Eastern District of Kentucky
Press releases recorded for this federal judicial district.
Lexington Man Sentenced 10 Years for Distributing Child PornographyRead the Press Release
LEXINGTON — A 23-year-old Lexington man, who previously admitted to distributing child pornography images on the internet, has been sentenced to ten years in federal prison.
On Wednesday, U.S. Chief District Judge Karen Caldwell sentenced Joshua Gilley, ordered him to serve a lifetime term of supervised release, and ordered that he register as a sex offender, following his release from prison. Under federal law, Gilley must serve at least 85 percent of his sentence.
According to his plea agreement, between 2012 and 2013, Gilley distributed numerous child pornography images to others, via email. Gilley admitted that a search warrant at his home revealed thousands of child pornography images, including more than 900 sexual abuse images of prepubescent children.
The case started when an FBI investigator noticed child pornography images being distributed online. The FBI later traced the source of those images to a computer that was operated by Gilley.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Howard Marshall, Special Agent in Charge, FBI; Mark Barnard, Chief of Lexington Police; and Rodney Brewer, Commissioner of the Kentucky State Police, jointly announced the sentence.
The investigation was conducted by the FBI’s Violent Crimes Against Children Section, the Lexington Police, and the Kentucky State Police’s Electronic Crime Branch. Assistant U.S. Attorney David A. Marye prosecuted this case on behalf of the federal government.
Lexington Couple Pleads Guilty to Grant FraudRead the Press Release
LEXINGTON — A Lexington couple has admitted in federal court that they submitted false claims related to federal grants from the National Institutes of Health (“NIH”) and defrauded the government out of hundreds of thousands of dollars.
Today, Jerome Hahn, 69, pleaded guilty, to conspiracy to defraud the United States with respect to claims, before U.S. District Judge Danny C. Reeves. On December 16, 2015, Vesta Brue, 70, pleaded guilty to making a false claim against the United States.
According to court documents, Vesta Brue certified on behalf of Telehealth Holdings, LLC, a company owned by Jerome Hahn, that the company had incurred expenses totaling $222,037, relating to two federal grants Telehealth received from NIH, for the development of medical devices. Brue falsely certified that the funds had been spent in accordance with grant rules and regulations.
Brue and Hahn waived their right to be indicted by a grand jury, were formally charged in court, and admitted to the charges.
Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; Howard S. Marshall, Special Agent in Charge, Federal Bureau of Investigation; Derrick Jackson, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General, Atlanta Region; and Christopher A. Henry, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division, jointly announced the guilty pleas.
The investigation was conducted by the Federal Bureau of Investigation, the U.S. Department of Health and Human Services, Office of Inspector General, and the Internal Revenue Service, Criminal Investigation Division. Assistant U.S. Attorney Kate K. Smith represents the federal government in this case.
Vesta Brue is scheduled to be sentenced on March 30, 2016. She faces a maximum prison sentence of 5 years and a maximum fine of $250,000. Jerome Hahn is scheduled to be sentenced on May 18, 2016. He faces a maximum prison sentence of 10 years and a maximum fine of $250,000. Any sentence will be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statutes.
Floyd County Man Sentenced to 165 Months for Receipt of Child PornographyRead the Press Release
PIKEVILLE, Ky. — A Floyd County man, who previously admitted that he received nearly 30,000 images of child pornography, has been sentenced to 165 months in federal prison.
On January 28, U.S. District Judge Danny C. Reeves has sentenced Bret A. Dunning, 53, for receipt of child pornography. Judge Reeves has also ordered Dunning to pay $10,000 in restitution and has assessed a $1,750 fine. Under federal law, Dunning must serve at least 85 percent of his prison sentence; and upon his release, he will be under the supervision of the U.S. Probation Office for 15 years. Dunning must register as a sex offender for the rest of his life.
Dunning admitted, at his guilty plea, that he had downloaded child pornography images from the internet. In March 2013, Kentucky State Police conducted a search at Dunning’s residence and found the images. The images depicted prepubescent children engaged in sexually explicit conduct.
Dunning pleaded guilty in October of 2015.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Howard Marshall, Special Agent in Charge, FBI; and Rodney Brewer, Kentucky State Police Commissioner, jointly announced the sentence.
The investigation was conducted by Kentucky State Police and the FBI. Assistant U.S. Attorney David A. Marye prosecuted this case on behalf of the federal government.
Winchester Man Sentenced to 51 Months for Defrauding Oil CompanyRead the Press Release
LEXINGTON — A Winchester, Ky., man, who previously admitted that he stole over $3 million from his former employer, Apollo Oil, LLC, has been sentenced to 51 months in federal prison.
Yesterday, U.S. District Court Judge Danny C. Reeves sentenced Bradley Earl Taylor, 38, for wire fraud. Under federal law, Bradley must serve at least 85 percent of his prison sentence. Following his release, he will be under the supervision of the U.S. Probation Office for three years.
Taylor, who worked as Apollo’s operations manager, admitted that he created a fictitious supplier, called BCW, LLC, and falsified purchase orders, invoices, and other shipping documents, causing Apollo to issue checks to BCW for nonexistent products. Taylor then stole the checks, deposited them into a bank account he opened in the name of BCW, and used the proceeds for personal gain.
According to the plea agreement, from 2004 to 2014, Taylor caused Apollo to issue 232 checks to BCW, totaling $3,055,422.33. Taylor personally received all of this money. In addition to his prison term, Taylor has also been ordered to make full restitution.
Taylor pleaded guilty to the offense in October 2015.
Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Howard Marshall, Special Agent in Charge, FBI, jointly announced the sentence.
The investigation was conducted by the FBI. Assistant U.S. Attorney Andrew Boone prosecuted this case on behalf of the federal government.
New Orleans Man Pleads Guilty to One Count of Conspiracy to Receive Illegal KickbacksRead the Press Release
U.S. Attorney Kenneth A. Polite announced that CARY PAYTON, age 61, of New Orleans, pled guilty to one count of conspiracy to receive illegal kickbacks.
On March 12, 2015, PAYTON was indicted along with 19 other defendants in a 26-count indictment charging approximately $30,052,295 in Medicare fraud and the BP fraud.
PAYTON was a Licensed Practical Nurse (LPN) at Abide Home Care Services, a home health company operated by owner Lisa Crinel. PAYTON and other LPNs, aides, recruiters and marketers were paid about $150 - $300 for each referral of a Medicare beneficiary to Abide. Abide then fraudulently billed Medicare for medically unnecessary home health services. PAYTON admitted to receiving a $300 payment for his referral of a Medicare beneficiary to Abide.
PAYTON faces a maximum term of imprisonment of five years, a $250,000 fine, and three years of supervised release following imprisonment. U.S. District Judge Susie Morgan set sentencing for April 20, 2016.
U.S. Attorney Polite praised the work of the Federal Bureau of Investigation in investigating this matter. Assistant U.S. Attorneys Patrice Harris Sullivan, Sharan Lieberman and Andre Lagarde are in charge of the prosecution.
Paintsville Mayor Indicted for Theft of Government ResourcesRead the Press Release
LONDON, Ky. — Paintsville Mayor Robert Porter and the former general manager of the local, public utility commission have been accused of misappropriating property and city resources.
A federal grand jury in London, Ky., returned an indictment today charging Mayor Porter and Larry Herald, the former general manager of the Paintsville Utilities Commission, with two counts of theft of government property. Herald was also charged with one count of intentionally making false statements to the FBI.
According to the indictment, from 2009 until 2012, Porter, with the knowledge, approval and assistance of Herald, did not pay for utilities services provided to residences that he owned in Paintsville. The total delinquency was in excess of $7,000. In addition, Porter is alleged to have used city funds to pay for personal expenses, such as maintenance on his automobiles and shipping fees for personal items. The indictment further alleges that Porter used a city owned vehicle for personal trips.
It is also alleged that, in August 2015, during the investigation, Herald intentionally made materially false statements to the FBI, about his knowledge of Porter’s delinquent utilities bill.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Howard S. Marshall, Special Agent in Charge, FBI, and Rodney Brewer, Kentucky State Police Commissioner, jointly announced the indictment.
The investigation was conducted by the FBI and the Kentucky State Police. Assistant U.S. Attorneys Kenneth Taylor and Kate Smith are prosecuting this case on behalf of the federal government.
A date for the defendants to appear in court has not yet been set. Misappropriating federal property carries a maximum penalty of 10 years and making false statements to a federal agent carries a maximum penalty of five years. However, any sentence following a conviction will be imposed after the Court carefully considers the U.S. Sentencing Guidelines and the federal statutes.
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.
Owner of Scott County Produce Business Pleads Guilty to Wire FraudRead the Press Release
LEXINGTON — The owner of a local produce business in Scott County, Ky., has admitted to fraudulently obtaining business loans, by falsifying information on the loan applications.
On Monday, William C. Thompson, 52, pleaded guilty, before Senior U.S. District Judge Joseph Hood, to wire fraud and making false statements on loan applications.
Thompson admitted that, in 2013, he submitted loan applications to receive thousands of dollars from federally funded agencies within the U.S. Department of Agriculture. However, in order to conceal his poor credit history, he used his son’s social security number on the applications. Thompson also made the false statements on the application to hide that he had previously filed for bankruptcy. If the agencies had known Smith’s credit history, they would not have issued him the loans.
The investigation was conducted by the U.S. Department of Agriculture, Office of Inspector General; U.S. Department of Agriculture, Farm Services Agency; and the Central Kentucky Agricultural Credit Association. Assistant U.S. Attorney Jim Arehart is prosecuting this case on behalf of the federal government.
Thompson is scheduled to be sentenced on March 7, 2015. He faces a maximum of 30 years in prison. However, the Court must consider the U.S. Sentencing guidelines and the federal statutes before imposing a sentence.
Boyd County Couple Sentenced to Prison for Defrauding Social Security Administration of Benefit PaymentsRead the Press Release
ASHLAND — An Ashland, Ky., couple, previously convicted of devising a scheme to defraud the Social Security Administration (SSA) and the Kentucky Medicaid Program, out of hundreds of thousands of dollars in benefit payments, has been sentenced to federal prison.
U.S. District Court Judge David L. Bunning sentenced Diana Lynn Ball, 59, to 36 months in federal prison for Supplemental Security Income (SSI) fraud, Medicaid fraud, theft of government property and making a false statement. Her husband, Lawrence Ball, 59, received 24 months for making a false statement. Judge Bunning has also ordered the couple to pay restitution, equal to the amount of the improper benefits received.
Both defendants were tried and convicted in July. Evidence at the trial established that, from 1996 until December of 2013, Diana Ball intentionally concealed her true living arrangement from the SSA, in order to fraudulently collect SSI and Medicaid benefits.
According to testimony, Ball repeatedly told the SSA she had separated from her husband and was not sharing living expenses. In reality, Ball had been living with her husband and was receiving financial support from him. Had the SSA been aware of the true living arrangement, Ball would not have been eligible to receive the benefit payments.
SSI is an income assistance program designed to provide financial assistance to elderly and disabled individuals who meet the program’s eligibility requirements. Kentuckians who are eligible for SSI also qualify for benefits under the Kentucky Medicaid Program.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Guy P. Fallen, Special Agent in Charge, Social Security Administration, Office of Inspector General, jointly made the announcement today.
