Eastern District of Kentucky

A former Social Security disability lawyer who was apprehended abroad and returned to the United States was arraigned today on charges stemming from his escape from home confinement and his failure to appear for sentencing following his March 2017 guilty plea in a social security disability benefits fraud scheme.  He immediately began serving the previously imposed 12-year prison sentence, which was ordered in his absence in June 2017.  

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, Special Agent in Charge Amy S. Hess of the FBI’s Louisville, Kentucky Field Division and Special Agent in Charge Michael McGill of the Social Security Administration-Office of Inspector General’s (SSA-OIG) Philadelphia Field Division made the announcement. 

Eric Christopher Conn, 57, of Pikeville, Kentucky, and his alleged accomplice, Curtis Lee Wyatt, were charged in connection with Conn’s escape in a seven-count indictment returned on Sept. 6, 2017, in the Eastern District of Kentucky in Lexington.  Conn entered pleas of not guilty.  Both he and Wyatt are scheduled to proceed to trial on Feb. 12, 2018.  

The indictment charges Conn and Wyatt with one count each of conspiracy to escape and one count each of conspiracy relating to Conn’s failure to appear for his sentencing.  Conn is also charged with one count of escape and one count of failing to appear.  The indictment alleges that Conn, while on home confinement after pleading guilty to two federal offenses but before being sentenced, escaped from custody by severing an electronic monitoring device from his ankle during a court-approved visit to Lexington on June 2, 2017, and fled to the Mexican border.  According to the indictment, Conn ultimately failed to appear for his sentencing hearing on July 14, 2017. 

Conn was also charged last year, along with a former Social Security administrative law judge and a former clinical psychologist, in an 18-count indictment charging conspiracy, mail and wire fraud, false statements, money laundering and other related offenses in connection with a $550 million Social Security disability fraud scheme.  The indictment alleges that from October 2004 to Feb. 13, 2012, Conn and others conspired to defraud the government by, among other things, submitting false and fraudulent medical documentation to the SSA in order to have the SSA pay claimants’ retroactive disability benefits, continue to pay claimants’ disability benefits in the future, award Medicare and Medicaid benefits to claimants and pay Conn’s attorney fees.  According to the indictment, the conspirators intended that the SSA disburse more than $550 million in disability benefits in more than 2,000 cases to claimants in Kentucky and elsewhere, irrespective of the claimants’ actual entitlement to benefits.

The former Social Security administrative law judge named in that indictment, David Black Daugherty, pleaded guilty in May 2017 to a two-count information charging him with receiving illegal gratuities, and was sentenced on Aug. 25, 2017, to four years in prison.  The former clinical psychologist, Alfred Bradley Adkins, was found guilty following a six-day trial in June 2017 of one count of conspiracy to commit mail fraud and wire fraud, one count of mail fraud, one count of wire fraud and one count of making false statements, and was sentenced on Sept. 22, 2017, to 25 years in prison.

Conn previously pleaded guilty on March 24, 2017, to a two-count information charging him with theft of government money and paying illegal gratuities, and was sentenced in absentia on July 14, 2017, to 12 years in prison on those charges.  Although Conn began serving his 12-year sentence, he remains charged under the original indictment. 

On Saturday, Dec. 2, 2017, Conn was taken into custody without incident in La Ceiba, Honduras with assistance from the Agencia Tecnica de Investigaciones Criminales de Honduras (ATIC) and the FBI’s Legal Attaché in San Salvador.  Since Conn’s escape, the FBI has worked diligently with U.S. Probation, the U.S. Marshals Service, U.S. Customs and Border Protection, the SSA-OIG, the Kentucky State Police, Lexington Police, Pikeville Police, University of Kentucky Police, and the Luna County (New Mexico) Sheriff’s Office to locate and apprehend him.  The Criminal Division’s Office of International Affairs provided valuable assistance to the investigation of Conn’s escape.   

An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law. 

The FBI and SSA-OIG investigated the case.  Trial Attorney Dustin M. Davis of the Criminal Division’s Fraud Section and Trial Attorney Elizabeth G. Wright of the Criminal Division’s Money Laundering and Asset Recovery Section are prosecuting the case.  

LEXINGTON, KY. – Robert M. Duncan, Jr. has taken the oath of office to become the United States Attorney for the Eastern District of Kentucky. He was nominated by President Donald Trump on August 3, 2017, and confirmed by the United States Senate on November 9, 2017. Duncan took the oath of office from Chief Judge Karen K. Caldwell of the United States District Court for the Eastern District of Kentucky.

 

“I am humbled and honored to have been appointed by President Trump and confirmed by the United States Senate to serve as the United States Attorney for the Eastern District of Kentucky,” Duncan stated.  “It is my great privilege to serve with the dedicated and talented members of the United States Attorney’s Office, men and women who are committed to the principles of justice, fairness, and the rule of law.  As a native Kentuckian and career prosecutor, I understand the unique challenges facing our District, including the devastation of lives caused by drug trafficking and the tragic consequences of violent crime.  I am committed to working with our partners and colleagues in law enforcement to help make our communities safer through the vigorous and fair enforcement and prosecution of the laws of the United States.”     

 

As United States Attorney, Robert M. Duncan, Jr. is the top-ranking federal law enforcement official in the Eastern District of Kentucky, which encompasses the 67 easternmost counties in the Commonwealth, has a population of approximately 2.2 million, and includes the cities of Lexington, Covington, Frankfort, Ashland, Pikeville, Somerset, and London.  Duncan will serve as the twenty-third presidentially appointed United States Attorney for the Eastern District of Kentucky, which was created in 1901.    

 

Duncan will oversee a staff of 83 employees, including 39 attorneys, 36 non-attorney support personnel, and 8 contract employees. The office is responsible for prosecuting federal crimes in the District, including crimes related to terrorism, public corruption, child exploitation, firearms, and narcotics. The office also defends the United States in civil cases and collects debts owed to the United States.

 

Prior to his appointment, Duncan had served for more than a decade as an Assistant United States Attorney in the Eastern District of Kentucky.  Beginning in 2011 and continuing until his appointment as United States Attorney, Duncan focused on the prosecution of Organized Crime Drug Enforcement Task Force cases, working with federal, state, and local law enforcement personnel to disrupt and dismantle complex drug trafficking and money laundering organizations operating in the District and elsewhere.  From 2007 to 2013, Duncan served as coordinator of the office’s Project Safe Neighborhoods Program, a Department of Justice initiative to reduce gun and gang crime through education, community outreach, and prosecution. 

 

During his career as a federal prosecutor, Duncan handled a wide array of criminal and appellate matters, including cases involving violent crimes, immigration offenses, public corruption, white-collar offenses, environmental crimes, and child exploitation offenses.  Duncan also served as the Professional Responsibility Officer for the office, providing advice about legal ethics.  Duncan joined the United States Attorney’s Office in January 2005. 

 

Prior to becoming a federal prosecutor, Duncan served as a law clerk to Senior United States District Court Judge Henry R. Wilhoit, Jr., in Ashland, Kentucky.  

 

Duncan is a member of the Kentucky Bar Association and admitted to practice law in Kentucky. He is also admitted to practice before the Supreme Court of the United States, the United States Court of Appeals for the Sixth Circuit, and the United States District Court for the Eastern District of Kentucky.  Duncan has served as President of the Kentucky Chapter of the Federal Bar Association and on several civic, educational, and philanthropic boards.      

 

Robert M. Duncan, Jr., grew up in Inez, in Martin County, Kentucky, along the Commonwealth’s border with West Virginia.  Duncan graduated from Sheldon Clark High School in Inez in 1996.  He graduated from Centre College in Danville, Kentucky, in 2000 with his B.A. in English and minor in History.  Duncan received his J.D. in May 2003 from the University Of Kentucky College of Law in Lexington, Kentucky. 

 

Duncan, his wife, Valerie, and their children live in Lexington.  

Photo taken by U.S. Attorney's Office - EDKY Officials in the picture from Left to Right: Acting U.S. Attorney Carlton S. Shier, IV, Lou Anna Red Corn, Fayette County Commonwealth Attorney, Amy Hess, Special Agent in Charge, FBI Louisville, Chief Mark G. Barnard, Lexington Police Department, Lieutenant Ann Welch, Lexington Police Department, Winn Stephens, Executive Director, Children's Advocacy Center of the Bluegrass, Kimberly Kidd, Special Agent, FBI, Sue Thornton, Paralegal Contractor, U.S. Attorney's Office Forfeiture Unit and Wade Napier, AUSA, U.S. Attorney's Office Forfeiture Unit.

 

Local law enforcement partners that participated in the criminal prosecution

to share forfeited funds with local Children’s Advocacy Center

 

LEXINGTON, Ky. – The United States Attorney’s Office, the Department of Justice Criminal Division’s Money Laundering and Asset Recovery Section, the FBI, the Fayette Commonwealth Attorney’s Office, the Lexington Police Department, and the Children’s Advocacy Center of the Bluegrass (CAC) jointly announced today that a portion of proceeds from the sale of the Lexington residence owned by two men convicted of child abuse will be shared with the CAC.

 

Beginning in 2014, the Fayette Commonwealth’s Attorney’s Office prosecuted brothers Jack and Jerry Cassidy for possession of child pornography and for the sexual abuse of six minor victims, which dated back to the 1970s.  The Cassidys met their abuse victims through volunteer work in the Lexington community.  The victims were 15 years of age or younger at the time of the abuse and much of that abuse occurred at the brother’s Lexington residence, which is located on Mason Headley Road.  The Lexington Police Department’s investigation of the case began when emergency personnel and police were called to the residence in August 2014.  Upon their arrival, the police found that the Cassidys had documented their abuse of victims, in diaries and other writings, and had evidence of that abuse on display in the house.

 

Both brothers entered guilty pleas to nine criminal counts, which included possession of child pornography, sexual abuse, sodomy and indecent and immoral practices (a pre-penal code offense).  Fayette Circuit Court Judge Kimberly Bunnell has sentenced both men to 20 years in state prison, the maximum allowed by Kentucky law.

 

In 2015, the United States Attorney’s Office filed a civil forfeiture action against the Mason Headley residence, asserting that the home had facilitated the interstate transport of minors for the purpose of sexual assault.  Federal civil asset forfeiture law allows the federal government to file lawsuits against property that has been used to facilitate a violation of federal law, or is otherwise the proceeds of a federal criminal violation.  The Cassidys agreed to the forfeiture of their residence, which was then awarded to the federal government and eventually sold by the United States Marshals Service.

 

Through the federal government’s asset forfeiture equitable sharing program, the FBI is permitted to share up to 80 percent of the net proceeds of forfeited assets, with the local law enforcement partners who participated in the investigation and prosecution of the case.  In turn, local law enforcement partners are each permitted to transfer their shared funds, up to $25,000 per year, to community-based organizations that serve a law enforcement purpose. 

 

In this case, the FBI has shared the maximum amount allowed from the sale of the residence with its two local partners in the investigation:  the Lexington Police Department and the Fayette Commonwealth Attorney’s Office.  Both of these partners have elected to transfer the maximum amount of their shared funds to the CAC this year ($50,000 in total), with remaining shared funds being transferred next year.

 

The CAC is a community-based organization that advocates on behalf of children alleged to have been abused; assists in the coordination of investigations of child abuse, by providing a location for forensic interviews and medical examinations; promotes the coordination of services for children alleged to have been abused; and provides, directly or by agreement, services that include forensic interviews, medical examinations, mental health and related support services, court advocacy, consultation, and training.

 

“These men committed appalling offenses against minor victims and used their home to facilitate their criminal conduct,” said Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky.  “We were able to use the tools available to us under federal law to forfeit an instrument of their cruelty and, with the assistance of our valued law enforcement partners, convert it into a genuine benefit to future child abuse investigations in our community and the provision of essential services to victims of child abuse.”

 

“Under Kentucky law, our office could not obtain forfeiture of the property where these horrible acts occurred,” said Lou Anna Red Corn, Fayette Commonwealth’s Attorney.  We are fortunate in Lexington to have law enforcement agencies that work together like this, and as result of these shared funds, we are turning something horrible into something healing for child sexual abuse victims.”

 

“Detectives in our Special Victims Section utilize the Children’s Advocacy Center nearly every day,” said Lexington Police Chief Mark Barnard.  “The CAC provides a nurturing, friendly and safe environment to observe child interviews and meet with families and counselors.  Our partnership with the CAC plays a necessary and important role in investigating and prosecuting crimes against young victims.  Central Kentucky law enforcement agencies have come to rely on the CAC, so this financial contribution to support its mission of reducing the trauma experienced by child victims of sexual abuse was simply the right thing to do.”

 

“The Children’s Advocacy Center of the Bluegrass is honored to receive these funds,” said Winn Stephens, Executive Director of the Children’s Advocacy Center of the Bluegrass.  “We are going to change the narrative of this story.  What started as a horrible crime will ultimately result in helping hundreds of children overcome the abuse they suffered.  These funds will also be utilized to aid in the investigation and prosecution of child abuse cases and to make sure other individuals who hurt our most vulnerable citizens are swiftly brought to justice.”

