Eastern District of Kentucky

PIKEVILLE, KY - Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Joseph P. Reagan, Special Agent in Charge, Drug Enforcement Administration; Jack Conway, Attorney General of Kentucky; Rodney Brewer, Kentucky State Police Commissioner; and Phillip Reed, Pikeville Police Chief, jointly announced today that a Floyd County man has been sentenced to 320 months in prison, for his role in a drug conspiracy involving heroin, prescription drugs, and cocaine.

Billy Shepherd, 41, was sentenced, on January 8th, following convictions for conspiracy to distribute and possession of heroin. U.S. District Judge Danny C. Reeves enhanced Shepherd’s sentence because Shepherd qualified as a career offender, based upon his significant criminal history. Shepherd has previously been convicted of first degree fleeing and evading police and first degree wanton endangerment. Under federal law, Shepherd will have to serve at least 85 percent of his prison sentence.

A jury convicted Shepherd in September 2014. According to evidence presented at trial, in 2013, law enforcement officers executed a search warrant on a vehicle in which Shepherd was a passenger. They found 21 grams of heroin, along with Oxycodone pills and cocaine, that belonged to Shepherd.

The evidence also established that Shepherd conspired, with five others, to distribute heroin in Floyd County. According to testimony, the conspirators made trips to Columbus, Ohio to buy ounce quantities of heroin for distribution.

All of Shepherd’s co-defendants have pleaded guilty and have been sentenced for their roles in the conspiracy.

The investigation was conducted by the DEA, London Field Division; the Kentucky Attorney General’s Office; Kentucky State Police; and the Pikeville Police Department. Assistant U.S. Attorney Todd Bradbury prosecuted this case on behalf of the federal government.

FRANKFORT, KY - Today, a federal jury convicted a California man of running a bogus oil production enterprise in Kentucky that defrauded investors, nationwide, out of millions of dollars.

The jury convicted John G. Westine, Jr., 69, for 26 counts of mail fraud and one count each of conspiracy to launder funds and securities fraud. Westine was acquitted on one mail fraud count. The jury reached its verdict after six and a half hours of deliberations, following nine days of trial.

According to testimony at trial, Westine and others lured money from investors by making false statements regarding an oil production business. The false statements led investors to believe that oil was being produced, when in fact it was not, and led them to believe that the oil companies had been in the oil production business for decades, when in reality they had only been in existence for less than a year.

Additionally, evidence at trial established that Westine had concealed from investors that he had served more than 22 years in federal prison, for a 1992 conviction for a similar fraud scheme in Ohio, and that he was on parole.

According to voluminous testimony and documents presented by prosecutors, Westine and others used aliases and fictitious company names to conceal their true identity from investors and authorities.

In total, Westine and others defrauded approximately 200 investors out of more than $3,000,000.

Westine’s co-defendant and half-brother, Michael Hicks, pleaded guilty to similar charges and testified for the government at trial.

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 verdict.

The investigation was conducted by the U.S. Postal Inspection Service 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.

Westine faces a maximum prison sentence of 20 years on each mail fraud count and 20 years for both the securities fraud and money laundering offenses. Under federal law, Westine will have to serve at least 85 percent of his prison sentence. The Court will impose a sentence after carefully considering the U.S Sentencing Guidelines and the federal statutes.

Defendant Harbored Undocumented Mexican Migrant for Labor on Tobacco Farm

WASHINGTON, DC - The Department of Justice announced today that Pedra Perez-Gumeta, 52, of Lexington, Kentucky, was sentenced to serve 18 months in federal prison by United States Senior District Court Judge Joseph M. Hood for harboring an undocumented Mexican migrant for labor at a tobacco farm, illegally re-entering the United States after deportation and failing to pay a minimum wage to the undocumented Mexican migrant. Judge Hood also ordered Perez-Gumeta to pay restitution to the Mexican migrant in the amount of $1,311 and mandatory special assessments totaling $210.

Perez-Gumeta previously admitted that she had brought a woman to Lexington from Mexico to provide the woman with a job. Perez-Gumeta also admitted that she knew the woman was from Mexico and not legally within the United States, nor was the woman able to work legally in the United States. Perez-Gumeta also admitted that she had been previously deported from the United States and that she had re-entered the United States illegally. Perez-Gumeta further admitted that she did not pay the woman for all of the labor the woman performed, instead keeping a portion of the woman’s wages for herself. Perez-Gumeta pleaded guilty to the charges in September of 2014. In sentencing Perez-Gumeta, the court found that the defendant used coercion in the course of harboring the undocumented Mexican woman for financial gain.

Under federal law, Perez-Gumeta must serve 85 percent of her prison sentence, and, upon release, will be under the supervision of the United States Probation Office for one year, unless she is deported.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, Steven L. Igyarto, Resident Agent in Charge, Homeland Security Investigations (HSI), Department of Homeland Security (DHS), Rodney Brewer, Commissioner, Kentucky State Police (KSP), and Mark Barnard, Chief, Lexington-Fayette Urban County Government Division of Police, jointly made the announcement today after the sentencing.

The investigation was conducted by the DHS-HSI, the KSP, and the Lexington Police Department. The United States was represented by Trial Attorney Victor Boutros of the Civil Rights Division’s Human Trafficking Prosecution Unit and Assistant United States Attorneys Hydee R. Hawkins and David A. Marye.

LEXINGTON, KY -Norshawn Michael Duplessis, 40, of Detroit, Mich., has been sentenced to 15 years in prison, for possessing hundreds of grams of heroin and a firearm in Lexington.

On Wednesday, U.S. District Judge Danny C. Reeves sentenced Duplessis for possession with intent to distribute 100 grams or more of heroin and for possessing a firearm in furtherance of drug trafficking.

Duplessis previously admitted that he possessed over 400 grams of heroin and intended to distribute it. Duplessis further admitted that he possessed a .380 caliber pistol in furtherance of his drug trafficking crime. The heroin and firearm, along with approximately $57,000 in cash, were found by law enforcement in Duplessis’ Lexington apartment, during the execution of a search warrant.

Duplessis pleaded guilty to the drug charge in July of 2014 and to the gun charge in September of 2014.

Under federal law, Duplessis must serve at least 85 percent of his prison sentence, and, upon release, will be under the supervision of the United States Probation Office for eight years.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, Joseph P. Reagan, Special Agent in Charge, Drug Enforcement Administration, and Rodney Brewer, Commissioner, Kentucky State Police jointly made the announcement after the sentencing.

The investigation was conducted by DEA and KSP. Assistant United States Attorney, Robert M. Duncan Jr., prosecuted this case on behalf of the federal government.

LEXINGTON, KY - A Lexington, Ky., man, who previously admitted conspiring to defraud wireless telephone companies out of hundreds of smartphones, has been sentenced to 27 months in prison.

On Wednesday, U.S. District Judge Joseph M. Hood sentenced 56-year-old Michael Whiteside for conspiring with others to commit mail fraud and to launder the proceeds of his scheme.

Whiteside admitted that he participated in a conspiracy to defraud Verizon Wireless, and other wireless telephone companies, by using false pretenses to buy numerous smartphones, such as iPhones and Samsung Galaxies, at the discounted contract rates. Whiteside recruited and induced other individuals to buy smartphones and sign service contracts when, in fact, these individuals had no intention of honoring their contracts and paying monthly data services fees to the telephone companies. After the purchases, Whiteside took possession of the fraudulently obtained smartphones and shipped them overseas for resale, at substantially higher prices.

Whiteside’s spouse, Julia Whiteside, has also been convicted and sentenced for her role in the conspiracy. Whiteside’s son, Marques Whiteside, has pleaded guilty to mail fraud and money laundering conspiracies and is scheduled to be sentenced on January 5, 2015.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Paul R. Johnson, Special Agent in Charge, U.S. Secret Service, jointly announced the sentence.

The investigation was conducted by the Lexington Police Department and the U.S. Secret Service. Assistant U.S. Attorney Andrew T. Boone is prosecuting this case on behalf of the federal government.

PIKEVILLE, KY - The former Mayor of Martin, Ky., has been sentenced to 90 months in federal prison for various crimes including civil rights offenses and identity theft.

On Monday, U.S. District Judge Amul Thapar sentenced the former mayor, Ruth Thomasine Robinson, 70, for conspiracy to violate civil rights, conspiracy to defraud the Social Security Administration, federal program fraud, aggravated identity theft and vote buying. Judge Thapar also sentenced Robinson’s husband, James “Red” Robinson, 64, to 40 months in prison for vote buying. Under federal law, the Robinsons must serve at least 85 percent of their respective prison sentences.

Thomasine Robinson was convicted in May of the vote buying and civil rights violations. According to evidence at the trial, Thomasine Robinson and her co-conspirators intimidated poor and disabled citizens in order to gain their votes during Robinson’s 2012 campaign for re-election. For instance, members of the conspiracy directed residents of public housing to vote by absentee ballot under the supervision of Thomasine Robinson or another member of the conspiracy. The conspirators also targeted residents of private housing owned and leased by Thomasine Robinson.

Trial testimony established that the conspirators completed absentee ballots, marking their choice of candidates, and instructing the voters to sign the pre-marked ballots. Voters who complied by voting for Thomasine Robinson received promises of better living arrangements and other considerations. Voters who did not comply faced eviction or the loss of priority for public housing. In addition, the evidence established that the defendants offered to pay several voters to vote for Thomasine Robinson.

Thomasine Robinson was convicted in February of the identity theft and fraud offenses. Evidence at the trial established that from 2006 until January 2013, Ginger Marie Halbert, a co-conspirator, was purportedly working on a volunteer basis with Thomasine Robinson; in reality, Halbert was secretly being paid with federal funds. The funds used to pay Halbert were intended for the Martin Community Center and the Martin Housing Authority. Some of the misdirected money was supposed to fund an after school program for city children. To conceal the scheme, the defendants allegedly arranged for the checks to be made payable to Halbert’s son.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Howard S. Marshall, Special Agent in Charge of the Federal Bureau of Investigation; Guy Fallen, Special Agent in Charge, Social Security Administration, Office of the Investigator General, Office of Investigations; and Jack Conway, Attorney General of Kentucky, jointly made the announcement today.

The investigation was conducted by the Federal Bureau of Investigation, Social Security Administration, and the Kentucky Attorney General’s Office. Assistant U.S. Attorneys Ken Taylor and Andy Boone prosecuted this case on behalf of the federal government.

ASHLAND, KY - A Huntington, W.Va., man, previously convicted of second degree murder, has been sentenced to 312 months in federal prison for trafficking in heroin and crack cocaine in Boyd County.

On Tuesday, December 9, U.S. District Judge David Bunning sentenced 32 year-old Jason C. Brown and ordered him to serve 15 years of supervised release following the completion of his prison term. Judge Bunning enhanced Brown’s sentence because Brown’s criminal history qualifies him as a career offender. Brown has a prior drug trafficking felony conviction and a conviction for second degree murder in West Virginia. Under federal law, he must serve at least 85 percent of his prison sentence.

Evidence at Brown’s trial in September of this year established that Brown sold heroin on multiple occasions to individuals in Boyd County between January 2013 and April 2013. He also sold crack in February 2013. Evidence also established that Brown fled Ashland once he learned of the warrant for his arrest on these matters.

