Eastern District of Kentucky
Press releases recorded for this federal judicial district.
Bank Officer Becomes Fourth Defendant Sentenced in Multi-Million Dollar Bank FraudRead the Press Release
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.
Jury Convicts Two of Federal Charges Relating to the Distribution of Drugs That Resulted in OverdosesRead the Press Release
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.
Federal Court Enters Judgement Imposing $4.4 Million Civil Penalty Against Former Berea PharmacyRead the Press Release
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.
Berea Pharmacist Sentenced to 30 Years for Illegally Dispensing Prescription Pills and Pseudoephedrine and Money LaunderingRead the Press Release
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.
Bath County Man Sentenced for Misbranding Drugs and Obstructing JusticeRead the Press Release
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.
Corbin Man Charged in Murder-For-Hire SchemeRead the Press Release
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.
Deputy Attorney General Recognizes District EmployeesRead the Press Release
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 Man Sentenced to 65 Months InPrison for Involvement in Kickback SchemeRead the Press Release
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.
Federal Jury Convicts Husband, Wife and Son of Conspiracy to Defraud Nicholasville BusinessRead the Press Release
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.
Cynthiana Man Found Guilty of Robbery Involving Lexington PharmacyRead the Press Release
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.
Tennessee Woman Sentenced to Three Years for Identity Theft and Tax Fraud ConspiracyRead the Press Release
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.
State Prisoner Sentenced to 129 Months in Federal Prison for Tax Fraud ConspiracyRead the Press Release
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.Former Deputy Jailer at Kentucky River Regional Jail Convicted of Federal Charges Related to the Death of a DetaineeRead the Press Release
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.
Former Deputy Jailer at Kentucky River Regional Jail Convicted of Federal Charges Related to the Death of A DetaineeRead the Press Release
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 Man Receives Life Sentence for Distributing Fentanyl Resulting in DeathRead the Press Release
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
Missouri Man Sentenced to 120 Months for Using the Internet to Knowingly Attempt to Entice A Minor to Engage in Sexual ActivityRead the Press Release
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.
Henry County Man Sentenced to 40 Years for Child Exploitation OffensesRead the Press Release
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.
Kentucky Deputy Jailer Convicted by Jury of Assault of Inmate and Obstruction of JusticeRead the Press Release
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.
Former Deputy Jailer at Kentucky River Regional Jail Convicted by Jury of Assault of Inmate and Obstruction of JusticeRead the Press Release
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.
Former Owners of Russell Springs Lab Convicted of Seventeen Counts of Health Care FraudRead the Press Release
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.
Knott County Man Receives Four Consecutive Life Sentences for Drug Trafficking and Aggravated Sexual Abuse of ChildrenRead the Press Release
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.
Letcher County Business Owner Sentenced to 30 Months for Filing False Tax ReturnsRead the Press Release
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.
Winchester Man Sentenced to 24 Months for Illegally Hacking into Website and Lying to Federal AgentsRead the Press Release
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.
Two Madison County Residents Sentenced for Conspiring to Distribute FentanylRead the Press Release
LEXINGTON, Ky. – Two Richmond, Ky., residents have been sentenced for conspiring to distribute large quantities of fentanyl.
U.S. Senior District Court Judge Joseph M. Hood sentenced Travis B. Preston, 28, to 11 years of imprisonment for conspiring to distribute 40 grams or more of a mixture or substance containing a detectable amount of fentanyl. Tiffany L. Griffith was sentenced to five years of imprisonment for aiding and abetting the distribution of 40 grams or more of a mixture or substance containing a detectable amount of fentanyl. Both defendants must serve 85 percent of their respective prison sentences. Following the completion of their sentences, Preston and Griffith will be under the supervision of the United States Probation Office for eight years and four years, respectively.
Preston and Griffith admitted to possessing approximately 121 grams of fentanyl for distribution. The fentanyl was discovered in Griffith’s purse during a traffic stop that occurred on April 5, 2016, in Lancaster, Ky.
The defendants pleaded guilty to the charges in December of 2016.
Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky, Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration, Richard W. Sanders, Commissioner, Kentucky State Police, and Tim Davis, Garrard County Sheriff, jointly made the announcement today.
The investigation was conducted by the Garrard County Sheriff’s Office, the Kentucky State Police, and the Drug Enforcement Administration. The United States was represented in the case by Assistant United States Attorney Robert M. Duncan, Jr.
Louisville Man Sentenced to Five Years in Prison for Involvement in Kickback SchemeRead the Press Release
LEXINGTON, Ky. – A Louisville, Ky. man, who previously admitted to bribing a former public official, was sentenced today to five years in federal prison.
Chief U.S. District Judge Karen K. Caldwell sentenced Lawrence J. O’Bryan, 57, for convictions on three counts of bribery concerning a federally funded program. O’Bryan was also ordered to pay $100,000 fine and $642,201.50 in restitution. He has paid the restitution in full. Under federal law, O’Bryan must serve at least 85 percent of his prison sentence.
O’Bryan previously admitted that he accepted kickbacks on behalf of the former Secretary of the Kentucky Personnel Cabinet, Timothy Longmeyer, beginning in 2009.
According to O’Bryan’s plea agreement, Longmeyer agreed to use his former position to steer contracts to MC Squared Consulting. In return, the owner of MC Squared agreed to pay O’Bryan approximately half of MC Squared’s proceeds from these contracts. O’Bryan then kicked back a portion of these funds to Longmeyer. During his involvement in this scheme, O’Bryan accepted $642,201.50 in kickbacks from MC Squared and transferred a significant portion of those funds to Longmeyer.
O’Bryan pleaded guilty to three counts of bribery concerning a federally funded program in September 2016. Longmeyer pleaded guilty to a related charge and was sentenced to 70 months in prison in September 2016. Additionally, Samuel McIntosh and Myron Harrod, both affiliated with MC Squared, pleaded guilty to related charges in January 2017 and are currently awaiting sentencing.
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.
Bath County Man Convicted of Obstructing Justice and Selling Misbranded ProductsRead the Press Release
LEXINGTON, Ky. – Samuel A. Girod, from Owingsville, Kentucky, has been convicted by a federal jury of conspiracy to impede 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.
On Wednesday afternoon, the jury, sitting in Lexington, delivered a guilty verdict on all thirteen counts against Mr. Girod. The verdict came after two and half days of trial.
The evidence at trial established that in September 2013, Mr. Girod and his company Satterfield Naturals were ordered by a federal judge in Missouri to stop manufacturing and distributing three products he made: TO-MOR-GONE, Chickweed Healing Salve, and R.E.P. Mr. Girod advertised the products as curing skin cancer, removing tumors, and helpful for other conditions, including poison ivy, diaper rash, psoriasis, sinus infections, and headaches. Despite the federal court order, Mr. Girod continued to sell his products to customers in Wisconsin, Indiana, and Illinois, making the same claims about them. Mr. Girod was convicted of selling misbranded products with the intent to defraud and failing to register with the Food and Drug Administration (FDA) with the intent to defraud, in violation of the Food, Drug, and Cosmetic Act.
He was also convicted of conspiracy to impede an officer of the United States and obstruction of proceedings before the FDA in connection with events that arose in November 2013, when two FDA Consumer Safety Officers attempted a court-ordered inspection of Mr. Girod’s manufacturing facility. Further, once the criminal case began, Mr. Girod instructed a witness not to respond to a federal grand jury subpoena and violated his bond conditions when he failed to appear in the criminal case.
Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky, and Mark McCormack, Special Agent in Charge, FDA Office of Criminal Investigations, jointly announced the verdict. 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.
Girod is scheduled to be sentenced on June 16, 2017. Any sentence will be imposed only after the Court has considered the U.S. Sentencing Guidelines and the applicable statutes.
Former Lake Cumberland Marina Owner Sentenced to 50 Months for Bank FraudRead the Press Release
LEXINGTON, Ky. – A Kentucky man, who operated a marina on Lake Cumberland, has been sentenced to 50 months in federal prison for bank fraud.