The investigation was conducted by the SSA, Office of Inspector General. Assistant U.S. Attorney Laura K. Voorhees prosecuted this case on behalf of the federal government.
Former Johnson County Teacher Sentenced to 14 Years for Sexually Exploiting a MinorRead the Press Release
PIKEVILLE, Ky. — A former high school teacher in Johnson County, Ky., who previously admitted to sexually exploiting a minor student, has been sentenced to 14 years in federal prison.
On Tuesday, U.S. District Judge Danny C. Reeves sentenced 26 year-old Robert Cantrell, of Versailles, Ky., for illegally enticing a minor to engage in sexual activity. Judge Reeves further ordered Cantrell to serve 15 years of supervised release, following his sentence. Under federal law, Cantrell must serve at least 85 percent of his prison sentence.
Earlier this year, Cantrell admitted that, in 2014, he had enticed a minor student to text him sexually explicit images of the student engaging in sexually explicit conduct. Additionally, Cantrell admitted that he had induced the minor student to engage in sex acts with him.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Howard S. Marshall, Special Agent in Charge, Federal Bureau of Investigation; Jack Conway, Kentucky Attorney General; and Dwayne Price, Johnson County Sheriff, jointly made the announcement.
The investigation was conducted by the FBI, the Kentucky Attorney General’s Cyber Crimes Unit; and Johnson County Sheriff’s Office.
Lexington and Versailles Men Charged with Illegal Distribution of Fentanyl Resulting in a DeathRead the Press Release
LEXINGTON, Ky. — A Lexington man and a Versailles man have both been charged with unlawfully distributing a controlled substance resulting in an overdose death.
On November 5, 2015, a superseding federal indictment was returned against Luis Aguirre-Jerardo, of Lexington, and Gill Dewayne Garrett, of Versailles, charging both men with illegally distributing fentanyl resulting in a death. Garrett was named in the original indictment, returned on September 3, 2015.
Fentanyl is an extremely dangerous opioid, having a potency 30-50 times greater than heroin. According to the indictment, on or about July 1, 2015, Aguirre-Jerardo and Garrett unlawfully distributed fentanyl to a Woodford County woman who died as a result of using the drug they supplied. The indictment also alleges that, from approximately June 2015 until October 2015, Aguirre-Jerardo, Garrett, and two others, Allen P. White and Helaina Gracelyn Naehring, conspired to illegally distribute fentanyl, heroin, cocaine, and crack cocaine in Woodford County.
Fentanyl is the most potent opioid used in medical treatment and is occasionally diverted from legitimate sources for illicit use. However, most fentanyl sold on the street is manufactured for illicit use by drug cartels. Frequently, the drug user believes they are using heroin or narcotic pain pills because illicit fentanyl is often made to closely resemble those substances.
The Centers for Disease Control and Prevention recently warned of the increased presence of fentanyl on our streets and the resulting heightened risk of overdose fatalities. The DEA’s Office of Diversion Control reports a dramatic increase in the number of seizures of illicit fentanyl in recent years, indicating the rising availability of the drug on our streets. The reports indicate that 80% of fentanyl seizures in 2014 were concentrated in ten states. Kentucky was one of those “top ten” states.
This indictment is the result of an initiative launched by the Office of the United States Attorney for the Eastern District of Kentucky and the DEA. The initiative seeks to establish enhanced partnerships with participating state and local law enforcement gencies and county coroners, in order to aggressively investigate and prosecute illegal drug trafficking that results in an overdose. Under federal law, defendants guilty of illegal drug trafficking resulting in death or serious injury are subject to a mandatory minimum sentence of 20 years in federal prison. If the defendant has a prior felony conviction for a drug offense, the mandatory sentence is life imprisonment. The Versailles Police Department, a local partner in this initiative, investigated the case in conjunction with the DEA, leading to the charges against both the Lexington and Versailles defendants.
“Cases such as this one are precisely why we launched our initiative to partner with state and local law enforcement agencies in order to bring to justice the drug dealers who are causing so much damage in our region,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “The growing heroin problem, coupled with the introduction of substantial quantities of fentanyl to Lexington, Versailles, and other communities in Central Kentucky, marks a deadly turn in the drug threat confronting our region. Traffickers in heroin and fentanyl callously profit from the misery of others. With increasing frequency, the results are deadly. There is no stronger tool in our arsenal than the federal prosecution of drug traffickers whose criminal conduct results in an overdose. Effective use of that tool requires close cooperation between federal, state and local authorities. Our colleagues in the Versailles Police Department answered our call to action, and we are deeply appreciative. Because of their superb police work, these two defendants, who we allege to be purveyors of substantial quantities of deadly drugs, have been removed from the streets of Lexington and Versailles,” Harvey said.
U.S. Attorney Harvey; Joseph Reagan, Special Agent in Charge, DEA; and John Wilhoit, Chief of the Versailles Police Department, jointly announced the indictment.
Assistant U.S. Attorney Todd Bradbury is prosecuting the case on behalf of the federal government.
Aguirre-Jerardo and Garrett face a minimum of 20 years in federal prison and a maximum of life imprisonment. Any sentence following a conviction, however, would be imposed after the Court considers the U.S. Sentencing Guidelines and the applicable law.
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.
Five Former Owners of a Kentucky Clinical Laboratory Indicted for Health Care FraudRead the Press Release
LEXINGTON — A federal grand jury has returned a 100-count indictment charging five men, who owned a clinical laboratory, with billing health care third-party payors for urine drug tests that were medically unnecessary and not eligible for reimbursement.
On Thursday, a federal grand jury returned an indictment charging Dr. Robin G. Peavler, 54, of Lexington, Ky., Dr. Bryan S. Wood, 48, of Danville, Ky., and Dr. Robert L. Bertram, 47, James W. Bottom, 62, Brian C. Walters, 43, all of Russell Springs, Ky., with one count of conspiracy to commit health care fraud and 99 counts of health care fraud. The alleged conduct was part of a scheme to defraud Medicare, Medicaid, Anthem BlueCross BlueShield, Bluegrass Family Health, and others.
Beginning around December 2010, as alleged in the indictment, the defendants agreed to collect thousands of urine samples for testing at PremierTox, a clinical lab formerly owned by the defendants, which lacked the ability to perform quantitative drug tests on such a high volume of samples.
PremierTox allegedly froze the samples, at a lab in Russell Springs, Ky., and didn’t perform the tests until up to ten months later, knowing that the results were no longer relevant to the treatment of the patients. According to the indictment, the defendants submitted claims to Medicare, Medicaid and private insurers, and were reimbursed thousands of dollars for these unnecessary tests.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Derrick Jackson, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General, Atlanta Region; and Jack Conway, Kentucky Attorney General, jointly made the announcement today.
The investigation was conducted by the U.S. Department of Health and Human Services, Office of Inspector General, and the Office of the Kentucky Attorney General’s Medicaid Fraud and Abuse Control Unit. Assistant U.S. Attorney Kate K. Smith is prosecuting this case on behalf of the federal government.
The defendants are scheduled to appear in court on December 1, 2015 at 1:30 p.m. If convicted, the defendants face a maximum of ten years in prison. Any sentence following a conviction, however, would be imposed after the Court considers the U.S. Sentencing Guidelines and the applicable federal statutes.
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.
Two Former Jailers at the Kentucky River Regional Jail Indicted on Charges Related to the Death of A Pretrial DetaineeRead the Press Release
hickman_damon_-_indictment.pdf (80.65 KB)WASHINGTON – The Justice Department announced today that a federal grand jury in London, Kentucky, has indicted two former deputy jailers at the Kentucky River Regional Jail on charges related to the July 9, 2013, in-custody death of Larry Trent, a pretrial detainee at the jail. The indictment charges Damon Hickman, 38, and William Howell, 59, with causing Trent’s death, and charges Hickman with attempting to cover up his involvement in the death.
Hickman and Howell are charged with federal civil rights violations for depriving Trent of his civil rights. Count one of the indictment charges Hickman and Howell of failing to provide Trent with necessary medical care after he was injured, thereby acting with deliberate indifference to a substantial risk of harm to Trent, which resulted in Trent’s death. Count two of the indictment also charges both defendants with using excessive force against Trent, resulting in bodily injury to him.
Hickman is additionally charged with one count of obstruction of justice for falsifying an official log by indicating that observations of Trent were being made and that Trent was “10-4,” meaning that he was safe and not in obvious physical distress, when in fact Trent was not “10-4.”
Hickman and Howell face a maximum penalty of life in prison for the death-resulting civil rights offense, and face a maximum penalty of 10 years in prison for assaulting Trent. Hickman faces a maximum penalty of 20 years in prison for falsification of records in a federal investigation.
An indictment is merely an accusation, and the defendants are presumed innocent unless proven guilty.
The case is being investigated by the FBI’s London Resident Agency, with assistance provided by the Kentucky State Police. The case is being prosecuted by Trial Attorney Sanjay Patel of the Civil Rights Division’s Criminal Section and Assistant U.S. Attorney Hydee Hawkins of the Eastern District of Kentucky.
Kenton County Man Sentenced to 200 Months for Trafficking HeroinRead the Press Release
COVINGTON — A Covington, Ky., man has been sentenced to 200 months for distributing heroin in Kenton County.
On Friday, U.S. District Judge Amul Thapar sentenced Johnny J. Shands for distribution of heroin. Shands’ criminal history qualified him as a career offender and led to an enhanced sentence. His prior convictions include weapons offenses and trafficking cocaine. Under federal law, Shands must serve at least 85 percent of his prison sentence; and following the completion of his sentence, he will be under the supervision of the U.S. Probation Office for 12 years.
According to court records, Shands sold heroin to undercover officers, on multiple occasions, in early 2015. Authorities conducted searches at multiple residences and found cash, heroin and fentanyl that belonged to Shands. Shands pled guilty in July and admitted that he distributed between 100 and 400 grams of heroin.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Howard S. Marshall, Special Agent in Charge, Federal Bureau of Investigation, jointly made the announcement.
The investigation was conducted by the FBI Safe Streets Task Force and the Covington Police Department. Assistant U.S. Attorney Tony Bracke prosecuted this case on behalf of the federal government.
Wayne County Man Sentenced to 30 Years for Producing Child PornographyRead the Press Release
LONDON — A Wayne County man, previously convicted of producing child pornography, has been sentenced to 30 years in federal prison.
On Thursday, U.S. District Judge Gregory F. Van Tatehnove sentenced 31 year-old Brandon Lynn Jones. Under federal law, Jones must serve at least 85 percent of his sentence. And, upon his release from prison, Jones must immediately register as a sex offender and will be under the supervision of the U.S. Probation Office for the rest of his life.
According to court documents, in 2014, Jones produced and distributed photographs depicting his sexual abuse of a minor, under the age of twelve.
Jones’s conviction is the result of an undercover investigation conducted by the Federal Bureau of Investigation’s Child Exploitation Task Force, Washington, D.C. Field Division.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Howard S. Marshall, Special Agent in Charge, FBI Louisville; and, Assistant Director in Charge, Paul M. Abbate, FBI Washington, D.C., jointly announced the sentence.