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

The investigation was conducted by the Federal Bureau of Investigation’s Safe Streets Task Force and the Kentucky State Police. Assistant U.S. Attorney Tony Bracke prosecuted this case on behalf of the federal government.

LEXINGTON, KY - Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Stuart L. Lowrey, Special Agent in Charge for the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); Tom Caul, Special Agent in Charge for the Social Security Administration (SSA), Office of the Inspector General; and Rodney Brewer, Kentucky State Police Commissioner, jointly announced today that a Lincoln County man has been sentenced to 66 months in federal prison, for illegally possessing more than 100 firearms and defrauding the Social Security Administration out of thousands of dollars.

U.S. District Judge Danny C. Reeves sentenced 46 year-old David Brummett, on Wednesday, November 26, for being a felon in possession of firearms and defrauding the SSA. Under federal law, Brummett must serve at least 85 percent of his prison sentence.

According to the plea agreement, in May 2013, Kentucky State Police (KSP) detectives searched Brummett’s home, pursuant to a warrant, and discovered 140 firearms. Because Brummett has a prior felony conviction, he is prohibited from possessing firearms. Brummett admitted he knew it was unlawful for him to possess firearms.

Additionally, Brummett, who had been receiving Social Security disability benefits, admitted that he intentionally failed to report some of his money and assets to the SSA so he could continue receiving financial assistance. According to court records, Brummett obtained $70,000 from SSA that he was not entitled to receive.

The investigation was conducted by ATF, KSP and the SSA. Assistant U.S. Attorney Hydee Hawkins prosecuted this case on behalf of the federal government.

LEXINGTON, KY - A Lawrenceville, Ga., man, who previously admitted using the identities of other people to fraudulently collect federal income tax refunds, was sentenced today to 87 months in prison.

U.S. District Court Judge Danny C. Reeves sentenced 39 year-old James Changala Kaira for theft of public money, bank fraud, and aggravated identity theft. Judge Reeves also ordered Kaira to pay $588,129.62 in restitution. Under federal law, Kaira will have to serve at least 85 percent of his prison sentence and will be under the supervision of the U.S. Probation Office for three years following the completion of his sentence.

Kaira previously admitted that from January 2013 until March 2014, he filed false tax returns using the identities of other taxpayers without the taxpayers’ knowledge. In some circumstances, he obtained tax refund checks that were issued to those taxpayers by the United States Treasury. He then forged the taxpayers’ signatures on the checks and cashed them at a money services business located in Lexington.

Kaira also admitted that between February and March of 2014, he committed bank fraud by using the false tax returns to obtain refund anticipation loans from one of several financial institutions. Information presented at the sentencing hearing established that Kaira fraudulently claimed $668,046.45 in tax refunds; of this amount, $588,129.62 was paid by the United States Treasury.

Kaira pleaded guilty to the charges in August of 2014.

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

U.S. Attorney’s Office Helps Collects Over $182 Million – More Than 20 Times its Annual Budget

LEXINGTON, KY - Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, announced today that the U.S. Attorney’s Office, with assistance from its partnering agencies, recovered $182,247,824.53 from civil and criminal actions for Fiscal Year 2014.

The Office, which operates on an annual budget of less than $10 million, ranks near the top 10 percent of all U.S. Attorney Offices (94 offices nationwide) in total collections. The Office collected the money during the fiscal year that started October 1, 2013 and ended September 30, 2014. The Eastern District of Kentucky consists of 67 counties stretching from Southern Kentucky up to the Ohio border.

“Our office achieved unprecedented success in recovering funds for the taxpayers during the last fiscal year. This is not by accident; we have focused intensely on collecting money owed to the Government as a result of criminal activity or obtained from the federal treasury by fraudulent means”, said U.S. Attorney Harvey. “This is vital work in this age of limited resources and we take pride in recovering funds for the public treasury that far exceeds the entire annual budget for this office. I commend the dedicated public servants in our office as well as our agency partners for their remarkable success on behalf of the American taxpayer.”

Approximately $76 million was collected in False Claims Act (FCA) cases and related matters. These cases often involve the submission of fraudulent claims by healthcare providers to federal healthcare programs such as Medicare. Specifically, in May, King’s Daughters Medical Center agreed to pay $40.9 million to settle civil allegations related to unnecessary cardiac procedures. In January, St. Joseph’s Hospital agreed to pay more than $16 million to settle similar FCA allegations. The $76 million is the largest amount collected in FCA cases in the Office’s 114 year history.

“We elevated the priority of FCA cases in our office about four years ago and implemented that decision by devoting significantly more resources to this important area,” said Harvey. “The result vindicates that decision and is a credit to our staff who work these complex cases. Our efforts not only protect the federal treasury, but promote appropriate medical care based on the best interests of the patients as well.”

Attorney General Eric Holder announced Wednesday that the Justice Department collected $24.7 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2014. The more than $24 billion in collections in FY 2014 represents nearly eight and a half times the appropriated $2.91 billion budget for the 94 U.S. Attorney’s Offices and the main litigating divisions in that same period.

The U.S. Attorneys’ Offices, along with the Department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.

The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.

COVINGTON, KY - A Burlington man was sentenced to 128 months in federal prison today for manufacturing methamphetamine and possession of a short-barreled shotgun in furtherance of drug trafficking.

U.S. District Judge Amul Thapar sentenced 38 year-old Joseph Wagner to 128 months in prison and placed him on supervised release for 15 years after he completes his prison term. He also ordered the forfeiture of the shotgun and ammunition used in the offense.

Wagner previously pled guilty on June 30, 2014 and admitted to manufacturing methamphetamine and possessing a sawed-off shotgun to assist in his drug trafficking at a residence in Independence, Kentucky. A construction worker engaged to assist in rehabilitating the residence that Wagner was using to manufacture methamphetamine had an altercation with Wagner on December 17, 2013 and contacted police. Responding officers observed Wagner in possession of the sawed-off shotgun and surrounded the residence. Wagner held them at bay for over three hours before surrendering to police. Officers located the sawed-off shotgun and items confirming the manufacture of methamphetamine. Investigators located a witness who confirmed that Wagner had been manufacturing and distributing methamphetamine.

Under federal law, Wagner must serve at least 85 percent of his prison sentence. He will be on supervised release for fifteen years after completion of 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 after the sentencing.

The investigation was conducted by the Bureau of Alcohol, Tobacco, Firearms & Explosives, the Independence Police Department and the Northern Kentucky Drug Strike Force. The U.S. Attorney’s Office was represented in the case by Assistant U.S. Attorney Tony Bracke.

LEXINGTON, KY - United States Attorneys Kerry B. Harvey and David J. Hale announced the appointment of Assistant United States Attorneys to serve as District Election Officers in connection with the Justice Department’s nationwide Election Day Program for the upcoming November 4, 2014 general elections.

Assistant United States Attorney Ken Taylor has been appointed to serve as the District Election Officer (DEO) for the Eastern District of Kentucky and Assistant United States Attorney Josh Judd has been appointed to serve as the DEO for the Western District of Kentucky. In that capacity they are each responsible for overseeing their Districts’ handling of complaints of election fraud and voting rights abuses in consultation with Justice Department Headquarters in Washington.

“Every citizen has a right to vote without interference or discrimination and to have that vote counted in a fairly conducted election,” stated Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “The Department of Justice will act promptly and aggressively to protect the integrity of the election process.”

“Ensuring free and fair elections depends in large part on the cooperation of the American electorate,” stated David J. Hale, United States Attorney for the Western District of Kentucky. “It is imperative that those who have specific information about discrimination or election fraud make that information available immediately to my Office, the FBI, or the Civil Rights Division of the Justice Department.”

The Department of Justice has an important role in deterring election fraud and discrimination at the polls, and combating these violations whenever and wherever they occur. The Department’s long-standing Election Day Program furthers these goals, and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open on Election Day.

Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input. It also contains special protections for the rights of voters and provides that they can vote free from acts that intimidate or harass them. For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting may violate federal voting rights law. Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice.

In order to respond to complaints of election fraud or voting rights abuses on November 4, 2014, and to ensure that such complaints are directed to the appropriate authorities, AUSA/DEO Josh Judd will be on duty in Louisville while the polls are open. He can be reached by the public at the following telephone number: (502) 625-7049. AUSA/DEO Ken Taylor will be on duty in Lexington, while the polls are open and can be reached by the public at the following telephone numbers: (859) 685-4874 or (859) 321-9488.

In addition, the FBI will have special agents available in each field office and resident agency throughout the country to receive allegations of election fraud and other election abuses on Election Day. The local FBI field offices can be reached by the public at (859) 246-4700 in Lexington and (502) 263-6000 in Louisville.

Complaints about ballot access problems or discrimination can be made directly to the Civil Rights Division’s Voting Section in Washington at 1-800-253-3931 or (202) 307-2767.

COVINGTON, KY -A Louisville man was sentenced today to 156 months in federal prison for possessing crack cocaine in Northern Kentucky with the intent to distribute it.

U.S. District Judge Amul Thapar sentenced 58 year-old Edward L. Adams to 156 months in prison and placed him on supervised release for six years after he completes his prison term.

On December 18, 2013, Adams admitted to possessing almost 20 grams of crack cocaine at a hotel in Boone County with the intent to distribute it.

Adams entered his guilty plea on June 19, 2014. Under federal law, he must serve at least 85 percent of his prison sentence. He is classified as a career offender under federal law because of two prior felony drug trafficking convictions. This classification enhanced his sentence.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Howard S. Marshall, Special Agent in Charge, Federal Bureau of Investigation, jointly made the announcement after the sentencing.

The investigation was conducted by the Federal Bureau of Investigation Safe Streets Task Force and the Northern Kentucky Drug Strike Force. The U.S. Attorney’s Office was represented in the case by Assistant U.S. Attorney Tony Bracke.

LEXINGTON, KY -A former Lexington attorney was sentenced today to 20 years in prison for wire fraud, mail fraud, tax fraud, obstruction of justice, and distribution of synthetic marijuana..

U.S. Senior District Court Judge Joseph M. Hood sentenced 35-year-old Seth J. Johnston and ordered him to serve three years of supervised release following the completion of his prison sentence. Under federal law, Johnston must serve at least 85 percent of his prison sentence. Restitution will be determined at a later date. Johnston pleaded guilty to the charges in October of 2013.

“Mr. Johnston relentlessly pursued a course of criminal conduct that is breathtaking in both its scope and audacity,” said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky. “He seemingly missed no opportunity to defraud those with whom he dealt; often abusing his status as an attorney to do so. The sentence imposed today is just punishment for reprehensible conduct that victimized so many who placed their trust in Mr. Johnston.”

In a related hearing held on September 4th and 5th, 2014, Judge Hood found that Johnston engaged in multiple fraud schemes, resulting in a total loss amount of over $4 million dollars, to more than 250 victims, and that his crimes involved the abuse of a position of trust. In addition, Judge Hood found that Johnston had violated a prior order of the court and had engaged in obstructive conduct, including instructing others in the commission of criminal activity.

Johnston previously admitted that he was responsible for collecting money for plaintiffs in a civil lawsuit, as part of a settlement regarding the diet drug Fen-Phen. Johnston diverted $14,963.15 of the collected money for his personal use. Angela Ford, the Lexington attorney representing the plaintiffs in the lawsuit, hired the law firm where Johnston worked to garnish assets of the defendants in that lawsuit, William Gallion, Shirley Cunningham and Melbourne Mills, Jr. This fraud scheme started in 2008 and continued through 2010.