LEXINGTON, Ky. – Jason Whitis, 41, Robbie Neal Whitis, 34, and Joshua Kelley Pyles, 33, each of Somerset, Ky., were sentenced today, by Senior United States District Judge Joseph M. Hood, for conspiring to distribute 50 grams or more of methamphetamine.  Robbie Whitis and Pyles were also sentenced for possessing a firearm in furtherance of the methamphetamine conspiracy.  Jason Whitis was sentenced to 200 months in prison; Robbie Whitis was sentenced to 75 months; and Pyles was sentenced to 120 months. 

Jason Whitis and Robbie Whitis previously pleaded guilty, on August 7, 2017, and admitted that they conspired with each other and Pyles to distribute approximately 220 grams of methamphetamine.  The methamphetamine was intended for distribution in the Somerset area.  The methamphetamine was discovered during a traffic stop of a vehicle occupied by all three defendants, in Fayette County, on April 26, 2017.  During the traffic stop, Robbie Whitis and Pyles were each found in possession of a firearm.  Robbie Whitis then admitted that he possessed the firearm for protection, in furtherance of the drug crime.  Pyles was found guilty after a jury trial, in August of this year.

Under federal law, all three men must serve 85 percent of their prison sentences.  Following their release, they will then be under the supervision of the United States Probation Office. 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky; Timothy J. Plancon, DEA Special Agent in Charge; and Richard Sanders, Commissioner, Kentucky State Police, jointly made the announcement.

The investigation was conducted by the DEA and the Kentucky State Police.  The United States was represented by Assistant United States Attorneys Robert M. Duncan, Jr., and Lauren Tanner Bradley.

WASHINGTON – Justice Department announced today that a former supervisory deputy jailer at the Kentucky River Regional Jail (KRRJ), Perry County, Kentucky, has been sentenced to 126 months in federal prison related to his role in an unprovoked violent assault of a detainee.

 

United States District Judge Karen K. Caldwell formally sentenced Damon Wayne Hickman, 40, on his conviction.  Under federal law, Hickman must serve 85 percent of his prison sentence.  Following the completion of his prison term, he will be under the supervision of the United States Probation Office for three years.

 

On Nov. 9, 2016, Hickman entered a guilty plea to using excessive force against the detainee, resulting in bodily injury, and to deliberately ignoring the detainee’s serious medical needs, also resulting in bodily injury, and obstruction of justice.  On May 11, 2017, William Curtis Howell, 60, was convicted of the same offenses after a jury trial, and he is scheduled to be sentenced in United States District Court on Dec. 19, 2017.  Hickman was also convicted of obstruction of justice for creating a fake medical log to cover up his and Howell’s misconduct.

 

According to evidence and testimony presented during Hickman’s pretrial hearings and Howell’s jury trial, on July 9, 2013, at the Kentucky River Regional Jail in Hazard, Kentucky, Hickman and Howell violently beat Larry Trent, 54, a pretrial detainee, and left him in his cell, seriously injured and bleeding from an open head wound.  Trent ultimately died from injuries sustained during the beating.  Trent was in custody for a DUI charge.  Hickman, who was initially charged along with Howell, pleaded guilty prior to trial and testified against Howell.

 

The assault started when Howell and Hickman opened the door to Trent’s cell to remove a sleeping-mat, and Trent ran out of the cell.  Howell tased Trent, and after Trent was brought to the floor, Hickman, without justification, violently kicked Trent in the ribs.  Hickman and Howell continued their assault after Trent was carried back to the area outside of his cell.  Both deputies, without justification, punched, kicked, and stomped on Trent.  Witnesses further testified that, before closing the cell door, Howell stepped into Trent’s cell and kicked Trent in the head while Trent was on the floor and posing no threat.  After the assault, Hickman and Howell had other inmates clean up Trent’s blood from the floor and walls outside of his cell.

 

The evidence further revealed that Trent was lying motionless in his cell with blood all over his face.  However, Hickman and Howell willfully failed to provide medical attention, because they did not want to get in trouble.  Approximately four hours after the beating, another employee at the jail discovered Trent’s lifeless body.  Paramedics were summoned and Trent was transported to a local hospital, where he was later pronounced dead.

 

“Corrections officers throughout the country carry out their duties in a responsible manner on a daily basis,” said Acting Assistant Attorney General John Gore. “Attacks like this one dishonor those responsible corrections officers and is a violation of civil rights, and the Department of Justice will prosecute such misconduct.”

 

“The criminal conduct in this case was a disgraceful breach of public trust, a grave disservice to truly dedicated law enforcement personnel, and an appalling violation of a man’s civil rights,” said Acting U. S. Attorney Carlton Shier.  “Holding law enforcement officials accountable for violations of the public trust we place in them is absolutely critical to making our communities safer.”

 

Autopsy results presented at trial showed that Trent died from internal bleeding caused by a displaced pelvic fracture, and from blunt force trauma to his head, torso, and extremities.

 

According to evidence presented at pretrial hearings for Hickman and at an unrelated jury trial of another KRRJ supervisory deputy jailer, Kevin Asher, Hickman and Asher assaulted another pre-trial detainee at the same jail in 2012.  On Oct. 19, 2017, Asher was sentenced to 108 months imprisonment for his involvement in that unrelated inmate assault.

 

The Kentucky River Regional Jail houses pre-trial detainees from Perry and Knott Counties.  As a supervisory deputy jailer, Hickman was responsible for the custody, care, safety and control of the inmates at the jail.

 

Carlton S. Shier, IV, Acting U.S. Attorney for the Eastern District of Kentucky; John M. Gore, Acting Assistant Attorney General for the Civil Rights Division; and Amy Hess, Special Agent in Charge, Federal Bureau of Investigation, jointly made the announcement. 

 

The investigation was conducted by the FBI and the Kentucky State Police.  Assistant U.S. Attorney Hydee Hawkins of the United States Attorney’s Office and Trial Attorney Sanjay Patel of the Civil Rights Division prosecuted this case on behalf of the federal government. 

LEXINGTON, Ky. – A Lexington, Ky., man has entered a guilty plea to a federal arson charge, which involved a fire at a local business where he had previously been employed.

 

Bennie C. Davis, 21, entered his guilty plea today, before Senior U.S. District Judge Joseph M. Hood.

 

In his guilty plea, Davis admitted that, on April 25, 2017, he entered the Qdoba Restaurant located on East Tiverton Way, in Lexington, after the store had closed and then set fire to the building.  Davis had been recently discharged from a management position with Qdoba, a position he had held for several years.

 

Acting U.S. Attorney Carlton S. Shier, IV; Stuart Lowery, Special Agent in Charge, ATF; and Kristin Chilton, Chief of the Lexington Fire Department, jointly announced the guilty plea.

 

The ATF and the Lexington Fire Department conducted the investigation.  Assistant U.S. Attorney Roger West prosecuted the case on behalf of the federal government.

 

Davis will be sentenced on February 29, 2018 and faces a minimum sentence of five years.  He must serve at least 85 percent of his prison sentence.

LEXINGTON, Ky. – A Central Kentucky pharmacist, who owned and operated Hometown Pharmacy of Georgetown, has been sentenced to eight years in federal prison, followed by two years of home incarceration as a term of his supervised release, for Conspiracy to Distribute Oxycodone and Money Laundering.

 

Chief United States District Judge Karen K. Caldwell formally sentenced Michael Ingram, 37, of Cynthiana, Ky., earlier today.  Ingram must serve 85 percent of his sentence.  Ingram has also forfeited in excess of $450,000 stemming from his criminal conduct. 

 

In his July 2017 guilty plea, Ingram admitted that, while operating Hometown Pharmacy of Georgetown, he illegally distributed and dispensed oxycodone, by filling forged prescriptions from outside Kentucky.  Ingram also admitted that his distribution and dispensation of these pills was outside the scope of pharmaceutical professional practice and was not for a legitimate medical purpose.  Ingram further admitted that he used the proceeds of those illegal oxycodone sales to purchase the property now housing an additional business, Hometown Pharmacy of Cynthiana.

 

“We continue to see corrupt medical professionals choose profit over medical judgment and callously fuel an opioid epidemic that has decimated our state,” said Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky.  “This despicable conduct does enormous damage, both to individuals struggling with addiction and to our communities as a whole.  Combatting this epidemic requires that we be clear:  these egregious breaches of professional trust are criminal conduct that will be prosecuted.”

 

Acting United States Attorney Shier; Mark McCormack, Special Agent in Charge, FDA Office of Criminal Investigations; Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration; and Tracey D. Montaño, Special Agent in Charge, IRS, Criminal Investigation, jointly announced the sentence.  The case was prosecuted by Assistant United States Attorneys Andrew Smith and Cynthia Rieker

LEXINGTON, Ky. – Joyce Minton, 65, Aaron Brooke Warren, 43, and James Minton, 70, all of Nicholasville, Ky., have been sentenced, respectively, to 97 months, 46 months, and 18 months in federal prison, for defrauding a Nicholasville business.  They were also ordered to forfeit the proceeds of their crimes and to pay restitution to their victims.

 

Senior United States District Judge Joseph M. Hood formally sentenced the Mintons and Aaron Brooke Warren yesterday.  They must serve 85 percent of their prison sentence. 

 

In June, according to evidence presented at their trial, James Minton, Joyce Minton, and Aaron Brooke Warren conspired to defraud their longtime employer, Clark Machine Tool and Die, of Nicholasville.  The criminal conspiracy took place from February 2000 through May 2016 and stole over $1,500,000.  The conspirators defrauded the business by using company checks and credit cards to purchase personal items, by cashing and keeping company petty cash checks, by issuing themselves extra paychecks, and by inflating their paychecks.  They also kept money that customers had paid the company for work, converting those funds to their personal use.  Joyce Minton was the office manager and bookkeeper for the company; Aaron Brooke Warren was the company’s shop supervisor; and James Minton was a contractor.

 

The jury convicted Joyce Minton of 46 counts of conspiracy, mail fraud, bank fraud, and money laundering; Aaron Brooke Warren was convicted of 34 counts of conspiracy, mail fraud, and money laundering; and James Minton was convicted of seven counts of conspiracy and mail fraud.

 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky; Amy Hess, Special Agent in Charge, Federal Bureau of Investigation; Chris White, Assistant Inspector in Charge, United States Postal Inspection Service; and Richard W. Sanders, Commissioner of the Kentucky State Police, jointly announced the sentences.  Assistant U.S. Attorneys Neeraj Gupta and Ken Taylor prosecuted the case on behalf of the federal government.

WASHINGTON – A former supervisory deputy jailer at the Kentucky River Regional Jail has been sentenced to 108 months in federal prison and three years of supervised release related to his role in an unprovoked violent assault of a detainee who was being held at the jail, and for subsequently covering up the beating.                                           

Yesterday, United States District Judge Karen K. Caldwell formally sentenced Kevin Eugene Asher, 32, on his conviction.  Under federal law, Asher must serve 85 percent of his prison sentence.  Following the completion of his prison term, he will be under the supervision of the United States Probation Office for the London, KY office of the Eastern District of Kentucky. 

On April 12, 2017, a jury convicted 32-year-old Kevin Asher of deprivation of civil rights under color of law, and obstruction of justice.  

According to evidence and testimony presented during the jury trial, in November 2012, Asher and another deputy jailer, Damon Wayne Hickman, physically assaulted Gary Hill, a 55-year-old inmate who was being held following an arrest for a misdemeanor charge of disorderly conduct.  

According to testimony, Deputies Asher and Hickman approached Hill after Hill had run the faucet in his jail cell to the point where water had spilled out onto the floor.  Hickman testified at trial that he punched Hill in the face, causing Hill to fall onto the floor.  Hickman further testified that while Hill was curled up in a fetal position, he and Asher began kicking Hill.  Asher and Hickman then immobilized Hill in a restraint chair and Hickman continued to beat him.  Evidence established that following the brutal assault, the deputies failed to obtain any medical treatment for Hill who had received numerous injuries.  

The jury also found that Asher obstructed justice by filling out an incident report at the jail in which he falsely claimed that Hill had slipped and fallen onto the floor and that no physical force had been used against him. 

The Kentucky River Regional Jail houses pre-trial detainees from Perry and Knott Counties.  As a supervisory deputy jailer, Asher was responsible for the custody, care, safety and control of the inmates at the jail. 

Carlton S. Shier, IV, Acting U.S. Attorney for the Eastern District of Kentucky; John M. Gore, Acting Assistant Attorney General for the Civil Rights Division; and Amy Hess, Special Agent in Charge, Federal Bureau of Investigation, jointly made today’s announcement. 

“Nothing justifies or excuses the defendant’s outrageous conduct in this case,” said Acting Assistant Attorney General John Gore.  “When deputy jailers make the corrupt choice to violate our Constitution and laws, the Justice Department will prosecute such misconduct, just as it did here.”

“This type of criminal conduct not only causes real injuries to victims, but tarnishes the work of truly dedicated law enforcement personnel,” said Acting U.S. Attorney Carlton Shier.  “Prosecuting this type of disgraceful conduct is critical to making our communities safer.  We simply must hold officials accountable for violations of the public trust that was placed in them.”

“Law enforcement officers are given tremendous power to enforce the law and ensure justice. Preventing abuse of this authority is necessary to protect the rights of our citizens and maintain confidence in law enforcement,” said Amy Hess, Special Agent in Charge of the FBI’s Louisville Office. “Mr. Asher’s sentence shows that the FBI will aggressively investigate color of law and civil rights violations, to hold those with the responsibility for upholding the law accountable to it.”