Assistant U.S. Attorney Adam Reeves prosecuted the case on behalf of the federal government.
Kenton County Man Sentenced to 147 Months for Distributing Child Pornography over the InternetRead the Press Release
COVINGTON — A Kenton County man, who previously admitted to distributing images and videos of child pornography, through peer-to-peer files over the internet, was sentenced today to 147 months in federal prison.
U.S. District Judge Amul Thapar sentenced Alan K. Newberry, 43, of Park Hills, Ky., for distribution of child pornography and also ordered him to pay $13,500 in restitution to victims. Under federal law, Newberry must serve at least 85 percent of his prison sentence and he will be required to register as a sex offender for the remainder of his life.
According to Newberry’s plea agreement, authorities with the Kentucky Attorney General’s Office identified numerous images and videos of child pornography that had been made available for download on the internet. They traced the source of those files to Newberry’s computer, which was located at his home in Park Hills. Authorities executed a search warrant at the residence, searched his computer, and found 4,000 images and 700 videos of children engaged in sexually explicit conduct. Many of the images depicted prepubescent children and sadistic abuse.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Jack Conway, Kentucky Attorney General, jointly announced the sentence.
The investigation was conducted by the Cyber Crimes Unit of the Office of the Kentucky Attorney General.
Former Georgia Doctor Admits to Unlawfully Prescribing Pain Medication to Thousands of KentuckiansRead the Press Release
LONDON — A former Georgia physician has admitted in federal court that he conspired with the owner of a Georgia pain clinic, and others, to unlawfully distribute thousands of prescription pills to Kentuckians.
On Thursday, Michael Johnston, 58, pleaded guilty, before U.S. District Judge Amul Thapar, to conspiring to unlawfully distribute oxycodone. Pursuant to his plea agreement, which is still awaiting the Court’s approval, Johnston agreed to serve 10 years in prison, beginning on the date of his formal sentencing, January 12, 2016. Under federal law, he must serve at least 85 percent of his sentence.
Johnston admitted that, from May 2011 until November 2011, he conspired with Joel Shumrak, the owner of a Tucker, Ga., pain clinic, and others, to illegally distribute large quantities of oxycodone and Xanax to residents of numerous Kentucky counties, including Clay, Laurel, Rockcastle, Pulaski, Floyd, Knox, Bell, Pike, Jefferson, Whitley, Madison, Montgomery, Fayette, and Magoffin counties. Johnston further admitted that he ignored the fact that these Kentuckians were addicts and were likely selling the drugs for profit upon their return to Kentucky.
Johnston, who had previously practiced as a pediatrician, acknowledged that he had no formal training or experience in prescribing adult pain medication, prior to being hired by Shumrak. According to Johnson’s plea agreement, many of the patients were seen by non-physicians, who then recommended prescriptions, allowing the clinic to increase the number of patients that could be seen in a day.
Johnson also admitted that he provided little or no physical examination to many of these patients, before providing the prescriptions; he made no referrals for surgery or other medical exams; and he was encouraged to see as many patients, per day, as possible.
Court records also show that Shumrak’s clinic did not even accept medical insurance, operating on a cash-only basis. Shumrak has also pleaded guilty and was sentenced to 14 years imprisonment earlier this year.
Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; Joseph Reagan, Special Agent in Charge, DEA, Detroit Field Division; A.D. Wright, Acting Special Agent in Charge, DEA, Miami Field Division; and Daniel Salter, Special Agent in Charge, DEA, Atlanta Field Division, jointly made the announcement.
The investigation was conducted by the DEA in Kentucky, Georgia, Florida and Ohio. Assistant U.S. Attorney Sam Dotson prosecuted this case on behalf of the federal government.
Winchester Man Admits Defrauding His Employer Out of Millions of DollarsRead the Press Release
LEXINGTON — A Winchester, Ky., man has admitted to stealing over $3 million from his former employer, Apollo Oil, LLC.
On Monday, Bradley E. Taylor, 38, pleaded guilty to wire fraud, before U.S. District Court Judge Danny C. Reeves.
Taylor, who worked as Apollo’s operations manager, admitted that he created a fictitious supplier, called BCW, LLC, and falsified purchase orders, invoices, and other shipping documents, causing Apollo to issue checks to BCW for nonexistent products. Taylor then stole the checks issued by Apollo, deposited them into a bank account he opened in the name of BCW, and converted the proceeds to his personal use.
According to the plea agreement, from 2004 to 2014, Taylor caused Apollo to issue 232 checks to BCW, totaling $3,055,422.33. Taylor personally received all of this money.
Taylor waived his right to be indicted by a grand jury, was formally charged in court, and admitted to the charges.
Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Howard Marshall, Special Agent in Charge, FBI, jointly announced the guilty plea.
The investigation was conducted by the FBI. Assistant U.S. Attorney Andrew Boone is prosecuting this case on behalf of the federal government.
Taylor is scheduled to be sentenced on January 27, 2016. He faces up to 20 years in prison and a maximum fine of $250,000. However, any sentence will be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statutes.
Lexington Home Health Agency and Estate of Deceased Owner Agree to Judgment of $16 Million to Resolve Allegations of Health Care FraudRead the Press Release
LEXINGTON – Nurses’ Registry and Home Health Corporation (“Nurses’ Registry”) and the Estate of its former owner, the deceased Lennie House, have agreed to the entry of a judgment against them for $16,000,000 to resolve allegations of widespread healthcare fraud.
This civil judgment ends an investigation and False Claims Act litigation alleging that Nurses’ Registry, at the direction of Lennie House, fraudulently billed Medicare for medically unnecessary home health services, as well as services tainted by kickbacks provided by the company and House to local physicians and others who referred patients to Nurses’ Registry.
“For years, Nurses’ Registry abused its privileges as a provider in the Medicare program, and the trust of the medical community and general public,” said United States Attorney Kerry B. Harvey. “This settlement returns ill-gotten gains to the Medicare Trust Fund and ensures that Nurses’ Registry will have no further opportunity to defraud federal health care programs. Our office will continue to vigorously pursue health care fraud in this district, against companies and individuals, no matter how difficult or protracted the litigation may be.”
Under House’s direction, Nurses’ Registry engaged in systematic false billing that allowed them to wrongfully obtain millions of dollars from the Medicare program between 2004 and 2011. Medicare pays for home health services only when a physician signs a plan of care certifying that the patient is homebound and has a reasonable need for skilled nursing care or certain therapy services.
To advance its health care fraud, Nurses’ Registry falsified medical records to make it appear as if patients had a medical need for skilled nursing or therapy services, or appear as if the patients were homebound. At times, Nurses’ Registry employees even forged physician signatures on medical records to falsely “certify” that the patient required Nurses’ Registry’s services. Nurses’ Registry, at the direction of House, frequently re-certified patients for more and more home health services – and billed such services to Medicare – long after the patient ceased to meet Medicare’s eligibility requirements.
In addition to billing Medicare for unnecessary or non-reimbursable home health services, Nurses’ Registry and House provided tickets to athletic events and concerts, and provided other things of value, to doctors and referral sources in order to induce or reward patient referrals. This practice was so commonplace that physicians would contact the home health agency to ask for tickets to popular events, such as Taylor Swift concerts or the Kentucky Derby.
House instructed the company’s marketing employees to deliver bottles of liquor and other enticements to referral sources in order to ensure more valuable patient referrals that could be billed to Medicare. These transactions violated the federal Anti-Kickback Statute as well as the Stark Law, which prohibits home health agencies from billing for services referred to them by physicians with whom they have a financial relationship.
“We are focused on combatting fraud in the home health arena,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta. “Settlements like this one send a clear message that false claims to Medicare will not be tolerated.”
The United States filed a complaint against Nurses’ Registry, Lennie House, and Vicki S. House, House’s wife, in September 2011, following an investigation into a whistleblower lawsuit filed by former employees Alisia Robinson-Hill and David Price. After several years of litigation, this settlement, in conjunction with a prior settlement with Vicki House for $1,082,416, fully resolves that action in favor of the government. Under the terms of the settlement agreement, Nurses’ Registry will be sold to an independent third party within 90 days, and 70 percent of the net sale proceeds will be remitted to the federal government. In addition, the Estate of Lennie House will have one year to sell off all of its assets and will turn over 75 percent of those net sale proceeds to the government.
Ms. Robinson-Hill and Mr. Price will receive a share of the settlement proceeds pursuant to the qui tam provisions of the False Claims Act.
The investigation conducted prior to the government filing its complaint was conducted by the Department of Health and Human Services, Office of the Inspector General; the Office of the Kentucky Attorney General, Medicaid Fraud and Abuse Control Unit (“MFCU”); the Federal Bureau of Investigation; and the U.S. Attorney’s Office. The litigation was handled by Assistant United States Attorneys Christine Corndorf and Paul McCaffrey, with assistance from the Commercial Litigation Branch of the Department of Justice’s Civil Division.
U.S. Attorney Kerry B. Harvey Encourages Appreciation for the Men and Women Who Wear the BadgeRead the Press Release
These are tumultuous times for law enforcement officers. Tragic events in places like Ferguson, Missouri, and North Charleston, South Carolina have ignited a national debate concerning police methods. The debate is entirely appropriate – the wholesale condemnation of law enforcement officers is not. The recent horrific killing of a brave Kentucky State police trooper in Western Kentucky is a stark reminder of the risks willingly taken by our law enforcement officers in order to keep us safe.
The law enforcement profession, like any other, is not populated by perfect people. There are a few-very few- bad officers and there are times when good officers make bad decisions under the intense pressure of the moment. Effective policing requires a high level of trust between law enforcement officers and the communities they serve. A national discussion that serves to improve law enforcement methods and increase community trust is entirely appropriate and a valuable public dialogue. No public servant is above criticism-including those of us who work in the criminal justice system.
The national discussion concerning law enforcement methods should not, however, overlook a simple, but crucial fact – the overwhelming majority of law enforcement officers are good and dedicated people engaged in an incredibly difficult job. Never has the work of a law enforcement officer been more complex, difficult, or dangerous. Recent events in our Commonwealth have made the nature of law enforcement work all too clear. Every day thousands of men and women who wear the badge work diligently to make our communities better places to live. They never know when a routine shift will immediately escalate into a life and death situation. When that happens, our law enforcement officers are expected to stand tall, make good decisions in a split second, and protect the innocent from those who would do them harm. Sometimes, they make the ultimate sacrifice while doing so.
Our law enforcement officers engage in many thankless and unseen tasks that are essential to protecting our homes, our families and our freedoms from all sorts of threats, both great and small. As we go about our daily lives, we do so in relative safety because the men and women who wear the badge are willing to stand in the breach. We know that those who choose this profession do it neither for wealth nor fame. They deserve our appreciation and respect.
As United States Attorney for the Eastern District of Kentucky, I am privileged to work closely with local, state and federal law enforcement officers representing many agencies. I am deeply honored to be associated with these truly admirable men and women and the outstanding work they do for us all.
The national dialogue concerning police methods is important, and I encourage everyone to participate. It is equally important that we acknowledge the bravery and sacrifice of our law enforcement officers as they go about their vital work.
The next time you see a police officer would be a great time to simply say thanks.