In addition, Johnston admitted to defrauding Ford when she hired Johnston to establish multiple corporate bank accounts to hold $3.5 million of Ford’s money. Johnston acknowledged that he diverted a significant amount of Ford’s money for his own personal gain, some of which he used to purchase property for other clients. To cover up this scheme, Johnston provided Ford with fraudulent bank documents regarding the status of her money.

Johnston also admitted that in 2010 he perpetrated a scheme to defraud the residual heirs of an Estate for which he provided representation. According to court records, he diverted approximately $1.1 million dollars that should have gone to the residual heirs of the Estate.

Johnston further admitted that, as part of a drug conspiracy, he provided approximately $100,000 to others, to purchase synthetic marijuana to be distributed in Lexington.

Johnston also acknowledged that in 2013, he instructed witnesses, under subpoena to provide records to the grand jury regarding the fraud offenses, to destroy documents so that certain evidence would not be available. Johnston further admitted that, in 2011, he under reported his taxable income to the IRS. Specifically, Johnston reported an income of $26,372 when, in fact, his income was $208,950.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; Howard S. Marshall, Special Agent in Charge, FBI; Christopher Henry, Special Agent in Charge, IRS; James V. Allen, Acting Special Agent in Charge, DEA, and Ronnie Bastin, Chief of the Lexington Division of Police, jointly announced the sentence.

The investigation was conducted by the FBI, IRS, DEA and Lexington Police. Assistant U.S. Attorneys Erin M. Roth and Robert Duncan Jr., prosecuted the case on behalf of the federal government.

LEXINGTON, KY -A Lexington man, previously convicted of receiving and possessing thousands of child pornography videos, has been sentenced to 20 years in prison.

On Monday, U.S. District Judge Joseph M. Hood formally sentenced Erik A. Hentzen, 26, and also ordered him to serve a lifetime of supervised release, following the completion of his sentence. Under federal law, Hentzen will have to serve at least 85 percent of his prison sentence.

The evidence at Hentzen’s trial established that, from May 2012 to March 2013, Hentzen downloaded thousands of videos, which depicted prepubescent children engaged in sexually explicit conduct.

On March 23, 2013, investigators with the Kentucky Attorney General’s Office executed a search warrant and seized multiple computers belonging to Hentzen; the computers contained more than 4,000 videos depicting child pornography.

The investigation started when authorities discovered that Hentzen had stolen the internet signal of a neighbor in his apartment complex. Authorities later located numerous child pornography videos that had been made available for download over the internet. Investigators then traced the location of the computer to Hentzen’s apartment in downtown Lexington.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Jack Conway, Kentucky Attorney General; and Gary T. Hartwig, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), jointly announced the sentence.

The investigation was conducted by the Office of the Attorney General’s Cyber Crimes Unit and HSI. The Fort Mitchell Branch of the U.S. Attorney’s Office prosecuted the case on behalf of the federal government.

Defendant is the last of 11 conspiracy members to be sentenced

PIKEVILLE, KY - A federal Judge has sentenced a former Pikeville pharmacy manager to 72 months in prison for her role in a conspiracy to illegally dispense thousands of prescription pills.

On Tuesday, U.S. District Judge Amul Thapar sentenced 60-year-old Beverly Lockhart, who worked at multiple Pikeville Pharmacies, for conspiracy to distribute Oxycodone. Under federal law, Lockhart must serve at least 85 percent of her prison sentence.

According to evidence presented at her trial earlier this year, Lockhart conspired with several co-defendants, from June 2006 to July 2011, to illegally dispense prescription drugs to Eastern Kentuckians. Lockhart’s co-defendants include two doctors, the corporation which owns the pharmacy where Lockhart worked, another pharmacy employee and six street-level dealers who obtained their pills from the pharmacies where Lockhart was employed. Dr. Linda Roos, who practiced medicine in Houston, Texas was sentenced to 72 months in December 2013 for her role and has permanently surrendered her license to practice medicine. All 11 defendants have been sentenced.

The investigation was conducted by the U.S. Food and Drug Administration, Office of Criminal Investigations; the Federal Bureau of Investigation; the Kentucky Board of Pharmacy; the Kentucky Office of Inspector General; Kentucky State Police and the Pikeville Police Department.

Assistant U.S. Attorney Lee Gentry prosecuted this case on behalf of the federal government.

COVINGTON, KY - A Covington, Ky., man, who has previously admitted in federal court that he sold heroin that resulted in the death of one of his customers, was sentenced today to 20 years in prison.

U.S. District Judge David L. Bunning sentenced 29 year-old Timothy Tingle-Brown for distributing heroin that resulted in death. Under federal law, Tingle-Brown must serve at least 85 percent of his prison sentence and will be on supervised release for three years following the completion of his prison term.

Tingle-Brown admitted to selling heroin to a man at an apartment in Taylor Mill, Ky., on April 20, 2013. The man subsequently died from an overdose from the heroin that Tingle-Brown had sold to him.

In June of this year, Tingle-Brown pleaded guilty to the charge shortly after the start of his trial. He was indicted in September 2013.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and James V. Allen, Acting Special Agent in Charge, Detroit Field Division, Drug Enforcement Administration, jointly announced the sentence.

The investigation was conducted by the Cincinnati Resident Office of the Drug Enforcement Administration, the Taylor Mill Police Department, and the office of the Kenton County Commonwealth Attorney. Assistant U.S. Attorney Tony Bracke represented the federal government in this matter.

LEXINGTON, KY -A former doctor in Paintsville, Ky., was sentenced to 48 months in prison on Thursday, for his role in a conspiracy that was responsible for illegally distributing more than 25,000 prescription pills in Eastern Kentucky.

U.S. District Judge Amul Thapar sentenced Rano Bofill, 72, for conspiracy to unlawfully dispense Oxycodone. Judge Thapar also ordered that Bofill pay $15,000 in community restitution to the Commonwealth of Kentucky. Under federal law, Bofill will have to serve at least 85 percent of his prison sentence.

According to court documents, from January 2009 until December 2012, Bofill conspired with Tammy Cantrell and Shelby Lackey, owners of Care More Pain Management, LLC, located in Johnson County, to distribute thousands of Oxycodone pills to patients without a legitimate medical purpose.

Bofill acknowledged that he wrote prescriptions for numerous patients after performing little to no examination and, in some instances, he even signed off on prescriptions without actually ever seeing the patients. Patients who visited the clinic paid $200 for the initial visit and $185 for subsequent visits; all fees were paid in cash. Bofill admitted he saw approximately 25 patients per day and was paid between $5,000 and $6,000 per week.

For their part in the conspiracy, Lackey and Cantrell received sentences of 97 and 108 months respectively. At the time of their guilty pleas, in April 2013, Cantrell and Lackey were the first pain clinic owners in the Eastern District of Kentucky to have federal convictions for illegally distributing prescription drugs. Another doctor at the clinic, Richard Albert, pleaded guilty to a conspiracy charge in July 2012; he was sentenced to 75 months in prison. Albert, Cantrell, and Lackey have collectively agreed to forfeit approximately $, 128,206 as proceeds of the conspiracy.

The investigation into this case started when detectives with the Kentucky Attorney General’s Office received complaints, from local law enforcement, that Care More was seeing a remarkably high volume of patients. Court records state that patient lines at Care More stretched into the parking lot.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; James V. Allen, Acting Special Agent in Charge, DEA; and Jack Conway, Kentucky Attorney General, jointly announced today’s plea.

The investigation was conducted by the Kentucky Attorney General’s Office, the DEA, and the Paintsville Police Department. Assistant U.S. Attorney Roger West prosecuted this case on behalf of the federal government.

The Pharmacies and Treatment Programs will no longer have authority to dispense prescription drugs

PIKEVILLE, KY -Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and James V. Allen, Acting Special Agent in Charge, Drug Enforcement Administration (DEA), jointly announced today that the federal government has reached settlements, worth more than a million dollars, with multiple Eastern Kentucky treatment programs and two pharmacies, to settle allegations that they failed to maintain accurate records of their controlled substances.

“The regulatory scheme governing the handling of controlled substances is designed to insure that these powerful drugs are used only for appropriate medical purposes,” said U.S. Attorney Harvey. “These vital safeguards are compromised and our communities are put at greater risk when medical professionals entrusted to prescribe or dispense these drugs do not meet their obligations under the Controlled Substances Act. The substantial penalties paid in these cases are consistent with the importance of strict compliance with the Controlled Substances Act by all DEA registrants.”

The Perry County Treatment Center, LLC; Pike County Treatment Center, LLC; and Paintsville Professional Associates, LLC, and one of its doctors, agreed to pay a total of $525,000 to settle claims that they violated the Controlled Substance Act. This is believed to be the largest penalty ever obtained by the U.S. Attorney’s Office in the Eastern District of Kentucky, in a civil case involving methadone treatment programs. Additionally, MedZone Pharmacy and Neighborhood Pharmacy, both in Prestonsburg, Ky., each agreed to pay $250,000 for similar violations. The facilities involved in the settlements surrendered their DEA registration number and will no longer have the authority to possess or dispense controlled substances.

The government contended that a DEA audit of the treatment programs and pharmacies revealed shortages and overages of prescription drugs and incomplete and inaccurate records. DEA agents found the facilities had improperly documented the type of drug, the dosage strength, the name of drugs, or the amount of the drugs they were dispensing. The investigations were initiated by the DEA’s London, Ky., office, after it had monitored drug sales data reported by distributors and wholesalers.

Under federal law, the DEA supplies medical professionals with a registration number that authorize them to possess, prescribe and dispense certain controlled substances, such as Methadone, Oxycodone, Hydrocodone, Lortab and others. The DEA also has the authority to perform audits and inspections to ensure that clinics, pharmacies and treatment programs properly document drug transactions, including the amount of controlled substances dispensed, discarded, and received.

Assistant U.S. Attorney Andrew Sparks litigated this case on behalf of the federal government.

COVINGTON, KY - A Lakeside Park man has been sentenced to 78 months in federal prison, for selling crack cocaine and possessing a firearm in furtherance of drug trafficking.

U.S. District Judge Amul Thapar sentenced 56 year-old Michael Robinson to 78 months in prison and placed him on supervised release for 10 years after he completes his prison term.

Robinson admitted to distributing crack cocaine in Kenton and Campbell Counties in 2012 and 2013. He also possessed crack cocaine and a loaded firearm at the time of his arrest, on November 12, 2013. Robinson acknowledged that he intended to sell the crack cocaine and that he possessed the firearm to assist him in his drug trafficking.

Robinson was previously convicted of selling cocaine in Kenton County in 2004 and had received a prison term of five years for that offense.

.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 announced the sentence.

Robinson entered his guilty plea on April 9, 2014. Under federal law, Robinson must serve at least 85 percent of his prison sentence.

The investigation was conducted by the Bureau of Alcohol, Tobacco, Firearms, & Explosives, the Covington Police Department, and the Campbell County Drug Task Force. The U.S. Attorney’s Office was represented in the case by Assistant U.S. Attorney Tony Bracke.