Today, Senior U.S. District Judge Joseph M. Hood sentenced John Guzman, 70, of Shelby County, Ky., for nine counts of bank fraud. In addition to his federal prison sentence, Guzman was sentenced to five years of supervised release. Under federal law, Guzman must serve at least 85 percent of his prison sentence.
Guzman was convicted last year, after a one-week trial in Lexington, by a jury who found him guilty of defrauding American Founders Bank of over $4,000,000. According to evidence presented at trial, Guzman bought the Grider Hill Marina, on Lake Cumberland, using money from nine fraudulent bank loans. Guzman submitted false paperwork in his bank loan applications, and claimed that the money would be used to buy boats and homes that did not actually exist. As part of his fraud, he falsified appraisal documents and insurance policies for the nonexistent collateral, and forged signatures of investors and acquaintances, as well as that of his deceased brother.
Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky; Amy S. Hess, Special Agent in Charge, FBI Louisville Division; and Joseph Moriarty, Special Agent in Charge, FDIC OIG Chicago Division, jointly made the announcement today. The case was investigated by the Federal Bureau of Investigation and the Federal Deposit Insurance Corporation, Office of Inspector General. Assistant U.S. Attorneys Neeraj Gupta and Ken Taylor prosecuted this case on behalf of the federal government.
Berea Pharmacist Found Guilty of Illegally Dispensing Hundreds of Thousands of Prescription Pills and Thousands of Boxes of Pseudoephedrine and Money LaunderingRead the Press Release
LEXINGTON, Ky. – A Berea pharmacist, Lonnie Hubbard, age 41, has been convicted by a federal jury of 71 counts, including fifty-six drug 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; twelve counts of money laundering; and two conspiracy charges.
The jury returned the guilty verdict after approximately three hours of deliberation, following eight days of trial.
“This case sends a strong message to medical professionals who dispense controlled substances: failure to exercise reasonable professional judgment, by consistently ignoring suspicious behavior, will not be tolerated,” said Acting U.S. Attorney Carlton S. Shier, IV. “Mr. Hubbard failed to exercise his professional responsibility and the result was an enormous amount of prescription pain pills and methamphetamine precursors being made available for illicit purposes. The great work of our law enforcement partners in this case is critical to our fight against the drug epidemic.”
According to evidence presented at trial, from 2010 until 2015, Hubbard, who owned RX Discount Pharmacy in Berea, sold prescription pain pills, without a legitimate medical purpose, and sold pseudoephedrine, knowing or having reason to believe that it was being used to manufacture methamphetamine. Many of the people 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 a cocktail of 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.
Those who obtained drugs at Hubbard’s pharmacy 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 either 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, and several luxury vehicles.
Hubbard’s wife, Meggan, was sentenced earlier this month for her involvement in purchases of property that came from the unlawful sales of the prescription drugs and pseudoephedrine; she received a sentence of five months’ imprisonment, to be followed by five months’ home detention. Three other co-defendants have pleaded guilty and been sentenced.
Hubbard is scheduled to be sentenced on June 6th. He faces a maximum of twenty years on the conspiracy offenses; twenty years on the charges of unlawful distribution of pseudoephedrine; twenty years on the unlawful distribution of controlled substances counts, except Count 15; and 10 years on the individual money laundering counts.
Acting U.S. Attorney Shier; 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 conviction.
The investigation was conducted by the DEA, IRS, USDA, Kentucky Board of Pharmacy, Inspector General for the Cabinet of Health and Family Services, Berea Police Department, Mt. Vernon Police Department, Madison County Sheriff’s Office, and the Appalachian HIDTA. The case was prosecuted by Assistant U.S. Attorneys Ron Walker, Katherine Crytzer, and Lauren Bradley.
Virginia Attorney Convicted of Defrauding Local Construction Company Out of More Than A Million DollarsRead the Press Release
FRANKFORT, Ky. – Daniel R. Goodwin, an attorney from McLean, Virginia, has been convicted of defrauding a Laurel County construction company, in connection with a purported project to build a “green recycling center” in Manchester, Ky. The company, Elza Construction, LLC, lost $1.32 million upfront and incurred several million dollars more in excavation and site preparation costs, but nothing was ever built at the site.
Late Thursday, a federal jury in Frankfort delivered a guilty verdict on four counts of wire fraud and one count of conspiracy to commit wire fraud. The verdict came after a week of trial and a day-and-a-half of deliberation.
The evidence at trial established that from 2008 until at least 2011, a company called “Waste Not Technologies,” which also went by the name “Global Green Holdings,” made false promises to the city of Manchester and several would-be contractors who wanted to work on building a green recycling center that would turn municipal waste into useful products like railroad ties and insulation. David Bennett, the chief executive officer of Global Green Holdings, promised the project would create 1,400 jobs and bring in millions in revenue.
Part of this scheme was to require contractors like Elza Construction to send money to an escrow account in lieu of a traditional construction performance bond, with the promise that the money would be used to release financing for the project and that the money would be returned on a set schedule, typically within 3 to 4 months. Daniel Goodwin controlled the escrow account that received money from Elza Construction and others. Instead of following the terms of written agreements, he distributed the money among his co-conspirators and kept some of it for himself. The money was never returned to Elza Construction or any of the other contractors.
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 verdict. The case was investigated by the FBI and Assistant U.S. Attorneys Gregory Rosenberg and Andrew Trimble prosecuted the case on behalf of the federal government.
Goodwin is scheduled to be sentenced on June 14, 2017. He faces a maximum sentence of 20 years on each count of wire fraud, and a maximum of five years on the count of conspiracy to commit wire fraud. However, any sentence would be imposed only after the Court has considered the U.S. Sentencing Guidelines and the applicable statutes.
Lexington Man Sentenced to 10 Years for Possession with Intent to Distribute FentanylRead the Press Release
More than 120 grams of fentanyl was found in the defendant’s home
LEXINGTON, Ky. – A Lexington man, who admitted in federal court last year that he possessed and intended to distribute large quantities of fentanyl in Fayette County, has been sentenced to 10 years in federal prison.
Today, Senior U.S. District Judge Joseph M. Hood sentenced 55 year-old William Dixon for possession with intent to distribute 40 grams or more of fentanyl. Under federal law, Dixon must serve at least 85 percent of his prison sentence.
Dixon admitted last year that, in July 2016, the Lexington Police conducted a search of his residence and located 121 grams of fentanyl and 69 grams of a mixture of heroin, fentanyl, and acetyl fentanyl. Dixon had previously been convicted of possession with the intent to distribute cocaine and using a firearm in furtherance of a drug crime, in 2003.
Dixon worked for the city in the Division of Water Quality at the time of his arrest.
“The great work of our law enforcement partners at the DEA and the Lexington Police prevented an enormous amount of this very dangerous drug from being illegally distributed,” said Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky. “Fentanyl can be lethal in the 2 mg range and the seizure in this case represents one of the largest ever in the Lexington area. This case was a significant achievement toward public safety and supports our continued efforts in combatting the opioid epidemic in our community.”
Acting U.S. Attorney Shier; 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 Cindy Rieker prosecuted this case on behalf of the federal government.
Former Owner of Environmental Services Company Indicted for Illegally Disposing of Hazardous WasteRead the Press Release
LEXINGTON, Ky. – A federal grand jury in Lexington, Ky., returned an indictment against a former central Kentucky businessman on one count of conspiracy and seven counts of environmental law crimes under the Resource Conservation and Recovery Act (RCRA).
The indictment, returned on Thursday, specifically charges Kenneth Gravitt with illegal storage, transportation and disposal of a hazardous waste.