- Kerry B. Harvey, United States Attorney, Eastern District of Kentucky
Nicholasville Man Sentenced to 84 Months for Distribution of Child PornographyRead the Press Release
LEXINGTON, Ky. — A Nicholasville man, who previously admitted that he made child pornography images available for download on the internet, has been sentenced to 84 months in federal prison.
On Thursday, Chief U.S. District Judge Karen Caldwell sentenced Jeffrey Treadway, 37, for distribution of child pornography. Under federal law, he must serve at least 85 percent of his prison sentence; and upon his release, he will be under the supervision of the U.S. Probation Office for 25 years.
According to court documents, in 2013, law enforcement identified several child pornography files available for download on the internet and traced the source of the images to Treadway’s computer, which was located at his home in Nicholasville.
The FBI searched Treadway’s computer and found over 20,000 thousand images of children, some of whom were under the age of 12, engaged in sexually explicit conduct. Treadway admitted that some of the images depicted adults sexually abusing children.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky and Howard S. Marshall, Special Agent in Charge, FBI, jointly announced the sentence.
The investigation was conducted by the FBI and the Kentucky Regional Computer Forensic Laboratory (KRCFL). The case was prosecuted by Assistant U.S. Attorney David A. Marye.
Jury Convicts Lexington Woman of Filing False Tax ReturnsRead the Press Release
Defendant Claimed Hundreds of Thousands of Dollars in Tax Refunds
LEXINGTON, Ky. — A federal jury convicted Winona Jean Cox, of Lexington, Ky., of filing four false income tax returns and then obstructing the Internal Revenue Service from recovering a fraudulently-claimed refund check.
On Thursday, the jury convicted Cox, 40, of four counts of filing false tax claims and one count of interfering with the administration of the internal revenue laws. The jury reached its verdicts after three days of trial and two hours of deliberation.
At trial, the United States proved that Cox falsely claimed over $477,000 in tax refunds during tax years 2005 through 2008. Cox’s fraud involved over-reporting interest income and tax withholding, using counterfeit IRS 1099-OID forms. Cox then submitted claims for tax refunds based on those inflated amounts.
Evidence at trial also proved that, after Cox was mailed a tax refund check for one of the fraudulent returns, she attempted to obstruct the IRS from recovering that money, by assigning the titles of her three homes and her car to nominee trusts and wire transferring most of the refund into a bank account under a different name.
Cox faces a maximum sentence of five years in prison on the filing false claims counts, and three years in prison for interfering with the administration of the internal revenue laws. Sentencing is currently scheduled for December 14, 2015 before U.S. District Judge Joseph Hood. Any sentence imposed by the Court will come after careful consideration of the U.S. Sentencing Guidelines and the federal statutes governing imposition of sentences. Under federal law, Cox must serve at least 85 percent of her prison sentence.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; and Christopher A. Henry, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division, jointly made the announcement.
The investigation was conducted by the Internal Revenue Service, Criminal Investigation Division. Assistant U.S. Attorneys Neeraj Gupta and Ken Taylor prosecuted this case on behalf of the federal government.
Former Carter County Paramedic Sentenced to 18 Months for Tampering with FentanylRead the Press Release
COVINGTON, Ky. — A former paramedic, with the Carter County Emergency Medical Service (EMS), has been sentenced to 18 months in federal prison, for tampering with a consumer product.
On Monday, U.S. District Judge David L. Bunning sentenced 35 year-old Amanda Sturgill Jones and also ordered that she serve three years of supervised release following her prison term.
Jones admitted that on multiple occasions, between 2012 and June 2013, she stole fentanyl from the EMS storage center for her own personal use. To conceal her theft from the EMS and law enforcement, she replaced the empty vials of fentanyl with saline and then glued the caps back on the vials. Fentanyl is used to treat patients in severe pain.
Jones pleaded guilty in May of this year.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Antoinette V. Henry, Special Agent in Charge, U.S. Food and Drug Administration; and Rodney Brewer, Commissioner of the Kentucky State Police, jointly made the announcement.
The investigation was conducted by the U.S. Food and Drug Administration, Office of Criminal Investigations, the Kentucky State Police, and the Kentucky Board of Emergency Medical Services. Assistant U.S. Attorney Robert McBride prosecuted this case on behalf of the federal government.
California Man Sentenced to 13 Years for Multi-Million Dollar Fraud Scheme in KentuckyRead the Press Release
FRANKFORT - Yesterday, a federal judge sentenced a California man to 13 years in federal prison for his role in an oil investment scheme in Kentucky that defrauded over 200 investors, nationwide, out of more than $3,000,000.
U.S. District Judge Gregory Van Tatenhove sentenced Henry Irving Ramer, 76, for mail fraud, securities fraud, and conspiracy to launder money. Under federal law, Ramer must serve at least 85 percent of his prison sentence. Upon his release, he will be under the supervision of the U.S. Probation Office for 3 additional years.
Ramer was convicted by a jury in May of this year. According to the evidence at trial, Ramer and others raised money from investors by making misrepresentations and failing to disclose material facts about the oil well investments in Barren, Monroe, and Cumberland Counties. Ramer’s role was as a salesman and manager of two Los Angeles-based telemarketing sales operations. In 2013 and 2014, he and his team cold-called potential investors around the country and fraudulently convinced many of them to invest. Ramer also created false offering memorandums and a promotional video. Every one of the investors lost all or nearly all of their investment.
In January 2015, John Westine, another leader of the scheme, was convicted of mail fraud, securities fraud, and money laundering conspiracy after a two-week jury trial. He is scheduled for sentencing on September 18. Another co-defendant, Mark Cornell, has pleaded guilty and is also set for sentencing later this month. A fourth defendant, Westine’s half-brother Michael Hicks, was sentenced in July to three years in prison for his role.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Dugan Wong, Inspector in Charge of the U.S. Postal Inspection Service; and Charles Vice, Commissioner of the Kentucky Department of Financial Institutions, jointly made the announcement.
The investigation started when investors submitted complaints to the Kentucky Department of Financial Institutions, Division of Securities. The investigation was conducted by the U.S. Postal Inspection Service, including Postal Inspector Roberta Bottoms, and the Kentucky Department of Financial Institutions, Division of Securities.
Assistant U.S. Attorneys Ken Taylor and Neeraj Gupta prosecuted these cases on behalf of the federal government.
Versailles Man Indicted for Illegal Distribution of Fentanyl Resulting in a DeathRead the Press Release
A federal grand jury returned an indictment charging Gill Dewayne Garrett, 29, of Versailles, Kentucky, with unlawful distribution of a controlled substance that resulted in an overdose death, announced U.S. Attorney Kerry B. Harvey for the Eastern District of Kentucky, Special Agent in Charge Joseph Regan for the DEA and Chief John Wilhoit of the Versailles Police Department.
In a two-count indictment, filed on Thursday, Garrett was charged with illegal distribution of fentanyl resulting in a death and with conspiracy to distribute fentanyl, heroin and cocaine. A co-defendant, Allen P. White, of Versailles, was also charged in the drug conspiracy.
According to the indictment, on or about July 1, 2015, Garrett unlawfully distributed fentanyl, a powerful opioid, to an individual who died as a result of using the drugs he provided. The indictment also alleges that, from approximately June 2015 until August 2015, Garrett and White conspired to distribute fentanyl, heroin and cocaine in Woodford County.
“This case demonstrates why our Overdose Prosecution Initiative is so important for this region,” said U.S. Attorney Harvey. “Fentanyl is an extremely dangerous drug, far more potent than heroin. Fentanyl is turning up on our streets in increasing quantities, often with deadly results. Federal law provides for particularly severe consequences when illegal drug trafficking results in death. We intend to use every available tool to combat this terrible problem, including these enhanced penalties.”
The investigation was conducted by the Versailles Police Department and the DEA. Assistant U.S. Attorney Todd Bradbury is prosecuting this case on behalf of the federal government.
A date for Garrett to appear in court has not yet been set. He faces a minimum of 20 years in prison and a maximum of life imprisonment. White faces a maximum of 20 years in prison.
Any sentence following a conviction, however, would be imposed after the court considers the U.S. Sentencing Guidelines and the applicable federal statutes.
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.
Versailles Man Indicted for Illegal Distribution of Fentanyl Resulting in a DeathRead the Press Release
LEXINGTON, Ky. — A federal grand jury returned an indictment charging a Versailles, Ky., man with unlawful distribution of a controlled substance that resulted in an overdose death.
In a two-count indictment, filed on Thursday, Gill Dewayne Garrett, 29, was charged with illegal distribution of fentanyl resulting in a death and with conspiracy to distribute fentanyl, heroin, and cocaine. A co-defendant, Allen P. White, of Versailles, was also charged in the drug conspiracy.
According to the indictment, on or about July 1st of this year, Garrett unlawfully distributed fentanyl, a powerful opioid, to an individual who died as a result of using the drugs he provided. The indictment also alleges that, from approximately June 2015 until August 2015, Garrett and White conspired to distribute fentanyl, heroin, and cocaine in Woodford County.
“This case demonstrates why our Overdose Prosecution Initiative is so important for this region. Fentanyl is an extremely dangerous drug, far more potent than heroin. Fentanyl is turning up on our streets in increasing quantities, often with deadly results. Federal law provides for particularly severe consequences when illegal drug trafficking results in death. We intend to use every available tool to combat this terrible problem, including these enhanced penalties,” said U.S. Attorney Kerry B. Harvey.
Harvey, U.S. Attorney for the Eastern District of Kentucky; Joseph Reagan, Special Agent in Charge, DEA; and John Wilhoit, Chief of the Versailles Police Department, jointly announced the indictment.
The investigation was conducted by the Versailles Police Department and the DEA. Assistant U.S. Attorney Todd Bradbury is prosecuting this case on behalf of the federal government.
A date for Garrett to appear in federal court has not yet been set. He faces a minimum of 20 years in prison and a maximum of life imprisonment. White faces a maximum of 20 years in prison. Any sentence following a conviction, however, would be imposed after the Court considers the U.S. Sentencing Guidelines and the applicable federal statutes.
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.
Fayette County Public Schools and U.S. Attorney’s Office Partner on Anti-Bullying Education for High School StudentsRead the Press Release
As part of its ongoing commitment to ensuring a safe and welcoming learning environment for all students, Fayette County Public Schools partnered with community leaders, law enforcement officials and the U.S. Attorney’s Office to kick-off the 2015-16 school year with an anti-bullying summit for high school students.
“Our school campuses must be safe places for all students,” said Fayette County Public Schools Superintendent Manny Caulk. “There is no room for discrimination, bullying or hate in our school district.”
The goal of Thursday’s event was to raise awareness about the harmful impact of bullying and to promote tolerance in schools. The summit specifically focused on equipping students to know how to respond if they witness bullying or are a victim of bullying.
While Fayette County Public Schools has strong policies to protect students against harassmentand bullying, national statistics from the Centers for Disease Control and Prevention report that roughly 1 in every 5 high school students has experienced bullying.
Increased education and attention to the issue has had an impact in FCPS. In the past five years, while our enrollment has risen by more than 3,000 students, the number of reported incidents of bullying or harassment in Fayette County schools has been cut nearly in half – from 1,019 incidents in the 2010-11 school year to 533 last year.
