Eastern District of Kentucky

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.

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.

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.

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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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.

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.

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.

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.

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.

     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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

COVINGTON — An X-ray technician from Ft. Thomas, Ky., has admitted in federal court to defrauding state and federal health care programs out of thousands of dollars.

On Friday, Robert Moyer pleaded guilty today to health care fraud, before U.S. District Judge Amul Thapar.

According to court records, starting in June 2010 and continuing until December 2010,   Moyer 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 service.  Under federal law, health care benefit programs only reimburse medical professionals for services conducted by a licensed professional.

In total, Moyer filed more than 3,800 fraudulent claims worth $112,173.93.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Jack Conway, Kentucky Attorney General; Sylvia Mathews Burwell, , Department of Health and Human Services, Office of Inspector General, Office of Investigations; 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; Department of Health Human Services, Office of Inspector General, Office of Investigations and the Ohio Attorney General’s Office. 

Moyer will appear for sentencing on July 16, 2015 at 10:00 a.m.  He faces a maximum of 10 years in prison.  However, the Court must consider the U.S. Sentencing Guidelines and the applicable statutes before imposing a sentence.

LEXINGTON - The U.S. Attorney’s Office announced today that a federal jury found Dr. Phillip Robinson, a Somerset optometrist, liable, under the False Claims Act, for seeking payment from the Medicare program for more than 11,000 unnecessary eye examinations he provided to nursing home residents.

On Friday, May 1, 2015, the jury reached its verdict, after three hours of deliberation, following a five-day trial.  The jury found that the Medicare program lost $419,075 as a result of Dr. Robinson’s false claims.  Under the False Claims Act, Dr. Robinson will be required to pay the federal government three times that amount, $1,257,225.

“Dr. Robinson's scheme to defraud the taxpayers betrays the standards we expect of our healthcare providers,” said U.S. Attorney Kerry B. Harvey. “His willingness to use many of our most vulnerable citizens to further his financial interests at the expense of our vital federally funded healthcare programs is particularly troubling.  We will continue to use every available tool to protect the public treasury from this sort of abuse.”

Dr. Robinson provided eye care services at approximately a dozen nursing homes in Pulaski, Lincoln, and McCreary Counties, among other southeastern and south-central locations in Kentucky.  Evidence presented at the trial established that, from January 1, 2007 to January 31, 2012, Dr. Robinson gave eye examinations to the vast majority of his nursing home patients, once a month, regardless of the patients’ condition or medical need.  Medical experts testified that they were unaware of any other optometrists that provided eye exams with this frequency.

The evidence further established that Dr. Robinson caused the Medicare program to be billed for these exams.  Because Medicare only pays for medically necessary exams, Dr. Robinson intentionally filed claims that represented each exam was necessary.

The jury concluded that Dr. Robinson was responsible for 11,085 false claims, submitted to Medicare for payment, for the unnecessary eye examinations.

In January 2015, Dr. Robinson’s practice group, Associates in Eye Care, agreed to pay the government $800,000 to settle related claims against it, thereby avoiding trial.

Health care providers found liable under the False Claims Act are typically excluded from further participation in federal health care programs such as Medicare and Medicaid.  A decision about Dr. Robinson’s exclusion from federal health care programs will be made by the Department for Health and Human Services, Office of Inspector General (HHS-OIG).

This investigation was conducted by HHS-OIG, the Kentucky Office of Attorney General’s Medicaid Fraud and Abuse Control Unit, and the United States Attorney’s Office for the Eastern District of Kentucky.  Assistant United States Attorneys Christine Corndorf, Andrew Smith, and Paul McCaffrey litigated the case on behalf of the federal government.

LEXINGTON — A Mt. Sterling, Ky., man, who previously admitted to being responsible for the distribution of 20,000 prescription pills in Montgomery County, has been sentenced to 150 months in federal prison.

On Friday, April 24, U.S. District Judge Danny C. Reeves sentenced Jeffrey Scott Wingate, 52, for possession with intent to distribute Oxycodone.  Wingate was also ordered to forfeit approximately $200,000, several firearms, and two vehicles.

Judge Reeves also sentenced Charles Michael Spence, 39, of Mt. Sterling, to 81 months for conspiring to distribute Oxycodone.  Spence acknowledged he was responsible for the distribution of 14,000 Oxycodone pills.  Under federal law, both defendants must serve at least 85 percent of their prison sentence and will be under the supervision of the U.S. Probation Office for three years, following their release.