Kenneth Gravitt was the owner and operator of Global Environmental Services (GES), which operated at sites in Georgetown, Cynthiana, and Winchester. In 2013, GES began recycling Cathode Ray Tubes (CRTs), which are the vacuum video tubes inside older box televisions and computer monitors. Because CRTs contain large amounts of lead, their disposal presents a potential environmental hazard and is regulated by RCRA. Lead is extremely toxic and can cause serious health problems upon exposure, and therefore must be disposed in a particular way that is safe for the community.
According to the indictment, GES received for recycling many more loads of CRTs than it could process and disposed of numerous CRTs illegally. Specifically, Gravitt, aided and abetted by others, allegedly transported the CRTs to a Georgetown landfill that did not have a permit to handle hazardous waste; stored ground-up CRT glass containing excessive amounts of lead in large, open, outdoor piles; and put thousands of CRTs and glass in a large hole that had been dug behind the Georgetown facility, all in violation of federal environmental laws.
Carlton S. Shier IV, Acting United States Attorney for the Eastern District of Kentucky made the announcement today.
If Gravitt is convicted, the maximum punishment on each count is 5 years imprisonment and a $250,000 fine. The investigation was conducted by the United States Environmental Protection Agency, Criminal Investigation Division. The case was presented to the grand jury by Assistant U.S. Attorneys Ken Taylor and Erin Roth.
Any sentence upon conviction will come after the Court considers the U.S. Sentencing Guidelines and the federal statue.
Pain Management Physician Resolves False Claims Act AllegationsRead the Press Release
LEXINGTON, Ky. – Pain management physician Dr. Robert Windsor has agreed to the entry of a $20 million consent judgment to resolve allegations that he violated the False Claims Act by billing federal health care programs for surgical monitoring services that he did not perform and for medically unnecessary diagnostic tests. Dr. Windsor owned pain management clinics in Georgia and Kentucky that operated under the umbrella of National Pain Care, Inc., including clinics in Lexington, London, Somerset, Hazard, Prestonsburg, and Pikeville, Kentucky.
“Dr. Windsor placed personal gain above all else in his medical practice,” said Carlton S. Shier, IV, Acting U.S. Attorney for the Eastern District of Kentucky. “In doing so, he put his patients at risk, and defrauded the United States. We will use every tool at our disposal to protect vital healthcare programs from those who seek unearned profit at the taxpayers’ expense.”
“Windsor placed patients at risk by claiming that he was monitoring the neurological health of patients during surgery when he actually had an unqualified medical assistant do the work,” said John Horn, U. S. Attorney for the Northern District of Georgia. “Windsor unfortunately put his own interests above the health and safety of his patients.”
“Providing medically unnecessary services to a vulnerable population, such as Medicare beneficiaries, places patients at risk and jeopardizes millions of taxpayer dollars,” said Derrick Jackson, Special Agent in Charge of the U.S. Department of Health & Human Services, Office of Inspector General. “HHS-OIG is committed to safeguarding the federal health care programs and the patients receiving medical services. Today’s settlement should send a message to others who profit from schemes abusing patient safety that we will pursue justice for our beneficiaries and the programs.”
“The announced monetary settlement involving Dr. Robert Windsor is a direct result of several years of hard work by federal agents and prosecutors as they pursued and enforced rampant violations of the federal False Claims Act. The FBI continues to play a key role in identifying, investigating, and presenting for prosecution individuals such as Dr. Windsor who target and negatively impact our federal health care programs,” said David J. LeValley, Special Agent in Charge, FBI Atlanta Field Office.
“This settlement highlights the commitment of the Defense Criminal Investigative Service (DCIS) and its law enforcement partners to protect the integrity of the Department of Defense (DoD) health care program,” said Special Agent in Charge John F. Khin, Southeast Field Office. “DCIS aggressively investigates health care providers that defraud the DoD, to preserve American taxpayer dollars intended to care for our Warfighters, their family members, and military retirees.”
“The Georgia Department of Law will continue to work with our federal and local partners to pursue resolutions against those who threaten the medical care of Georgia citizens and misuse taxpayer dollars,” said Chris Carr, Attorney General for the State of Georgia.
The government alleges that Dr. Windsor engaged in two schemes. First, the government alleges that Dr. Windsor caused the submission of false claims to Medicare, TRICARE, and FEHBP for the online, real time intraoperative monitoring of surgeries that Dr. Windsor did not personally monitor, that were not monitored by a physician, and that Dr. Windsor falsely represented had been monitored by him during the period from January 1, 2008 through July 22, 2013. On October 24, 2016, Dr. Windsor was sentenced to three years, two months in federal prison and three years of supervised release in connection with this conduct.
The government also alleges that Dr. Windsor submitted or caused the submission of false claims to Medicare, the Georgia and Kentucky Medicaid programs, TRICARE, and FEHBP for medically unnecessary balance tests, nerve conduction and electromyography procedures, and qualitative drug screens performed in Georgia and Kentucky during the period from January 1, 2010 through June 30, 2014.
In order to satisfy the $20 million consent judgment, Dr. Windsor will sell all but one of his residential and commercial properties and pay the net sale proceeds to the government. Dr. Windsor will also sell certain other assets, including two boats and four jet skis, and pay the net sale proceeds to the government.
The settlement resolves two lawsuits filed by three whistleblowers, Kris Frankenberg, Stephanie Herder, and Bradley Davis, under the qui tam provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the government for false claims and share in any recovery. lawsuits resolved are captioned United States ex rel. Frankenberg v. Windsor et al., No. 1:12-cv-3114 (N.D. Ga.), and United States ex rel. Herder et al. v. National Pain Care, Inc., et al., No. 14-cv-00221 (E.D. Ky.).
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $31.4 billion through False Claims Act cases, with more than $19.6 billion of that amount recovered in cases involving fraud against federal health care programs.
This case was investigated by the U.S. Attorney’s Office for the Northern District of Georgia, the U.S. Attorney’s Office for the Eastern District of Kentucky, the U.S. Department of Health & Human Services Office of Inspector General, the Federal Bureau of Investigation, the Defense Criminal Investigative Service, and the Kentucky Office of Attorney General’s Medicaid Fraud and Abuse Control Unit.
The civil settlement was reached by Assistant United States Attorneys Lena Amanti (Northern District of Georgia) and Paul McCaffrey (Eastern District of Kentucky).
Tennessee Man Sentenced to 188 Months for Drug Trafficking and Money Laundering Conspiracies in Central KentuckyRead the Press Release
LEXINGTON, Ky. – A Tennessee man has been sentenced to 188 months in federal prison for conspiring to distribute massive quantities of marijuana and cocaine in central Kentucky and conspiring to launder approximately one million dollars in drug proceeds.
On Thursday, January 26, U.S. District Judge Karen Caldwell sentenced Benito Segura Tovar, 34, of Knoxville, Tenn. Under federal law, Tovar must serve at least 85 percent of his prison sentence.
Segura Tovar admitted that he conspired with Edgar Villa Castanedaand Miguel Salas, both of Lexington, Ky., and others to distribute over five kilograms of cocaine and over 1,000 kilograms – roughly 2,200 pounds - of marijuana between August 2014 and February 2015. The cocaine was supplied in part by Raul Garcia Valencia of Atlanta, Ga.
The defendants distributed the drugs in Tennessee, Georgia, and central Kentucky, including Fayette, Madison and Montgomery Counties. Segura Tovar also admitted that he, Villa Castaneda, and Salas conspired to launder over one million dollars in drug proceeds.
Law enforcement seized approximately four kilograms of cocaine, 150 pounds of marijuana, several firearms, and approximately $1,000,0000 in bulk cash during the investigation.
Villa Castaneda and Salas pleaded guilty last year. Castaneda was sentenced to 204 months’ imprisonment; Salas was sentenced to 174 months’ imprisonment. Garcia Valencia was convicted at trial in June 2016 and sentenced to 160 months’ imprisonment.
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, DEA; Amy Hess, Special Agent in Charge of the Louisville Division, FBI; Stuart Lowrey, Special Agent in Charge of the Louisville Field Division, ATF; Richard W. Sanders, Kentucky State Police; and Mark Barnard, Chief of Lexington Police, jointly made the announcement today.