The investigation was conducted by the FBI and the Kentucky State Police.  Assistant U.S. Attorney Hydee Hawkins of the United States Attorney’s Office and Trial Attorney Sanjay Patel of the Civil Rights Division prosecuted this case on behalf of the federal government

FRANKFORT, Ky. – A Frankfort man has been sentenced to 23 years in federal prison, for producing sexually explicit images of a minor and then sending them to another man.

 

Yesterday, United States District Judge Gregory F. Van Tatenhove formally sentenced Matthew Craig Fosson, 41, on his conviction.  Under federal law, Fosson must serve 85 percent of his prison sentence.  Following the completion of his prison term, he will be under the supervision of the United States Probation Office for life.

 

In his guilty plea earlier this year, Fosson admitted that, in August 2016, he produced sexually explicit images of a minor female, who was in his custody and care.  He sent those images to a Pennsylvania man, who in turn sent sexually explicit images of another minor female to Fosson.

 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky and Amy S. Hess, Special Agent in Charge of the FBI Louisville Field Division, jointly announced the sentence.

LEXINGTON, Ky. – A Wallingford, Ky. woman was indicted today for engaging in crop insurance fraud.

           

A federal grand jury in Lexington returned an indictment charging 62-year-old Debra Muse with one count of conspiring to violate federal law and 27 counts of making false statements to influence the Federal Crop Insurance Corporation (“FCIC”) and companies the FCIC reinsures.

           

The indictment alleges that Muse, a crop insurance agent that contracted with Rural Community Insurance Services (“RCIS”), agreed with tobacco farmers to make false statements and reports to the FCIC and companies the FCIC reinsures, in order to submit false claims for crop insurance indemnity payments.  These false documents included false sales bills from Clays Tobacco Warehouse, where Muse also worked seasonally, and falsified tobacco grading reports.  According to the indictment, for crop year 2014, the FCIC, through RCIS, paid out nearly $170,000 in indemnity payments to Muse’s clients, as a result of these false claims for crop damage that her clients’ tobacco crop did not suffer in the way reported to the United States Department of Agriculture.

 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky; Karen Citizen-Wilcox, Special Agent in Charge, United States Department of Agriculture Office of Inspector General; Amy Hess, Special Agent in Charge, Federal Bureau of Investigation; Tracey D. Montano, Special Agent in Charge, Internal Revenue Service-Criminal Investigations; and Dwayne Depp, Director, Kentucky Department of Insurance Fraud Investigation Division, jointly announced the indictment.

 

The investigation preceding the indictment was conducted by the United States Department of Agriculture Office of Inspector General, United States Department of Agriculture Risk Management Agency, Federal Bureau of Investigation, Internal Revenue Service-Criminal Investigations, and Kentucky Department of Insurance.  The indictment was presented to the grand jury by Assistant U.S. Attorneys Kathryn M. Anderson and Erin M. Roth. 

 

A date for Muse to appear in court has not yet been scheduled.  For the conspiracy charge, Muse faces up to 5 years in prison and a fine of $250,000.  For each charge of making false statements to the FCIC, she faces up to 30 years in prison and a fine of $1,000,000.  However, any sentence following a conviction would be imposed by the Court, after its consideration of the U.S. Sentencing Guidelines and the federal statutes. 

 

            Any indictment is an accusation only. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

Case involved illegal prescribing practices at a Georgetown, Ky. pain clinic

                                                                                                 

LEXINGTON, Ky. — Yesterday, Alan Arnold Godofsky, 61, of Cincinnati, was found guilty by a federal jury, on five counts of distributing oxycodone outside the scope of professional medical practice and not for a legitimate medical purpose.  The jury returned its guilty verdict after seven days of trial.

 

The evidence at trial established that, from March 2011 through January 2012, Godofsky worked as a physician at Central Kentucky Bariatric and Pain Management, in Georgetown.  The evidence further established that, during this period, Godofsky prescribed significant quantities of oxycodone pills to patients, outside the scope of professional medical practice and without a legitimate medical purpose.  Specifically, the evidence established that he prescribed these drugs without conducting examinations, without obtaining informed consent, and to patients who had no legitimate medical need.

 

“Sadly, this case represents yet another example of a physician abdicating his professional responsibility to his patients, placing his own profit over sound medical judgment, and fueling the opioid epidemic,” said Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky.  “Prescription opioid abuse has decimated our community and the prosecution of medical professionals who betray the trust of patients and illegally dispense these highly addictive medications has been, and will continue to be, a priority for our office.  We appreciate the great work of our law enforcement partners in this case; without them, this important prosecution would not have been possible.”     

           

Acting United States Attorney Shier; Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration; Andy Beshear, Attorney General of Kentucky; Richard Sanders, Commissioner, Kentucky State Police; and Steven Davis, Acting Inspector General, Kentucky Cabinet for Health and Family Services, jointly announced the verdict.

 

Godofsky is scheduled to be formally sentenced on January 24, 2018.  The investigation was conducted by the DEA, the Kentucky Attorney General’s Office, the KSP, and the CHFS Office of the Inspector General.  The United States was represented by Assistant United States Attorney Ron L. Walker, Jr.

LONDON, Ky. – On Monday, a federal indictment was unsealed, charging two Laurel County men and a Pulaski County couple with drug, kidnapping, and firearms offenses.

 

On September 28, 2017, a federal Grand Jury, sitting in London, charged that Robert “Bobby” Hurley, III, of East Bernstadt, Ky.; Ronald Brandon “Hubcap” Hubbard, of London, Ky.; Roger Creech, of Somerset, Ky.; and Tracy Amanda Hamblin, also known as Tracy Creech, of Somerset, Ky., aided and abetted each other in the kidnapping of an unidentified victim, in May of this year.  The indictment alleges that the group kidnapped the victim, for the purpose of assaulting them, and utilized a facility or instrumentality of interstate commerce to commit the crime.  The indictment further charges the group with brandishing, using, and carrying a firearm, during commission of the crime.

 

The indictment has also charged each of the four with conspiracy to distribute methamphetamine, along with a fifth subject, Brian McDonald, who was not charged as part of the kidnapping.  Additionally, Roger Creech, Brian McDonald, and Robert Hurley, III, were each charged with illegally possessing firearms.

 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky; Stuart Lowrey, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF); Richard Sanders, Commissioner of the Kentucky State Police (KSP); and Greg Speck, Pulaski County Sheriff, jointly announce the indictment.  The case was investigated by the ATF, KSP, and Pulaski County Sheriff’s Office.

 

Any indictment is an accusation only. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

 

LEXINGTON, Ky. – Appalachian Regional Healthcare, Inc. (“ARH”) has agreed to pay the United States $150,000, to settle civil allegations that it unlawfully filled fraudulent prescriptions for stimulants and that it failed to make and maintain complete and accurate records of its controlled substances, in violation of the federal Controlled Substances Act.

 

The settlement resolves a civil lawsuit that was filed by the United States against ARH in May of 2016.  In the lawsuit, the United States alleged that Harlan ARH Hospital Pharmacy knowingly filled fraudulent prescriptions for Schedule IV stimulants.  Specifically, the United States alleged that ARH knew the prescriptions were fraudulent because ARH was aware that no doctor-patient relationship existed between the Harlan ARH Emergency Room physician, who was writing the prescriptions, and the ARH nurses and staff, who were filling the prescriptions at ARH pharmacies.  The lawsuit further alleged that individuals in Harlan ARH’s management were made aware of the improper prescribing in 2010; yet, the Harlan ARH Hospital Pharmacy continued filling those prescriptions until 2014.  The United States alleged that, as a result of these improperly filled prescriptions, ARH illegally dispensed thousands of stimulant pills to its employees and their family members.

 

The lawsuit further alleged that ARH failed to make and maintain complete and accurate records of its controlled substances at two other pharmacies, Hazard ARH Regional Medical Center Clinic Pharmacy and Middlesboro ARH Pharmacy, and that, because of that failure, Government auditors were prevented from being able to determine whether other controlled substances had been diverted for illegal use.

 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky and the Drug Enforcement Administration, Diversion Control Division jointly announced the settlement.  The Diversion Control Division and the U.S. Attorney’s Office conducted the investigation of alleged violations.  Assistant U.S. Attorneys Katherine Crytzer and Daniel Hancock represented the federal government in this case.

FRANKFORT, Ky. – A Hazard, Ky. physician and his wife have been sentenced to 180 months in prison and 80 months in prison, respectively, following their federal convictions on multiple charges relating to the unlawful distribution of prescription opioids, health care fraud, and money laundering.

 

Yesterday, U.S. District Judge Gregory Van Tatenhove sentenced Dr. James “Ace” Chaney, 52, and his wife, Lesa Chaney, 51, on their convictions.  In April 2016, a federal jury convicted Dr. Chaney of conspiracy to commit drug trafficking, 62 counts of illegal distribution of controlled substances, two counts of maintaining a premise for drug distribution, conspiracy to commit money laundering, 20 counts of money laundering, conspiracy to commit health care fraud and 84 counts of health care fraud.  The same jury convicted Lesa Chaney, the President and CEO of Ace Clinique of Medicine LLC,  of conspiracy to commit drug trafficking, two counts of maintaining a premise for drug distribution, conspiracy to commit money laundering, 20 counts of money laundering, conspiracy to commit health care fraud and 13 counts of health care fraud.

 

“This case is an example of a physician systematically betraying the trust of patients, placing his own profit over medical judgment, defrauding taxpayer-funded medical assistance programs, and fueling the opioid epidemic that has ravaged our state,” said Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky.  “Dr. Chaney’s conduct has damaged our community immeasurably and has deprived government assistance programs of critical resources.  Combatting health care fraud and prescription opioid abuse have been, and will continue to be, key priorities for our office.  Without the great work of our law enforcement partners in this case, we would not have been able to prosecute this disgraceful scheme.”   

 

From 2006 to 2014, James and Lesa Chaney owned and operated Ace Clinique of Medicine, in Hazard.  The trial evidence established that Dr. Chaney pre-signed prescriptions for controlled substances, to be filled out by clinic staff while he was vacationing or otherwise not present at the clinic, and that Dr. Chaney knowingly provided prescriptions for controlled substances to individuals who were diverting the pills for sale and to individuals who were abusing the drugs.  Dr. Chaney also required all of his patients to undergo monthly urine drug screening to test for the presence of the drugs he prescribed, as well as illegal narcotics.  When the results showed the patients were not taking the prescribed pills, or were taking illegal narcotics, Dr. Chaney directed his staff to alter the test results to falsely indicate an appropriate result.  These fraudulent test results were then submitted to Medicare, Medicaid and private insurers for payment.

 

The evidence at trial also showed that patients would frequently wait eight hours or longer, each month, to be seen by a health care provider at Ace Clinique.  The examinations would then typically be of short duration and the patient would receive a prescription for controlled substances.  The Chaneys would nonetheless bill for an office visit that falsely indicated a thorough physical examination had occurred.  The evidence further showed that the Chaneys billed Medicare for work Dr. Chaney allegedly did while he was vacationing outside the United States.

 

The Chaneys billed Medicare and Medicaid nearly $88,000,000 during the period of the conspiracy, and received more than $21,000,000.  The court ruled at the sentencing hearing that 60% of those payments resulted from the Chaney’s fraud, and they will be ordered to pay restitution back to Medicare and Medicaid, in an amount equal to what they fraudulently obtained. 

 

Under federal law, the Chaneys must serve 85% of their prison sentences and will be under the supervision of the U.S. Probation Office for three years after their release from prison.

 

Acting United States Attorney Shier; Amy S. Hess, Special Agent in Charge of the FBI’s Louisville Field Office; and Richard Sanders, Commissioner of the Kentucky State Police, jointly announced the sentences.

LEXINGTON, Ky. – A Savannah, Ga. woman, who previously admitted to her role in a conspiracy to unlawfully obtain federal tax refunds, was sentenced today to 24 months in prison.  She is the fourth and final defendant to be sentenced in this case.

           

Chief U.S. District Judge Karen Caldwell sentenced 57-year-old Lavonda Jones Hunt for conspiracy to commit mail and wire fraud and aggravated identity theft. 

 

Hunt admitted to participating in a scheme to defraud the United States by receiving and redeeming federal tax refunds,  in the names of other individuals, as a result of fraudulently filed tax returns.  Co-conspirator Alreshia Blackmon, who worked for the Kentucky state penitentiary, admitted to supplying co-conspirators with personal identifying information of inmates, for the purpose of filing tax returns in their names.  Co-conspirator Candice Casanova admitted to obtaining personal identifying information of numerous individuals through various means.  Casanova further admitted to preparing and filing the false tax returns from Tampa, Florida, and then directing that the refund checks be sent to locations in Kentucky for Hunt, a then-Lexington resident, to retrieve.  Hunt cashed these refunds with Azzam Maali, at his small grocery store, Progress Foods, which is located in Lexington, Kentucky.  Maali charged a significant fee for cashing these obviously fraudulent refunds.

 

The other co-conspirators in this case have already been sentenced.  Blackmon received a sentence of 12 months and 1 day; Casanova received a sentence of 51 months; and Maali received a sentence of 15 months.          

 

Under federal law, Hunt, Blackmon, Casanova, and Maali must serve 85% of their prison sentences and will be under the supervision of the U.S. Probation Office for 1 to 3 years after their release from prison.