In November 2014, Wingate and Spence pleaded guilty to the drug charges and admitted that, from September 2013 through June 12, 2014, they conspired with co-defendant, Eric Gonzalez, aka Joel Ramon Hipolito, and others to distribute Oxycodone pills.  Judge Reeves previously sentenced Gonzalez to 200 months in prison for his role in the conspiracy.

According to Wingate’s plea agreement, he also acknowledged that he conspired to distribute approximately 5 ounces of heroin.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; Howard Marshall, Special Agent in Charge, Federal Bureau of Investigation; Rodney Brewer, Commissioner, Kentucky State Police; David Charles, Chief, Mt. Sterling Police Department; and Fred Shortridge, Montgomery County Sheriff, jointly made the announcement.

The investigation was conducted by the FBI, Kentucky State Police, the Mt. Sterling Police Department and the Montgomery County Sheriff’s Office.  Assistant United States Attorney Robert M. Duncan, Jr., prosecuted this case on behalf of the federal government.

COVINGTON — A Covington, Ky., couple has been sentenced to federal prison for conspiring to distribute heroin in northern Kentucky.

U.S. District Judge David L. Bunning sentenced William Lovelace, 25, to 90 months for conspiracy and possessing a firearm in furtherance of a drug trafficking crime.  Tonia Cross received a 24 month sentence for conspiracy.  Under federal law, both defendants must serve at least 85 percent of their prison sentence, and upon release, Lovelace and Cross will serve terms of supervised release of 10 and 3 years, respectively.

Lovelace and Cross pleaded guilty in January of this year and admitted they conspired to distribute heroin in Campbell and Kenton Counties on multiple occasions, between May 1, 2014 and August 16, 2014.

Authorities arrested Cross and Lovelace on August 16, 2014, after observing Lovelace, armed with a handgun, sell heroin in Bellevue.    

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Howard S. Marshall, Special Agent in Charge, Federal Bureau of Investigation; and Colonel Wayne Turner, Chief of Police, Bellevue Police Department, jointly made the announcement today.

The investigation was conducted by the FBI’s Safe Streets Task Force and the Bellevue Police Department.  Assistant U.S. Attorney Tony Bracke prosecuted this case on behalf of the federal government.

LEXINGTON — A Madison County man, who was previously convicted of heroin charges, has been sentenced to 10 years in federal prison.

U.S. District Judge Joseph M. Hood sentenced Neal Scott Stone, 39, for conspiracy to distribute heroin, distribution of heroin, possession with intent to distribute heroin, attempt to possess with intent to distribute one kilogram of cocaine, and violating the conditions of his supervised release from a previous crime.  Judge Hood also sentenced Stone’s girlfriend, Catherine Leake, 28, to two years in prison for conspiring with Stone.  Both defendants must serve at least 85 percent of their prison sentence.

A federal jury convicted Stone of the drug charges in January of this year and found that he conspired to distribute heroin from March 1, 2014 until May 13, 2014.  Leake pleaded guilty to the conspiracy offense in January.

According to court documents, in May 2014, Leake distributed heroin, on Stone’s behalf, to another individual at a fast food restaurant in Richmond.  Following the transaction, authorities arrested Stone and Leake.  After executing a search warrant at Stone’s residence, authorities recovered several items associated with the drug conspiracy, including 71 grams of heroin.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, David Gregory, Chief of Police, Berea, Ky., and Joseph P. Reagan, Special Agent in Charge, DEA, jointly made the announcement.

The investigation was conducted by the Berea Police Department and the DEA.  Assistant U.S. Attorney Cindy Rieker prosecuted the case on behalf of the federal government.

LONDON — The owner of two out-of-state pain clinics, that unlawfully distributed hundreds of thousands of prescription pills to thousands of Kentuckians, has pleaded guilty to drug charges in federal court.

On Tuesday, Joel Shumrak, 67, pleaded guilty to conspiracy to distribute oxycodone and alprazolam, and to laundering money. Shumrak has agreed to serve a prison term of 168 months, pending the Court’s approval. Shumrak has also agreed to forfeit approximately $7 million in proceeds from the conspiracy. He will be formally sentenced on August 4, 2015.

According to his plea agreement, from June 2008 until May 2014, hundreds of Kentuckians, from Clay, Laurel, Rockcastle, Pulaski, Floyd, Knox, Bell, Pike, Jefferson, Whitley, Madison, Montgomery, Fayette, Magoffin and other Kentucky Counties, visited Shumrak’s clinics in Tucker, Ga., and Broward, Fla., on a weekly basis, to unlawfully obtain prescription pills without a legitimate medical need. Shumrak admitted that these patients received little to no physical examinations before obtaining the drugs, and that many of the Kentucky patients distributed the drugs upon their return to Kentucky.