U.S. Attorneys and Federal Law Enforcement Leaders Conduct Summit to Target Heroin and Opioid Trafficking and Overdose EpidemicRead the Press Release
DETROIT – U.S. Attorneys and leaders of federal law enforcement agencies from across six states met in Detroit on August 26, 2015, to share strategies to combat the heroin and prescription pill epidemic across the region.
The effort was announced jointly by U.S. Attorneys Barbara L. McQuade, Eastern District of Michigan, Kerry Harvey, Eastern District of Kentucky, Patrick A. Miles, Jr.; Western District of Michigan, Steven Dettelbach, Northern District of Ohio, Carter Stewart, Southern District of Ohio, John Kuhn, Jr., Western District of Kentucky, David J. Hickton, Western District of Pennsylvania, William C. Killian, Eastern District of Tennessee, David Rivera, Middle District of Tennessee, Edward Stanton, Western District of Tennessee, William Ihlenfeld, II, Northern District of West Virginia, and R. Booth Goodwin, II, Southern District of West Virginia; Directors of High Intensity Drug Trafficking Areas (HIDTA) Abraham Azzam, Michigan, Derek Siegle, Ohio, and Frank Rapier, Appalachia; Drug Enforcement Administration (DEA) Special Agents in Charge Joseph P. Reagan, Detroit Division, Karl Colder, Washington, D.C. Division, Gary Tuggle, Philadelphia Division, and Daniel Salter, Atlanta Division; Special Agent in Charge Paul M. Abbate, Federal Bureau of Investigation (FBI), Detroit Field Office; and Special Agent in Charge Marlon Miller, Homeland Security Investigations (HSI), Detroit. U.S. Attorney Hickton also co-chairs the national Heroin Task Force.
The summit was called in response to the national epidemic of heroin and prescription pill abuse that has hit Michigan, Ohio, Kentucky, Tennessee, Pennsylvania and West Virginia, particularly hard. Heroin overdose deaths in the United States have tripled from 2010 to 2013. Nationally, the number of deaths from all drug overdoses exceeded 43,000 last year, more deaths than from traffic accidents. Heroin use in the United States has doubled from 2007 to 2012.
In the Midwest, opioid deaths have increased 62 percent. The summit seeks to target this national and regional problem by dismantling drug trafficking organizations that distribute heroin and prescription pills and by increasing prevention and educational efforts.
One of the purposes of the summit is to discuss a regional strategic initiative as part of the federal Organized Crime Drug Enforcement Task Force (OCDETF) program. Under this initiative, law enforcement and prosecutors across the region will investigate and prosecute the movement of heroin and prescription pills from Michigan and Ohio into Kentucky, Tennessee, West Virginia and western Pennsylvania. This effort includes action by the U.S. Attorneys’ Offices, DEA, FBI, HSI, the Bureau of Alcohol Tobacco, Firearms and Explosives (ATF) and the Internal Revenue Service Criminal Investigations (IRS-CI). As part of the initiative, the three HIDTA programs in the region, Michigan, Ohio, and Appalachia, will work with their federal, state and local partners to increase enforcement of heroin and pill trafficking and to target drug distribution that results in overdoses and deaths.
The initiative also includes a commitment by each U.S. Attorney to engage in district-wide anti-heroin and prescription pill programs.
U.S. Attorney Killian said, “Tennessee has one of the highest rates of prescription drug abuse in the country. However, like many other states, we are now seeing a rise in heroin use as the prescription drugs are becoming more expensive and difficult to obtain. This summit was convened to help find ways to strengthen the coordinated efforts of local, state and federal law enforcement in their fight against these growing addictions and the resulting rise in overdose deaths.”
Daniel Salter, Special Agent in Charge, DEA, Atlanta Division, said, “The abuse of prescription pills, heroin, and fentanyl, an opioid 30 to 50 times more potent than heroin, has become a problem of epidemic proportions across the United States. This epidemic affects people of all backgrounds with no respect to race, gender, age, or socio-economic class. DEA and our federal, state and local law enforcement partners are committed to attacking the drug trafficking organizations that distribute these poisons in our communities without regard to the deadly consequences of their actions.”
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Florida Man Sentenced to 84 Months for Role in Conspiracy to Distribute HeroinRead the Press Release
LEXINGTON - A Florida man, who supplied a network of drug traffickers in Mt. Sterling, Ky., with heroin, has been sentenced to 84 months in federal prison.
On Wednesday, U.S. District Judge Danny C. Reeves sentenced 33 year-old Alvin Jason Givens for conspiracy to distribute at least 100 grams of heroin. Under federal law, Givens must serve at least 85 percent of his prison sentence. Givens is the last of 11 defendants involved in the conspiracy to be sentenced. The leader of the Mt. Sterling drug trafficking organization, Jeffrey Wingate, was sentenced earlier this year to 150 months in federal prison.
According to Givens’ plea agreement, from September 2013 until June 2014, Givens supplied Wingate with heroin, as well as oxycodone pills, to bring back to Kentucky and distribute. During the conspiracy, Wingate made several trips to Florida to acquire both oxycodone pills and heroin. In addition to the heroin, Givens was also responsible for the illegal distribution of 20,000 oxycodone pills, which was considered in determining his sentence.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Howard S. Marshall, Special Agent in Charge, FBI; Rodney C. Brewer, Commissioner, Kentucky State Police; David Charles, Chief, Mt. Sterling Police Department; and Fred Shortridge, Montgomery County Sheriff, jointly made the announcement today.
The investigation was conducted by the FBI, Kentucky State Police, the Mt. Sterling Police Department and the Montgomery County Sheriff’s Office. Assistant U.S. Attorney Robert M. Duncan Jr. prosecuted this case on behalf of the federal government.
Winchester Tax Preparer Pleads Guilty to Tax FraudRead the Press Release
LEXINGTON - A Winchester, Ky., tax return preparer has admitted in federal court that she submitted false individual income tax returns and evaded paying thousands of dollars in federal income taxes.
Virginia Christine Smith, 44, pleaded guilty today to tax fraud in front of U.S. District Judge Danny C. Reeves.
According to her plea agreement, Smith knowingly underreported income on her personal tax returns in 2009, 2010, and 2011. During that time period, she owned a professional tax return preparation business called Christina’s Bilingual Service, which she operated out of her home in Winchester, Ky.
Smith admitted failing to pay $40,079 in federal taxes. As part of her guilty plea agreement, Smith pledged to repay that amount to the Internal Revenue Service, plus penalties and interest.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Caroline D. Ciraolo, Assistant Attorney General for the Tax Division; and Christopher A. Henry, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division, jointly made the announcement.
The investigation was conducted by the Internal Revenue Service, Criminal Investigation Division. Assistant U.S. Attorney Neeraj Gupta prosecuted this case on behalf of the federal government.
Smith will appear for sentencing on November 18, 2015. She faces a maximum of three years in prison. The Court must consider the U.S. Sentencing Guidelines and the applicable federal statutes before imposing a sentence.
Sex Offender from California Sentenced to 30 Years for Coercing a Kentucky Teenager to Send Sexually Explicit Photos of HerselfRead the Press Release
LEXINGTON - A registered sex offender from California, who previously admitted to coercing a minor from eastern Kentucky to send him sexually explicit photos of herself, has been sentenced to 30 years in federal prison.
On Thursday, Chief U.S. District Judge Karen Caldwell sentenced 38 year-old Luis Antonio Caballero for enticing a minor to engage in sexually explicit conduct for the purposes of producing a visual image of that sexual conduct. At the time of this offense, Caballero was on parole, for another crime related to the sexual exploitation of a minor in California. Due to this previous conviction, Caballero’s sentence was enhanced. Under federal law, Caballero must serve at least 85 percent of his prison sentence.
In early 2014, Caballero coerced the eastern Kentucky teenager to take and send sexually explicit photos of herself. Specifically, he used threats, which included vulgar language, to get the victim to comply with his demands. When the victim stopped sending photos and tried to end the communications, Caballero contacted the victim’s guardian and threatened to drive to Kentucky and kidnap the girl.
Caballero pleaded guilty to the charge in November 2014.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Howard S. Marshall, Special Agent in Charge, FBI, jointly announced the sentence today.
The investigation was conducted by the FBI, Louisville Field Division and FBI, San Francisco Field Division. Assistant U.S. Attorney David A. Marye prosecuted this case on behalf of the federal government.
Leader of Large Heroin and Marijuana Conspiracy in Northern Kentucky and Ohio Sentenced to 353 MonthsRead the Press Release
COVINGTON - The leader of a large drug trafficking operation, that distributed large quantities of heroin and marijuana in northern Kentucky and southern Ohio, has been sentenced to 353 months in federal prison.
Today, U.S. District Judge Amul R. Thapar sentenced Alberto Lara-Chavez, 45, of Pasadena, Calif., for conspiracy to distribute 100 grams or more of heroin and 100 kilograms or more of marijuana, distribution of heroin, distribution of marijuana, possession of a firearm in furtherance of drug trafficking, possession of a firearm by an illegal alien, conspiracy to launder money, and engaging in a continuing criminal enterprise. Judge Thapar also sentenced Lara-Chavez’s son, Jose Alberto Lara, 23, of Planada, Calif., to 60 months in prison for conspiracy to distribute 100 kilograms or more of marijuana. Under federal law both defendants must serve at least 85 percent of their prison sentences.
Those two, along with Felix Agundiz-Montes, were convicted in March of 2015, following a nine-day jury trial. The evidence at trial established that, from October 2012 through May 16, 2014, Lara-Chavez led a group of 19 individuals who conspired to distribute heroin and marijuana in Kenton, Boone, Campbell, Gallatin, and Grant Counties in Kentucky, as well as Hamilton, Brown, and Clermont Counties in Ohio.
The evidence at trial also established that the group shipped marijuana, from Texas and California, to locations in Ohio and Kentucky; the group operated a large marijuana field in Sardinia, Ohio; and brought heroin, from Columbus, Ohio, to northern Kentucky for distribution.
Court records and evidence further showed that, during the course of the conspiracy, many of the conspirators were not legally present in the United States and had been brought here, by other conspirators, to sell narcotics; many illegally possessed firearms to protect the drugs and drug proceeds; and the leaders conspired to launder funds from the operation through bank deposits, wire transfers, and casino activity. Several of the conspirators also claimed they were associated with a Mexican drug cartel.
Lara-Chavez was the leader of the group and directed its local activities. All of his co-conspirators have been convicted and sentenced for their roles.
Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Joseph Reagan, Special Agent in Charge, Detroit Field Division, Drug Enforcement Administration, jointly made the announcement.
The investigation was conducted by the Drug Enforcement Administration, the United States Postal Investigation Service, the Internal Revenue Service, and the Northern Kentucky Drug Strike Force. The United States was represented in this case by Assistant United States Attorney Tony Bracke.
Boyd County Woman Convicted of Defrauding Social Security Administration Out of $280,000Read the Press Release
ASHLAND — An Ashland, Ky., couple has been convicted by a jury of crimes related to a scheme to defraud the Social Security Administration (SSA) and the Kentucky Medicaid Program, out of hundreds of thousands of dollars over the course of 15 years.