LEXINGTON, KY - Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; James V. Allen, Acting Special Agent in Charge, DEA; and Jack Conway, Kentucky Attorney General, jointly announced today that two Eastern Kentucky pain clinic owners, who had previously admitted to conspiring with doctors to illegally dispense more than 50,000 prescription pills, were sentenced to federal prison.

U.S. District Judge Amul Thapar sentenced Tammy Cantrell, 41, of Oil Springs, Ky., to 108 months and Shelby Lackey, 52, of Williamsport, Ky., to 97 months, for conspiracy to distribute and unlawfully dispense Oxycodone and maintaining a drug involved premise. In total, Cantrell, Lackey and one of their co-defendants have forfeited $1,128,206, as proceeds of the conspiracy.

At the time of their guilty plea, in April 2013, Cantrell and Lackey were the first pain clinic owners in the Eastern District of Kentucky (district includes 67 counties) to have federal convictions for such charges.

According to the plea agreements, the defendants owned and operated Care More Pain Management, LLC, located in Paintsville, Ky. From 2008 until approximately February 2012, the defendants conspired with two doctors to dispense Oxycodone to Eastern Kentuckians without a legitimate medical purpose.

Specifically, Court records state that the doctors performed little or no physical examination before writing prescriptions that were usually for 90 Percocet pills. Patients paid $200 for the initial visit and $185 for subsequent visits; all fees were paid in cash. One of the doctors has admitted that he saw between 40 and 50 patients in one day. In many instances, the doctors wrote prescriptions without seeing patients or signed blank prescriptions for office assistants to give to patients.

Cantrell and Lackey paid the doctors as much as $8,500 a week. The clinic did not accept insurance and the doctors made no referrals for physical rehabilitation. Neither Cantrell nor Lackey are medically certified and neither has any nursing experience.

In June 2013, Dr. Richard Albert was sentenced to 75 months in federal prison for his role in the conspiracy. Another doctor, Rano Bofill, pleaded guilty to a conspiracy charge earlier this year and is awaiting sentencing.

The investigation was conducted by the DEA and the Kentucky Attorney General’s Office. Assistant U.S. Attorney Roger West prosecuted this case on behalf of the federal government.

FRANKFORT, KY - A Scarsdale, New York man, who was convicted of wire fraud relating to a Ponzi scheme, was sentenced to 120 months in prison yesterday. U.S. District Court Judge Gregory F. VanTatenhove sentenced Eilat Lev, 65, on his conviction.

Lev previously admitted that he defrauded investors, of approximately $33,000,000, during a scheme he executed from 2005 through 2008. According to the plea agreement, Lev admitted that he owned a business called International Tractor Company, Inc. (ITC), located in Ardsley, New York. He was in the business of buying and selling heavy construction equipment, domestically and internationally. Lev relied, in part, on other individuals to finance the purchase of the equipment, with the agreement that he would arrange for the sale of the equipment and would return the amount invested, pay interest on the amount invested, and share the profit made on any sale with the individuals who provided the financing.

In 2002, an investor accepted an ongoing business proposition from Lev, where the investor would finance the purchase of specific items of equipment on the global market. Lev had identified the equipment for sale and had typically secured a willing buyer. For each transaction, the investor would receive paper work from Lev identifying the equipment, the amount required to purchase it, and confirmation of the sale price, which had been negotiated and agreed upon by the ultimate purchaser. Upon receiving this documentation, the investor would arrange for the transfer of money from his bank account to an account utilized by ITC, in New York. Under the terms of the agreement, Lev would complete the transaction and would return the investment, the agreed interest and, the share of the profit to the investor, within an agreed upon time frame.

In 2005, the investor opened a line of credit with First Southern National Bank located in Pulaski County, Kentucky. He used this line of credit to continue to finance transactions with Lev and his company. In order to draw from the line of credit, Lev was required to submit the same itemized documentation to the bank, which would then transfer funds, by wire, from the investor’s line of credit to Lev’s account at Gotham Bank of New York.

Lev admitted that he perpetrated a scheme to defraud this investor, and others, by soliciting millions of dollars under false pretenses, failing to invest the investors’ funds as promised, and misappropriating investors’ funds without the knowledge or authorization of the investors. In furtherance of the scheme, rather than purchasing and selling specific items of equipment and returning the investment, interest, and profit to them, Lev ran a scheme by which he falsified purchase and sales documents and diverted new investor funds to pay prior investors their principal, interest and/or profits on prior transactions, thereby creating the impression among investors that the business was successful, which enticed them to invest more money. By the end of 2008, Lev was without funds to pay his investors their principal, interest, and/or profit, causing these individuals to lose approximately $33,700,000.

Lev plead guilty in October of 2013.

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

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

The investigation was conducted by the Federal Bureau of Investigation. The U.S. Attorney’s Office was represented by Assistant U.S. Attorney Laura K. Voorhees.

LONDON, KY - A Pulaski County man, who has previously admitted to distributing heroin that resulted in the death of another individual, was sentenced to 20 years in prison.

U.S. District Judge Amul Thapar sentenced 30 year-old Anthony Lacortiglia for distribution of heroin resulting in death and conspiracy to distribute heroin. Following the completion of his prison term, Lacortiglia will be under the supervision of the U.S. Probation Office for 20 years. Under federal law, Lacortiglia must serve at least 85 percent of his prison sentence.

In August 2013, following the first day of trial, Lacortiglia pled guilty to the offenses. Lacortiglia admitted that on May 4, 2012, he distributed heroin to John Latham at Latham’s Pulaski County residence. A short time later, Latham died as result of injecting the heroin provided to him by Lacortiglia. Lacortiglia also admitted to conspiring with others to distribute heroin within Pulaski County.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; Bryan B. Underwood, Acting Special Agent in Charge, FBI; Rodney Brewer, Kentucky State Police Commissioner; Robbie Clark, Director of the Lake Cumberland Area Drug Task Force and Todd Wood, Pulaski County Sheriff, jointly announced the sentence.

The investigation was conducted by Kentucky State Police, the Pulaski County Sheriff’s Office, and the Lake Cumberland Area Drug Task Force, and various agents of the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Jason Parman.

COVINGTON, KY - A Boone County man, who previously admitted that he created multiple videos of minors engaged in sexually explicit conduct, was sentenced today to 35 years in prison.

U.S. District Judge David L. Bunning sentenced Michael Schweitzer, 47, for producing and possessing child pornography. Under federal law, Schweitzer will have to serve at least 85 percent of his prison sentence.

According to court documents, in November 2012, Schweitzer provided a drug to a minor and then recorded himself sexually assaulting the minor, while the minor was under the influence.

During the investigation, authorities seized Schweitzer’s cell phone and discovered more videos that Schweitzer had recorded, which also involved minors engaged in sexually explicit conduct.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Gary J. Hartwig, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI),and Michael Helmig, Boone County Sheriff, jointly made the announcement.

The investigation was conducted by the Boone County Sheriff’s Office and HSI. The Ft. Mitchell Branch of the U.S. Attorney’s Office prosecuted this case on behalf of the federal government.

LEXINGTON, KY - An Eastern European man has admitted his involvement in an international internet fraud ring that defrauded hundreds of purchasers of motor vehicles across the U.S.

Petrica Octavian Stoian, 27, who was extradited from Hungary to the U.S. in June 2013, pleaded guilty in federal court on Monday to one count of conspiring to commit wire fraud.

As part of the scheme, the conspirators used websites, such as eBay.com and Autotrader.com to offer non-existent vehicles for sale. Members of the conspiracy negotiated with victims via telephone and e-mail and instructed them to electronically transfer the purchase funds using Western Union, MoneyGram, or bank wire transfers. The funds were first received by conspiracy members in the U.S. and then resent to co-conspirators abroad.

During his plea in federal court, Stoian admitted his involvement in the conspiracy. Specifically, Stoian acknowledged that he used numerous fraudulent identities to open bank accounts in Europe, which were used to receive funds from the U.S.

Eight other members of the conspiracy have already pleaded guilty and seven are currently awaiting sentencing. Stoian is scheduled to be sentenced on September 22, 2014 before U.S. District Judge Joseph M. Hood. He faces up to 20 years in prison and a $250,000 fine. However, the Court must consider the U.S. Sentencing Guidelines and applicable federal statutes before imposing a sentence.

This investigation was conducted by special agents with the U.S. Secret Service, Lexington Resident Office, in coordination with international law enforcement agencies.

Assistant U.S. Attorneys Erin Roth and Jordi de Llano prosecuted this case on behalf of the federal government.

FRANKFORT, KY - The owner of a children’s fun and gaming center in Danville, Ky., has been sentenced to 10 years in prison for defrauding investors in his business.

U.S. District Judge Gregory Van Tatenhove sentenced 50-year-old Paul Christopher Turner on Monday, for aggravated identity theft and wire fraud. Under federal law, Turner will have to serve at least 85 percent of his prison sentence.

According to court documents, Turner used the personal identifying information of some investors without their permission and forged signatures of a notary public, in order to obtain loans and open lines of credit for his business.

Turner previously pled guilty to an indictment that alleged from approximately 2004 through 2013 he raised millions of dollars from investors to promote his company. Turner improperly lured some of that money from investors through misrepresentations and falsehoods about how the investors’ money would be used. Turner then applied some of the funds toward his own living expenses.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; Dugan Wong, Inspector in Charge, United States Postal Inspection Service, Pittsburgh Division; and Rodney Brewer, Commissioner, Kentucky State Police jointly made the announcement today.

The investigation was conducted by the United States Postal Inspection Service and the Kentucky State Police. The case was prosecuted by Assistant U.S. Attorney Kenneth R. Taylor.

COVINGTON, KY -A Covington, Ky., man admitted in federal court today that he sold heroin that resulted in the death of one of his customers.

Timothy Tingle-Brown, 29, pled guilty today before U.S. District Judge David L. Bunning to distributing heroin that resulted in death.

“This case exemplifies the commitment of our office and our law enforcement partners to the fight against heroin trafficking,” said Kerry B. Harvey, U.S. Attorney in the Eastern District of Kentucky. “Tingle-Brown faces at least twenty years in prison because he chose to sell heroin, a decision with deadly consequences in this case. Others who are tempted to engage in this destructive behavior should take heed of the price to be paid.”

Tingle-Brown admitted to selling heroin to a man at an apartment in Taylor Mill, Ky., on April 20, 2013. The man subsequently died from an overdose from the heroin that Tingle-Brown had sold to him.

A federal grand jury in Covington returned an indictment on September 12, 2013 charging Tingle-Brown with distribution of heroin resulting in death. The trial started on June 20, 2014 and a jury was selected, but Tingle-Brown entered a guilty plea this morning before the trial was scheduled to continue.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and James V. Allen, Acting Special Agent in Charge, Detroit Field Division, Drug Enforcement Administration, jointly announced the guilty plea.

The investigation was conducted by the Cincinnati Resident Office of the Drug Enforcement Administration, the Taylor Mill Police Department, and the office of the Kenton County Commonwealth Attorney. Assistant U.S. Attorney Tony Bracke represents the federal government in this matter.

Tingle-Brown is scheduled to be sentenced on September 30, 2014. He faces a minimum of 20 years in prison and a maximum of life. He also faces a maximum fine of $1,000,000.00 and at least three years of supervised release. However, any sentence will be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statutes.