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.

LEXINGTON — A Richmond man, who previously admitted to making images of child pornography available for download on the internet, has been sentenced to 144 months in federal prison.

U.S. District Judge Joseph M. Hood sentenced 53-year-old Mark Douglas Taylor for distribution of child pornography and ordered him to be under the supervision of the U.S. Probation Office for 10 years following his release.  Under federal law, Taylor must serve at least 85 percent of his sentence.

According to Taylor’s plea agreement, an undercover investigator with the Office of the Kentucky Attorney General, downloaded several files from the internet that she suspected contained child pornography.  Law enforcement later identified Taylor’s computer as the source of the child pornography files.  Then, in February 2014, law enforcement executed a search warrant at his residence and located numerous images depicting prepubescent children engaged in sexually explicit conduct on his computer.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Jack Conway, Kentucky Attorney General; and Howard Marshall, Special Agent in Charge of the FBI, jointly made the announcement today.

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

COVINGTON — A federal judge has sentenced a Cincinnati man to 220 months in federal prison, for his role in a conspiracy that distributed heroin in Newport, Ky.

U.S. District Judge Amul Thapar sentenced Carlos Massengill, 45, for conspiracy to distribute heroin.  Judge Thapar enhanced Massengill’s sentence because Massengill qualified as a career offender, due to his significant criminal history.

Massengill admitted that he and a co-defendant, Anquan Williams, 35, distributed heroin in Newport, on several occasions between April 2014 and July 30, 2014.

Williams was sentenced to 120 months in prison on April 2.  Williams and Massengill pleaded guilty in December of 2014.

Under federal law, Massengill 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 Stuart L. Lowrey, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms & Explosives (Louisville Field Division), jointly made the announcement today.

The investigation was conducted by the Bureau of Alcohol, Tobacco, Firearms & Explosives and the Campbell County Drug Task Force.  Assistant U.S. Attorney Tony Bracke prosecuted the case on behalf of the federal government.

FRANKFORT — A former deputy of the Franklin County Sheriff’s Department, who previously admitted to using evidence collected from an investigation to pay for personal expenses, has been sentenced to 16 months in federal prison and two months of home incarceration.

U.S. District Judge Gregory F. Van Tatenhove sentenced Matthew Christian Brown, 32, for theft of government property and ordered him to pay $17,840.54 in restitution.  Of that amount, $9,900 will be paid to the Franklin County Sheriff’s Department.  Under federal law, Brown 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 three years.                                                                     

According to his plea agreement, Brown, who also served as the chief narcotics officer, executed a search warrant at a suspect’s residence, where he seized a watch and a ring.  Instead of logging those items as evidence, Brown kept them for himself.  He further admitted that he sold the ring back to the suspect.

Brown served as a deputy sheriff from May 2007 until December 2012.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Rodney C. Brewer, Kentucky State Police Commissioner; and Howard Marshall, Special Agent in Charge, Federal Bureau of Investigation, jointly made the announcement today.

The investigation was conducted by the Kentucky State Police and the FBI.  Assistant U.S. Attorney Hydee Hawkins prosecuted this case on behalf of the federal government.

LEXINGTON — A Powell County couple, that previously admitted to selling nearly $3,000 in counterfeit money, have both been sentenced to 41 months in federal prison.

On Wednesday, U.S. District Judge Danny C. Reeves sentenced Timothy Ray Profitt, 34, and his wife, Amanda Marie Profitt, 27, for counterfeiting securities of the United States. Under federal law, each defendant will have to serve 85 percent of their prison sentence.

According to their plea agreements, between September 26, 2013 and October 2, 2013, the Profitts manufactured 143 counterfeit bills, all in denominations of $20. They then sold $2,860 in counterfeit bills to others in Powell County, for less than the face value of the counterfeit money.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Craig Hutzell, Acting Special Agent in Charge, United States Secret Service, jointly announced the sentences.

The investigation was conducted by the U.S. Secret Service and the Winchester Police Department. Assistant U.S. Attorney Kate K. Smith prosecuted this case on behalf of the federal government.

COVINGTON — The leader of a massive drug conspiracy that distributed large quantities of heroin and marijuana in northern Kentucky and southern Ohio has been convicted by a jury of multiple drug charges and other related offenses.

