lexington Police Department. The United States was represented by Assistant U.S. Attorney David Kiebler.
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