Defendant possessed 4,000 videos of child pornography

LEXINGTON, KY - A federal jury has found a Lexington man guilty of receiving and possessing thousands of child pornography images.

On Wednesday night, following three days of trial and four hours of deliberation, the jury convicted Erik A. Hentzen, 26, of the charges.

The evidence at trial established that, from May 2012 to March 2013, Hentzen downloaded thousands of videos, which depicted prepubescent children engaged in sexually explicit conduct.

On March 23, 2013, investigators with the Kentucky Attorney General’s Office executed a search warrant and seized multiple computers belonging to Hentzen; the computers contained more than 4,000 videos depicting child pornography.

The investigation began when authorities discovered that numerous child pornography videos had been made available for download over the internet. Investigators then traced the location of the computer to Hentzen’s apartment in downtown Lexington.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Jack Conway, Kentucky Attorney General; and Gary J. Hartwig, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), jointly announced the conviction.

The investigation was conducted by the Office of the Attorney General’s Cyber Crimes Unit and HSI. The Fort Mitchell Branch of the U.S. Attorney’s Office prosecuted the case on behalf of the federal government.

Hentzen is scheduled to be sentenced on September 15, 2014. Each of the charges he was convicted of carries a maximum term of 20 years in prison. However, the Court must consider the U.S. Sentencing Guidelines and the federal statutes before imposing the sentence.

LEXINGTON, KY - Hematology and Oncology Center PLLC (HOC) in Somerset, Ky., pled guilty in federal court on Tuesday to charges of knowingly receiving a misbranded cancer treatment drug.

HOC’s former office manager, Natarajan Murugesan, also pled guilty; he admitted to aiding and abetting in the introduction of an unapproved oncology drug into interstate commerce. HOC and Murugesan’s offenses qualify as misdemeanors under the Food, Drug, and Cosmetic Act. The criminal charges stem from a 2014 civil settlement in which HOC, Murugesan, and Dr. N Mullai agreed to pay $2 million, plus interest, to resolve allegations that they violated the False Claims Act by submitting false claims to the Medicare program for misbranded and unapproved chemotherapy drugs that were administered through HOC’s Somerset clinic.

“The Food, Drug and Cosmetic Act establishes a ‘closed’ system of drug manufacturing and distribution to protect the safety of drugs used in the United States,” said U.S. Attorney Kerry Harvey. “Efforts to bypass this system with non-FDA approved foreign source drugs put patients at risk of receiving counterfeit, contaminated, or ineffective medications. The government will continue to prosecute such efforts – particularly when motivated by profit – to minimize the chances of patients receiving unsafe medications, and to ensure that the Medicare program does not pay for unapproved drugs.”

The defendants admitted that, between January 2010 and July 2011, HOC purchased substantial amounts of chemotherapy drugs and other cancer treatment drugs from a foreign distributor in Canada, which was operating under the name Quality Specialty Products (“QSP”). These drugs were sourced from foreign locations including: Turkey, India, the European Union, the United Kingdom, or other unidentified international locations. Often, the drugs arrived at HOC with labeling and dosage instructions in foreign languages. Some of the QSP drugs were distributed with labeling that wasn’t approved by the United States Food and Drug Administration (FDA), and therefore were misbranded. Also, many of these QSP drugs were not the version of the international oncology drug approved by the FDA for distribution within the United States.

Murugesan was responsible for ordering the drugs from QSP. He and HOC purchased the foreign QSP drugs for prices substantially below what drugs from FDA-approved manufacturers and distributors cost. Mullai administered the QSP drugs to her patients, and HOC submitted claims for reimbursement to Medicare, which typically does not cover misbranded or unapproved drugs by the FDA.

The parallel civil and criminal investigation was conducted by the FDA, Office of Criminal Investigation (FDA-OCI), and the plea agreements and settlement resulted from joint efforts of FDA-OCI, the Department of Health and Human Services, Office of Inspector General (HHS-OIG), and the U.S. Attorney’s Office.

HOC and Murugesan are scheduled to be sentenced on October 3, 2014. HOC faces up to five years of probation and a maximum fine of $200,000. Murugesan faces up to one year in prison and a maximum fine of $100,000. However, any sentence will be imposed by the Court after consideration of the U.S. Sentencing Guidelines and other federal statutes.

ASHLAND, KY -An inmate at the Federal Correctional Institute (FCI) in Ashland, Ky., has been sentenced to 60 months in prison for conspiring with a correctional officer and others to smuggle prohibited items into the prison.

On Monday, June 9, U.S. District Judge David L. Bunning sentenced 33-year-old Gary Musick, of Newport, Tenn., for conspiracy to introduce contraband into a correctional facility and possession of contraband. The sentence will run consecutivly to the 235 month sentence that Musick is currently serving for other criminal convictions.

Musick was convicted of the contraband charges, by a jury, in March 2014. According to testimony at trial, Musick’s co-defendant and former girlfriend, Cindy Gates, and other female associates of Musick, routinely visited the FCI and delivered prohibited items, such as tobacco, marijuana, and nude photographs, to correctional officer James Lewis. Lewis subsequently provided the items to Musick, in exchange for payment from Gates and others.

The evidence at trial established that Musick also sold the prohibited items to other inmates. In some instances, he directed inmates to have money sent to an address outside of the institution as payment. The conspiracy lasted from December 2010 until February 2012.

Lewis and Gates have previously been convicted and sentenced for their roles. Lewis was sentenced to 15 months in prison and Gates received probation.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and John F. Oleskowicz, Special Agent in Charge, Department of Justice Office of the Inspector General, Chicago Field Office, jointly announced the sentence.

The investigation was conducted by the Department of Justice Office of the Inspector General. Assistant U.S. Attorneys Edwin J. Walbourn, III and Wade T. Napier prosecuted this case on behalf of the federal government.

LEXINGTON Two former part owners of four Subway restaurants in Lexington admitted they employed unauthorized aliens and intentionally failed to pay them lawful wages.

 Amrutlal Patel, 46, pleaded guilty to harboring unauthorized aliens, and his wife Dakshaben Patel, 46, pleaded guilty to evading employment taxes.  Both defendants also pleaded guilty to failure to pay employees overtime hours.

According to court documents, from April 2012 until November 2013, Amrutlal Patel used his residence to harbor four unauthorized aliens, who were employed at the Subway restaurants.  These employees worked as many as 80 hours a week, but the Patels paid them below minimum wage and didn’t compensate them for overtime hours.  Federal law requires employers to pay employees a minimum wage of $7.25 an hour and one and one-half times that rate for hours worked that exceed 40 in a week.

 Dakshaben Patel acknowledged that she omitted unauthorized aliens from the payroll in order to evade taxes.  According to the plea agreement, the couple must pay between $9,000 and $9,900 in payroll taxes, a $65,000 money judgment which is in lieu of a real estate forfeiture to the government, and $40,000 in restitution to the improperly compensated employees. 

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky and Gary T. Hartwig, Special Agent in Charge, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), Ronnie Bastin, Chief, Lexington Division of Police and Christopher A. Henry, Special Agent in Charge, IRS, Criminal Investigation Division, jointly announced the plea.

Assistant U.S. Attorneys Hydee Hawkins and David Marye, and Civil Rights Attorney, Benjamin Hawk, prosecuted this case on behalf of the federal government.

The Patels will be sentenced on September 4, 2014. Amrutlal Patel faces a maximum of ten years in prison and a Dakshaben Patel faces a maximum of five years.  However, any sentence imposed by the Court would come after consideration of the U.S. Sentencing Guidelines and the federal statutes governing the imposition of sentences.

Defendant is last of 38 defendants to be sentenced

COVINGTON – The final member of a large prescription drug ring that illegally distributed approximately 80,000 prescription pills in Northern Kentucky and Southern Ohio, was sentenced to 151 months in federal prison.  

U.S. District Judge Amul Thapar sentenced 34 year-old Nick Sandlin, of Cincinnati, on Thursday and placed him on lifetime supervised release.  Sandlin must serve at least 85 percent of his prison sentence.  Sandlin is the last of 38 defendants involved in this conspiracy to be sentenced.

According to court records, from December of 2011 through February of 2013, Sandlin admitted to conspiring with others to distribute oxycodone.  Specifically, Sandlin organized trips to pain clinics in Florida, where several of his co-defendants obtained prescriptions for large quantities of oxycodone.  The group then typically traveled to various locations in Florida, Pennsylvania, Missouri, and Kansas to fill the prescriptions.  Sandlin and others paid medical and travel expenses in exchange for the bulk of the oxycodone pills prescribed to each patient.  Sandlin made approximately 13 trips to Florida to obtain oxycodone and admitted to distributing over 5,000 tablets.  Sandlin  acknowledged that he took part in a smaller conspiracy to distribute marijuana during this time as well. 

This was the final sentencing in a prosecution that resulted from an Organized Crime Drug Enforcement Task Force (OCDETF) investigation, termed Operation Family Vacation. 

All 38 members of the conspiracy have been convicted and sentenced.  The ringleaders of the group, Damon and John Helton, received sentences of 360 and 270 months in prison, respectively, for engaging in a continuing criminal enterprise.  Sentences for other members of the conspiracy ranged from 168 months to 30 months.  Several members of the conspiracy were also convicted of money laundering.  The average sentence was over 96 months.  This investigation resulted in the forfeiture of five motor vehicles, 25 firearms, 12 pieces of real estate, and approximately $110,000.00 in currency.  

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, James V. Allen, Acting Special Agent in Charge, Detroit Field Division, Drug Enforcement Administration, and Kathy A. Enstrom, Special Agent in Charge, Cincinnati Field Office, Internal Revenue Service - Criminal Investigation, jointly announced the sentence.

The investigation was conducted by the Drug Enforcement Administration, the Internal Revenue Service, the Northern Kentucky Drug Strike Force, the Covington Police Department, and the Norwood Police Department.  The U.S. Attorney’s Office was represented in the case by Assistant U.S. Attorneys Tony Bracke and Wade Napier.

Defendant is last of 38 defendants to be sentenced

COVINGTON, KY -The final member of a large prescription drug ring that illegally distributed approximately 80,000 prescription pills in Northern Kentucky and Southern Ohio, was sentenced to 151 months in federal prison.

U.S. District Judge Amul Thapar sentenced 34 year-old Nick Sandlin, of Cincinnati, on Thursday and placed him on lifetime supervised release. Sandlin must serve at least 85 percent of his prison sentence. Sandlin is the last of 38 defendants involved in this conspiracy to be sentenced.

According to court records, from December of 2011 through February of 2013, Sandlin admitted to conspiring with others to distribute oxycodone. Specifically, Sandlin organized trips to pain clinics in Florida, where several of his co-defendants obtained prescriptions for large quantities of oxycodone. The group then typically traveled to various locations in Florida, Pennsylvania, Missouri, and Kansas to fill the prescriptions. Sandlin and others paid medical and travel expenses in exchange for the bulk of the oxycodone pills prescribed to each patient. Sandlin made approximately 13 trips to Florida to obtain oxycodone and admitted to distributing over 5,000 tablets. Sandlin acknowledged that he took part in a smaller conspiracy to distribute marijuana during this time as well.