      On Thursday, March 12, a federal jury convicted Alberto Lara-Chavez, 45, of Planada, Calif., of conspiracy to distribute 100 grams or more of heroin and 100 kilograms or more of marijuana, distribution of heroin and 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.

     Felix Agundiz-Montes, 30, of Walton, Ky., was also convicted, of conspiracy to distribute 100 grams or more of heroin and 100 kilograms or more of marijuana, attempted distribution of marijuana, and conspiracy to launder money; and Jose Alberto-Lara, 23, of Planada, Calif., was convicted of conspiracy to distribute 100 kilograms or more of marijuana.

     The jury returned the verdict after nine days of trial.  The evidence established that from October 2012 through May 16, 2014, the defendants were members of a larger group that 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.

     Evidence at trial established that the group shipped marijuana to this area from Texas and California and operated a large marijuana field in Sardinia, Ohio.  The group brought heroin to this area from Columbus, Ohio for distribution.  Evidence and court records showed that many of the members of the group were not legally present in the United States and had been brought here by other conspiracy members to sell narcotics.  Many of them possessed firearms to protect the drugs and drug proceeds.  The leaders of the group conspired to launder funds from the drug operation through bank deposits, wire transfers, and casino activity.

     Lara-Chavez was the leader of the group and directed its local activities.  Group members identified themselves as associates of a Mexican drug cartel.

     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, and the Internal Revenue Service.  The United States was represented in the trial by Assistant United States Attorneys Tony Bracke and Jason Denney.

    The defendants are scheduled to appear for sentencing before Judge Amul Thapar, in Covington, on July 1, 2015.  Lara-Chavez faces a potential sentence of life imprisonment.  Agundiz-Montes and Alberto-Lara face a maximum sentence of 40 years in prison.  However, the sentences will be imposed by the court after consideration of the United States Sentencing Guidelines and the federal statute governing the imposition of sentences.

LEXINGTON — A former vice-president of a Shelbyville bank has been sentenced to 12 months in prison, with an additional six months of home-incarceration, for misappropriating hundreds of thousands of dollars of bank funds.

On Tuesday, U.S. District Judge Gregory F. Van Tatenhove sentenced Roy T. Edwards to his prison term and also ordered him to pay $308,482 in restitution.

According to court documents, from March 2005 through November 2006, Edwards fraudulently authorized hundreds of thousands of dollars in loans to applicants who were not qualified based on their credit histories and the bank suffered financial losses based on the loans. More specifically, Edwards knowingly approved loan applications that contained false information regarding applicants’ income, employment, and assets.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Patrick T. Collins, Federal Deposit Insurance Corporation (FDIC), Office of Inspector General, jointly announced the sentence.

The investigation was conducted by the FDIC. Assistant U.S. Attorney Andrew Sparks prosecuted the case on behalf of the federal government.

PIKEVILLE — Three members of a Floyd County family admitted in federal court that they attempted to defraud insurance companies out of thousands of dollars.

On Monday, Charles Ray Tackett, 42, his son, Michael Ray Tackett, 25, and his wife, Anna Grace McGuire Tackett, 27, pleaded guilty to wire fraud and conspiracy before U.S. District Judge Danny C. Reeves.

According to court documents, Charles Tackett devised a scheme to defraud insurance carriers, by fraudulently obtaining insurance on classic vehicles. Tackett admitted he purchased vehicles, including a 1971 Cadillac Deville and a 1972 Oldsmobile, and falsely reported to the insurance companies that the vehicles had been fully restored through a body shop, when no such work had been done to the vehicles.

Tackett claimed the cars were worth significantly more than their actual value and he obtained insurance based on the inflated value of the vehicles. After the vehicles were destroyed in a fire, Tackett attempted to recover money by filing a claim under the fraudulently obtained insurance policy.

Tackett also acknowledged he recruited his wife and son to join the conspiracy. Michael Tackett and Anna McGuire Tackett executed similar schemes involving a 1978 Chevy Monte Carlo, a 1979 Pontiac Trans Am, and a 1984 Pontiac Firebird.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Howard S. Marshall, Special Agent in Charge, Federal Bureau of Investigation, jointly announced the guilty pleas.

The investigation was conducted by the Federal Bureau of Investigation. Assistant U.S. Attorney Kate K. Smith represents the federal government in this case.

All three defendants are scheduled to be sentenced on June 22, 2015. They face a maximum prison sentence of 20 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.