 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky; Tracey D. Montano, Special Agent in Charge of the Nashville Field Office for the Internal Revenue Service-Criminal Investigations; and Jon Oldham, Resident Agent in Charge of the Lexington Resident Office for the United States Secret Service, jointly announce the sentences.

LEXINGTON, Ky. – A Nicholasville, Ky. man was sentenced yesterday to 41 months in federal prison for manufacturing counterfeit Federal Reserve Notes.

            

U.S. District Court Judge Joseph M. Hood sentenced 39-year-old Thomas Johnson for counterfeiting obligations of the United States, by manufacturing Federal Reserve Notes.

 

Johnson admitted to manufacturing and selling counterfeit money.  He manufactured counterfeit $10, $20, $50, and $100 bills and, either personally or through others, attempted to pass those bills at local retail establishments and fast food restaurants. 

 

Under federal law, Johnson must serve 85% of his prison sentence and will be under the supervision of the U.S. Probation Office for three years after his release from prison.

 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky; Jon Oldham, Resident Agent in Charge for the United States Secret Service Lexington Office; and Barry Waldrop, Nicholasville Police Department Chief of Police, jointly announced the sentence.

LEXINGTON, Ky. – A federal inmate pleaded guilty today, to bribing a corrections officer at the Federal Medical Center in Lexington, Kentucky (“FMC Lexington”) to smuggle prohibited items into the prison.

 

Keith Griffith, a 35-year-old federal inmate, pleaded guilty to conspiracy to introduce prohibited objects into a federal correctional facility and bribing a public official, making him the fourth individual convicted on charges relating to this scheme. On June 15, 2017, James Carrington of Winchester, Ky., a former corrections officer at FMC Lexington, pleaded guilty to bribery of a public official. That same day, another federal inmate, Amai Rawls, pleaded guilty to conspiracy to introduce prohibited objects into a federal correctional facility. On June 30, 2017, Stephanie Dukes of Louisville, Ky., pleaded guilty to bribing a public official. All four now await sentencing.

 

Between May 2015 and August 2016, Dukes purchased various items that federal inmates were not permitted to possess, at Griffith’s direction, and then paid Carrington to smuggle those items into FMC Lexington, where Griffith and Rawls were already serving sentences for federal offenses. Carrington would deliver the prohibited items to specific locations in FMC Lexington, where Griffith and Rawls would retrieve the items and personally use or consume the items or distribute them to other inmates. The prohibited items smuggled into FMC Lexington include MP3 players, cell phones, tobacco, dietary supplements, and synthetic marijuana.

 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky; John F. Oleskowicz, Special Agent in Charge of the Chicago Field Office for the U.S. Department of Justice Office of the Inspector General; and Amy Hess, Special Agent in Charge of the Louisville Field Office for the Federal Bureau of Investigation, jointly announce the convictions.

 

Griffith will appear for sentencing on January 10, 2018 at 11:30 am. He faces a maximum of 15 years in prison. James Carrington and Amai Rawls will be sentenced on September 29, 2017. Carrington faces a maximum of 15 years in prison and Rawls faces a maximum of 1 year. Stephanie Dukes will be sentenced on October 4, 2017, and she faces a maximum of 15 years in prison. The Court must consider the U.S. Sentencing Guidelines and the applicable federal statutes before imposing a sentence.

 

LEXINGTON, Ky. — Aaron T. Shakir, 36, and Tracey M. Thomas, 51, both of Paris, Ky., were sentenced today by United States District Judge Danny C. Reeves, for conspiring to distribute 28 grams of more of crack cocaine in Paris, during June and July 2016. Shakir was sentenced to 35 years in prison and Thomas was sentenced to 12 years in prison.

In May 2017, a federal jury found Shakir guilty of the drug conspiracy charge and substantive drug distribution charges. Shakir was also found guilty of illegally possessing a firearm during his drug trafficking. The jury convicted Shakir after a two-day trial. Thomas pleaded guilty, in May 2017, and admitted to conspiring with Shakir to distribute the crack cocaine.

Under federal law, Shakir and Thomas must serve 85 percent of their prison sentences. Upon release, both Shakir and Thomas will be under the supervision of the United States Probation Office for eight years.

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky; Stuart Lowery, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); and Richard Sanders, Commissioner, Kentucky State Police (KSP), jointly announced the sentence.

The investigation was conducted by the ATF and the KSP. The United States was represented by Assistant United States Attorneys Robert M. Duncan, Jr., and Cynthia T. Rieker.

LEXINGTON, Ky. – A Frankfort, Ky., man was indicted today for charges alleging a scheme to bribe an employee of the Commonwealth of Kentucky.

 

A federal grand jury in Lexington returned an indictment charging 64 year-old James Sullivan with one count of conspiring to bribe and three counts of payments to influence an employee of a federally funded program.

 

The indictment alleges that Sullivan agreed to make cash payments to Timothy Longmeyer, to influence decisions that Longmeyer made while an employee of the Commonwealth of Kentucky.

 

As alleged in the indictment, Sullivan first offered to bribe Longmeyer in 2009. At that time, Sullivan represented a company that held a contract to administrate workers’ compensation claims filed by state employees. The Personnel Cabinet managed this program, giving Longmeyer oversight over the workers’ compensation contract. Between 2009 and approximately June 2015, Sullivan made multiple cash payments to Longmeyer, each time intending that Longmeyer would help with awarding, extending, and renewing the contract for Sullivan’s client. The indictment alleges that Sullivan made cash payments of $5,000 and $4,000 to Longmeyer, among other payments that were part of the conspiracy.

 

The indictment also alleges that Sullivan sought Longmeyer’s assistance on behalf of several private attorneys that Sullivan represented. Sullivan asked Longmeyer to identify opportunities for those attorneys to secure contracts to handle civil litigation for the Attorney General’s Office. Sullivan presented Longmeyer $1,000 in cash, intending to receive his assistance. Longmeyer is not alleged to have committed any criminal conduct while employed by the Kentucky Attorney General.

 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky, and Amy Hess, Special Agent in Charge, Federal Bureau of Investigation, jointly announced the indictment.

 

The investigation preceding the indictment was conducted by the Federal Bureau of Investigation. The indictment was presented to the grand jury by Assistant U.S. Attorney Andrew T. Boone.

 

A date for Sullivan to appear in court has not yet been scheduled. He faces up to 5 years in prison for the conspiracy charge and up to 10 years in prison for each of the bribery charges, and a maximum fine of $250,000 for each count. However, any sentence following a conviction would be imposed by the Court, after consideration of the U.S. Sentencing Guidelines and the federal 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.

LEXINGTON, Ky. — Miguel David Ayala, 38, of Cynthiana, Ky., was sentenced yesterday to 150 months in federal prison for robbing a pharmacy and possession with intent to distribute Hydrocodone . Ayala was also ordered to pay $3,219.61 in restitution.

 

Senior U.S. District Judge Joseph M. Hood formally sentenced Ayala after he was convicted by a jury, following a three-day trial. The evidence at trial established that, on July 8, 2015, Ayala robbed the Rite Aid Pharmacy on Executive Drive in Lexington, Kentucky. During the robbery, Ayala, who was armed with a handgun, stole approximately 4,000 Hydrocodone pills, a Schedule II controlled substance. The evidence also established that following the robbery Ayala possessed these stolen pills with intent to distribute them.

 

Under federal law, Ayala must serve 85 percent of his prison sentence; and upon his release, he will be under the supervision of the United States Probation Office for three years.

 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky; Timothy J. Plancon, DEA Special Agent in Charge of the Detroit Field Division; Mark G. Barnard, Chief of the Lexington Division of Police; and Ray Johnson, Chief of the Cynthiana Police Department, jointly announced the sentence.

 

The investigation was conducted by the DEA, the Lexington Police Department, and the Cynthiana Police Department. The United States was represented by Assistant United States Attorney Robert M. Duncan, Jr.

 

LONDON, Ky. – A Perry County couple, who owned several trucking companies, have both been sentenced to 56 months’ imprisonment, for defrauding and extorting more than 65 of their customers.

 

On August 14, 2017, U.S. Circuit Judge Amul Thapar, sitting by designation in the U.S. District Court for the Eastern District of Kentucky, sentenced 50-year-old Elliot Campbell on his convictions for wire fraud, conspiracy to commit wire fraud and conspiracy to commit extortion. Judge Thapar previously sentenced Melinda Campbell, 41, Elliot Campbell’s wife, on May 24, 2017. Under federal law, both will have to serve at least 85 percent of their 56-month sentences. They have also been ordered to pay $137,210.87 in restitution to their victims.

 

Both were found guilty of the charges following a jury trial in March of 2016.

 

The evidence at trial established that, from 2010 until 2012, the Campbells operated trucking companies and contracted with shipping brokers throughout the country to transport cargo freight. According to evidence, the Campbells induced shipping brokers to enter into contracts with special conditions, such as date-specific deliveries using a team of drivers or “dedicated loads” that would transport only a single customer’s cargo freight on a truck. Once the defendants obtained the cargo freight, however, they intentionally failed to fulfill the specified delivery conditions in the contract and then held the cargo hostage, by demanding payment prior to delivery. In response to complaints from shipping brokers, the Campbells created new companies and used false names to disguise and continue their fraudulent scheme, which inflicted significant financial harm on their victims.

 

Carlton S. Shier, IV, Acting U.S. Attorney for the Eastern District of Kentucky; Amy Hess, Special Agent in Charge, Federal Bureau of Investigation; and Thomas J. Ullom, Regional Special Agent-in-Charge, U.S. Department of Transportation Office of Inspector General, jointly announced the sentences.

 

ASHLAND, Ky. – A federal jury has convicted a former revenue officer assigned to the Prestonsburg, Ky., office of the Internal Revenue Service of defrauding, and making false statements to, the United States government.

 

On August 17, 2017, the jury returned its guilty verdict against 32-year-old Jason Helton of Louisa, Ky. U.S. District Judge David Bunning set Helton’s sentencing for December 18, 2017.

 

The evidence at trial established that on several occasions, from 2014 to 2016, Helton submitted false time sheets and false travel vouchers to the IRS, in order to receive salary, benefits, and travel expense reimbursements for work that he did not perform. Specifically, the evidence revealed that several taxpayers had confirmed that they did not receive visits from Helton on the dates he claimed to have visited and that Helton had falsely claimed to be reporting for work in the Prestonsburg office, on dates when he had not.

 

Carlton S. Shier, IV, Acting U.S. Attorney for the Eastern District of Kentucky and Rodney Davis, Special Agent in Charge, Washington Field Division, Treasury Inspector General for Tax Administration jointly announced the verdict.

LEXINGTON, Ky. – The leader of a drug conspiracy in Versailles, Ky., has been sentenced to federal prison, for distributing fentanyl that resulted in the overdose death of a Woodford County woman.

 

Chief U.S. District Judge Karen K. Caldwell formally sentenced Luis Aguirre-Jerardo, age 29, of Versailles, Ky., to a term of 28 years. Aguirre-Jerardo had previously admitted that he distributed fentanyl – an extremely powerful opioid that can be as much as 50 times stronger than heroin – to Jolene Bowman, who died as a result of ingesting the drug. He specifically admitted that he distributed counterfeit pills, which were marked to resemble legitimate oxycodone tablets but instead contained the more-potent fentanyl. Aguirre-Jerardo distributed approximately 25 of these counterfeit pills to a co-Defendant, Gill Dewayne Garrett, who sold one to Jolene Bowman, causing her fatal overdose, on July 1, 2015, in Versailles. Garrett also pled guilty to the charge and was sentenced to 20 years. Aguirre-Jerardo pled guilty in August of 2016.

 

“This case is a direct result of the launch of our Overdose Prosecution Initiative and has taken both a dangerous drug dealer and his source of supply off our streets, for a very long time,” said Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky. “Eastern Kentucky has been devastated by opioid abuse and our office remains committed to its comprehensive approach to fighting the epidemic, including our continued emphasis on pursuing overdose prosecutions under federal law. The great work of our law enforcement partners in this case has helped make our overdose initiative a real success and a strong tool in combatting this scourge on our community.”

 

Under federal law, Aguirre-Jerardo must serve 85 percent of his prison sentence; and upon his release, he will be under the supervision of the U.S. Probation Office for ten years.

 

Acting United States Attorney Shier; Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration; and Chief James Fugate, Versailles Police Department, jointly made the announcement.

 

The investigation was conducted by the Drug Enforcement Administration and the Versailles Police Department. The United States was represented by Assistant United States Attorney Todd Bradbury.

 

LEXINGTON Ky. – A Lexington man, who pled guilty in May of 2017, was sentenced in federal court today, to five months in prison and five months home confinement. He was also ordered to pay a $5,500 fine.

Senior U.S. District Court Judge Joseph M. Hood sentenced 34-year-old Matt Garner for conspiracy to commit wire fraud and making false statements to a federal agency.

Matt Garner, 34, a former licensed real estate appraiser, made false statements in connection with appraisals he submitted for use by lenders in connection with federally-backed mortgages.

Garner owned and operated Lexington-based Garner & Associates. Between 2012 and 2016, his company was paid for more than 700 appraisals, on homes being purchased or refinanced in numerous counties surrounding Lexington and Owensboro, Ky. In his guilty plea, acknowledged that, in a significant percentage of these appraisals, he falsely certified on federal appraisal forms that he had personally visited the property and conducted the appraisal. , in fact, had paid unlicensed individuals a small portion of the appraisal fee to perform the appraisals.