The investigation was conducted as part of the Organized Crime Drug Enforcement Task Force (OCDETF) Lexington, Ky. OCDETF is an initiative focusing on significant national and international drug trafficking and money laundering criminal organizations. The investigation was coordinated by DEA with the assistance of FBI, KSP, Lexington Police Department, and ATF. The United States was represented by Assistant United States Attorney Robert M. Duncan, Jr., and Assistant United States Attorney G. Todd Bradbury.
Lexington Woman Sentenced to 61 Months for Identity Theft in Tax Refund SchemeRead the Press Release
LEXINGTON, Ky. – A Lexington, Ky., woman, who stole personal identifying information of dozens of individuals and used that information to file tax returns that would generate tax refunds, was sentenced on Tuesday, January 17, 2017, to 61 months in prison and ordered to pay restitution of $81,423.90 to the Internal Revenue Service.
U.S. District Court Judge Joseph M. Hood sentenced 30-year-old Yarelis Rios for Theft of Public Funds and Aggravated Identity Theft.
Rios previously admitted that from January 2012 to April 2013, she used the identifying information of numerous individuals that she obtained through the course of her employment at various apartment complexes in the Lexington area, to prepare fraudulent tax returns with the Internal Revenue Service. Specifically, Rios prepared and filed a total of 64 fraudulent tax returns in the names of different individuals for tax years 2011 and 2012 that requested refund amounts. The majority of the tax returns specified that the refunds were to be direct deposited into Rios’s personal bank account. In total, the 64 fraudulent tax returns filed by Rios requested tax refunds totaling $408,670 to be directed into bank accounts or onto debit cards associated with Rios. The Internal Revenue Service, however, was able to prevent 51 of these returns from being distributed by identifying them as fraudulent, so that only $81,423.90 in fraudulent federal tax refunds were issued.
Under federal law, Rios must serve 85 percent of her prison sentence and will be under the supervision of the U.S. Probation Office for 3 years following her period of incarceration.
Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky; Tracey D. Montaño, Special Agent in Charge, Internal Revenue Service Criminal Investigation; Jon Oldham, Resident Agent in Charge, United States Secret Service; and Mark Barnard, Chief of Police, Lexington Police Department, jointly announced the sentence. Assistant United States Attorneys Erin M. Roth and Kathryn M. Anderson represented the government.
Olive Hill Man Sentenced to 11 Years for Receipt of Child PornographyRead the Press Release
LEXINGTON, Ky. – An Olive Hill, Ky., man, who previously admitted that he possessed thousands of images and hundreds of videos containing child pornography, has been sentenced to 11 years in federal prison.
Today, U.S. District Judge David L. Bunning sentenced James Keith Wolfe, 55, for receipt of child pornography and also ordered him to serve a 20year term of supervised release following the completion of his sentence. Under federal law, Wolfe must serve at least 85 percent of his prison sentence.
Wolfe pleaded guilty in August of 2016 to a single count of receipt of child pornography.
In September of 2015, FBI and other law enforcement agents executed a search warrant at his Olive Hill residence, seizing several laptop computers, multiple thumb drives, and two Dell towers. Law Enforcement agents discovered that Wolfe’s computer and other electronic media contained more than 3,800 still images and 670 videos of children engaged in sexually explicit conduct.
The investigation began when authorities made a direct connection to Wolfe’s computer while he was using a peer to peer (P2P) file sharing network to download child pornography images.
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 investigation was conducted by the FBI. Assistant U.S. Attorney David Marye prosecuted this case on behalf of the federal government.
McKesson Agrees to Pay Record $150 Million Settlement for Failure to Report Suspicious Orders of Pharmaceutical DrugsRead the Press Release
LEXINGTON, Ky. – McKesson Corporation (McKesson), one of the nation’s largest distributors of pharmaceutical drugs, agreed to pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act (CSA), Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky, and Drug Enforcement Administration (DEA) Detroit Field Division Special Agent in Charge, Timothy J. Plancon, announced today.
Locally, this settlement resolves the U.S. Attorney’s Office for the Eastern District of Kentucky’s and DEA London Resident Office Diversion Group’s joint investigation of McKesson’s Washington Courthouse, Ohio Distribution Center, which distributed pharmaceutical drugs to pharmacies in Kentucky, Ohio, and West Virginia. The settlement further resolves open civil investigations being conducted by eleven other U.S. Attorney’s Offices across the nation and administrative investigations by DEA.
“McKesson’s failure to report suspicious orders fueled the opioid epidemic in eastern Kentucky,” said Acting U.S. Attorney Shier. “Opioid abuse has devastated our community, and the investigation of drug distributors, like McKesson, is one aspect of the United States’s multifaceted fight against this epidemic.”
DEA Special Agent in Charge Plancon said: “The United States is in the midst of an opiate epidemic which is being fueled by the misuse of opiate painkillers. This historic settlement demonstrates DEA’s commitment to the public health and safety by holding the McKesson Corporation accountable for their actions. It doesn’t matter if the violator is a multi-billion dollar corporation, or an individual selling smaller amounts of drugs on the street, DEA is committed to fighting this epidemic from all angles.”
The nationwide settlement requires McKesson to suspend sales of controlled substances from its Washington Courthouse Distribution Center and distribution centers in Colorado, Michigan, and Florida for multiple years. The staged suspensions are among the most severe sanctions ever agreed to by a DEA registered distributor. The settlement also imposes new and enhanced compliance obligations on McKesson’s distribution system.
In 2008, McKesson agreed to a $13.25 million civil penalty and administrative agreement for similar violations. In this case, the government alleged again that McKesson failed to design and implement an effective system to detect and report “suspicious orders” for controlled substances distributed to its independent and small chain pharmacy customers – i.e. orders that are unusual in their frequency, size, or other patterns. From 2008 until 2013, McKesson supplied various U.S. pharmacies an increasing amount of oxycodone and hydrocodone pills, frequently misused products that are part of the current opioid epidemic.
The government’s investigation developed evidence that even after designing a compliance program after the 2008 settlement, McKesson did not fully implement or adhere to its own program. For example, from January 1, 2009 to August 1, 2013, McKesson’s Washington Courthouse Distribution Center failed to report suspicious orders of controlled substances to DEA.
In addition to the monetary penalties and suspensions, the government and McKesson agreed to enhanced compliance terms for the next five years. Among other things, McKesson has agreed to specific, rigorous staffing and organizational improvements; periodic auditing; and stipulated financial penalties for failing to adhere to the compliance terms. Critically, the settlement will require McKesson to engage an independent monitor to assess compliance – the first independent monitor of its kind in a CSA civil penalty settlement.
Locally, the civil penalty investigation was conducted by the U.S. Attorney’s Office for the Eastern District of Kentucky and DEA Detroit Field Division’s London Resident Office’s Diversion Group. This multi-district investigation also involved the following DEA Offices: Boston Field Division, Chicago Field Division, Denver Field Division, Miami Field Division, Newark Field Division, San Francisco Field Division, St. Louis Field Division, and Washington District Office. The following U.S. Attorney’s Offices also participated in the case: Central District of California, Eastern District of California, District of Colorado, Middle District of Florida, Northern District of Illinois, District of Massachusetts, Eastern District of Michigan, District of Nebraska, District of New Jersey, Northern District of West Virginia, and Western District of Wisconsin.
U.S. Attorneys’ Offices for the District of Colorado and the Northern District of West Virginia, along with DEA Office of Chief Counsel and Diversion Control Division, led the civil settlement negotiations. DEA’s Denver, Detroit, and Miami Field Divisions, and its Washington Division Office led the administrative and civil investigation. The Criminal Division’s Narcotic and Dangerous Drug Section (NDDS) also coordinated and assisted in negotiating certain portions of the settlement. Assistant United States Attorneys Amanda Rocque (Colorado), Alan McGonigal (Northern District of West Virginia), and Katherine Crytzer (Eastern District of Kentucky) represented the United States in the civil penalty investigations and negotiations. Associate Chief Counsel Lee Reeves and Senior Attorneys Dedra Curteman, Dana Hill, and Krista Tongring represented DEA. Trial Attorneys Harry Matz and Kirtland Marsh were involved for NDDS.