A former employee of the University of Kentucky’s Veterinary Diagnostic Laboratory has been sentenced to 66 months in prison for downloading child pornography images onto his work-issued computer.

On Wednesday, U.S. District Judge Karen Caldwell sentenced 60 year-old Neil Mason Williams for receipt of child pornography.  Under federal law, Williams will have to serve at least 85 percent of his sentence.  Following his release from prison, Williams will be under the supervision of U.S. Probation Office for 20 years and he will have restricted access to a computer during this time period.

Williams pleaded guilty to the charge in December of last year, admitting that he used a file sharing program to download thousands of images of child pornography onto his work computer.  The investigation started in February 2014, when staff members from the Information Technology Department noticed files downloaded on Williams’ computer that appeared to contain child pornography.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Howard S. Marshall, Special Agent in Charge, FBI; Jack Conway, Kentucky Attorney General; and Ray Larson, Office of the Commonwealth’s Attorney, jointly announced the sentence today.

The investigation was conducted by the FBI, the University of Kentucky Police Department, and the Office of the Kentucky Attorney General.  Assistant U.S. Attorney David Marye, prosecuted the case on behalf of the federal government.

LEXINGTON — The perpetrators of an international wire fraud scheme, involving the fraudulent sale of automobiles over the internet, have been sentenced to combined terms of imprisonment totaling more than 60 years.

On Monday, U.S. Senior District Judge Joseph M. Hood sentenced the last of ten defendants involved in the criminal conspiracy. The scheme, which operated in Lexington and other places, originated in Eastern Europe, where conspirators used legitimate websites, such as eBay.com and Autotrader.com, to advertise non-existent vehicles for sale. The advertisements would list the used-vehicles for a competitive price. Once contacted by potential buyers, the conspirators would negotiate the price with victims, via telephone and e-mail.

After an agreement to purchase a vehicle was reached, conspirators instructed victims to wire the purchase funds to United States-based members of the conspiracy, through Western Union, MoneyGram, or a bank wire transfer. The conspirators would then pick up the funds using various forms of fraudulent identification. The United States-based conspirators kept some of the proceeds but wired the rest of the money to the international members of the conspiracy.

Within the United States, the conspiracy operated in Georgia, Ohio, Kentucky, Tennessee, Indiana, and Michigan. In all, more than 550 victims of the scheme, whose losses exceed $2,000,000, have been identified.

The defendants sentenced include Nicholas Corey Garner and Petrica Octavian Stoian. Garner was a leader of the conspiracy who recruited many of the United States-based defendants to join the scheme; he received 240 months in prison. Stoian is a Romanian national, who coordinated several aspects of the international portion of the conspiracy. He admitted to opening bank accounts in Hungary, using false identities, to receive proceeds of the fraud. In June of 2013, the United States extradited Stoian from Hungary, to face the fraud charges in this case. Stoian received 97 months in prison.

Other members of the conspiracy have been sentenced as follows: Dwayne Hardy, 72 months; Nathaniel Garner, 70 months; Harold Smith, 60 months; Brooks Sowell, 60 months; Sabrina Carmichael, 60 months; April Abrams, 36 months; and Eli Holley, 36 months (sentenced Monday). Jelahni Williams, who only participated in the conspiracy for three days, was sentenced to time-served.

Under federal law, each defendant must serve at least 85 percent of their prison sentence and will be under the supervision of the United States Probation Office for three years following their release.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Craig Hutzell, Acting Special Agent in Charge of the U.S. Secret Service, jointly announced the sentences.

The investigation was conducted by the U.S. Secret Service and Assistant U.S. Attorney Erin M. Roth prosecuted the case on behalf of the federal government.

FRANKFORT — A central Kentucky oil operator has admitted to his role in a scheme that defrauded investors nationwide out of millions of dollars.

On Tuesday, Mark Cornell pleaded guilty to securities fraud before U.S. District Judge Gregory Van Tatenhove.  In January of this year, John G. Westine, Jr., a leader of the scheme, was convicted by a jury of mail fraud, money laundering conspiracy, and securities fraud.  A third member of the scheme, Michael Hicks, pleaded guilty to mail fraud in November 2014.  Westine and Hicks are scheduled to be sentenced in May.

In his plea agreement, Cornell admitted that his role in the scheme was to act as the local operator of a series of reworked wells for which production levels were exaggerated.  Cornell was paid large sums of money by Westine and his associates to rework the wells and to provide guarantees of these excessive production levels.  Those fraudulent guarantees were used by Westine and his associates to sell royalty interests in the wells to investors, via high-pressure telephone tactics.