Diana Lynn Ball, 57, was convicted on Wednesday of one count of Supplemental Security Income (SSI) fraud, one count of Medicaid fraud, one count of theft of government property and one count of making a false statement. Her husband, Lawrence Ball, was convicted of one count of making a false statement.
Evidence at the trial established that, from 1996 until December of 2013, Diana Ball intentionally concealed her true living arrangement from the SSA, in order to fraudulently collect SSI and Medicaid benefits.
According to testimony, Ball repeatedly told the SSA she had separated from her husband and was not sharing living expenses. In reality, Ball had been living with her husband and was receiving financial support from him. Had the SSA been aware of the true living arrangement, Ball would not have been eligible to receive approximately $280,000 in benefits. Diana Ball claimed an insanity defense at trial.
SSI is an income assistance program designed to provide financial assistance to elderly and disabled individuals who meet the program’s eligibility requirements. Kentuckians who are eligible for SSI also qualify for benefits under the Kentucky Medicaid Program.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Guy P. Fallen, Special Agent in Charge, Social Security Administration, Office of Inspector General, jointly announced the conviction.
The investigation was conducted by the SSA, Office of Inspector General. Assistant U.S. Attorney Laura K. Voorhees is prosecuting this case on behalf of the federal government.
Sentencing for the defendant is scheduled for November. The charges carry a maximum of five years in prison. However, the court must consider the U.S. Sentencing Guidelines and the federal statutes before imposing a sentence.
Clay County Man Responsible for Overdose Death Sentenced to Life in PrisonRead the Press Release
First Life Sentence in Kentucky in an Overdose Death Case Involving Prescription Drugs
LONDON — A federal judge has sentenced a Clay County man to life in prison for illegally distributing prescription drugs that caused the death of another person.
Today, U.S. District Judge Karen K. Caldwell sentenced Terry Smith, 55, for distribution of a controlled substance resulting in death. Because of Smith’s criminal history, he received a mandatory life sentence under federal law. Smith has prior felony convictions for robbery in the first degree, for which he was sentenced to 20 years and later paroled, and possession of a controlled substance in the first degree, for which he received a probated sentence.
Judge Caldwell also sentenced Smith to 360 months for conspiracy to distribute oxycodone and 120 months for possession of firearms by a convicted felon. Both sentences will run concurrently with the life sentence. Smith’s wife, Gerry,53, received 90 months in prison for conspiring with her husband and others to distribute oxycodone.
This case marks the first time in Kentucky that a life sentence was imposed in an overdose death case involving prescription drugs.
“Mr. Smith operated a drug trafficking organization which brought large quantities of narcotics into Kentucky from other states, causing immeasurable harm to many of our communities. Ultimately, his criminal conduct caused the death of one of those he callously exploited,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “We do not take sentences of this magnitude lightly. It is clear, however, that Mr. Smith’s long history of serious criminal conduct coupled with the deadly consequences of his large scale drug trafficking scheme merits the sentence imposed by the Court and required by federal law.”
In January, a jury convicted Smith of the charges, following a five day trial. Evidence at the trial established that on September 9, 2011, Smith had sponsored Patty Smallwood and others to travel to an out-of-state pain clinic, called Georgia Health Associates, in Tucker, Ga., to obtain oxycodone pills. Upon their return, Smith paid for them to fill these prescriptions at the Community Drug Pharmacy, in Manchester, Ky. These individuals then gave the pills to Smith, who kept a portion for himself and divided the rest among the people who made the trip.
The evidence then showed that Smallwood took a portion of her pills that night. She later went to bed and never woke up. Smallwood was found dead the following morning by her boyfriend. Although an autopsy was not performed, toxicology reports reflected that, along with smaller levels of several other drugs, Smallwood had four times the therapeutic level of oxycodone in her system. A toxicologist testified that the oxycodone use was the likely cause of her death.
This case also marks the first time in the Eastern District of Kentucky that a conviction was obtained in an overdose death case, without an autopsy report being used as evidence.
U.S. Attorney Harvey and Joseph P. Reagan, Special Agent in Charge, Drug Enforcement Administration (DEA), jointly announced the sentence.
The investigation was conducted by the DEA. Assistant U.S. Attorney W. Samuel Dotson prosecuted this case on behalf of the federal government.
Cincinnati Man Sentenced to Three Years Imprisonment for His Role in Multi-Million Dollar Fraud Scheme in KentuckyRead the Press Release
FRANKFORT — A Cincinnati man has been sentenced to three years in federal prison after pleading guilty to his role in a Kentucky oil investment scheme that defrauded over 200 victims nationwide out of more than $3,000,000.
On Monday, U.S. District Judge Gregory F. Van Tatenhove sentenced Michael Hicks for mail fraud. As Hicks admitted, and as shown by evidence at the trials of Hicks’s co-defendants, from 2012 to 2014, Hicks was part of a scheme that used high-pressure telephone calls to sell investments in oil wells, located in in Barren, Monroe, and Cumberland Counties in Kentucky, to victims around the country.
These sales presentations included fraudulently guaranteed and exaggerated oil production numbers, and failed to disclose material facts and risks about the investments. Members of the scheme avoided detection by using false names when communicating with investors, repeatedly changing their company’s name, and shifting addresses between Bowling Green, Louisville, Covington, Nashville, and Los Angeles. Every investor lost all or nearly all of their investment.
As part of his guilty plea agreement, Hicks admitted that he willingly joined the scheme, opened bank accounts in various names, operated mailing addresses in various names, cashed or deposited investor checks made out to various company names, and then withdrew and mailed the victims’ money to his co-defendants in California.
Hicks also agreed to testify against his co-defendants John Westine and Henry Ramer, who were each convicted of mail fraud, securities fraud, and money laundering conspiracy, in separate jury trials in January 2015 and May 2015. Westine, Hicks’s half-brother and a resident of Malibu, Calif., was a leader of the scheme. Ramer, another leader of the scheme, worked as a salesman and manager of two Los Angeles-based telemarketing sales operations. A fourth member of the scheme, Mark Cornell, a local Kentucky oil well operator who assisted the conspiracy by exaggerating his oil production numbers, pleaded guilty to securities fraud in March 2015. These three other defendants will be sentenced by the samejudge in August and September.
Under federal law, Hicks must serve at least 85 percent of his prison sentence. Hicks will be placed under the supervision of the U.S. Probation Office for an additional three years after his prison sentence, and was also ordered to pay over $3,000,000 in restitution to his victims.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Dugan Wong, Inspector in Charge of the U. S. Postal Inspection Service; and Charles Vice, Commissioner of the Kentucky Department of Financial Institutions, jointly announced the sentence.
The investigation started when investors submitted complaints to the Kentucky Department of Financial Institutions, Division of Securities. The investigation was conducted by the U.S. Postal Inspection Service, including Postal Inspector Roberta Bottoms, and the Kentucky Department of Financial Institutions, Division of Securities.
Assistant U.S. Attorneys Ken Taylor and Neeraj Gupta prosecuted these cases on behalf of the federal government.
Former Ft. Thomas X-Ray Technician Sentenced to a Year for Health Care FraudRead the Press Release
COVINGTON — A former X-ray technician from Ft. Thomas, Ky., who previously admitted to defrauding state and federal health care programs out of thousands of dollars, has been sentenced to one year in federal prison.
U.S. District Judge Amul Thapar sentenced Robert Moyer for health care fraud and also ordered him to pay 112,173.93 in restitution. Under federal law, Moyer must serve at least 85 percent of his prison sentence.
According to court records, starting in June 2010 and continuing until December 2011, Moyer, who owned Mobile Medical Resources, knowingly allowed an unlicensed individual to administer x-rays to Medicare and Medicaid patients from Kentucky and Ohio. He then falsified documentation to conceal who performed the x-ray services. Under federal law, the Medicare and Medicaid programs only reimburse for such medical services when they are provided by a licensed professional.
“Billing Medicare and Medicaid for services performed by non-licensed personnel is fraud,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta. “This defendant not only stole money from the taxpayers, his X-rays sometimes had to be re-taken because they were of such poor quality that they were useless.”
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Sylvia Mathews, Derrick Jackson, Special Agent in Charge, Department of Health and Human Services, Office of Inspector General, Office of Investigations; Jack Conway, Kentucky Attorney General; and Mike DeWine, Ohio Attorney General, jointly made the announcement.
The investigation was conducted by the Office of the Kentucky Attorney General, Medicaid Fraud and Abuse Control Unit; Assistant U.S. Attorney Laura K. Voorhees prosecuted this case on behalf of the federal government.
Leader of International Prescription Drug Ring Sentenced to 15 Years in PrisonRead the Press Release
LONDON - The leader of a large-scale drug trafficking organization, which brought prescription drugs from Mexico to eastern Kentucky and northern Tennessee for nearly 15 years, has been sentenced to 180 months in federal prison.
On July 2nd, U.S. District Judge Gregory F. Van Tatenhove sentenced 60 year-old Donald Lee King, of Speedwell, Tenn., for operating a continuing criminal enterprise to distribute a controlled substance. Under federal law, King must serve at least 85 percent of his prison sentence; and following his release, he will be under the supervision of the U.S. Probation Office for five years. King has also forfeited nearly $75,000 in cash, multiple firearms, vehicles, and other property.
King admitted that, from around 1996 until September of 2013, he developed a large drug distribution network in which others, under his direction, made monthly trips to Texas to obtain large quantities of Alprolazam (Xanax). There, they obtained the drugs from conspirators who were receiving the drugs from a supplier in Mexico. The pills were then transported back to Kentucky and distributed in Bell County, Ky., and Claiborne County, Tenn. Alprozolam is a controlled substance typically used to treat anxiety.
Six co-defendants have previously pleaded guilty and been sentenced for their roles in the conspiracy.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky and Joseph P. Reagan, Special Agent in Charge, Detroit Field Division, Drug Enforcement Administration (DEA), jointly made the announcement today.
The investigation was conducted by the DEA. Assistant U.S. Attorney W. Samuel Dotson represented the U.S. Attorney’s Office in this case.
Home Health Agency Executive Director to Pay U.S. Government over $1 Million to Settle Civil ClaimsRead the Press Release
LEXINGTON – The executive director of a Lexington-based home health agency has agreed to pay the U.S. Government $1,082,416 to settle allegations that she provided unlawful compensation to physicians who referred patients to the agency.
Vicki S. House, a resident of Scott County, was the Secretary and an Executive Director of Nurses’ Registry and Home Health Corporation (“Nurses’ Registry”), an agency that provides home health services to patients throughout Central Kentucky.
According to the settlement agreement, from March 2006 through April 2010, House provided compensation to three local physicians who referred patients to Nurses’ Registry. Nurses’ Registry then submitted claims to Medicare seeking payment for the services it provided to the patients referred by these physicians. The U.S. Government contends that this conduct violated the Stark Law, which prohibits the submission of claims resulting from referrals from physicians to whom the agency has provided compensation.
“We intend to use every tool available to protect the taxpayers from those who abuse federal health care programs for personal gain,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “Every dollar lost to fraud and abuse is a dollar that is unavailable to meet the needs of those who depend on Medicare for vital healthcare needs. We will continue to vigorously protect the interests of the United States in this litigation.”