Lexington Man Faces Life in Prison After Convicted by Jury of Distributing Fentanyl Resulting in DeathRead the Press Release
LEXINGTON, Ky. – A Lexington man faces life in prison after a jury convicted him of distributing fentanyl that resulted in the overdose death of a 37 year-old Fayette County resident.
On Thursday, Joshua Donald Ewing, 28, was convicted of distribution of a controlled substance resulting in death. The jury returned the verdict after seven hours of deliberation following two days of trial. Because of Ewing’s criminal history, he is subject to a mandatory life sentence under the federal overdose death law. Sentencing is scheduled for February 6.
“The drug dealers who sell heroin and fentanyl in our communities know full well that, sooner or later, the result of their criminal conduct is likely a tragic and unnecessary death,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “Overdose victims are not merely statistics-they leave behind grieving parents, siblings, and children who deserve justice. While we take no joy in these cases, we are committed to using every available tool to combat the opioid epidemic which so afflicts our Commonwealth. All of us owe a debt of gratitude to the local and federal law enforcement officers who do the hard work that has made our Overdose Prosecution Initiative so successful.”
According to evidence presented at trial, in February of 2016, Ewing sold fentanyl to Jeremy Deaton, who was expecting heroin. Deaton consumed the drug, and died of an overdose. A toxicologist testified that, had it not been for the fentanyl, Deaton would not have died. The toxicologist further testified that Deaton had more than five times the therapeutic range of fentanyl in his blood.
Ewing was on probation for possession of heroin at the time he sold the fentanyl to Deaton.
U.S. Attorney Harvey; 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 Lexington Police and the DEA. Assistant U.S. Attorney Todd Bradbury prosecuted this case on behalf of the federal government
Former Paintsville Mayor Sentenced to 48 Months for Misusing City FundsRead the Press Release
PIKEVILLE, Ky. – Former Paintsville Mayor, Robert Porter, has been sentenced to 48 months for misappropriating property and city resources.
On Thursday, U.S. District Judge Reeves sentenced Porter for misappropriating federal property belonging to a city that received substantial federal funding. Judge Reeves also ordered that Porter pay a $4,000 fine.
In September of 2016, a federal jury, in London, Ky., convicted Porter on those charges.
Evidence presented at the trial established that, from 2009 until 2012, Porter, with the knowledge, approval and assistance of Larry Herald, the former general manager of the Paintsville Utilities Commission, did not pay for utilities services provided to residences that he owned in Paintsville. The total delinquency was in excess of $7,000. The evidence also revealed that Porter used thousands of dollars in city and federal funds to pay for personal expenses, such as maintenance and repairs on his personal automobiles, gasoline for personal trips, and shipping fees for personal items.
Evidence at the trial also established that Porter used a city owned vehicle, seized from a drug investigation by the Paintsville Police Department, for personal trips.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Amy Hess, Special Agent in Charge, FBI; and Richard W. Sanders, Kentucky State Police Commissioner, jointly made the announcement.
The investigation was conducted by the FBI and the Kentucky State Police. Assistant U.S. Attorneys Ken Taylor, Kate Smith and Andrew Boone prosecuted this case on behalf of the federal government.
Shelbyville Woman Sentenced to 25 Years for Producing Images of Child PornographyRead the Press Release
FRANKFORT, Ky. – A Shelbyville, Ky., woman, previously convicted of photographing images of children engaged in sexually explicit conduct, has been sentenced to 25 years in federal prison.
On Wednesday, U.S. District Judge Gregory F. Van Tatenhove sentenced Melissa Torres, 37, for enticing a minor to engage in sexually explicit conduct for the purpose of producing a visual depiction of that conduct. He also ordered her to serve a lifetime of supervised release following the completion of her sentence. Under federal law, Torres must serve at least 85 percent of her prison sentence.
Torres admitted that, on September 22, 2014, she coerced two children under the age of 10 to engage in sexually explicit conduct and took video of the encounter. She later distributed the video.
The Shelbyville Police Department began an investigation after someone found the child pornography images and notified the police.
Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; Amy Hess, Special Agent in Charge, FBI; and Danny Goodwin, Shelbyville Police Chief, jointly made the announcement.
The investigation was conducted by the FBI and the Shelbyville Police. Assistant U.S. David Marye prosecuted this case on behalf of the federal government.
North Carolina Man Sentenced to 262 Months for Enticing Boyle County Minor to Engage in Sexually Explicit ConductRead the Press Release
LEXINGTON, Ky. – A North Carolina man, previously convicted of enticing a minor in Danville, Ky., to engage in sexually explicit conduct, was sentenced on Tuesday to 262 months in federal prison.
U.S. District Judge Danny C. Reeves sentenced James Matthew Shelton, 30, and also ordered him to serve a lifetime term of supervised release following the completion of his sentence. Under federal law, Shelton must serve at least 85 percent of his prison sentence.
Shelton admitted at his guilty plea that, from July 1, 2014 to August 23, 2014, he persuaded a 13-year-old female in Danville to send sexually explicit photos of herself to his cell phone.
In April of 2015 an investigator with the Office of the Kentucky Attorney General, and other law enforcement agents, executed a search warrant at Shelton’s residence in North Carolina and seized his cell phone. The phone contained images of child pornography. The investigation started in September of 2014, when the Boyle County Sheriff’s Office received a complaint that Shelton had threatened one or more minors in Boyle County.
Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; Amy Hess, Special Agent in Charge, FBI; Andy Beshear, Attorney General of Kentucky; and Derek Robbins, Boyle County Sheriff, jointly made the announcement.
The investigation was conducted by the FBI, the Office of the Kentucky Attorney General, and the Boyle County Sheriff’s Office.
Leader of Drug Trafficking Ring Sentenced to Life for Distributing Fentanyl That Caused Overdose Death of Madison County ManRead the Press Release
Case represents first time in eastern Kentucky that a life sentence was imposed as a result of
an overdose of fentanyl and that federal overdose penalties were applied to out-of-state
defendants from Detroit, a major source for illicit drugs
LEXINGTON, Ky. — The leader of a drug trafficking organization that brought significant amounts of heroin and fentanyl, from Detroit, Mich., to Richmond, Ky., has been sentenced to life imprisonment for distributing fentanyl that resulted in the overdose death of a Madison County resident.
On Monday, U.S. District Judge Danny Reeves sentenced Navarius Westberry, 38, originally from Michigan, but living in Lexington, for distributing a controlled substance resulting in an overdose death. Anyone convicted under this law is subject to a prison term of 20 years to life. After an extensive hearing, the Court imposed a term of life imprisonment.
“The facts of this case are particularly disturbing,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “Mr. Westberry and his co-conspirators moved to Kentucky from Michigan for the sole purpose of establishing a large scale distribution network for heroin and fentanyl. The organization which he led was among the first to introduce large quantities of fentanyl to the Richmond community. The drugs sold by the Westberry organization caused multiple overdoses, including fatalities. The evidence indicates that Mr. Westberry knew the drugs sold by his organization were particularly dangerous. Mr. Westberry exhibited a callous disregard for human life in his quest for easy money. The Court determined that his freedom must be forever forfeited as a result of his criminal conduct. I hope that those inclined toward this sort of destructive conduct, whether they live in Kentucky or occupy a higher position in the drug distribution network, take heed – the people of Kentucky have had enough. The drugs you are peddling will kill people and the price you will pay for that is steep – whether ether you are the street level dealer, or a leader of the criminal organization.”