In total the defendants defrauded approximately 200 investors nationwide out of more than $3,000,000.

The investigation started when investors submitted complaints to the Kentucky Department of Financial Institutions, Division of Securities.

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 guilty plea.

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 are prosecuting this case on behalf of the federal government.

Cornell is scheduled to be sentenced in June.  He faces a maximum sentence of 20 years imprisonment.  The Court will impose a sentence after carefully considering the U.S Sentencing Guidelines and the federal statutes.

LEXINGTON, KY - Dongping “Daniel” Tao, a former mining engineering professor at the University of Kentucky, admitted in federal court today that he defrauded the University out of tens of thousands of dollars, in items and services.

Tao, 54, pleaded guilty to one count of wire fraud, before U.S. District Judge Karen Caldwell. Tao also admitted that he defrauded Georgia-Pacific, LLC, a private company for whom he worked as a consultant.

Tao acknowledged that he received grant money from the University that was intended for research, on behalf of the College of Engineering, but Tao 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.

According to his plea agreement, between 2010 and 2013, Tao fraudulently obtained $59,411.86 from the University and $2,280.00 from Georgia-Pacific

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, the UK Police Department, and the UK Internal Audit Department. Assistant U.S. Attorney Andrew T. Boone represents the federal government in this case.

Tao is scheduled to be sentenced on June 11, 2015 at 10:30 am. He faces a maximum prison sentence of 20 years 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.

LONDON, KY - An optometry practice in Pulaski County has agreed to pay the U.S. Government $800,000 to settle civil allegations that it billed federal health care programs for medically unnecessary and worthless eye examinations provided to nursing home residents over the course of several years.

The U.S. Government contends that from January 1, 2007 to January 31, 2012, Associates in Eye Care P.S.C. (“AEC”), employed an optometrist, Dr. Philip Robinson, who provided routine, monthly eye examinations to almost all of his nursing home patients, regardless of their condition or medical need. Many of these examinations were medically unnecessary according to the government’s allegations.

“Federally funded healthcare programs provide an essential safety net for many of our most vulnerable citizens,” said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky. “Those who abuse the system for personal gain jeopardize the programs on which so many rely. We are committed to using every available tool to protect these vital programs from fraud and abuse.”

The government also alleges that because of the high number of patients seen by Robinson on a daily basis, it was not possible for all of the patients to receive a legitimate eye exam. Therefore, the exams had no medical value. AEC billed Medicare and Medicaid for all eye examinations provided by Robinson to nursing home patients and received payment from those programs.

According to the settlement agreement, AEC violated the False Claims Act by knowingly seeking payment from federal health care programs for unnecessary and/or worthless medical services.

In addition to payment of the settlement amount, AEC has agreed to enter into an integrity agreement with the Department of Health and Human Services-Office of Inspector General (HHS-OIG), which obligates it to undertake substantial internal compliance reforms and to commit to a third party review of its claims to federal health care programs for the next three years.

Dr. Robinson is also a defendant in the United States’ False Claims Act complaint filed in May 2013. This settlement resolves the government’s claims against AEC, but does not resolve any claims for False Claims Act violations against Robinson. Robinson’s trial is scheduled to begin in April 2015. If he is found liable, Robinson would be responsible for paying back three times the amount of money Medicare and Medicaid paid for his unnecessary and/or worthless services and 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; the Office of the Kentucky Attorney General, Medicaid Fraud and Abuse Control Unit (“MFCU”), and the U.S. Attorney’s Office.

Defendant Robbed Two Banks in Ky.

COLUMBUS, OH - William J. McBride, Jr., 49, of Columbus, pleaded guilty in U.S. District Court to armed bank robberies in Ohio, West Virginia, Kentucky and Indiana.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, John Barrios, Acting Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Division, William J. Ihlenfeld, II, United States Attorney for the Northern District of West Virginia, John E. Kuhn, Jr., Acting United States Attorney for the Western District of Kentucky, Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Joshua Minkler, Acting United States Attorney for the Southern District of Indiana, announced the plea entered into today.

According to court documents, between June 21, 2014 and August 23, 2014, McBride robbed six different federally insured banks in five different federal jurisdictions while armed with a dangerous weapon.

McBride, at gunpoint, demanded and received more than $21,000 in cash total from the banks. The defendant did not wear any disguise during the robberies, and witnesses in each location described him similarly.