Nurses’ Registry and the Estate of its former owner and Chief Executive Officer, Lennie G. House, are also defendants in the United States’ complaint that alleges False Claims Act violations.
This settlement only resolves the government’s claims against Vicki House; it does not resolve any allegations for False Claims Act violations against Nurses’ Registry or Lennie House’s Estate. Those defendants are scheduled for trial in August 2015. If they are found liable, Nurses’ Registry and Lennie House’s Estate will be liable for three times the amount of money Medicare paid the agency for false claims, and the agency would be excluded from further participation in federal health care programs.
The investigation was conducted by the Department of Health and Human Services, Office of the Inspector General, Office of Investigations; the FBI; the Office of the Kentucky Attorney General, Medicaid Fraud and Abuse Control Unit; and the U.S. Attorney’s Office for the Eastern District of Kentucky. Assistant U.S. Attorneys Paul McCaffrey and Christine Corndorf represented the federal government in this case.
Final Member of a Scheme that Defrauded Capitol Finance Out of Hundreds of Thousands of Dollars Sentenced to Two Years in PrisonRead the Press Release
LONDON - The final member of a scheme, in which the defendants used other people’s identities to defraud a Leslie County bank out of hundreds of thousands of dollars, has been sentenced today to prison.
On Thursday, July 2, Nicole Lewis, 34, of Leslie County received two years in prison for aggravated identity theft. U.S. District Judge Gregory F. Van Tatenhove had previously sentenced her co-defendants, Deborah Wilson, 53, and Theresa Bowling, 46, to 18 months and 42 months respectively, for their roles in the scheme. Judge Van Tatenhove ordered that all three defendants, together, pay $420,806.60 in restitution to Capitol Finance in Leslie County. Under federal law, all of them must serve at least 85 percent of their prison sentences.
According to court documents, in November 2008 and continuing to April 2009, Bowling, Lewis and Wilson illegally obtained copies of other people’s drivers’ licenses, dates of birth and social security numbers from various sources to apply for loans. Bowling and Lewis, who held management positions at a loan company called Capitol Finance, processed the loans as if they were legitimate and issued the checks for the fraudulent loans. Lewis and Bowling cashed the checks at Hyden Citizens Bank in Leslie County. All three defendants spilt the money and used it for their personal gain.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky and Craig Hutzell, Acting Special Agent in Charge, United States Secret Service, jointly announced the sentence.
The investigation was conducted by Secret Service. Assistant U.S. Attorney Andrew Sparks prosecuted this case on behalf of the federal government.
Kenton County Man Admits Making Child Pornography Available for Download on the InternetRead the Press Release
COVINGTON — A Kenton County man has admitted to making child pornography images and videos available for download over the internet.
On Thursday, Alan K. Newberry, 43, of Park Hills, Ky., pleaded guilty to distribution of child pornography. Based on his conviction, Newberry will be required to register as a sex offender for the remainder of his life.
According to Newberry’s plea agreement, authorities with the Kentucky Attorney General’s Office identified child pornography files that had been made available for download on the internet. They traced the source of the images and videos to Newberry’s computer, which was located at his home in Park Hills. Authorities executed a search warrant at Newberry’s residence, searched his computer, and found 4,000 images and 700 videos of children engaged in sexually explicit conduct. Many of the images depicted prepubescent children and sadistic conduct.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Jack Conway, Kentucky Attorney General, jointly announced the guilty plea.
The investigation was conducted by the Office of the Kentucky Attorney General.
Newberry is scheduled for sentencing on September 24, 2015. He faces a maximum of 20 years in prison. The Court must consider the U.S. Sentencing Guidelines and the federal statutes before imposing a sentence.
Former State Representative Convicted on Bribery ChargeRead the Press Release
A former state representative and Pikeville, Kentucky, coal operator, Wendell Keith Hall, has been convicted by a jury of bribing a federal mine official.
The jury deliberated for one hour and 30 minutes following five days of trial. According to evidence presented at trial, Hall, who represented House District 93 in the Kentucky General Assembly, paid mine reclamation officer Kelly Shortridge for favorable treatment in connection with his official duties.
Shortridge worked as an environmental inspector for the Office of Surface Mine Reclamation and Enforcement, where he was responsible for enforcing federal mine reclamation laws and regulations. From 2006 through 2011, Shortridge inspected mines owned by Hall. Shortridge ignored violations that occurred on Hall’s property in exchange for a series of payments totaling over $46,000.
The evidence also established that the two men disguised the payments as consulting fees. In 2010, they set up a shell company, DKJ Consulting, in the name of Shortridge’s wife and opened a bank account with her as the sole authorized signatory on the account. Hall then used a company he owned, S&K Properties, to funnel money to Shortridge through DKJ to make the payments appear as legitimate business expenses.
“Mr. Hall’s brazen scheme to corrupt an important governmental function for his personal benefit is made all the more egregious by his former status as a member of the Kentucky General Assembly,” said U.S. Attorney Kerry B. Harvey for the Eastern District of Kentucky. “The United States will seek a sentence which properly reflects the serious nature of Mr. Hall’s criminal conduct.”
Shortridge pleaded guilty in February of this year. Shortridge is scheduled to be sentenced on Aug. 6, 2015. U.S. Attorney Harvey, Special Agent in Charge, Howard S. Marshall for the FBI and Scott Oliver of the Office of Inspector General for the Department of Interior jointly made the announcement.
Hall faces a maximum of 10 years in prison. However, any sentence imposed will come after the court considers the U.S. Sentencing Guidelines and the federal statutes governing the imposition of sentences.
Former State Representative Convicted on Bribery ChargeRead the Press Release
PIKEVILLE – A former state representative and Pikeville coal operator, Wendell Keith Hall, has been convicted by a jury of bribing a federal mine official.
The jury deliberated for one hour and 30 minutes following five days of trial. According to evidence presented at trial, Hall, who represented House District 93 in the Kentucky General Assembly, paid mine reclamation officer Kelly Shortridge for favorable treatment in connection with his official duties.
Shortridge worked at the Kentucky Division of Mine Reclamation and Enforcement, where he was responsible for enforcing mine reclamation laws and regulations. From 2006 through 2011, Shortridge inspected mines owned by Hall. Shortridge ignored violations that occurred on Hall’s property in exchange for a series of payments totaling over $46,000.
The evidence also established that the two men disguised the payments as consulting fees. In 2010, they set up a shell company, DKJ Consulting, in the name of Shortridge’s wife and opened a bank account with her as the sole authorized signatory on the account. Hall then used a company he owned, S&K Properties, to funnel money to Shortridge through DKJ to make the payments appear as legitimate business expenses.
“Mr. Hall’s brazen scheme to corrupt an important governmental function for his personal benefit is made all the more egregious by his former status as a member of the Kentucky General Assembly,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “The United States will seek a sentence which properly reflects the serious nature of Mr. Hall’s criminal conduct.”
Shortridge pleaded guilty in February of this year. Shortridge is scheduled to be sentenced on August 6, 2015.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Howard S. Marshall, Special Agent in Charge, FBI; and Scott Oliver, Department of Interior, Office of Inspector General, jointly made the announcement.
Hall faces a maximum of 10 years in prison. However, any sentence imposed will come after the Court considers the U.S. Sentencing Guidelines and the federal statutes governing the imposition of sentences.
McCreary County Couple Sentenced to Prison for Defrauding Social Security and Kentucky Medicaid Out of Hundreds of Thousands of DollarsRead the Press Release
LONDON — A McCreary County couple, who defrauded the Social Security Administration and Kentucky Medicaid out of hundreds of thousands of dollars, has been sentenced in federal court.
On Thursday, June 18, U.S. District Judge Gregory F. Van Tatenhove sentenced Oliver Taylor, 59, to 33 months in prison, for theft of government property, health care fraud, and defrauding the Social Security Administration (SSA). Oliver’s wife at the time of the offenses, Lisa Taylor, 51, was sentenced to 18 months in prison, for social security fraud. Both defendants have been ordered to pay full restitution to the SSA. Under federal law, they will have to serve at least 85 percent of their prison sentences.
According to court documents, in 1993, Oliver Taylor began receiving Social Security benefit payments on behalf of his elderly mother. Starting in 1995, following his mother’s death, and continuing until 2014, Oliver Taylor repeatedly failed to report his mother’s death to the SSA, in order to continue receiving her benefit payments for his own personal use. Specifically, Oliver made false statements to the SSA and signed his deceased mother’s name on eligibility forms to indicate she was still alive.
For approximately seven years, Lisa Taylor assisted in the fraud scheme, by signing SSA reports for Oliver and by pretending to be Oliver’s mother during a phone conversation with the SSA.
Because Oliver illegally converted his mother’s benefits to his own use, he was ineligible for his own SSA benefits. Additionally, he fraudulently failed to report the money he collected from his mother’s benefits as income to the SSA and Kentucky Department for Medicaid Services.
As a result of their scheme, the Taylors fraudulently obtained a total of $487,798.98 from the SSA and the Kentucky Department for Medicaid Services.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky and Margaret Moore-Jackson, Special Agent in Charge, Social Security Administration, Office of Inspector General, Atlanta Field Division, jointly made the announcement.
The investigation was conducted by the Social Security Administration, Office of the Inspector General, Office of Investigations. Assistant U.S. Attorney Adam C. Reeves prosecuted the case.
Former State Employee Sentenced 13 Years for Receiving Child PornographyRead the Press Release
LONDON — A former state employee in London, Ky., who previously admitted to downloading images of child pornography from the internet while at work, has been sentenced to 13 years in federal prison.
On Thursday, U.S. District Judge Gregory Van Tatenhove sentenced 51 year-old Gordon Bowers for receiving child pornography. Under federal law, Bowers must serve at least 85 percent of his prison sentence, and following his release, he will be under the supervision of the U.S. Probation Office for 15 years. Judge Van Tatehove also ordered Bowers to pay $35,000, in restitution to multiple victims, for costs associated with psychological counseling services.
According to his plea agreement, in February of 2014, law enforcement identified several child pornography images and videos online. Authorities traced the source of the images to a computer at the London State Office Building. Agents executed a search warrant at Bowers’ office and found over 40,000 images of child pornography on his state-issued computer and other electronic storage devices. The images depicted children engaged in sexually explicit conduct.
Bowers pleaded guilty in January of this year. He worked as an environmental scientist.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky;, Jack Conway, Kentucky Attorney General;, and Gary Hartwig, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), jointly made the announcement.
The investigation was conducted by the Office of the Kentucky Attorney General and HSI. Assistant U.S. Attorney Kathleen Coffey prosecuted this case on behalf of the federal government.
Two Ashland Men Sentenced in Money Laundering Conspiracy Involving Stolen MotorcyclesRead the Press Release
LONDON — A federal judge sentenced two men from Ashland, Ky., today for conspiring to commit money laundering, by stripping stolen motorcycles of their original identifying marks, rebuilding and retitling them for innocent buyers.