This was the final sentencing in a prosecution that resulted from an Organized Crime Drug Enforcement Task Force (OCDETF) investigation, termed Operation Family Vacation.

All 38 members of the conspiracy have been convicted and sentenced. The ringleaders of the group, Damon and John Helton, received sentences of 360 and 270 months in prison, respectively, for engaging in a continuing criminal enterprise. Sentences for other members of the conspiracy ranged from 168 months to 30 months. Several members of the conspiracy were also convicted of money laundering. The average sentence was over 96 months. This investigation resulted in the forfeiture of five motor vehicles, 25 firearms, 12 pieces of real estate, and approximately $110,000.00 in currency.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, James V. Allen, Acting Special Agent in Charge, Detroit Field Division, Drug Enforcement Administration, and Kathy A. Enstrom, Special Agent in Charge, Cincinnati Field Office, Internal Revenue Service - Criminal Investigation, jointly announced the sentence.

The investigation was conducted by the Drug Enforcement Administration, the Internal Revenue Service, the Northern Kentucky Drug Strike Force, the Covington Police Department, and the Norwood Police Department. The U.S. Attorney’s Office was represented in the case by Assistant U.S. Attorneys Tony Bracke and Wade Napier.

Settlements Valued At More Than $75 Million Completed In the First Half of 2014

LEXINGTON The U.S. Attorney’s Office’s concerted efforts to combat Medicare and Medicaid fraud and recover wrongfully obtained taxpayer dollars, are bearing fruit as evidenced by recent civil settlements totaling more than $75 million.  The settlements – highlighted by today’s $40.9 million dollar deal with King’s Daughters Medical Center in Ashland, Kentucky – result from a reorganization of investigative and prosecutorial resources within the U.S. Attorney’s Office to focus on health care fraud.

“Health care fraud has been a Department of Justice priority for several years, and our office has made it a priority as well,” said U.S. Attorney Kerry B. Harvey.  “There is a tremendous amount of taxpayer money in federal health care programs like Medicare and Medicaid being spent in the Eastern District of Kentucky.  Where there are signs that health care providers have obtained taxpayer dollars through fraud or other forms of abuse, it is our responsibility to investigate those allegations and recover those funds to the fullest extent allowed by the evidence and the law.”

The Eastern District of Kentucky covers 67 counties in the eastern half of the state, and US. Attorney Harvey leads the U.S Attorney’s Office, which has responsibility for enforcing federal laws in that part of the state. 

In late 2010, U.S. Attorney Harvey reorganized the U.S. Attorney’s Office to create a fraud unit that focuses in part on fighting civil fraud, particularly health care fraud.  The attorneys and other personnel assigned to the group – including a paralegal, auditor, and investigator – work closely with law enforcement agencies such as FBI and Health and Human Services (HHS) and with state level counterparts at the Kentucky Office of the Attorney General to investigate health care fraud allegations.  Where appropriate, criminal and civil health care fraud investigations are conducted simultaneously. 

“These cases are large and complex from both a legal and factual standpoint,” said Andrew Sparks, Chief of the Fraud Unit.  “They have taken time to investigate, but those efforts are paying off.”

U.S. Attorney Harvey observed that several of the cases resolved this year involved allegations of medically unnecessary procedures and other unsafe medical practices, which can pose serious health risks.  

“These cases are not just about dollars and cents; they are also about patient safety and quality medical care,” said U.S. Attorney Harvey.  “Where appropriate, this office can and will use federal laws and resources to hold accountable those health care providers that put their bottom line above their patients’ interests.” 

Each of the 2014 settlements resolves allegations that health care providers violated the False Claims Act by submitting false or fraudulent claims to Medicare or Medicaid.  That federal statute allows the government to recover up to three times the amount of monetary loss caused by the fraudulent conduct.  Several of the settlements included a separate Corporate Integrity Agreement between the defendant and HHS, which allows for greater government oversight of the health care provider’s quality of service, billing, and compliance practices.

Harvey emphasized the ongoing nature of the Department’s health care fraud efforts and the importance of public awareness of potential fraud. 

“We are not resting on our laurels with these settlements, and have added additional resources to our health care fraud group over the last few months,” said Harvey.   “However, we can only investigate what we know about, and I would encourage those members of the public who are aware of potential fraud to report it through appropriate channels, whether at their workplace, through the HHS fraud hotline, or at our office.” 

Below is a list of some of the significant civil health care fraud settlements in 2014.

U.S. vs. Saint Joseph London Hospital:   The hospital agreed to pay the federal government $16.5 million to settle allegations that it billed Medicare and Medicaid for highly invasive and medically unnecessary cardiac procedures.

U.S. vs. Mullali:  A Somerset, Ky., oncology center agreed to pay the government $2 million to settle allegations that the oncology practice had purchased cheap, foreign chemotherapy drugs that were not approved by the FDA.  The drugs were used on patients, and then the oncology center billed the services to Medicare as if the drugs were the FDA-approved versions.

U.S. vs. PremierTox:  A chain of opiate addiction recovery centers, and a clinical laboratory along with two physician owners agreed to pay the government $15.75 million to settle allegations that they fraudulently billed federal health care programs for urine tests that were unnecessary and excessive.

U.S. vs. King’s Daughters: The Ashland Hospital agreed to pay $40.9 million, plus interest, to settle allegations that it had billed Medicare and Medicaid for invasive and medically unnecessary heart procedures as well as allegations of significant Stark Law violations.

This Represents the Largest Federal Health Care Fraud Settlement involving a Hospital in the History of the Eastern District of Kentucky

ASHLAND King’s Daughters Medical Center (KDMC) in Ashland, Ky., has agreed to pay the U.S. Government $40.9 million to resolve civil allegations that it made millions of dollars by falsely billing federal health care programs for  heart procedures that were performed on patients who didn’t medically need them.

“The conduct alleged in this matter is unacceptable, victimizing both taxpayers and patients,” said U.S. Attorney for the Eastern District of Kentucky Kerry B. Harvey. “Treatment decisions motivated by financial gain undermine public confidence in our health care system and threaten vital federal programs upon which so many of our citizens rely.  We will not relent in our efforts to protect the public from the sort of systematic misconduct alleged in this case.”

The government alleged that, between 2006 and 2011, KDMC maximized reimbursements from Medicare and Kentucky Medicaid by billing for numerous unnecessary coronary stents and diagnostic catheterizations performed by KDMC physicians.  The government also alleged that the physicians falsified medical records in order to justify these unnecessary procedures, which allegedly generated millions of dollars in fraudulent reimbursements for KDMC.  This alleged conduct violated the False Claims Act because under federal law, federal health care programs like Medicare only reimburse providers for procedures that are deemed medically necessary.

To the knowledge of the U.S. Attorney’s Office, this case marks the largest settlement involving a hospital in the history of the Eastern District of Kentucky (District consists of 67 counties).  The settlement amount roughly doubles the amount of money KDMC received as a result of the alleged fraudulent billing for the unnecessary services.

“Hospitals that place their financial interests above the well-being of their patients will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “The Department of Justice will not tolerate those who abuse federal health care programs and put the beneficiaries of these programs at risk by providing medically unnecessary care.”

The settlement also resolves allegations that KDMC violated the Stark Law by engaging in improper financial relationships with certain physicians.  The government contended that KDMC paid some cardiologists salaries that were unreasonably high and in excess of fair market value.  The government further contended that the cardiologists receiving these unreasonably high salaries referred their patients to KDMC for various health services.  The Stark Law is designed to limit the influence of money on physicians’ medical decisions by prohibiting financial relationships between hospitals and referring physicians, unless these relationships meet certain designated exceptions.

In connection with this settlement, KDMC 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 the hospital 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 five years.

“Medically unnecessary procedures can cause very serious health issues, wastes millions in tax payer dollars each year and undercuts the public’s trust in the medical professionalism the Medicare Trust Fund,” said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services Office of Inspector General in the region covering Kentucky.  “The OIG will continue to protect beneficiaries and hold health care providers accountable for improper claims.”
       
“This type of alleged conduct deceives individuals when they are seeking medical treatment and are vulnerable,” said Perrye K. Turner, Special Agent in Charge, FBI, Louisville Field Division. “The level of funds involved in this matter is staggering.  This money has been stolen from the patients and the taxpayers.”

The Commonwealth of Kentucky will receive $1,018,380, which represents the state’s share of the recovered Medicaid funds.  The Medicaid program is funded jointly by the federal and state governments. 

“We take very seriously our obligation to ensure the safety of patients in Kentucky and to hold accountable those who put profits ahead of patient care,” said Jack Conway, Kentucky Attorney General.  “I appreciate the hard work of my Medicaid Fraud Unit and all of the agencies involved in this case, and I am pleased that we are able to recover this money on behalf of Kentucky taxpayers and a vital state program.”

The investigation was conducted by the FBI; the HHS-OIG; the Kentucky Office of Attorney General-Medicaid Fraud and Abuse Control Unit; the Commercial Litigation Branch of the Department of Justice’s Civil Division and the U.S. Attorney’s Office for the Eastern District of Kentucky.  The claims settled by this agreement are allegations only, and there has been no determination of liability. 

Settlement Agreement

ASHLAND, KY - A former corrections officer at the Federal Corrections Institute (FCI) in Ashland, Ky., has been sentenced to federal prison for conspiring with an inmate and others to smuggle prohibited items into the prison.

U.S. District Judge David L. Bunning sentenced 46-year-old James Lewis on Monday to 15 months in federal prison. Under federal law, Lewis will have to serve at least 85 percent of his prison sentence.

According to court records, from December 2010 until February 2012, Lewis conspired with inmate Gary Musick, of Newport, Tenn., and Musick’s girlfriend, Cindy Gates, to introduce tobacco, marijuana, and nude photographs into the prison. Gates frequently visited the prison and gave the items to Lewis. Lewis subsequently provided the items to Musick, in exchange for payment from Gates and others.

Evidence at Musick’s trial, in March, established that he sold some of the prohibited items to other inmates. Musick was convicted of conspiracy to introduce contraband into a correctional facility and possession of contraband. Gates pleaded guilty to a misdemeanor conspiracy charge, prior to trial, and she was also sentenced on Monday; she received probation.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and John F. Oleskowicz, Special Agent in Charge, Department of Justice, Office of the Inspector General, Chicago Field Office, jointly announced the sentence.

The investigation was conducted by the Department of Justice, Office of the Inspector General. Assistant U.S. Attorneys Edwin J. Walbourn, III and Wade T. Napier prosecuted this case on behalf of the federal government.

PIKEVILLE  – The former Mayor of Martin, Ky., has been convicted of intentionally violating voters’ civil rights, during her reelection campaign in 2012.

On Thursday evening, a federal jury in Pikeville, Ky., convicted former Martin Mayor, Ruth Thomasine Robinson, 69, of conspiracy to violate civil rights and one count of vote buying.  The jury also convicted her husband, James “Red” Robinson, 64, of the conspiracy count and one vote buying count.  Her stepson, James Steven Robinson, 32, was found guilty of the conspiracy count and two of three vote buying counts and another co-defendant, Johnny T. Moore, 32,was acquitted of all charges.  The jury returned the verdicts after approximately two hours of deliberation, following three days of trial.  