Under federal law, Garner must serve 85 percent of his prison sentence. He will also be under supervision of the U.S. Probation Office for three years, following his term of incarceration.

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky, and Amy S. Hess, Special Agent in Charge, Federal Bureau of Investigation, Louisville Field Office, announced the sentence today.

The Louisville Division of the Federal Bureau of Investigation conducted the investigation. Assistant U.S. Attorneys Ken Taylor and Kate Anderson represented the federal government

COVINGTON, Ky. – An Edgewood, Ky., woman, who was found guilty by a federal jury in January 2017, was sentenced today to 66 months in prison.

U.S. District Court Judge David L. Bunning sentenced 49-year-old Phyllis Tyler for Conspiracy to Commit Food Stamp Fraud, Food Stamp Fraud, and four counts of Money Laundering.

Tyler operated A&E Fashion’s and Beauty Supply LLC (A&E), a convenient store in Covington, Ky., which was an authorized food stamp retailer. The United States Department of Agriculture administers the food stamp program, formally called the Supplemental Nutrition Assistance Program (SNAP), which provides benefits to recipients who are eligible for assistance. Retail stores may participate in SNAP only with the authorization of the USDA, Food and Nutrition Service and may only accept and redeem food stamp benefits in connection with the sale of eligible food stamp items. Authorized retailers cannot accept food stamp benefits in exchange for cash. Food stamp recipients use an Electronic Benefit Transfer (EBT) card that maintains the benefit balance and can be used at any authorized retailer to redeem benefits.

According to the evidence at trial, from January 2, 2012 until June 26, 2015, Tyler made cash purchases of food stamp benefits from beneficiaries, paying half the value of the benefits actually on the EBT cards. She then redeemed the full benefits by conducting EBT transactions at her store, which triggered a direct reimbursement for the sale from the federal government to Tyler’s business bank account. She also used cards that she purchased for cash at other retailers, to buy items for her personal use or for inventory at her store. As a result of the fraud, Tyler was responsible for causing a $408,979.76 loss to the food stamp program. On four occasions, Tyler also transferred more than $10,000 in food stamp fraud proceeds through a financial institution, in violation of federal money laundering statutes.

Under federal law, Tyler must serve 85 percent of her prison sentence and will be under supervision of the U.S. Probation Office for three years following her term of incarceration.

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky, Tracey D. Montaño, Special Agent in Charge, IRS Criminal Investigation, Nashville Field Office, and Chief Brian Carter of the Covington Police Department, announced the sentence today.

IRS Criminal Investigation, United States Department of Agriculture, Kentucky Cabinet for Health and Family Services and the Covington Police Department conducted the investigation. Assistant U.S. Attorneys Kathryn Anderson and Elaine Leonhard represented the federal government.

LEXINGTON, Ky. – A Richmond, Ky., man, who previously admitted to embezzling money from several related commercial real estate companies in Lexington, has been sentenced to 33 months in federal prison.

 

Today, U.S. District Court Judge Joseph M. Hood sentenced 65-year-old Robert K. Chaffins for four counts of mail fraud. Chaffins was Vice President of the Asset Management Division of a conglomerate of related entities, namely Lex/108, LLC, Leestown Distribution, LLC, Melbourne Distribution Center, LLC, and 801 Realty, LLC. In this role, Chaffins was responsible for collecting various payments from tenants renting business space from these entities. Knowing some of the fees provided for in the leases were not being collected, he set up bank accounts in the name of these entities, billed the tenants for particular fees through the U.S. Mail, and deposited payments into the bank accounts for his personal use.

 

In total, from February of 2007 until January 28, 2016, Chaffins deposited $1,064,522.36 in checks intended for Lex/108, LLC, Leestown Distribution, LLC, Melbourne Distribution Center, LLC, and 801 Realty, LLC, into bank accounts he controlled. He used this money to make payments on a second home, a Mercedes Benz, investment and retirement accounts, and dozens of other personal expenses.

 

Chaffins pleaded guilty to the mail fraud charges in March 2017. Under federal law, he must serve 85% of his prison sentence and will be under the supervision of the United States Probation Office for three years following his term of incarceration.

 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky; Jon Oldham, Resident Agent in Charge, United States Secret Service, Lexington Resident Office; and Chief Mark Barnard, Lexington Police Department, jointly announced the sentence.

 

The United States Secret Service and the Lexington Police Department conducted the investigation and Assistant United States Attorney Kathryn Anderson represented the United States.

Defendant helped three previously-sentenced codefendants fraudulently obtain over $2.1 million from his bank

 

LEXINGTON, Ky. – A former Vice President of PBI Bank in Lexington was sentenced to two years in federal prison after pleading guilty to helping three other people defraud the bank.

 

U.S. District Judge Danny C. Reeves sentenced Joseph Tobin, age 45, for six counts of aiding and abetting bank fraud and one count of bank fraud. Judge Reeves had previously sentenced Daniel Sexton to 109 months, Jonathan Williams to 60 months, and Sheila Flynn to 24 months of imprisonment for their roles in the fraud. Sexton, Williams, and Flynn are currently serving their sentences in federal prisons after pleading guilty.

 

According to their guilty pleas, Sexton and Williams owned and operated several mobile home businesses in Georgetown, Kentucky. Flynn worked at those businesses as an office manager. Tobin was a Vice President at PBI Bank in Lexington, which was receiving funds through the Troubled Assets Relief Program at the time of the offense.

 

Sexton, Williams, and Flynn conspired together to obtain various bank loans using false corporate accounting records, false tax records, and false appraisals for assets such as a private plane. They also failed to disclose debts they owed to others in their loan applications. Tobin knew that the loan applications were fraudulent but approved them anyway.

 

Sexton and Williams also recruited other people to take out loans from PBI Bank then direct the money to them. Tobin approved these loans even though he knew that Sexton and Williams were the true borrowers. Tobin also set up a straw loan for another borrower.

 

In addition to their prison sentences, Judge Reeves ordered the four defendants to pay restitution to four victimized banks. Sexton and Williams were each ordered to pay over $2.6 million in restitution, Tobin is responsible for $185,001 and Flynn for over $1.4 million.

 

Carlton S. Shier, IV, Acting U.S. Attorney for the Eastern District of Kentucky; Amy S. Hess, Special Agent in Charge, Federal Bureau of Investigation; and Alfred Hogan, Special Agent in Charge, Office of the Special Inspector General for the Troubled Assets Relief Program, jointly announced the sentence. Assistant U.S. Attorney Dmitriy Slavin represented the United States.

The case involved a cluster of overdoses, in Montgomery County, caused by carfentanil.

 

LEXINGTON, Ky. – Today, a federal jury convicted Robert Shields, of Cincinnati, and Wesley Hamm, of Mount Sterling, Ky., of one count of conspiracy to distribute carfentanil, fentanyl, and heroin; one count of distribution of carfentanil resulting in death; and one count of distribution of carfentanil resulting in serious bodily injury. The charges involved a cluster of drug overdoses, within a 12-hour period, in Montgomery County, in August of 2016. The jury returned its verdict after an hour and twenty minutes of deliberation, following four days of trial.

 

“These defendants were illegally distributing extremely dangerous drugs; and all too predictably, that resulted in overdoses and an unnecessary death,” said Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky. “Carfentanil is designed for large mammals – not humans – and presents a grave danger to the public. These defendants brazenly risked the lives of the people in Montgomery County and our office remains committed to using the severe penalties available to punish drug trafficking resulting in overdoses under federal law. The great work of our local and federal law enforcement partners made this case possible and helps make our Overdose Prosecution Initiative such a success.”

 

Both men face a minimum of twenty years and a maximum of life imprisonment.

 

Acting United States Attorney Shier; Timothy J. Plancon, Special Agent in Charge of the Detroit Field Division of the DEA; Fred Shortridge, Montgomery County Sheriff; and David Charles, Chief of the Mount Sterling Police Department, jointly announced the verdict.

 

Formal sentencing for both defendants is scheduled for November 17, 2017. The investigation was conducted by DEA, the Montgomery County Sheriff’s Office, and the Mount Sterling Police Department. Assistant U.S. Attorney Todd Bradbury prosecuted the case on behalf of the federal government.

Judgment assesses penalties for illegal sales of pseudoephedrine

 

LEXINGTON, Ky. – The U.S. District Court has entered a civil judgment for $4,474,000, in favor of the United States and against a former Berea pharmacy and its owner, assessing civil penalties against them for illegally selling 100-count bottles of pseudoephedrine and failing to comply with other laws governing pseudoephedrine sales.

 

The civil judgment is part of a settlement resolving a federal civil suit against RX Discount of Berea, P.L.L.C., which formerly operated a retail pharmacy in Berea, and its owner and manager, Lonnie W. Hubbard, age 41. According to the United States’ civil complaint, from 2009 through 2012, RX Discount, acting through Hubbard, knowingly or recklessly sold at retail over 1,000 100-count bottles of pseudoephedrine, in violation of the Controlled Substances Act (CSA). Further, RX Discount was not certified under the CSA to sell pseudoephedrine, from January 1, 2011 through June 8, 2011, July 1, 2012 through July 18, 2012, and August 1, 2013 through March 29, 2014.

 

As part of the civil settlement, RX Discount and Hubbard acknowledged that they engaged in this misconduct, and the civil judgment holds RX Discount and Hubbard liable under the CSA. The judgment also imposes civil monetary penalties against them: $4,000 for each sale of 100-count bottles of pseudoephedrine, and $10,000 for each period RX Discount failed to be properly certified to sell pseudoephedrine, for a total of $4,474,000.

 

In February 2017, in a related criminal case, Hubbard was convicted of 71 counts involving the illegal sales of oxycodone, hydrocodone, and pseudoephedrine and money laundering. Today Hubbard was sentenced to 30 years imprisonment. Hubbard’s wife, Meggan, who also worked at RX Discount, is currently incarcerated, serving five months for her involvement in purchasing property using funds from the unlawful sales of prescription drugs and pseudoephedrine.

 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky announced the judgment.

 

The investigation of the civil case was conducted by the DEA, the Office of the Inspector General for the Cabinet of Health and Family Services, and the Kentucky Board of Pharmacy. Assistant U.S. Attorney Christine Corndorf represented the United States.

Defendant was responsible for illegally distributing hundreds of thousands of pills

and thousands of boxes of pseudoephedrine

 

LEXINGTON, Ky. – A Berea pharmacist, who was convicted of 71 counts involving the illegal dispensing of oxycodone, hydrocodone, and pseudoephedrine, was sentenced today to 30 years in federal prison.

 

U.S. District Judge Danny C. Reeves sentenced Lonnie Hubbard, age 41, for 57 counts involving the illegal dispensing of controlled substances without a legitimate medical purpose and dispensing pseudoephedrine knowing it would be used to manufacture methamphetamine; maintaining a drug involved premises; and 13 counts involving money laundering.

 

Hubbard’s sentencing followed his conviction after an eight-day jury trial.

 

According to evidence presented at trial, from 2010 until 2015, Hubbard, who owned RX Discount Pharmacy of Berea, sold prescription pain pills, without a legitimate medical purpose, and pseudoephedrine, knowing or having reasonable cause to believe that it was being used to manufacture methamphetamine. Many of the individuals Hubbard sold to were addicts and drug traffickers from Madison, Rockcastle, Laurel, Clay and other counties in central and eastern Kentucky.

 

The evidence further established that many of Hubbard’s customers visited pain clinics in Florida, Ohio, Tennessee, and Georgia, to obtain illegitimate prescriptions from irreputable clinics. Hubbard would charge $600 to $1,000 to fill the prescriptions, which included excessive amounts of oxycodone. According to trial testimony, Hubbard also sold multiple boxes of pseudoephedrine at a time, at excessive prices, to drug addicts and traffickers. From 2013 to 2015, Hubbard’s pharmacy was the number one independent pharmacy retailer of pseudoephedrine in Kentucky.

 

Hubbard’s pharmacy clients testified that RX Discount was one of the only places in Kentucky that would fill their out of state prescriptions for pain medication.

 

More than twenty doctors from Florida, Georgia, and Tennessee, who wrote the illegal prescriptions related to this case, have surrendered their medical license, been indicted, or are currently under investigation.

 

The evidence also revealed that Hubbard made approximately $2.2 million in cash from the illegal drug sales and used that money to buy three residences, a boat, several luxury vehicles, a motorcycle, two watercraft, and a super ATV.

 

Hubbard’s wife, Meggan, is currently incarcerated, serving five months’ imprisonment for her involvement in purchasing property with funds from the unlawful sales of the prescription drugs and pseudoephedrine. Her imprisonment will be followed by five months’ home detention. Three other co-defendants have also pleaded guilty and been sentenced.

 

Carlton S. Shier, IV, Acting U.S. Attorney for the Eastern District of Kentucky; Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration; and Tracey D. Montaño, Special Agent in Charge, IRS, Criminal Investigation Division, jointly announced the sentence. The United States was represented by Assistant U.S. Attorneys Ron Walker, Katherine Crytzer, and Lauren Bradley.

LEXINGTON, Ky. – A Bath County, Ky., man, who was found guilty by a jury earlier this year of several federal charges, including manufacturing misbranding products, conspiring to impede an investigation and tampering with a witness, has been sentenced to 72 months in federal prison.