U.S. District Judge Gregory Van Tatenhove sentenced Richard Meade, 67, to 2 years in prison and Mark Justice, 55, to 18 months in prison, for conspiracy to commit money laundering by illegally transferring the ownership of motorcycles, aiding and abetting money laundering, and aiding and abetting possession of a vehicle and vehicle parts with altered vehicle identification numbers (VIN). At a later date, the Court will determine a restitution amount to compensate the original owners and insurance companies.
Both defendants were convicted in 2013. Evidence established that motorcycles had been stolen at motorcycle rallies in South Carolina, South Dakota and Florida, by a group of thieves who brought them back to Kentucky to strip them and rebuild them. They removed parts of the stolen motorcycles and replaced them with aftermarket parts bearing different VIN numbers, to conceal that they had been stolen. The stolen motorcycles were registered in Kentucky, with new VIN numbers. In 2006 and 2007, Meade and Justice took some of the newly registered motorcycles, sold them and helped provide fraudulent documents for the retitling process.
Six other defendants previously pleaded guilty and have been sentenced for their roles in the case.
The FBI and Kentucky State Police identified nearly 200 victims in this case, which include the original motorcycle owners and insurance companies.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Howard S. Marshall, Special Agent in Charge, FBI, and Rodney Brewer, Kentucky State Police Commissioner jointly announced the sentence.
The investigation was conducted by the FBI, Kentucky State Police, the Boyd County Sheriff’s Office, Ohio Bureau of Investigations, Ohio Attorney General’s Office, and Ohio State Patrol. Assistant United States Attorneys Kenneth R. Taylor and Erin Roth prosecuted this case on behalf of the federal government.
Former University of Kentucky Professor Sentenced for Wire FraudRead the Press Release
LEXINGTON — Dongping “Daniel” Tao, a former mining engineering professor at the University of Kentucky, who previously admitted to defrauding the University and a private company out of tens of thousands of dollars, has been sentenced to one year in prison.
Today, U.S. District Judge Karen Caldwell sentenced Tao, 52, for wire fraud. In addition to the 12-month term of incarceration, Judge Caldwell ordered that Tao pay a $10,000 fine, $59,411.86 in restitution to the University, and $2,280.00 in restitution to Georgia-Pacific, LLC, a private company for whom he worked as a consultant.
At his guilty plea in February of this year, Tao admitted that he received grant money from the University that was intended for mining engineering research, but used the money for his consulting business, paying for travel, materials, and services.
Tao then sought payment from his consulting clients, as reimbursement for expenses that he had actually used the University’s money to pay. Tao also admitted that he fabricated and altered invoices, to show fictitious costs, and submitted those invoices to the University and Georgia-Pacific for payment. Tao then received payment for these fraudulent expenses.
Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Howard Marshall, Special Agent in Charge, FBI, jointly announced the sentence. The investigation was conducted by the FBI, the University Police Department, and the University Internal Audit Department. Assistant U.S. Attorney Andrew T. Boone prosecuted this case on behalf of the federal government.
Owner of Pain Clinics in Florida and Georgia Sentenced to 14 Years for Conspiracy to Distribute Prescription Drugs to KentuckiansRead the Press Release
LONDON — The owner of two out-of-state pain clinics, where hundreds of thousands of prescription pills were unlawfully distributed to thousands of Kentuckians, has been sentenced to 14 years in federal prison.
On Thursday, May 28, U.S. District Judge Amul Thapar sentenced Joel Shumrak, 67, for conspiracy to distribute oxycodone and alprazolam and laundering money. Shumrak will also forfeit $7 million in proceeds from the drug conspiracy, which he laundered through various banks, including several off-shore banks. Under federal law, he must serve at least 85 percent of his prison sentence.
Beginning around June of 2008, and continuing until June of 2014, thousands of Kentuckians, from Clay, Laurel, Rockcastle, Pulaski, Floyd, Knox, Bell, Pike, Jefferson, Whitley, Madison, Montgomery, Fayette, Magoffin and other Kentucky Counties, travelled to Shumrak’s pain clinics, located in Tucker, Ga., and Broward, Fla., almost daily, to unlawfully obtain prescription pills without a legitimate medical need. Shumrak admitted that his clinics catered to out-of-state patients and that these individuals received little to no physical examinations or other medical treatment before obtaining the drugs. Shumrak further admitted that he was aware that many of these Kentucky patients distributed the drugs upon their return to the Commonwealth.
Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; Joseph Reagan, Special Agent in Charge, DEA, Detroit Field Division; A.D. Wright, Acting Special Agent in Charge, DEA, Miami Field Division; and Daniel Salter, Special Agent in Charge, DEA, Atlanta Field Division, jointly made the announcement.
The investigation was conducted by the DEA in Kentucky, Georgia, Florida and Ohio. Assistant U.S. Attorney Sam Dotson prosecuted this case on behalf of the federal government.
Cincinnati Man Sentenced to 120 Months for Heroin Distribution in CovingtonRead the Press Release
COVINGTON — A federal judge sentenced a Cincinnati man, who has a lengthy criminal history, to 120 months in federal prison for distributing over 500 grams of heroin in Covington, Ky.
Willie A. Robinson, 50, of Cincinnati, admitted to selling over 250 grams of heroin on three occasions in July 2014 and to possessing over 300 grams of heroin, which he intended to sell when arrested on September 2, 2014.
Robinson was indicted on December 11, 2014 and entered a guilty plea on February 24, 2015.
Robinson was previously convicted of felony marijuana trafficking in 2002 and federal fraud offenses in 2007.
Under federal law, Robinson must serve at least 85 percent of his prison sentence, and he will be on supervised release for 10 years following his prison term.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Joseph P. Reagan, Special Agent in Charge, Detroit Field Division, Drug Enforcement Administration, jointly made the announcement today.
The investigation was conducted by the Drug Enforcement Administration and the Northern Kentucky Drug Strike Force. Assistant U.S. Attorney Tony Bracke prosecuted the case on behalf of the federal government.
California Man Convicted for Role in Multi-Million Dollar Fraud Scheme in KentuckyRead the Press Release
FRANKFORT - Today, a federal jury in Frankfort, Ky., convicted Henry Irving Ramer, of Encino, Calif., for his role in an oil investment scheme in Kentucky that defrauded over 200 investors, nationwide, out of more than $3,000,000.
The jury convicted Ramer, 76, of 21 counts of mail fraud, securities fraud, and conspiracy to launder money. The jury reached its verdicts after six days of trial and five hours of deliberation.
Ramer is the fourth defendant to be convicted in this investment fraud case and faces a maximum statutory sentence of twenty years in prison and a $5,000,000 fine. Sentencing is scheduled for September 8, 2015 before U.S. District Judge Gregory Van Tatenhove.
According to evidence presented at trial, between 2012 and 2014, Ramer and others raised money from victims by making misrepresentations and failing to disclose material facts about the purported investments in Kentucky oil wells, in Barren, Monroe, and Cumberland Counties. The information provided to investors included fraudulent oil production numbers and did not disclose that one member of the group had been previously convicted in a similar oil investment fraud scheme and was sentenced to 22 years in federal prison.
Ramer and his co-defendants used false identities when communicating with investors, changed company names, and maintained shifting addresses in Bowling Green, Louisville, Covington, and Nashville. Every investor lost all or nearly all of their investment. When charges were brought in August 2014, Ramer and others were already planning a new phase of the scheme, using a new company name.
Ramer worked as a salesman and manager of two Los Angeles-based telemarketing sales operations. He and his team of salespeople cold-called potential investors around the country and convinced many of them to purchase investments. Ramer also created false marketing brochures and a promotional video.
In January 2015, John Westine, a leader of the scheme, was convicted of mail fraud, securities fraud, and money laundering conspiracy after a two-week jury trial. A third member of the scheme, Westine’s half-brother, Michael Hicks, pleaded guilty to mail fraud in November 2014. A fourth member of the scheme, a central Kentucky oil and gas operator named Mark Cornell, pleaded guilty to securities fraud in March 2015.
Any sentences imposed by the Court will come after careful consideration of the U.S. Sentencing Guidelines and the federal statutes governing imposition of sentences.
Under federal law, Ramer must serve at least 85 percent of his prison sentence.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Dugan Wong, Inspector in Charge of the U. S. Postal Inspection Service; and Charles Vice, Commissioner of the Kentucky Department of Financial Institutions, jointly made the announcement.
The investigation started when investors submitted complaints to the Kentucky Department of Financial Institutions, Division of Securities. The investigation was conducted by the U.S. Postal Inspection Service, including Postal Inspector Roberta Bottoms, and the Kentucky Department of Financial Institutions, Division of Securities.
Assistant U.S. Attorneys Ken Taylor and Neeraj Gupta prosecuted this case on behalf of the federal government.
Ft. Wright Man Sentenced to 106 Months for Drug and Weapons OffensesRead the Press Release
COVINGTON – A Ft. Wright, Ky., man has been sentenced to 106 months in federal prison for heroin, cocaine and weapons offenses.
On Tuesday, U.S. District Judge David L. Bunning sentenced 27 year-old Michael Daniels, for possession with intent to distribute heroin and crack cocaine and possessing a firearm in furtherance of a drug trafficking crime. Under federal law, Daniels must serve at least 85 percent of his prison sentence; and following his release, he will be under the supervision of the U.S. Probation Office for eight years.
Daniels pleaded guilty on December 1, 2014 and admitted that he had been selling heroin and crack cocaine, while staying at a hotel in Ft. Wright, in June 2014. Agents investigated a complaint about drug activity in Daniels’ hotel room and located 36 grams of heroin, 22 grams of crack cocaine, money, a digital scale, and a loaded 9mm handgun.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Howard S. Marshall, Special Agent in Charge, Federal Bureau of Investigation, and Daniel Kreinest, Chief of the Ft. Wright Police Department, jointly made the announcement today.
The investigation was conducted by the FBI’s Safe Streets Task Force and the Ft. Wright Police Department. Assistant U.S. Attorney Tony Bracke prosecuted this case on behalf of the federal government.
Mason County Man Sentenced to 87 Months for CocaineRead the Press Release
A Maysville, Ky., man, who led a conspiracy that distributed cocaine in Mason County, has been sentenced to 87 months in federal prison.
U.S. District Judge David L. Bunning sentenced 37 year-old Gerald Gibbs for conspiracy to distribute cocaine. Under federal law, Gibbs must serve at least 85 percent of his prison sentence, and following his release, he will be under the supervision of the U.S. Probation Office for 3 years.
During the sentencing hearing, the government established that, over the course of several years, Gibbs conspired with others to obtain cocaine that was ultimately distributed in Maysville in both powder and crack forms. The Court ultimately determined that Gibbs was responsible for distributing between two and three kilograms of cocaine.
William Slater and Randy Kirk, co-defendants of Gibbs, previously received prison sentences of 150 months and 63 months, respectively, for their roles in the conspiracy.
Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; Ron Rice, Chief of Police, Maysville Police Department; Joseph Reagan, Special Agent in Charge, Drug Enforcement Administration, Detroit Field Division; and Christopher A. Henry, Special Agent in Charge, Internal Revenue Service, jointly announced the sentence.
The investigation was conducted by the Maysville Police Department, DEA, and IRS. Assistant U.S. Attorney Elaine K. Leonhard prosecuted this case on behalf of the federal government.