According to evidence introduced at trial, Thomasine Robinson and her co-conspirators intimated poor and disabled citizens in order to gain their votes during the 2012 general election in Martin.  For instance, members of the conspiracy directed residents of public housing to vote by absentee ballot under the supervision of Thomasine Robinson or another member of the conspiracy.  The members of the conspiracy also targeted residents of private housing owned and leased by Thomasine Robinson. 

The trial testimony established that the members of the conspiracy filled out absentee ballots, marking the conspirators’ choice of candidates, and then had the voters sign the pre-marked ballots.  Voters who cooperated with this arrangement and voted for Thomasine Robinson received promises of better living arrangements and other consideration.  Voters who did not comply faced consequences such as eviction and the loss of priority for public housing. 

In addition, the evidence at trial established that the defendants offered to pay several voters to vote for Thomasine Robinson.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Perrye K. Turner, Special Agent in Charge, FBI; and Jack Conway, Kentucky Attorney General, jointly announced the conviction.  

The investigation was conducted by the FBI and the Kentucky Attorney General’s Office.  Assistant U.S. Attorneys Kenneth R. Taylor and Andrew T. Boone represent the federal government in this case.  

Sentencing is scheduled for September 9.  The defendants face a maximum of 10 years in prison for the conspiracy offense and a maximum of five years in prison on the vote buying offenses.  However, the Court must consider the U.S. Sentencing Guidelines and the federal statutes before imposing a sentence.

COVINGTON, KY - – The owner of a chiropractic clinic in Newport, Ky., has been convicted of a fraud scheme involving tens of thousands of dollars.

A federal jury in Covington convicted 48-year-old Andrea Almond, of Cincinnati, Ohio, of conspiracy to commit health care fraud, late Friday afternoon. The jury returned the verdict after four days of trial, following six hours of deliberation.

According to evidence established at trial, from September 2008 through April 2010, Almond conspired with a co-defendant to bill the Kentucky Medicaid Program for chiropractic services rendered at the Newport Chiropractic Center.

The evidence, however, also established that Almond never actually practiced at the Newport Chiropractic Center; the billed services were instead provided by other doctors, who had never been approved or enrolled in Kentucky Medicaid Program.

Almond billed the Kentucky Medicaid Program using her National Provider Identification number, knowing that the Kentucky Medicaid Program would not have paid for any claims for treatment rendered by unapproved providers.

The government proved that Almond and her co-conspirator fraudulently submitted approximately 1,943 claims to the Kentucky Medicaid Program, which totaled $483,797, and they received $95,098 in payments.

Her co-conspirator, Elaine Legg, has already pled guilty in the case. In a separate case, Dr. Nanci Allen, a former part owner in the Erlanger Chiropractic Clinic, has pled guilty to a similar scheme to defraud the Kentucky Medicaid Program. These individuals are also awaiting sentencing.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, Perrye Turner, Special Agent in Charge, Federal Bureau of Investigation; Dugan Wong, Postal Inspector in Charge, United States Postal Inspection Service, Pittsburg Field Division; and Jack Conway, Kentucky Attorney General, jointly made the announcement today.

The investigation was conducted by the Federal Bureau of Investigation; the United States Postal Inspection Service, Cincinnati Field Office; the Kentucky Attorney General’s Office, Medicaid Fraud Abuse and Control Unit; and the Kentucky Department for Medicaid Services. The federal government was represented by Assistant United States Attorney Laura K. Voorhees.

Almond will appear for sentencing on September 4, 2014. She faces a maximum of 10 years in prison. However, any sentence following a conviction will be imposed after the Court considers the U.S. Sentencing Guidelines and the applicable federal statutes.

COVINGTON, KY - The former superintendent for the Dayton Independent School District has been sentenced to two years in federal prison for embezzling school funds during his tenure.

U.S. District Judge David L. Bunning sentenced William Rye, 66, of Wilder, Ky., for embezzlement. Under federal law, Rye will have to 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. Following the sentencing, Rye was released on his own recognizance and ordered to report on June 2 to a prison facility designated by the Bureau of Prisons. Rye has already paid full restitution in the amount of $193,149.22.

Rye pled guilty in December 2013 and admitted that, between 2004 and 2012, he embezzled approximately $193,149.22 from the Dayton Independent School District, while serving as school superintendent. The Dayton School District annually receives in excess of $10,000 in federal funds.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Perrye Turner, Special Agent in Charge, Federal Bureau of Investigation, jointly made the announcement today.

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

PIKEVILLE, KY - A Pikeville doctor admitted in federal court that he allowed a pharmacy access to his prescription drug samples that were supposed to go to his patients.

Thad Manning, 48, pleaded guilty on Wednesday to conspiracy to misbranding drugs. Manning agreed to forfeit $250,000 which represents the proceeds he received as a result of the conspiracy. Manning will also enter into drug rehabilitation for an addiction to hydrocodone.

Manning admitted that over the course of several years he received numerous prescription drug samples from various pharmaceutical companies. In the written agreement between Manning and the pharmaceutical companies, Manning pledged to provide the samples to patients. Instead, Manning allowed Marrowbone Clinic Pharmacy (later known as Marrowbone Hometown Pharmacy) to take the prescription samples and co-mingle them with other prescription drugs already in stock bottles. These co-mingled drugs were ultimately dispensed to the pharmacy’s customers.

Because the pharmacy removed the sample medications from their original packaging and mixed them with medications from stock bottles, the drug’s identifying information and expiration information on the stock bottle became inaccurate and thus misbranded. This made it impossible for the consumer to know whether or not their particular medication had been recalled by the Food and Drug Administration or the pharmaceutical companies.

Manning was the last of several individuals to be charged in 2012 as a result of an investigation conducted by the Food and Drug Administration’s Office of Criminal Investigations, the FBI, the Kentucky Board of Pharmacy, the Kentucky Office of the Inspector General and the Kentucky State Police. The individuals that were indicted have been convicted of the charges including a Houston, Texas doctor who wrote unlawful prescriptions for patients from Pike County; six defendants who were distributing narcotics obtained from Marrowbone Clinic Pharmacy; a pharmacy employee who billed insurance carriers for prescriptions that were never filled; the Marrowbone Hometown Pharmacy Corporation for the selling of prescription drug samples; and the pharmacy manager who was convicted of narcotics trafficking and conspiracy to sell prescription drug samples. Pikeville Pharmacist Ronald Huffman was named the 2012 indictment but committed suicide around the time the charges were announced.

The U.S. Attorney’s Office was represented in this case by Assistant U.S. Attorney Lee Gentry.

Manning will be sentenced in July 2014. He faces a maximum of one year in prison and a $100,000 fine. However, the Court must consider the U.S. Sentencing Guidelines and the applicable federal statutes before imposing a sentence.

COVINGTON, KY -A longtime bookkeeper for a Northern Kentucky Bank admitted in federal court that she embezzled more than $100,000 from her employer, over a three year period.

Linda Penick, 58, of Dry Ridge, KY., pleaded guilty on Tuesday to bank embezzlement, before U.S. District Court Judge David L Bunning.

Penick admitted that, from 2010 until 2013, she defrauded the Grant County Deposit Bank, by transferring bank funds to her personal account and issuing cashier checks and money orders to herself. Many of these checks and money orders were made payable to her husband. Penick admitted that she used the money to pay bills and taxes.

According to the plea agreement, Penick embezzled $118,775.00, over a three year period. Penick worked at the bank for 23 years.

Penick waived her right to be indicted by a grand jury and pled guilty to the embezzlement charge by way of an information.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Perrye K. Turner, Special Agent in Charge, FBI, jointly made the announcement.

The investigation was conducted by the FBI. The U.S. Attorney’s Office was represented by Assistant U.S. Attorney Laura K. Voorhees.

Penick is scheduled to be sentenced on July 22, 2014. The bank embezzlement offense carries a maximum penalty of 30 years in prison and a maximum fine of $1 million. However, any sentence will be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statutes.

LEXINGTON, KY - A former employee of a child day care center in Nicholasville, KY., was sentenced today to 30 months in federal prison and ordered to pay $201,060 in restitution for defrauding her employer.

U.S. District Judge Karen Caldwell sentenced Pamela Sandlin, 55, for fraud. Under federal law, Sandlin will have to serve at least 85 percent of her prison sentence.

Sandlin previously admitted that, over the course of several years, she fraudulently took thousands of dollars while working as the Assistant Director at the Kids Connection Learning Center (KCLC). KLLC receives more than $10,000 annually in federal program funds.

According to her plea agreement, Sandlin was responsible for collecting money from parents, making bank deposits, and documenting financial transactions for KCLC. Court documents also established that Sandlin altered company records to conceal the fraud.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Perrye Turner, Special Agent in Charge, FBI, jointly made the announcement.

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

COVINGTON, KY - A Boone County man has admitted in federal court that he created multiple videos of minors engaged in sexually explicit conduct. Michael Schweitzer, 46, pleaded guilty on Tuesday, in front of U.S. District Judge David L. Bunning, to producing and possessing child pornography. Schweitzer was taken into custody of the U.S. Marshal.

Schweitzer has entered into an agreement with the U.S. Attorney’s Office that, pending the Court’s approval, would result in a sentence of 35 years in prison. Under federal law, Schweitzer will have to serve at least 85 percent of the prison sentence imposed. His sentencing is scheduled for July 1.

According to court documents, in November 2012, Schweitzer provided a drug to a minor and then recorded himself sexually exploiting the minor, while the minor was under the influence.

During the investigation, authorities seized Schweitzer’s cell phone and discovered more videos that he had produced, which also involved minors engaged in sexually explicit conduct.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Michael Helmig, Boone County Sheriff, jointly made the announcement today.

The investigation was conducted by the Boone County Sheriff’s Office. The Ft. Mitchell Branch of the U.S. Attorney’s Office prosecuted this case on behalf of the federal government.

Lexington, KY - A former doctor in Paintsville, KY., has admitted to his role in a conspiracy that was responsible for illegally distributing more than 25,000 prescription pills in Eastern Kentucky.

Om Monday, Rano Bofill, 72, pleaded guilty in federal court in Lexington, before U.S. District Judge Amul Thapar, to conspiracy to unlawfully dispense Oxycodone.

According to court documents, from January 2009 until December 2012, Bofill conspired with Tammy Cantrell and Shelby Lackey, owners of Care More Pain Management, LLC, located in Johnson County, to distribute thousands of Oxycodone pills to patients without a legitimate medical purpose.

Bofill acknowledged that he wrote prescriptions for numerous patients after performing little to no examination and, in some instances, he even signed off on prescriptions without actually ever seeing the patients. Patients who visited the clinic paid $200 for the initial visit and $185 for subsequent visits; all fees were paid in cash. Bofill admitted he saw approximately 25 patients per day and was paid between $5,000 and $6,000 per week

Lackey and Cantrell pled guilty last year to their roles in the conspiracy. At the time of their guilty pleas, Cantrell and Lackey were the first pain clinic owners in the Eastern District of Kentucky to have federal convictions for illegally distributing prescription drugs. Another doctor at the clinic, Richard Albert, pled guilty in July 2012 to a conspiracy charge and was sentenced to 75 months in prison. Albert, Cantrell and Lackey have collectively agreed to forfeit approximately $1.3 million, which represents proceeds from the conspiracy.