On August 23, 2014, a witness reported McBride’s license plate number upon seeing the defendant flee in his vehicle after robbing the Wesbanco Bank in St. Clairsville, Ohio. Law enforcement officials discovered the vehicle was registered to McBride and subsequently arrested him later the same day in a hotel in Columbus.

McBride pleaded guilty to six counts of armed robbery. He remains in custody.

Each count of armed robbery is a crime punishable by up to 25 years in prison.

U.S. Attorney Stewart commended the cooperative investigation by the FBI and other law enforcement agencies in each jurisdiction, as well as Assistant United States Attorney Sal Dominguez, who is representing the United States in this case.

LEXINGTON, KY - A Lexington, Ky., man, who previously admitted to leading a conspiracy to use stolen identities to file false federal income tax returns, has been sentenced to 175 months in prison.

On Wednesday, U.S. District Judge Danny C. Reeves sentenced 52-year-old David C. Pierce for wire fraud, aggravated identity theft, and conspiring to defraud the United States. Judge Reeves ordered $636,379 to be paid in restitution; of that amount, Pierce and another co-defendant are jointly and severally liable for $107,500. Under federal law, Pierce will have to serve at least 85 percent of his prison sentence.

Pierce previously pleaded guilty and admitted that he devised a scheme to obtain federal income tax refunds by fraud. Pierce accomplished this by creating false tax returns in the names of other members of his conspiracy and other individuals whose identities were stolen and supplied to him by his co-conspirators.

Pierce invented details about the lives of these taxpayers, including where they lived and worked, their incomes, and their expenses. He then filed these returns with the Internal Revenue Service (IRS), requesting that the tax refunds be directed to addresses and bank accounts belonging to him and other members of the conspiracy. During a two-year span, Pierce fraudulently claimed over $3.7 million in tax refunds and received over $600,000 in payments from the Internal Revenue Service.

Three of Pierce’s co-conspirators have also been sentenced for their roles in the conspiracy. Timothy Richard Smith, 51, was sentenced on Wednesday to 70 months imprisonment. Joyce Ann Estes, 44, received 51 months in prison on January 22, 2015. Stephen Lane Woodrum, 24, was sentenced to 48 months imprisonment on January 21, 2015. The final co-conspirator, Dwayne Ray Smith, has pleaded guilty to wire fraud, and aggravated identity theft, and conspiracy to defraud the United States. He is scheduled to be sentenced on February 11, 2015.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Christopher Henry, Special Agent in Charge, Internal Revenue Service, jointly announced the sentences.

The investigation was conducted by the Internal Revenue Service Office of Criminal Investigation. Assistant U.S. Attorneys Andrew T. Boone and Kate K. Smith prosecuted this case on behalf of the federal government.

FRANKFORT, KY - Timothy Alexander Conley, the former Morgan County Judge-Executive, was sentenced today to 87 months in federal prison for soliciting and accepting over a hundred thousand dollars in illegal kickbacks from a bridge contractor.

U.S. District Judge Gregory Van Tatenhove sentenced Conley for honest services mail fraud and ordered him to pay $130,000 in restitution. Judge Van Tatehnove ordered that Conley pay $104,000 to the Kentucky Transportation Cabinet and $26,000 to Morgan County. Under federal law, Conley will have to serve at least 85 percent of his prison sentence.

“Mr. Conley's reprehensible scheme betrayed the trust placed in him by the people of Morgan County,” said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky. “He transformed his high public office into a criminal enterprise designed to line his pockets, at the expense of the citizens who elected him. The sentence imposed is an appropriate punishment for a man who so thoroughly abused the public trust, at a time when his community most needed honest leadership. Our office and our law enforcement partners will continue to use every tool available to fight public corruption in our district.”

Conley admitted at his guilty plea in August 2014 that, between early 2009 through August 2013, he rigged the county’s competitive bidding process to ensure that contracts for certain Morgan County bridges were awarded to PBTHNOJJ Construction, a Salyersville, Ky., bridge contractor owned by Kenneth and Ruth Gambill. Conley admitted that, as part of that scheme, he directed Kenneth Gambill to deliver kickbacks to him from the proceeds of PBTHNOJJ Construction’s bridge contracts. For example, in 2013, Conley secretly altered bid documents for three bridges to ensure that PBTHNOJJ Construction would receive the contract to build each bridge. Conley solicited $15,000 per bridge and accepted $45,000 in cash from Kenneth Gambill for the three bridges.