Westberry admitted that, from January 2014 until August 2015, he organized and operated a drug trafficking organization in Richmond that distributed between 750 grams and one kilogram of heroin and 50 grams of fentanyl. Fentanyl, which is many times stronger than heroin, can be lethal in the 2 mg range.
Westberry also admitted that, in March 2015, he supplied heroin and fentanyl to others, which then led to the overdose death of 25 year-old Cory Brewer. The toxicology report and autopsy showed that Brewer’s death was caused by toxic levels of fentanyl.
This case marks the first time in the Eastern District of Kentucky that the federal overdose penalties were applied in a case involving defendants from Michigan, whose distribution of drugs in Kentucky caused an overdose.
Four other co-conspirators have pleaded guilty and been sentenced, including co-defendant, Benjamin Fredrick Charles Robinson, 21, also from Detroit, who was sentenced to 20 years for distributing a controlled substance that caused another overdose. In that case, the victim survived due to medical assistance.
U.S. Attorney Harvey; Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration; and James Ebert, Chief of Police, Richmond Police Department, jointly made the announcement.
The investigation was conducted by the DEA and the Richmond Police. Assistant U.S. Attorney Todd Bradbury prosecuted this case on behalf of the federal government.
U.S. Attorney Kerry B. Harvey Announces ResignationRead the Press Release
LEXINGTON, Ky. – Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, has announced his resignation, effective Friday, January 13, 2017. U.S. Attorney Harvey has served in office since May 14, 2010.
“The opportunity to serve as United States Attorney for the Eastern District of Kentucky has been a distinct honor,” United States Attorney Harvey said today. “I will be forever grateful for the trust placed in me by President Obama and the opportunity to serve in the Department of Justice during such consequential times. I am inspired by the tremendous work of the state, local and federal law enforcement communities with which I have served, and I will always treasure the chance to work alongside the exceptional staff of the United States Attorney’s Office for the Eastern District of Kentucky. We have accomplished a great deal together, and their commitment to the cause of justice will continue.”
“As United States Attorney for the Eastern District of Kentucky since 2010, Kerry Harvey has been an indispensable partner in our work to build a stronger and safer nation for all Americans," said Attorney General Loretta E. Lynch. "Under Kerry's leadership, his office has played a crucial role in the Justice Department's initiatives to prosecute fraud, corruption, and white-collar crime. And he has been a visionary leader in our work to end the devastating opioid epidemic, joining with state and local authorities to hold accountable those who illegally distribute heroin, prescription drugs, and other substances that ravage our communities. Kerry's work with the families of those who have fallen victim to this epidemic has given voice to those who have suffered and helped to steer countless others way from the same path. His efforts are in the highest traditions of the Department of Justice. I want to thank Kerry for his tireless efforts on behalf of the American people over the last seven years, and I wish him the very best as he begins the next chapter of his distinguished career."
Harvey’s efforts include serving on the National Heroin Task Force; serving three years on the Attorney General’s Advisory Committee (AGAC), a select group appointed by the Attorney General to serve as advisors to the Attorney General and as the voice for all United States Attorneys nationwide; serving as Co-Chairman of the AGAC’s Healthcare Fraud Working Group; establishing the highly successful U.S. Attorney’s Heroin Education Action Team (“USA HEAT”), an initiative to increase public awareness of the opioid epidemic in Kentucky; achieving landmark criminal convictions and civil recoveries for fraudulent healthcare practices; prosecuting significant public corruption cases; and prosecuting large-scale drug trafficking organizations. Under Harvey’s leadership, his office has become a national leader in federal prosecution of drug-overdose cases. His time in office has seen significant change – twenty-one of the forty-four Assistant United States Attorneys allocated to the office have been hired under Harvey’s leadership.
Signature achievements under Harvey’s leadership include:
Securing a number of public-corruption convictions against former state and local officials, including Richie Farmer, former Kentucky Commissioner of Agriculture; Timothy Longmeyer, former Secretary of the Commonwealth of Kentucky’s Personnel Cabinet and former Deputy Attorney General of Kentucky; Timothy Conley, former County Judge -Executive of Morgan County; Keith Hall, former member of the Kentucky House of Representatives; Robert Porter, former Mayor of Paintsville; Arch Turner, former superintendent of the Breathitt County Public Schools, and Tim Fegan, former Director of the Buffalo Trace Narcotics Task Force;
Securing landmark civil recoveries under the False Claims Act against two hospitals – $40.9 million from King’s Daughters Medical Center in Ashland and $16.5 million from Saint Joseph’s Hospital in London – to settle allegations of unnecessary cardiac procedures; and securing the criminal convictions of Dr. Richard Paulus and Dr. Sandesh Patil for their roles in performing unnecessary cardiac procedures;
Securing a $15.75 million civil recovery against an addiction treatment center (“SelfRefind”), a clinical laboratory (“PremierTox”), and two physician owners to resolve allegations that they fraudulently billed federal healthcare programs for medically unnecessary and excessive urine screens;
Securing a $16 million civil judgment against Nurses’ Registry Home Health Corporation and the estate of its former owner Lennie House, resolving allegations of widespread healthcare fraud;
Collecting more than $182 million on behalf of taxpayers during 2014 alone, an amount that represents the highest annual recovery in the Office’s history and more than twenty times the Office’s annual budget;
Securing criminal convictions of numerous pain clinic owners, pharmacists, doctors, and other health care professionals for the illegal distribution of prescription pain medication and other controlled substances, including pain-clinic owners William Singleton, Joel Shumrack and Michael Leman, pharmacist Charles Terry Tenhet, and Dr. James “Ace” Chaney;
Securing the criminal conviction of Lexington attorney Bryan Coffman and his co-defendant Gary Milby on charges relating to a fraudulent $36-million-dollar oil-and-gas investment scheme;
Developing an Overdose Prosecution Initiative to combat Kentucky’s opioid epidemic. The Initiative employs significant federal penalties for drug trafficking that results in death or serious bodily injury. It has resulted in dozens of prosecutions involving overdoses and has become a national model for other U.S. Attorney’s Offices; and
Creating the Office’s Civil Rights Program to prosecute criminal and civil violations of federal civil rights law, including prosecution of the first case in the nation charged under the Shepard-Byrd Hate Crimes Act.
As of January 14, 2017, Carlton S. Shier, IV, will assume leadership of the Office as Acting United States Attorney. Shier has been the First Assistant United States Attorney since April of 2013 and has been with the Department of Justice since 2010.
U.S. Attorney's Office Collects More Than $15 Million for U.S. Taxpayers in Fiscal Year 2016Read the Press Release
LEXINGTON, Ky. — U.S. Attorney Kerry B. Harvey announced today that his office collected more than $15,765,000 in Fiscal Year 2016. Of this amount, more than $8,214,000 was collected in criminal actions and more than $7,551,000 was collected in civil actions.
In addition to funds collected solely by the United States attorney’s Office for the Eastern District of Kentucky, Harvey’s office worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect $3,353,000 in cases pursued jointly with those offices. Of this amount, $2,370,500 was collected in criminal actions and more than $982,000 was collected in civil actions. Federal FY 2016 ran from October 1, 2015 to September 30, 2016.
“Federal law enforcement in the Eastern District of Kentucky is a wise investment for the taxpayers,” said Harvey. “Our top priority will always be to enforce the laws which keep Americans safe. We are pleased, however, that our efforts also enhance and protect the public treasury, while securing restitution for crime victims. Last year, we recovered an amount representing more than twice our office’s annual budget in fines, forfeitures, and restitution. We will continue to work hard every day to be good stewards of the resources allocated for our use.”
Attorney General Loretta E. Lynch announced earlier this month that the U.S. Department of Justice collected nearly $15.4 billion in civil and criminal actions in FY 2016. This amount represents more than five times the 2016 appropriated $2.93 billion budget for the 94 U.S. Attorneys’ offices and the litigating divisions of the Justice Department, combined.