The investigation into this case started when detectives with the Kentucky Attorney General’s Office received complaints from local law enforcement that Care More was seeing a remarkably high volume of patients. Court records state that patient lines at Care More stretched into the parking lot.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Robert L. Corso, Special Agent in Charge, DEA, and Jack Conway, Kentucky Attorney General, jointly announced the plea.

The investigation was conducted by the Kentucky Attorney General’s Office, the DEA and the Paintsville Police Department. Assistant U.S. Attorney Roger West prosecuted this case on behalf of the federal government.

Bofill will appear for sentencing on July 14, 2014. . He faces a maximum of 20 years in prison. However, the Court will consider the U.S. Sentencing Guidelines and the federal statues before imposing a sentence.

Defendant sentenced to maximum penalty allowed under the statute

LEXINGTON, KY - The former owner of pain clinics in Georgetown, KY., and Dry Ridge, KY., that illegally dispensed prescription drugs to thousands of patients, was sentenced today to 20 years in prison.

U.S. District Judge Karen Caldwell sentenced Ernest William Singleton for drug trafficking, money laundering, opening and maintaining a drug involved premise and conspiracy offenses. Singleton will have to serve at least 85 percent of his prison sentence.

Singleton and his corporations, Double D Holdings, LLC and S and R Medical Enterprises, LLC, which owned Central Kentucky Bariatric and Pain Management, Central Kentucky Family Pharmacy of Georgetown, and the Grant County Wellness Center in Dry Ridge, were convicted by a federal jury in June 2013.

According to evidence presented at trial, from October 2010 until February 2013 and under Singleton’s direction, doctors at the clinics prescribed large quantities of Oxycodone and Diazepam outside the scope of professional practice and without a legitimate medical purpose.

Specifically, the evidence established that Singleton oversaw the daily operations of the clinics, influenced doctors to overprescribe drugs to patients, and pressured them to see as many patients as possible. Witnesses testified that, at Singleton’s direction, one of the doctors saw more than 90 patients in a day and another doctor visited with some patients for as little as three minutes before prescribing medication. Witnesses also testified that when some doctors complained to Singleton about the volume of patients, he instructed them not to reduce their patient load.

Other evidence established that the pain clinics operated on a cash only basis and did not accept insurance. Patients paid approximately $250 on the first visit and $300 on subsequent visits. Investigators estimate that approximately 5,000 patients visited the clinics during the course of the conspiracy.

Some of the doctors who testified at trial confirmed that they could not provide adequate medical care under Singleton’s guidelines. Two of the doctors employed by Singleton, Lea Marlow and Gregory White, pled guilty to criminal charges last year and are currently serving prison terms.

The jury also found that Singleton engaged in money laundering, by using the drug proceeds to purchase real estate, a boat, and farm equipment, among other items. He also used the proceeds to build a home. Singleton has forfeited items numerous that either facilitated the crimes or were purchased with proceeds from his criminal offenses, including bank accounts consisting of more than $427,000, more than 20 firearms, more than 40 pieces of farm equipment, vehicles, and livestock.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; James W. Allen, Acting Special Agent in Charge, Drug Enforcement Administration; Christopher A. Henry, Special Agent in Charge of IRS, Criminal Investigation Division; Jack Conway, Kentucky Attorney General; and Rodney Brewer, Commissioner of Kentucky State Police, jointly made the announcement.

The investigation was conducted by the DEA, IRS Criminal Investigation Division, the Kentucky Attorney General’s Office and Kentucky State Police. Assistant U.S. Attorney Ron Walker, former Assistant U.S. Attorney Patrick H. Molloy, and Special Assistant U.S. Attorney Shawna Kincer, the Executive Director of Special Prosecutions with the Kentucky Attorney General’s Office, prosecuted the case.

Defendant defrauded federal agency and filed for bankruptcy despite owning millions of dollars in assets

LEXINGTON, KY. - A federal jury has found a Nicholasville woman guilty of defrauding the Social Security Administration (SSA), for approximately a decade, and fraudulently filing for bankruptcy, among other charges.

On Thursday evening, a jury convicted 51-year-old Sheryl Bruner of one count each of theft of government money, failure to disclose assets, and bankruptcy fraud.  She was also convicted of ten counts of money laundering and two counts of making false statements.  The jury returned the verdicts after approximately two and a half hours of deliberation, following four days of trial.

The evidence at trial established that, from 2003 until 2013, Bruner fraudulently claimed that she was disabled and had no funds or source of income, in order to qualify for financial assistance from the Supplemental Security Income (SSI) program.  SSI is an income assistance program designed to provide financial assistance to elderly and disabled individuals who meet the program’s eligibility requirements.  Bruner failed to disclose, and concealed from the SSA, that she owned multiple companies, which collectively earned millions of dollars during the time she was receiving financial assistance.  Bruner worked primarily as a Medicaid service provider.

The evidence also established that, on May 16, 2013, Bruner filed for bankruptcy, despite the fact that she had more than a million dollars in assets.   Bruner had tried to hide the amount of cash she had on hand, the bank and trust accounts she maintained or controlled, and vehicles and real estate she owned.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky andThomas Caul was recently selected as the Special Agent-in-Charge of the Social Security Administration, Office of the Inspector General, Office of Investigations for the Atlanta Field Division.

The investigation was conducted by the Social Security Administration, Office of the Inspector General, Office of Investigations.  Assistant U.S. Attorney Ken Taylor prosecuted the case on behalf of the federal government.

Bruner is scheduled to appear for sentencing in June 2014.  The money laundering offenses carry a maximum of 20 years in prison, the theft of government property offense carries a maximum of 10 years, and the other offenses each carry a maximum penalty of five years.  However, any sentence would be imposed by the Court, after consideration of the United States Sentencing Guidelines and the federal statutes governing the imposition of sentences.

ASHLAND –An inmate at the Federal Corrections Institute (FCI) in Ashland, KY., has been convicted by a federal jury of conspiring with a prison guard and others to smuggle prohibited items into the prison.

Today, a federal jury convicted 33-year-old Gary Musick, of Newport, Tenn., of conspiracy to introduce contraband into a correctional facility and possession of contraband.  The jury reached its verdicts after approximately three and half hours of deliberation, following four and a half days of trial.

According to testimony, Musick’s co-defendant and former girlfriend, Cindy Gates, and other female associates of Musick, routinely visited the FCI and delivered prohibited items, such as tobacco, marijuana, and nude photographs, to corrections officer James Lewis.  Lewis subsequently provided the items to Musick, in exchange for payment from Gates and others. 

The evidence at trial established that Musick also sold the prohibited items to other inmates, in exchange for stamps.  In some instances, he directed inmates to have money sent to an address outside of the institution as payment.  The conspiracy lasted from December 2010 until February 2012. 

Lewis and Gates previously pleaded guilty to a conspiracy charge.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and John F. Oleskowicz, Special Agent in Charge, Department of Justice, Office of the Inspector General, Chicago Field Office, jointly announced the conviction.

The investigation was conducted by the Department of Justice, Office of the Inspector General.  Assistant U.S. Attorneys Edwin J. Walbourn, III and Wade T. Napier prosecuted this case on behalf of the federal government.

Musick is scheduled to appear for sentencing in June 2014.  Both offenses carry a maximum of five years in prison. However, before the Court imposes a sentence it will carefully review the U.S. Sentencing Guidelines and the federal statutes governing the imposition of sentences.

PIKEVILLE, KY - A Johnson County man, who previously admitted to trafficking prescription drugs, was sentenced on Tuesday to 84 months in prison.

U.S. District Judge Amul Thapar sentenced 43 year-old John Kline for armed drug trafficking. Under federal law, Kline will have to serve at least 85 percent of his prison sentence.

Kline admitted during his guilty plea, in December 2013, that he had sold Oxycodone pills to several undercover officers with the Kentucky State Police. Kline was also in possession of a loaded semiautomatic pistol at the time of one of the drug transactions. According to the plea agreement, authorities searched Kline’s residence and found hundreds of Oxycodone pills and 17 firearms.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Stuart Lowrey, Special Agent in Charge, ATF; Rodney Brewer, Kentucky State Police Commissioner; and Dwayne Price, Johnson County Sheriff, jointly announced the sentence.

The investigation was conducted by ATF, the Kentucky State Police and the Johnson County Sheriff’s Office. Assistant U.S. Attorney Hydee Hawkins prosecuted this case for the U.S. Attorney’s Office on behalf of the federal government.

LEXINGTON, KY - Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Perrye Turner, Special Agent in Charge, FBI, and Mythili Raman, Acting Assistant Attorney General for the U.S. Department of Justice’s Criminal Division jointly announced today that a Winchester, KY., man admitted in federal court that he conspired to share confidential information about his employer’s brake pads with another company.

David Lewis, 65, pleaded guilty on Monday to conspiracy to commit theft of trade secrets, before Senior U.S. District Judge Joseph M. Hood.

Lewis admitted that, between 2006 and 2007, he emailed trade secrets concerning the specifications of brake pads, which information is the property of Lewis’s former employer, Brake Parts International, Inc. According to the plea agreement, Lewis was paid thousands of dollars by a Canadian company for this information.

On March 3, Lewis waived his right to be indicted and pleaded guilty to the charge brought by U.S. Attorney Harvey.

The investigation was conducted by the FBI and the U.S. Attorney’s Office was represented by Assistant U.S. Attorney Hydee Hawkins and Evan Williams, Senior Council of the Department of Justice’s Computer Crime & Intellectual Property Section.

David Lewis is scheduled to be sentenced on July 7, 2014. He faces up 10 years in prison and a maximum fine of $250,000. However, any sentence will be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the applicable federal statutes.

COVINGTON, KY - The former executive director of a federally funded northern Kentucky drug task force has admitted he stole money that belonged to the task force.

Timothy George Fegan, 52, pleaded guilty to one count of theft of government money. Fegan, who worked for the Buffalo Trace/Gateway Narcotics Task Force at the time, wrongfully took thousands of dollars from the organization, over an extended period. Fegan acknowledged that he took cash proceeds that Task Force agents had seized during drug investigations and took money that the Task Force kept on hand to perform undercover drug buys.

Between November 2011 and November 2012, the Task Force received approximately $150,000 in federal funding. Fegan admitted that he stole thousands of dollars in Task Force funds during this period. At sentencing, the Court will determine the total amount of money that Fegan stole from the Task Force, during the period from December 31, 2009 to November 2012.

The Buffalo Trace/Gateway Narcotics Task Force was organized by several county and city governments and was responsible for the investigation of drug crimes in various northern and eastern Kentucky counties. The Task Force was funded by federal and state grants and contributions from the county and city governments that formed the Task Force. The Task Force’s operations are based in Maysville, KY., and Fegan worked for the Task Force during this period, including serving as Interim Executive Director from December 31, 2009 through March 2010 and Executive Director from April 2010 until November 2012. The Task Force ceased its operations in early 2013.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Perrye Turner, Special Agent in Charge, FBI, jointly announced the guilty plea.

The investigation was conducted by the FBI and the Kentucky State Police. Assistant U.S. Attorney Andrew T. Boone is prosecuting this case for the U.S. Attorney’s Office on behalf of the federal government.

Sentencing is scheduled for June 19, 2014. The theft of government money offense carries a maximum of 10 years in prison and a maximum fine of $250,000. The sentence will be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the applicable federal statutes.