 

U.S. District Judge Danny C. Reeves sentenced Samuel Girod, 57, for impeding an officer of the United States, obstruction of proceedings before an agency of the United States, witness tampering, failure to appear, and nine violations of the Food, Drug, and Cosmetic Act, in connection with three products he made and distributed. Judge Reeves also ordered Girod to pay $14,239.08 in restitution to his customers, and imposed a term of supervised release of 3 years following his release from prison.

 

“The essence of this case is found in two fundamental principles: protecting the public and ensuring the integrity of the judicial process,” said Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky. “A federal jury convicted Mr. Girod of conduct that brazenly placed the public at risk, openly hampered law enforcement, and intentionally impeded the judicial process. The interests of everyone are served when criminal conduct undermining these principles is confronted and prosecuted.”

 

At his trial in March of this year, the evidence established that Girod had been manufacturing and selling homemade products to businesses in numerous states and that the products did not comply with FDA regulations. Specifically, one of his products was dangerous when used in the manner recommended and all three were advertised in a way that did not comply with the law.

 

In 2013, a federal judge in Missouri ordered Girod to stop manufacturing and selling his products, until his labeling and advertisement of the products met FDA regulations. Despite the court order, Girod continued to manufacture these products and sell them in diana, Wisconsin and Illinois, marketing them in the exact same manner as he had before the court order.

 

The evidence further established that, as part of the 2013 order, the judge required inspections of Girod’s facility in Bath County, to ensure his compliance with the order. In November 2013, two FDA Consumer Safety Officers attempted to conduct the court-ordered inspection of Girod’s facility, but they were prevented from conducting the inspection by Girod and others on his property.

 

Then, after the criminal case against him began, Girod tampered with a witness, failed to appear for court proceedings, and was a fugitive for several months.

 

Acting United States Attorney Shier and Mark McCormack, Special Agent in Charge, FDA Office of Criminal Investigations, jointly announced the sentence. The case was investigated by the FDA, Office of Criminal investigations, and the United States Marshals Service. Assistant U.S. Attorneys Kate K. Smith and Todd Bradbury prosecuted the case on behalf of the federal government.

LONDON, Ky. – William Timothy Sutton, 55, of Corbin, Ky., has been indicted on several charges relating to a murder-for-hire scheme.

 

On Thursday, a federal Grand Jury sitting in London returned the indictment charging Sutton with four counts of using the mail or a facility of interstate commerce, with the intent that four individuals be murdered in exchange for a promise and agreement to pay another to commit the murders.

 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky; Stuart L. Lowrey, Special Agent in Charge, ATF; and Richard W. Sanders, Commissioner of the Kentucky State Police, jointly announce the indictment.

 

The investigation preceding the indictment was conducted by the ATF and the Kentucky State Police. The case is being prosecuted by Assistant United States Attorney Sam Dotson.

 

Sutton’s appearance before the United States District Court has not yet been set.

 

An indictment is an allegation only. All defendants are presumed innocent and are entitled to a fair trial, at which the government must prove their guilt beyond a reasonable doubt.

 

WASHINGTON – Jenny Parker, Victim Assistance Specialist, Kyle Edelen, Public Information Officer, and Todd Bradbury, Assistant United States Attorney, all of the U.S. Attorney’s Office in the Eastern District of Kentucky, were three of 179 members of the Department of Justice recognized by Deputy Attorney General Rod Rosenstein, and Executive Office for U.S. Attorneys (EOUSA) Director Monty Wilkinson at the 33rd Director’s Awards Ceremony today in Washington D.C.

 

The Eastern District of Kentucky was one of 35 districts represented at the ceremony which was held in the Great Hall at the Robert F. Kennedy Department of Justice Building.

 

In his prepared remarks, Deputy Attorney General Rosenstein told the awardees: “These 179 award recipients embody the best of the Department of Justice.… Today’s honorees have earned the esteem of their colleagues. But most importantly, you have earned the gratitude of your fellow citizens — whose communities you have made safer, whose lives you have improved, and whose trust you have rewarded. ”

 

The three recipients received the Director’s Award for Superior Performance in Prevention and Reentry Activities for their work to establish, develop, implement and administer the U.S. Attorney’s Heroin Education Action Team (USA HEAT) initiative.

 

USA HEAT is a critical component of the comprehensive approach of the U.S. Attorney's Office in its continuing efforts to combat the opioid epidemic. The program is a partnership between the U.S. Attorney’s Office and families that have lost loved ones to an opioid overdose. These courageous parents, siblings, and children of overdose victims share their personal stories, providing a stark warning to others and educating communities about the far-reaching and enduring effects of this epidemic. USA HEAT is designed to support the overall effort against the opioid epidemic by educating and increasing community awareness. In conjunction with staff from the U.S. Attorney's Office, these surviving family members deliver a compelling message and are selflessly committed to helping others avoid similar tragedies in their lives. For more information on USA HEAT visit our website at https://www.justice.gov/usao-edky/heat.

 

“The Eastern District of Kentucky's USA HEAT program has been a critical piece to our efforts to fight opioid abuse, has made compelling presentations to thousands of Kentuckians and beyond, and has even been duplicated by other U.S. Attorney's Offices around the country,” said Acting United States Attorney Carlton S. Shier, IV. “By any measure, USA HEAT has been a genuine success and real benefit to our community. This prestigious, national recognition of our program is a true credit to the hard work and dedication of these recipients. Without their tireless efforts, our USA HEAT program would not be what it is.”

 

EOUSA provides oversight, general executive assistance, and direction to the 94 United States Attorneys’ offices around the country. For more information on EOUSA and its mission, visit http://www.justice.gov/usao.

LEXINGTON, Ky. – A Lexington, Ky. man, who previously admitted to bribing a former public official, was sentenced today to 65 months in federal prison.

 

Chief U.S. District Judge Karen K. Caldwell sentenced Samuel C. McIntosh, 58, for convictions on four counts of bribery concerning a federally funded program and one count of mail fraud. Under federal law, McIntosh must serve at least 85 percent of his prison sentence.

 

McIntosh previously admitted that he paid kickbacks to the former Secretary of the Kentucky Personnel Cabinet, Timothy Longmeyer, beginning in 2009.

 

According to McIntosh’s plea agreement, Longmeyer agreed to use his former position to steer contracts to MC Squared Consulting, a company that McIntosh owned. In return, McIntosh paid approximately half of MC Squared’s proceeds from these contracts as kickbacks. Until approximately March 2014, McIntosh paid these kickbacks to an intermediary, Lawrence O’Bryan, who then paid a portion of the funds to Longmeyer. Beginning in November 2014, McIntosh began to deal with Longmeyer directly and repeatedly gave Longmeyer large amounts of cash and conduit contributions to the campaigns of politicians specified by Longmeyer. Over time, McIntosh paid $642,201.50 in kickbacks through O’Bryan and $203,500.00 in kickbacks directly to Longmeyer.

 

O’Bryan pleaded guilty to three counts of bribery concerning a federally funded program in September 2016. In March 2017, Judge Caldwell sentenced O’Bryan to 60 months in prison and ordered him to pay $642,201.50 in restitution. O’Bryan has paid this amount in full to the Commonwealth of Kentucky. Longmeyer pleaded guilty to accepting bribes concerning a federally funded program in April 2016. In September 2016, Judge Caldwell sentenced him to 70 months in prison and ordered him to repay $203,500.00 in restitution. Today, Judge Caldwell ordered that McIntosh will be jointly liable with Longmeyer to repay this $203,500.00 to the Commonwealth of Kentucky.

 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky, and Amy Hess, Special Agent in Charge, Federal Bureau of Investigation, jointly announced the sentence. The U.S. Attorney’s Office was represented by Assistant U.S. Attorneys Andrew T. Boone and Kathryn M. Anderson.

LEXINGTON, Ky. – Following an eight-day trial, a federal jury sitting in Lexington has convicted
James Minton, 70, Joyce Minton, 65, and Aaron Brooke Warren, 43, all of Nicholasville, Ky., of numerous counts of conspiracy, mail fraud, bank fraud, and money laundering.

According to the evidence presented, James Minton, Joyce Minton, and Aaron Brooke Warren conspired to defraud their employer, Clark Machine Tool and Die, of Nicholasville. The criminal conspiracy took place from February 2000 through May 2016 and resulted in a loss in excess of $1,500,000. The conspirators defrauded the business by using company checks and credit cards to purchase personal items, by cashing and keeping company petty cash checks, by issuing themselves extra paychecks, and by inflating their paychecks. They also kept money that customers had paid the company for work, converting those funds to their personal use. Joyce Minton was the office manager and bookkeeper for the company; Aaron Brooke Warren was the company’s shop supervisor; and James Minton was a contractor.

On Monday, the jury convicted Joyce Minton of 46 counts of conspiracy, mail fraud, bank fraud, and money laundering; Aaron Brooke Warren was convicted of 34 counts of conspiracy, mail fraud, and money laundering; and James Minton was convicted of 7 counts of conspiracy and mail fraud.

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky; Amy Hess, Special Agent in Charge, Federal Bureau of Investigation; and Richard W. Sanders, Commissioner of the Kentucky State Police, jointly announced the verdict.

The case was investigated by the FBI and the Kentucky State Police. Assistant U.S. Attorneys Neeraj
Gupta and Ken Taylor prosecuted the case on behalf of the federal government.

The Defendants are currently scheduled to be sentenced on September 25, 2017, in Lexington. They face a maximum sentence of 30 years for the convictions, as well as potential restitution and forfeiture. Any sentence, however, will be imposed by the Court, after it has considered the U.S.
Sentencing Guidelines and the federal statutes governing the imposition of sentences.
 

 

LEXINGTON, Ky. – A Cynthiana, Ky., man has been convicted by a jury of federal charges related to the robbery of a Lexington Rite Aid.

On Thursday, a federal jury in Lexington found Miguel David Ayala, 38, guilty of pharmacy robbery and possession with intent to distribute hydrocodone pills. The jury returned the verdict after a three-day trial.

The evidence established that on July 8, 2015, Ayala robbed the Rite Aid Pharmacy on Executive Drive in Lexington. During the robbery, Ayala, who was armed with a handgun, stole approximately 4,000 hydrocodone pills.

The evidence also established that after the robbery, Ayala intended to distribute the stolen hydrocodone pills.

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky; Timothy J. Plancon, Special Agent in Charge of the DEA Detroit Field Division; Mark G. Barnard, Chief of the Lexington Division of Police; and Ray Johnson, Chief of the Cynthiana Police Department, jointly made the announcement.

The investigation was conducted by the DEA, Lexington Police Department, and Cynthiana Police Department. Assistant U.S. Attorney Robert M. Duncan, Jr., prosecuted the case on behalf of the federal government.

Ayala is currently scheduled to appear for sentencing before Senior Judge Joseph M. Hood in Lexington, on August 28, 2017, at 11:30 a.m. Ayala faces a maximum prison sentence of 20 years. Any sentence, however, will be imposed by the court, after consideration of the United States Sentencing Guidelines and the federal statutes governing the imposition of sentences.

Conspiracy included two members from Central Kentucky

 

LEXINGTON, Ky. – A Kingsport, Tenn., woman, who was previously found guilty of participating in a conspiracy to commit identity theft and tax fraud, has been sentenced today to three years in federal prison.

 

On Wednesday, U.S. District Judge Gregory F. Van Tatenhove sentenced 33-year-old Bonnie Sue Fleenor for conspiracy to commit mail and wire fraud.

 

Testimony at her trial revealed that Fleenor worked with several other individuals to steal the identifying information of hundreds of Tennessee state prison inmates, to use that information to file false federal income tax returns and fraudulently obtain tax refunds.

 

Fleenor participated in this conspiracy by handling the fraudulently obtained tax refund checks, supplying forged power-of-attorney forms and other assistance to co-conspirators, who cashed these checks and distributed the proceeds of the fraudulent scheme.

 

Between November 2008 and June 2013, members of this conspiracy filed hundreds of false federal income tax returns, seeking over $3.2 million in tax refunds. Twelve other individuals have been convicted and sentenced for participation in the conspiracy. These include Adam Alloway (60 months), Gregory Hedges (48 months), David Hedges (48 months), Teresa Rogers (42 months), Ira Lingo (30 months), Linda Ward (21 months), Amanda Hall (16 months), Joyce Bickers (12 months), and Sara Lingerfelt (6 months).

 

Carlton S. Shier, IV, Acting United States Attorney; Tommy Coke, Inspector in Charge, Pittsburgh Division, U.S. Postal Inspection Service; and Tracey D. Montaño, Special Agent in Charge, Internal Revenue Service Criminal Investigation, jointly made the announcement.

 

The investigation was conducted by the United States Postal Inspection Service and the Internal Revenue Service. Assistant U.S. Attorneys Andrew T. Boone and Kathryn M. Anderson prosecuted this case on behalf of the federal government.

LEXINGTON, Ky. – A prisoner in eastern Kentucky has been sentenced to 129 months after pleading guilty to conspiring to submit false tax returns using the names of other prisoners.

U.S. District Judge Danny C. Reeves sentenced William Helton, 37, of Mt. Sterling, Ky., for conspiracy to commit mail and wire fraud, and aggravated identity theft. Judge Reeves also ordered
Helton to pay $96,522 in restitution, plus interest. Under federal law, Helton must serve at least
85 percent of his prison sentence, and upon his release, he will serve three years of supervised release.