According to the plea agreement, these kickbacks were part of a scheme to defraud the citizens of Morgan County of their right to Conley’s honest services.

Kenneth and Ruth Gambill have each pleaded guilty and have been sentenced for conspiring to launder the proceeds of Conley’s kickback scheme.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Howard Marshall, Special Agent in Charge, FBI; and Jack Conway, Kentucky Attorney General, jointly announced the sentence today.

The investigation was conducted by the FBI and the Kentucky Attorney General’s Office. This case was prosecuted by Assistant U.S. Attorney Andrew T. Boone and trial attorney Jennifer Blackwell with the Public Integrity Section of the United States Department of Justice.

LONDON, KY - A Clay County man has been convicted by a federal jury of illegally distributing prescription drugs that resulted in the death of another individual, Patty Smallwood.

Terry Smith, 54, was found guilty on Monday of distribution of a controlled substance resulting in death. The jury also convicted Terry's wife, Gerry, of conspiring with Terry and others to distribute oxycodone. In addition, Terry Smith was found guilty on a charge of possession of firearms by a convicted felon. The jury returned the verdict after four hours of deliberation, following five days of trial.

Of all the convictions in overdose death cases, this is the first one in the Eastern District of Kentucky that occurred without an autopsy report being used as evidence.

"This is an important victory in the effort to hold drug dealers accountable for the carnage they cause in our communities,” said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky. “Overdose deaths are an unfortunate, but all too common, consequence of illegal drug trafficking. Federal law imposes a heavy penalty on drug dealers who cause a death. Our office and our law enforcement partners intend to seek that penalty whenever the proof warrants, even in the absence of an autopsy. Drug dealers should take heed-they will pay a heavy price for their callous disregard for human life."

Evidence at trial established that on or about September 9, 2011, Terry Smith had sponsored Patty Smallwood and others to travel to an out-of-state pain clinic called Georgia Health Associates in Tucker, Georgia to obtain oxycodone pills. Upon their return, Smith then 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 that had made the trip.

The evidence further showed that Patty Smallwood took a portion of her pills that night, went to bed, and never woke up. She was found dead the following morning by her live-in 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. In support of its case, the United States offered the testimony of a forensic toxicologist, who offered his expert opinion concerning the levels of drugs present in Ms. Smallwood’s system. The toxicologist testified that the oxycodone use was the likely cause of Ms. Smallwood’s death.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky and Joseph P. Reagan, Special Agent in Charge, Drug Enforcement Administration jointly announced the conviction.

The investigation was conducted by the Drug Enforcement Administration.

Sentencing is scheduled for May 15, 2015. Terry Smith faces a mandatory sentence of life in prison for the overdose death offense. Gerry Smith faces a maximum of 20 years on the conspiracy offense. However, the court will carefully consider the U.S. Sentencing Guidelines and federal statutes before imposing sentence.

LEXINGTON, KY -An ambulance services company in Floyd County agreed to pay the U.S. Government $948,000 to settle civil allegations that it billed federal health care programs for medically unnecessary services over the course of several years.

According to the settlement agreement, from February 1, 2006 until December 31, 2012, Lafferty Enterprises, LLC, doing business as Trans-Star Ambulance Services, transported Medicare patients to and from dialysis clinics by ambulance when an ambulance transport was not medically necessary. The government contends that Trans-Star violated the False Claims Act by billing Medicare for routine, non-emergency ambulance transports provided to patients who were able to safely travel to and from the dialysis clinics by other means. Medicare covers non-emergency ambulance transports only when all other forms of patient transportation are considered a medical risk.

“It is vitally important that the resources available to federally funded healthcare programs be used only to pay for medically necessary services,” said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky. “Our office and our agency partners are committed to protecting the integrity of these important programs on which so many of our citizens depend.”

In addition to the payment of the settlement amount, Trans-Star has agreed to enter into a corporate integrity agreement with the Department of Health and Human Services-Office of Inspector General (HHS-OIG), which obligates Trans-Star to undertake substantial internal compliance reforms and to commit to a third-party review of its claims to federal health care programs for the next three years.

The settlement was based on the penalties associated with the alleged violations and Trans-Star’s financial ability to pay.

The investigation and settlement stem from a complaint filed by a former owner of another ambulance company in eastern Kentucky, pursuant to the whistleblower provisions of the False Claims Act, which permit private individuals to bring a lawsuit on behalf of the United States. The whistleblower, Kevin Fairlie, will receive $189,600.

The investigation 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”) and the U.S. Attorney’s Office.