“Every day, the men and women of the Department of Justice work tirelessly to enforce our laws, ensuring that taxpayer dollars are used properly and that the American people are protected from exploitation and abuse,” said Attorney General Lynch. “Today’s announcement is a testament to that work, and it makes clear that our actions deliver a significant return on public investment. I want to thank the prosecutors and trial attorneys who made this year’s collections possible, and I want to emphasize that the department remains committed to the well-being of our people and our nation.”
The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the United States and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
In addition to these collections, the U.S. Attorney’s Office for the Eastern District of Kentucky, working with partner agencies and divisions, also collected more than $12,356,000 in asset forfeiture actions in FY 2016. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
Last Defendant in $48 Million Dollar Cigarette Tax Fraud Scheme SentencedRead the Press Release
The last defendant in a domestic and international, multimillion-dollar cigarette tax fraud scheme has been sentenced, the Department of Justice announced today.
On Thursday, U.S. District Judge David L. Bunning sentenced Anthony Cosica, 54, of Pinetop, Ariz., to 24 months in federal prison. Eight other defendants, including three from eastern Kentucky and two from Russia, have already been sentenced, for charges including conspiracy to commit mail fraud, wire fraud and money laundering and violations of the PACT Act.
This case marks the first prosecution in the nation for violations of the PACT Act, which is a 2010 federal law enacted to prevent trafficking in untaxed cigarettes.
According to court documents and evidence presented at trial, from 2008 to 2013, the defendants devised a scheme that defrauded federal, state and local governments across the country, out of cigarette excise taxes totaling approximately $48 million. Specifically, the defendants operated mail order and internet businesses engaged in the delivery sales of untaxed cigarettes to customers in all 50 states.
“This case represents a milestone in enforcement of the PACT Act,” said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky. “Mr. Cosica and his co-conspirators devised a complex criminal enterprise of international proportions which cost public treasuries millions of dollars. Congratulations to the law enforcement agencies and our trial team for their superb work in unwinding this criminal scheme.”
The leader of the conspiracy, John Maddux Jr., 56, formerly of Russell, Ky., operated mail order/online businesses that sold the cigarettes at discount prices. Maddux executed the scheme by forming a business with two Russian nationals, Alexander Sergeev and Mikhail Serov. Sergeev and Serov shipped cigarettes from Russia directly to customers of Maddux and his co-conspirators. Evidence at trial further established that Maddux also fulfilled cigarette orders for other co-conspirators, who were also operating similar mail/online businesses. To get the cigarettes through U.S. Mail, the defendants disguised and marked the cigarettes as gift items, which is a violation of the PACT Act.
Under the PACT Act, businesses are required to register and report cigarette and tobacco sales to state tax administrators, allowing States to properly collect required excise taxes from the businesses. The defendants intentionally avoided these requirements and millions of dollars in taxes during the scheme.
The defendants received the following prison sentences: John Maddux 10 years; Christina Carmen, formerly of Russell, Ky., 60 months; David H. White, formerly of Ashland, Ky., 24 months; Julie Coscia, of Pinetop, Ariz., 36 months; Michael E. Smith, of Escondido, Calif., 42 months; Alexander Sergeev, 46 months; Mikhail Serov, 46 months; and Barbara Routh, of Prospect, Ky., two years’ probation. Under federal law, all defendants must serve at least 85 percent of their prison sentence.
Domestic and International trafficking in untaxed cigarettes via mail order or the Internet defrauds the federal and state governments of hundreds of millions of dollars in tobacco taxes and frequently funds other criminal activity.
U.S. Attorney Harvey; Stewart Lowrey, Special Agent in Charge, Louisville Field Division, Alcohol Tobacco Firearms and Explosives; Tracey Montano, Special Agent in Charge, Nashville Field Office, Internal Revenue Service-Criminal Investigations; Richard Deer, Acting Special Agent in Charge, Philadelphia Regional Office of the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations; and Mark McCormack, Special Agent in Charge, Metro Washington Field Office, U.S. Food and Drug Administration, jointly announced the sentence.
The investigation was conducted by the Bureau of Alcohol Tobacco Firearms and Explosives, the Internal Revenue Service-Criminal Investigations, the United States Department of Labor, Office of Inspector General, and U.S. Food and Drug Administration. Assistant United States Attorneys Laura K. Voorhees and Wade T. Napier, and ATF Associate Chief Counsel, Jeffery A. Cohen, prosecuted this case on behalf of the federal government.
Last Defendant in $48 Million Dollar Cigarette Tax Fraud Scheme SentencedRead the Press Release
COVINGTON, Ky. — The last defendant in a domestic and international, multimillion-dollar cigarette tax fraud scheme has been sentenced.
On Thursday, U.S. District Judge David L. Bunning sentenced Anthony Cosica, 54, of Pinetop, Ariz., to 24 months in federal prison. Eight other defendants, including three from eastern Kentucky and two from Russia, have already been sentenced, for charges including conspiracy to commit mail fraud, wire fraud and money laundering and violations of the PACT Act.
This case marks the first prosecution in the nation for violations of the PACT Act, which is a 2010 federal law enacted to prevent trafficking in untaxed cigarettes.
According to court documents and evidence presented at trial, from 2008 to 2013, the defendants devised a scheme that defrauded federal, state and local governments across the country, out of cigarette excise taxes totaling approximately $48 million. Specifically, the defendants operated mail order and internet businesses engaged in the delivery sales of untaxed cigarettes to customers in all 50 states.
“This case represents a milestone in enforcement of the PACT Act,” said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky. “Mr. Cosica and his co-conspirators devised a complex criminal enterprise of international proportions which cost public treasuries millions of dollars. Congratulations to the law enforcement agencies and our trial team for their superb work in unwinding this criminal scheme.”
The leader of the conspiracy, John Maddux Jr., 56, formerly of Russell, Ky., operated mail order/online businesses that sold the cigarettes at discount prices. Maddux executed the scheme by forming a business with two Russian nationals, Alexander Sergeev and Mikhail Serov. Sergeev and Serov shipped cigarettes from Russia directly to customers of Maddux and his co-conspirators. Evidence at trial further established that Maddux also fulfilled cigarette orders for other co-conspirators, who were also operating similar mail/online businesses. To get the cigarettes through U.S. Mail, the defendants disguised and marked the cigarettes as gift items, which is a violation of the PACT Act.
Under the PACT Act, businesses are required to register and report cigarette and tobacco sales to state tax administrators, allowing States to properly collect required excise taxes from the businesses. The defendants intentionally avoided these requirements and millions of dollars in taxes during the scheme.
The defendants received the following prison sentences: John Maddux 10 years; Christina Carmen, formerly of Russell, Ky., 60 months; David H. White, formerly of Ashland, Ky., 24 months; Julie Coscia, of Pinetop, Ariz., 36 months; Michael E. Smith, of Escondido, Calif., 42 months; Alexander Sergeev, 46 months; Mikhail Serov, 46 months; and Barbara Routh, of Prospect, Ky., two years’ probation. Under federal law, all defendants must serve at least 85 percent of their prison sentence.
Domestic and International trafficking in untaxed cigarettes via mail order or the Internet defrauds the federal and state governments of hundreds of millions of dollars in tobacco taxes and frequently funds other criminal activity.
U.S. Attorney Harvey; Stuart Lowrey, Special Agent in Charge, Louisville Field Division, Alcohol Tobacco Firearms and Explosives; Tracey Montano, Special Agent in Charge, Nashville Field Office, Internal Revenue Service-Criminal Investigations; Richard Deer, Acting Special Agent in Charge, Philadelphia Regional Office of the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations; and Mark McCormack, Special Agent in Charge, Metro Washington Field Office, U.S. Food and Drug Administration, jointly announced the sentence.
The investigation was conducted by the Bureau of Alcohol Tobacco Firearms and Explosives, the Internal Revenue Service-Criminal Investigations, the United States Department of Labor, Office of Inspector General, and U.S. Food and Drug Administration. Assistant United States Attorneys Laura K. Voorhees and Wade T. Napier, and ATF Associate Chief Counsel, Jeffery A. Cohen, prosecuted this case on behalf of the federal government.