In his plea agreement, Helton admitted that while he was a state prisoner, he and a co- conspirator outside of prison, Jason Tyre, met and corresponded through a prison pen-pal program and developed a conspiracy in which they and other co-conspirators submitted numerous false tax returns, using other people’s personal information to fraudulently obtain money from tax refunds.

Helton also admitted that the overall conspiracy amounted to $390,000 of false tax refund claims over four years.

Helton acknowledged that he obtained other prisoners’ personal information, without their knowledge, such as social security numbers and provided that information in a letter to Tyre.

Then at Helton’s direction, Tyre filled out tax forms using the names and personal information of other prisoners. Tyre made false claims on the tax forms regarding items such as, filing status, income, employment, and number of dependents, in order to maximize the refund amount.

Helton further admitted that he directed Tyre to open bank accounts in Tyre’s name to hold the money from the fraudulent tax refunds and to wire the money to other co-conspirators once he received the tax refunds.

Helton was in state prison for convictions related to burglary, theft and drugs.

Tyre is scheduled for sentencing on May 26.

Carlton Shier, IV, Acting U.S. Attorney; Tommy Coke, Inspector in Charge, Pittsburgh Division, U.S.
Postal Inspection Service, and Tracey D. Montaño, Special Agent in Charge, Internal Revenue Service
Criminal Investigation, jointly made the announcement.

The investigation was conducted by the United States Postal Inspection Service and the IRS.
Assistant U.S. Attorney Neeraj Gupta prosecuted this case on behalf of the federal government.

A jury has convicted a former deputy jailer in eastern Kentucky for his role in violently assaulting a pre-trial detainee and willfully failing to provide necessary medical attention that led to his death. 

Acting Assistant Attorney General Tom Wheeler of the Justice Department’s Civil Rights Division, Acting U.S. Attorney Carlton S. Shier, IV, for the Eastern District of Kentucky, Special Agent in Charge Amy Hess of the Federal Bureau of Investigation, and Commissioner Richard W. Sanders of the Kentucky State Police jointly made the announcement.

William Curtis Howell was convicted of using excessive force against the detainee, resulting in bodily injury, and of deliberately ignoring the detainee’s serious medical needs, also resulting in bodily injury.  The jury returned the verdict after 90 minutes of deliberation, following four days of trial.

According to the evidence presented at trial, on July 9, 2013, at the Kentucky River Regional Jail in Hazard, Kentucky, Howell and another supervisory deputy jailer, Damon Wayne Hickman, violently beat Larry Trent, 54, a pretrial detainee, and left him in his cell, seriously injured and bleeding from an open head wound.  Trent ultimately died from injuries sustained during the beating.  Trent was in custody for a DUI charge.  Supervisory Deputy Jailer Hickman, who was initially charged along with defendant Howell, pleaded guilty prior to trial and testified against Howell.

According to evidence, the assault started when Howell and Hickman opened the door to Trent’s cell to remove a sleeping-mat, and Trent ran out of the cell.  Howell tased Trent and after Trent was brought to the floor, Hickman, without justification, violently kicked Trent in the ribs. While deputies carried Trent back to his cell, Trent took the taser from the deputy jailers.  Witnesses testified that after deputies retrieved the taser from Trent and while Trent was restrained on the floor by deputy jailers, Howell and Hickman, without justification, punched, kicked, and stomped on Trent.  Witnesses further testified that, before closing the cell door, Howell stepped into Trent’s cell and kicked Trent in the head while Trent was on the floor and posing no threat.  Further testimony was presented that, after the assault, Trent’s blood was in the detox hallway, booking area and on the deputies involved.

Testimony further revealed that Trent was lying motionless in his cell, with blood all over his face.  However, Howell and Hickman willfully failed to provide medical attention, because they did not want to get in trouble.  Approximately four hours after the beating, another employee at the jail noticed Trent’s lifeless body and emergency personnel were called. Trent was pronounced dead at a local hospital that afternoon. 

According to autopsy results presented at trial, Trent died of a fracture to his pelvis that caused hemorrhaging and from blunt force trauma to his head, torso and extremities. 

The Kentucky River Regional Jail houses pre-trial detainees from Perry and Knott Counties.  As a supervisory deputy jailer, Howell was responsible for the custody, care, safety and control of the inmates at the jail.

Hickman pleaded guilty last year for his role in the beating.  Another assault took place at the same jail in 2012.  In April of this year, Kevin Asher, the deputy jailer involved in that assault, was convicted of deprivation of civil rights under color of law, and obstruction of justice resulting in bodily injury. 

Sentencing for Howell is scheduled for Aug. 16, 2017, in London, Kentucky.  Excessive use of force resulting in bodily injury carries a maximum penalty of 10 years imprisonment, and deliberate indifference resulting in bodily injury carries a maximum penalty of 10 years imprisonment.  The U.S. District Court will consider the U.S. Sentencing Guidelines and the federal statutory penalties before imposing sentence.

The investigation was conducted by the Kentucky State Police and the FBI.  Assistant U.S. Attorney Hydee Hawkins of the United States Attorney’s Office for the Eastern District of Kentucky and Trial Attorney Sanjay Patel of the Civil Rights Division prosecuted this case on behalf of the federal government.

LONDON, Ky. – A jury has convicted a former deputy jailer in eastern Kentucky for his role in violently assaulting a pre-trial detainee and willfully failing to provide necessary medical attention that led to his death.

 

On Thursday evening, William Curtis Howell, 60, was convicted of using excessive force against the detainee, resulting in bodily injury, and of deliberately ignoring the detainee’s serious medical needs, also resulting in bodily injury. The jury returned the verdict after 90 minutes of deliberation, following four days of trial.

 

According to the evidence presented at trial, on July 9, 2013, at the Kentucky River Regional Jail in Hazard, Ky., Howell and another supervisory deputy jailer, Damon Wayne Hickman, violently beat Larry Trent, 54, a pretrial detainee, and left him in his cell, seriously injured and bleeding from an open head wound. Trent ultimately died from injuries sustained during the beating. Trent was in custody for a DUI charge. Supervisory Deputy Jailer Hickman, who was initially charged along with defendant Howell, pleaded guilty prior to trial and testified against Howell.

 

According to evidence, the assault started when Howell and Hickman opened the door to Trent’s cell to remove a sleeping-mat, and Trent ran out of the cell. Howell tased Trent; and after Trent was brought to the floor, Hickman, without justification, violently kicked Trent in the ribs. While deputies carried Trent back to his cell, Trent took the Taser from the deputy jailers. Witnesses testified that after deputies retrieved the Taser from Trent and while deputy jailers restrained Trent on the floor, Howell and Hickman, without justification, punched, kicked, and stomped on Trent. Witnesses further testified that, before closing the cell door, Howell stepped into Trent’s cell and kicked Trent in the head while Trent was on the floor and posing no threat. Further testimony was presented that, after the assault, Trent’s blood was in the detox hallway, booking area and on the deputies involved.

 

Testimony further revealed that Trent was lying motionless in his cell with blood all over his face. However, Howell and Hickman willfully failed to provide medical attention, because they did not want to get in trouble. Approximately four hours after the beating, another employee at the jail noticed Trent’s lifeless body and emergency personnel were called. Trent was pronounced dead at a local hospital that afternoon.

 

According to autopsy results presented at trial, Trent died of a fracture to his pelvis that caused hemorrhaging and from blunt force trauma to his head, torso and extremities.

 

The Kentucky River Regional Jail houses pre-trial detainees from Perry and Knott Counties. As a supervisory deputy jailer, Howell was responsible for the custody, care, safety and control of the inmates at the jail.

 

Another assault took place at the same jail in 2012. In April of this year, Kevin Asher, the deputy jailer involved in that assault, was convicted of deprivation of civil rights under color of law, and obstruction of justice resulting in bodily injury.

 

Carlton S. Shier, IV, Acting U.S. Attorney for the Eastern District of Kentucky; Thomas E. Wheeler, II, Acting Assistant Attorney General for the Civil Rights Division; Amy Hess, Special Agent in Charge, Federal Bureau of Investigation; and Richard W. Sanders, Kentucky State Police Commissioner jointly made the announcement.

 

The investigation was conducted by the Kentucky State Police and the FBI. Assistant U.S. Attorney Hydee Hawkins, of the United States Attorney’s Office, and Trial Attorney Sanjay Patel, of the Civil Rights Division, prosecuted this case on behalf of the federal government.

 

Sentencing for Howell is scheduled for August 16, 2017, in London, Ky. Excessive use of force resulting in bodily injury carries a maximum penalty of 10 years imprisonment; deliberate indifference resulting in bodily injury carries a maximum penalty of 10 years imprisonment. The U.S. District Court will consider the U.S. Sentencing Guidelines and the federal statutory penalties before imposing sentence.

LEXINGTON, Ky. – A federal judge has sentenced a Lexington man to life in prison, for illegally distributing drugs that caused an overdose death in Lexington.

 

Senior U.S. District Judge Joseph M. Hood formally sentenced 28 year-old Joshua Donald Ewing for distribution of fentanyl and heroin resulting in the death of Jeremy Deaton.

 

Under federal law, those convicted of illegally distributing Schedule I and II drugs that result in death face a minimum of 20 years and maximum of life in prison. If the defendant has a prior felony drug conviction, they are subject to a mandatory life sentence. A jury found Ewing guilty of the offense earlier this year.

 

According to the evidence at trial, in February of 2016, Ewing sold a mixture of fentanyl and heroin to Deaton, who thought he was only receiving heroin. Deaton consumed the drugs and died of an overdose. Fentanyl is an extremely powerful opioid that can be as much as 50 times stronger than heroin. A toxicologist confirmed that, had it not been for the fentanyl, Deaton would not have died. The toxicologist further explained that Deaton’s blood contained more than five times the therapeutic range for fentanyl.

 

At the time he illegally sold the drugs to Deaton, Ewing was on probation for a prior felony drug conviction.

 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky; Timothy J. Plancon, Special Agent in Charge of the Detroit Field Division of the Drug Enforcement Administration; and Mark Barnard, Chief of Lexington Police, jointly made the announcement

 

The investigation was conducted by the DEA and the Lexington Police. Assistant U.S. Attorney Todd Bradbury prosecuted this case on behalf of the federal government

 

FRANKFORT, Ky. - A Sikeston, Missouri man, who previously admitted to travelling to Kentucky with the intent to engage in illicit sexual conduct with a minor, has been sentenced to 120 months in federal prison.

 

Yesterday, U.S. District Court Judge Gregory F. Van Tatenhove sentenced David Bruce Jordan, 42, for using the Internet, with his cellular telephone, to knowingly attempt to persuade, induce, entice, and coerce a minor, to engage in sexual activity for which any person could be charged with a crime.

 

According to the plea agreement, Jordan previously admitted to travelling to Kentucky, from Missouri, on August 4, 2016, to meet with a person he believed to be a 14-year old female student. He also admitted that he was the person who had been communicating with that person he believed to be a 14 year-old student, and that those communications contained sexually explicit conversations. The “minor” was actually an undercover Kentucky State Police detective.

 

Jordan pleaded guilty to the charge in December of 2016.

 

Under federal law, Jordan must serve 85 percent of his prison sentence and will be under the supervision of the U.S. Probation Office for 15 years.

 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky; Steven Igyarto, Resident Agent in Charge, Department of Homeland Security, Homeland Security Investigations; and Rick Sanders, Commissioner of the Kentucky State Police, jointly announced the sentence.

 

The investigation was conducted by Homeland Security Investigations and the Electronic Crimes Branch of the Kentucky State Police. Assistant U.S. Attorney David A. Marye represented the federal government in the case.

FRANKFORT, Ky. – A Henry County, Ky., man, who was previously convicted of several child exploitation offenses, has been sentenced to 40 years in federal prison.

 

On April 11, U.S. District Judge Gregory Van Tatenhove sentenced Joseph David Martin, 43, for producing child pornography, distribution of child pornography, and possession of child pornography. Under federal law, Martin must serve at least 85 percent of his prison sentence.

 

Martin was convicted of the offenses in 2016. The evidence at trial established that Martin had sexually exploited a teenager, repeatedly, starting when the victim was 13 years old. The evidence further established that Martin videotaped some of the sexual encounters.

 

Carlton S. Shier, IV, Acting U.S. Attorney for the Eastern District of Kentucky; Amy Hess, Special Agent in Charge, Federal Bureau of Investigation; and Rick Sanders, Kentucky State Police Commissioner, jointly announced the sentence.

 

The investigation was conducted by the FBI and the KSP. Assistant U.S. Attorney David Marye prosecuted this case on behalf of the federal government.

A supervisory deputy jailer at an Eastern Kentucky detention center has been convicted today by a jury of federal charges related to his role in an unprovoked violent assault of a detainee, announced by Acting Assistant Attorney General Tom Wheeler for the Justice Department’s Civil Rights Division, Acting U.S. Attorney Carlton Shier, IV for the Eastern District of Kentucky and Special Agent in Charge Amy Hess of the Federal Bureau of Investigation’s Louisville Division.

The jury convicted 32-year-old Kevin Asher of deprivation of civil rights under color of law, and obstruction of justice.  The jury rendered the verdicts after four hours of deliberation following two and half of days of trial.  

According to evidence and testimony, in November 2012, Asher and another deputy jailer, Damon Wayne Hickman, physically assaulted Gary Hill, a 55-year-old inmate who was being held following an arrest for a misdemeanor charge of disorderly conduct.  