Man Who Distributed Drugs That Caused Overdose Death of Pregnant Woman in Fayette County Sentenced to Thirty YearsRead the Press Release
LEXINGTON, Ky. – A Lexington man, who pled guilty to distributing fentanyl which caused the overdose death of a pregnant Fayette County woman, has been sentenced to 30 years in federal prison.
On Tuesday, Senior U.S. District Judge Joseph Hood sentenced Fred Rebmann, 31, to 360 months’ imprisonment for distributing a controlled substance that resulted in death. Under federal law, Rebmann must serve at least 85 percent of his sentence.
Rebmann previously admitted that, in February of this year, he sold the pregnant woman a controlled substance that was believed to be heroin. Instead, however, the drug was fentanyl, an extremely powerful opioid that can be as much as 50 times more potent than heroin. She consumed the drugs and died.
Toxicology reports confirmed that she had five times the therapeutic dose of fentanyl in her system and no traces of heroin or other controlled substances. The report also concluded that, had it not been for the fentanyl, she would not have died.
“This case demonstrates why we use tough federal laws to prosecute drug dealers who sell poison that kills,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “For less than $100, the Defendant sold an obviously pregnant woman one of the deadliest drugs commonly available on our streets. The tragic result was all too predictable. Moreover, it is unacceptable, and we will use every prosecutorial tool available to us in order to protect our community from this predatory criminal conduct.”
U.S. Attorney Harvey, Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration, and Mark Barnard, Chief of Police, Lexington Police Department, jointly announced the sentence.
The investigation was conducted by DEA and the Lexington Police Department. Assistant U.S. Attorney Todd Bradbury prosecuted this case on behalf of the federal government.
Two Stanford Residents Admit to Conspiring to Distribute Large Quantities of FentanylRead the Press Release
LEXINGTON, Ky. — Travis B. Preston, 28, and Tiffany L. Griffith, 25, both of Stanford, Ky., pleaded guilty today to conspiring to distribute large quantities of fentanyl.
Preston admitted to conspiring to distribute 40 grams or more of a mixture or substance containing a detectable amount of fentanyl. Griffith admitted to aiding and abetting the distribution of 40 grams or more of fentanyl.
In the course of their guilty pleas, Preston and Griffith admitted possessing approximately 121 grams of fentanyl. The fentanyl was discovered in Griffith’s purse, during a traffic stop that occurred on April 5, 2016, in Lancaster. Fentanyl can be lethal in the two milligram range.
Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration; Richard W. Sanders, Commissioner, Kentucky State Police; and Tim Davis, Garrard County Sheriff, jointly made the announcement.
The investigation was conducted by the Drug Enforcement Administration, the Kentucky State Police, and the Garrard County Sheriff’s Office. The United States was represented in the case by Assistant United States Attorney Robert M. Duncan, Jr.
Preston and Griffith are currently scheduled to appear for sentencing before United States Senior District Judge Joseph M. Hood on March 6,2016. Because of a prior felony drug conviction, Preston faces a minimum sentence of imprisonment of 10 years, and maximum sentence of Life imprisonment. Griffith faces a mandatory minimum sentence of not less than 5 years and not more than 40 years imprisonment. However, any sentence imposed by the court would come after consideration of the United States Sentencing Guidelines and the applicable federal statutes.
Former Counselor at Federal Prison Pleads Guilty to Bribery ChargeRead the Press Release
LEXINGTON, Ky. – A former counselor at the federal prison in Lexington has pleaded guilty to smuggling tobacco into the prison in exchange for payments from inmates.
On Friday, 43 year-old Elianna D. Gill, formerly employed as a counselor at the Federal Medical Center in Lexington, pleaded guilty to receiving a bribe as a public official. Gill waived her right to be indicted by a grand jury and pleaded guilty to the charges brought by Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky.
According to her plea agreement, from February 2014 to August 2015, Gill smuggled tobacco into the prison facility for multiple inmates who paid her a total of $5,500 in return. Prisoners incarcerated in federal correctional facilities, including FMC Lexington, are prohibited from possessing tobacco.
U.S. Attorney Harvey; John F. Oleskowicz, Special Agent in Charge, Department of Justice, Office of the Inspector General, Chicago Field Office; and Amy Hess, Special Agent in Charge, Federal Bureau of Investigation, jointly made the announcement.
The investigation was conducted by the Department of Justice, Office of the Inspector General and the Federal Bureau of Investigation. Assistant U.S. Attorney Andrew E. Smith prosecuted this case on behalf of the federal government.
Gill is scheduled to appear before U.S. District Judge Danny C. Reeves for sentencing on March 24, 2017. She faces a maximum sentence of 15 years of imprisonment, a $250,000 fine, and three years of supervised release. As a condition of her plea agreement, Gill must also repay all of the money she received from the offense.
Cincinnati Man Sentenced to 300 Months for Distributing Fentanyl Resulting in Serious Bodily InjuryRead the Press Release
COVINGTON, Ky. — A Cincinnati, Ohio man has been sentenced to 300 months in federal prison for selling fentanyl that resulted in a near-fatal overdose.
Today, U.S. District Judge Amul Thapar sentenced Antoine Dudley, 32, for distribution of fentanyl causing serious bodily injury. Dudley must serve at least 85 percent of his prison sentence and will be on supervised release for fifteen years after he completes his prison sentence.
Dudley pleaded guilty on October 27, 2016 in the middle of his trial. According to testimony at trial, Dudley regularly sold both heroin and fentanyl to multiple customers throughout Northern Kentucky, between September 1, 2014 and his arrest on May 8, 2015. Evidence also showed that he distributed fentanyl, on November 21, 2014 in Covington, that caused the user to overdose and stop breathing.
Paramedics of the Covington Fire Department responded to the call and were able to revive the victim of the overdose through repeated administration of naloxone (Narcan®). The victim has made a full recovery, but evidence showed that she would have died if not for the actions of the responding paramedics.
Kerry B. Harvey, 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 investigation was conducted by the FBI Safe Streets Task Force. Assistant U.S. Attorney Tony Bracke prosecuted this case on behalf of the federal government.
Cincinnati Man Sentenced to 26 Years for Distributing Fentanyl Resulting in Overdose DeathRead the Press Release
COVINGTON, Ky. — A Cincinnati, Ohio man has been sentenced to 26 years in federal prison for providing drugs to someone who died of an overdose in the Kenton County jail.
Today, U.S. District Judge Amul Thapar sentenced Michael Howard, 42, for conspiracy to distribute fentanyl and morphine that resulted in an overdose death. Three of Howard’s co-defendants, Kimberly Mullins, Lisa Lattimore and Lynette Ball, received sentences of 244, 160, and 144 months, respectively, for their roles in the drug conspiracy. All four defendants must serve at least 85 percent of their sentences.
Howard pleaded guilty in June 2016 and admitted that he had been supplying heroin to Jamie Green for several months while Green was in custody in Campbell and Kenton Counties. Mullins arranged for the substances to be delivered to her daughter, Jamie Green, through other inmates on work release. Howard admitted supplying a substance that contained fentanyl and morphine to Mullins on September 4, 2014 for delivery to Green. Mullins delivered the substance to Green in the Kenton County Jail through the assistance of co-defendants Ball and Lattimore. Green used the substance and died of an overdose shortly thereafter on September 5, 2014.
A federal grand jury in Covington returned an indictment on November 12, 2015 charging Howard, Mullins, Lattimore, and Ball with conspiracy to distribute controlled substances resulting in death. Mullins, Lattimore, and Ball pleaded guilty on March 29, 2016 to this offense.
Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration, jointly announced the sentence. The investigation was conducted by the Drug Enforcement Administration and the Kenton County Police Department. Assistant U.S. Attorney Tony Bracke represented the federal government in this matter.