According to testimony, Deputies Asher and Hickman approached Hill after Hill had run the faucet in his jail cell to the point where water had spilled out onto the floor.  Hickman testified at trial that he punched Hill in the face, causing Hill to fall onto the floor.  Hickman further testified that while Hill was curled up in a fetal position, he and Asher began stomping and kicking Hill.  Asher and Hickman then immobilized Hill in a restraint chair and continued to beat him.  Evidence established that in the time following the assault, Hill received no medical attention for his wounds.  

The jury also found that Asher obstructed justice by filling out an incident report at the jail in which he falsely claimed that Hill had slipped and fallen onto the floor and that no physical force had been used against him.

The Kentucky River Regional Jail is a holding jail for pre-trial detainees.  As a supervisory deputy jailer, Asher is responsible for the custody, care, safety and control of the inmates at the jail.

Hickman pleaded guilty last year for his role in a separate assault at the same jail.  The  victim of that assault died.

The investigation was conducted by the FBI.  Assistant U.S. Attorney Hydee Hawkins of the United States Attorney’s Office and Trial Attorney Sanjay Patel of the Civil Rights Division prosecuted this case on behalf of the federal government.  

Sentencing for Asher is scheduled for Aug. 2, 2017.  The penalty for assault under color of law carries a maximum penalty of assault is 10 years.  The Obstruction of Justice offense carries a maximum penalty is 20 years.   The U.S. District Court will consider the U.S. Sentencing Guidelines and the federal statutes before imposing sentence.

LONDON, Ky. – A former supervisory deputy jailer at an Eastern Kentucky detention center has been convicted by a jury of federal charges related to his role in an unprovoked violent assault of a detainee.

 

The jury convicted 32-year-old Kevin Asher of deprivation of civil rights under color of law, and obstruction of justice. The jury rendered the verdicts after four hours of deliberation following two and half of days of trial.

 

According to evidence and testimony, in November 2012, Asher and another deputy jailer, Damon Wayne Hickman, physically assaulted Gary Hill, a 55-year-old inmate who was being held following an arrest for a misdemeanor charge of disorderly conduct.

 

According to testimony, Deputies Asher and Hickman approached Hill after Hill had run the faucet in his jail cell to the point where water had spilled out onto the floor. Hickman testified at trial that he punched Hill in the face, causing Hill to fall onto the floor. Hickman further testified that while Hill was curled up in a fetal position, he and Asher began kicking Hill. Asher and Hickman then immobilized Hill in a restraint chair and Hickman continued to beat him. Evidence established that following the brutal assault, the deputies failed to obtain any medical treatment for Hill who had received numerous injuries.

 

The jury also found that Asher obstructed justice by filling out an incident report at the jail in which he falsely claimed that Hill had slipped and fallen onto the floor and that no physical force had been used against him.

 

The Kentucky River Regional Jail houses pre-trial detainees from Perry and Knott Counties. As a supervisory deputy jailer, Asher was responsible for the custody, care, safety and control of the inmates at the jail.

 

Hickman pleaded guilty last year for his role in a separate assault at the same jail. The victim of that assault died.

 

Carlton S. Shier, IV, Acting U.S. Attorney for the Eastern District of Kentucky; Thomas E. Wheeler, II, Acting Assistant Attorney General for the Civil Rights Division; and Amy Hess, Special Agent in Charge, Federal Bureau of Investigation, jointly made the announcement.

 

The investigation was conducted by the FBI. Assistant U.S. Attorney Hydee Hawkins of the United States Attorney’s Office and Trial Attorney Sanjay Patel of the Civil Rights Division prosecuted this case on behalf of the federal government.

 

Sentencing for Asher is scheduled for August 2. Assault under color of law carries a maximum penalty of assault is 10 years. The obstruction of justice offense carries a maximum penalty is 20 years. The U.S. District Court will consider the U.S. Guidelines and the federal statutes before imposing sentence.

FRANKFORT, Ky. – On Friday, a federal jury convicted five former owners of PremierTox, a clinical laboratory in Russell Springs, Kentucky, of seventeen counts of health care fraud, each. The defendants were acquitted on various other counts that alleged related conduct. The seventeen counts of conviction related to medically unnecessary urine drug tests, which were submitted by the defendants’ laboratory to Anthem Blue Cross/Blue Shield with the intent to defraud the health insurer.

 

The evidence at trial established that Dr. Bryan Wood and Dr. Robin Peavler owned a chain of addiction treatment clinics called SelfRefind, headquartered in Danville, Kentucky. Patients at SelfRefind underwent urine drug testing as part of their treatment protocol. The urine drug testing consisted of screening tests, which indicated whether a drug was in the patient’s system, as well as more sophisticated and precise confirmation tests that were ordered when the treating physician felt it was necessary. At trial, all of the physician witnesses testified that they needed the confirmation test results by the time the patient came in for their next visit.

 

Until late 2010, SelfRefind used independent labs that returned test results within a week. In late 2010, Drs. Wood and Peavler joined Brian Walters, James Wesley Bottom, and Dr. Robert Bertram, Jr., to form PremierTox, a urine drug testing laboratory. Beginning in October 2010, Dr. Wood and Dr. Peavler directed SelfRefind to freeze its patients’ urine samples and then send them to PremierTox, where they were maintained in a storage facility that PremierTox actually referred to as the “Pee Palace.” As many as 10,000 frozen urine samples were stored in this facility. However, the five owners of the lab – Dr. Wood, Dr. Peavler, Dr. Bertram, Walters, and Bottom – did not have the testing equipment installed until January 2011, and did not begin conducting confirmation tests until April 2011. The evidence established that the significant delay in testing rendered many of the confirmation urine tests useless in the treatment of the SelfRefind patients, and medically unnecessary.

 

The evidence further established that once PremierTox began testing, the owners prioritized the testing of samples based on eligibility for reimbursement from particular insurance companies. Medicaid and Medicare patients’ samples got tested first, because PremierTox was enrolled with those insurers. PremierTox was not enrolled as a health care provider with Anthem insurance company until August 2011. Immediately after it became eligible to bill Anthem, it removed Anthem patients’ urine samples from the freezers, tested them, and billed the insurer. Some of the Anthem patient samples were actually tested nine to eleven months after they had been collected, and long after they had any value in treating the patient. The jury concluded that Dr. Wood, Dr. Peavler, Dr. Bertram, Walters, and Bottom each acted with specific intent to defraud Anthem, by billing for these long-delayed, medically unnecessary tests.

 

“Health care fraud victimizes us all, by improperly depleting the critical resources necessary to pay health care costs and, as in this case, by seeing medical professionals brazenly place their financial interests above medical necessity in the treatment of patients,” said Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky. “We will continue to make protecting the health care system from fraud a priority, as it promotes better care, places care over greed, and benefits every one of us.”

 

Sentencing of the defendants is scheduled for August 9, 2017. Any sentence imposed by the district court will be based on relevant facts of the defendants’ conduct and will take into account the U.S. Sentencing Guidelines.

 

Acting U.S. Attorney Shier and Derrick L. Jackson, Special Agent in Charge of the Department of Health and Human Services, Office of Inspector General’s Atlanta Regional Office, jointly announced the verdict. Assistant U.S. Attorneys Kate K. Smith and Paul C. McCaffrey prosecuted the case on behalf of the government.

PIKEVILLE, Ky. —A federal judge has sentenced a Knott County man to four consecutive life sentences for sexually abusing young children whose parents were part of his drug trafficking operations.

 

On Wednesday, U.S. District Judge Amul Thapar sentenced Freddie Kennedy, Jr., on one count of conspiracy to distribute oxycodone; seven counts of crossing a state line with the intent to engage in a sex act with a minor under the age of 12; and, ten counts of transporting a minor under the age of 18 across state lines with the intent to engage in criminal sexual activity.

 

Because parole is not an option under federal law, Kennedy must serve entirety of his life sentence. In February of this year, a jury convicted Kennedy of these offenses following a two-day trial.

 

The evidence at trial established that from April 2013 to June 2015, Kennedy organized a drug conspiracy in which several others traveled to out-of-state pain clinics to illegally obtain prescription drugs. In exchange for funding these trips, Kennedy received a portion of the drugs, which he distributed to other local dealers and drug users in the Knott and Perry County areas. Kennedy’s conspiracy was responsible for the distribution of thousands of oxycodone pills.

 

Evidence also established that, beginning sometime around October of 2013, Kennedy had sexual contact with four separate minor victims on multiple occasions, three of whom were under the age of the 10 at the time he abused them. Kennedy gained access to these victims because their parents were members of the conspiracy or drug addicts to whom he supplied oxycodone pills. In short, Kennedy would offer to watch the minor children while their parents were traveling to out-of-state pain clinics for him, or at home using drugs.

 

According to the evidence, while baby-sitting for the children, Kennedy intentionally groomed these minor victims by buying them expensive presents, as well as taking them to the movies, out to eat, and shopping as a way to win their trust.

 

While some of the abuse occurred at Kennedy’s residences in Perry and Knott Counties, much of it occurred on three separate out-of-state trips that Kennedy took with the minor children. Specifically, Kennedy took the victims for overnight stays at hotel/casino in located in Indiana. The minors stayed in a room with Kennedy, who was the only adult. On each of these occasions, Kennedy engaged in sexual acts with the minor victims.

 

Carlton Shier, IV, Acting U.S. Attorney for the Eastern District of Kentucky; Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration (DEA); Richard W. Sanders, Commissioner, Kentucky State Police (KSP), jointly announced the sentence.

 

The investigation was conducted by the DEA and KSP. Assistant U.S. Attorney W. Samuel Dotson prosecuted this case on behalf of the federal government.

LEXINGTON, Ky. – A business owner, who previously admitted he underreported more than $5 million in income over the course of three years, has been sentenced to 30 months in federal prison.

 

On Tuesday, U.S. District Judge Amul R. Thapar sentenced 38-year-old Jarrod C. Breeding, of Letcher County, for making false statements on tax returns filed with the IRS. Under federal law, Breeding must serve at least 85 percent of his sentence.

 

Breeding, the owner of Southern Steel Recycling in Isom, Ky., previously admitted that, for tax years 2011, 2012, and 2013, he underreported his income, by more than $5 million. Under federal law, domestic financial institutions, such as banks, must report any cash transaction at their institution that exceeds $10,000, as a way to assist in detecting crimes such as tax evasion.

 

Breeding underreported his income, in part, by structuring transactions, to avoid this $10,000 limit and the institution’s reporting requirements. This resulted in large amounts of money never being included on his bank statements. Then, when filing his tax returns, Breeding only reported the income that was actually included on his statements.

 

Breeding, who also owns 201 Speedway Racing in Isom, Ky., pleaded guilty in November 2016.

 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky, and Tracey D. Montaño, Special Agent in Charge, IRS Criminal Investigation, Nashville Field Office, jointly announced the sentence.

 

The case was investigated by IRS Criminal Investigations, and Assistant U.S. Attorneys Kate Anderson and Tiffany Fleming prosecuted the case on behalf of the federal government.

LEXINGTON, Ky. — A Winchester, Ky., man, who previously admitted to hacking and taking control of a high school sports website, to gain publicity for his online identity and harass and intimidate the website owner and others, has been sentenced to 24 months in federal prison.

 

Today, U.S. District Judge Danny C. Reeves sentenced Deric Lostutter, 29, for conspiring to illegally access a computer without authorization and lying to an FBI agent. Noah McHugh, Lostutter’s co-conspirator, previously pleaded guilty in September 2016 to accessing a computer without authorization and has been sentenced to eight months in prison.

 

“Ensuring proper online security and privacy is critically important to all of us,” said Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky. “Computer hacking and cyber harassment create real victims, causing enormous damage to real people, organizations, and institutions. This type of conduct simply cannot be tolerated and the great work of our FBI partners in this matter validates our ongoing efforts to protect the public from illegal computer intrusions and other cybercrime.”

 

Lostutter admitted that in December 2012, he and McHugh hacked into a fan’s website, created for Steubenville High School sports teams, to bring attention to a rape for which two Steubenville High School football players had been arrested in August 2012, and at the time were being held in custody.

 

Lostutter filmed a video wearing a mask and wrote a manifesto, which were both posted on the website to harass and intimidate people, and to gain publicity for Lostutter’s and McHugh’s online identities. Specifically, the messages threatened to reveal personal identifying information of Steubenville High School students, and made false claims that the administrator of the fan website was involved in child pornography and directed a “rape crew.”

 

As part of the same hack, Lostutter and McHugh accessed the administrator’s private email account, and then publicly posted a link to download the administrator’s emails on the fan website. Lostutter and McHugh changed the website so no one could access anything regarding athletics and could only view the video, the manifesto, and the link to the administrator’s private emails. Lostutter and McHugh then used their online identities in social media and news interviews to promote themselves and their hack.

 

In 2013, Lostutter lied to the FBI, by stating in an investigative interview that he had not written the manifesto posted to the website, that he had not accessed the password-protected section of the fan website, and that he had not changed the administrator password for the website, which prevented the administrator from regaining control of his own website.

 

Acting U.S. Attorney Shier and Amy Hess, Special Agent in Charge, Federal Bureau of Investigation, jointly made the announcement.

 

The investigation was conducted by the FBI. Assistant U.S. Attorney Neeraj Gupta prosecuted this case on behalf of the federal government.