District of Massachusetts
Press releases recorded for this federal judicial district.
Fall River Man Sentenced to Prison for Marijuana ConspiracyRead the Press Release
BOSTON – A Fall River man was sentenced yesterday in U.S. District Court in Boston in connection with his role in a scheme to distribute over 1,000 kilograms of marijuana in the Fall River area.
Edward Boyer, 54, a former criminal defense attorney, was sentenced by U.S. District Court Judge Nathaniel M. Gorton to nine years in prison, four years of supervised release and ordered to forfeit $250,000. Boyer pleaded guilty in October 2015 to conspiring to distribute marijuana and money laundering.
Boyer, a former criminal defense lawyer, was disbarred after a state court conviction for interfering with a witness and bribery in 1997. In 2012, federal agents determined that Boyer was regularly shipping packages containing $20,000 to post office boxes in Mendocino, Calif. Surveillance and shipping records showed that Boyer was also regularly receiving large boxes from Mendocino. In June 2013 and May 2014, federal agents obtained search warrants and seized packages destined for Boyer which contained 6-7 kilograms of marijuana. Evidence from the investigation revealed that from 2012 to 2014, suppliers in California shipped over 1,500 kilograms of high-grade marijuana to Boyer who sold it in the Fall River area to a network of distributors. Boyer shipped the proceeds back to the suppliers in California, totaling over $8 million, and used bank accounts to transfer the funds.
At today’s sentencing hearing, the Court found that Boyer was the leader of the organization and was responsible for the distribution of over 1,000 kilograms of marijuana. Boyer’s seven co-defendants, including three individuals from California, have also been convicted and are awaiting sentencing.
United States Attorney Carmen M. Ortiz; Michael J. Ferguson, Special Agent in Charge of the Drug Enforcement Administration, New England Field Division; Shelly Binkowski, Inspector in Charge of the U.S. Postal Inspection Service; and Kristina O’Connell, Acting Special Agent in Charge of the Internal Revenu Service’s Criminal Investigation in Boston, made the announcement. The case was prosecuted by Assistant U.S. Attorney Ted Heinrich of Ortiz’s Narcotics and Money Laundering Unit.
Extradited Chinese National Sentenced to Nine Years for Providing U.S. Goods to Iran to Support its Nuclear ProgramRead the Press Release
BOSTON – A Chinese national was sentenced today in U.S. District Court in Boston in connection with supplying a U.S. designated Iranian Weapons of Mass Destruction (WMD) Proliferator with 1,185 pressure transducers that could be used to make nuclear weapons-grade uranium.
Sihai Cheng, a/k/a Chun Hai Cheng, a/k/a Alex Cheng, 35, a citizen of the People’s Republic of China (PRC), was sentenced by U.S. District Court Chief Judge Patti B. Saris to nine years in prison. In December 2015, Cheng pleaded guilty to two counts of conspiring to commit export violations and smuggle goods from the United States to Iran and four counts of illegally exporting U.S. manufactured pressure transducers to Iran.
“Cheng knowingly provided more than 1,000 pressure transducers to Iran which advanced its nuclear weapons capabilities,” said United States Attorney Carmen M. Ortiz. “At this critical time, the prosecution of individuals who violate our export laws – wherever they are located – is just as important, if not more, than ever before.”
“Massachusetts is a worldwide leader of innovative technology and research,” said Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division. “Mr. Cheng smuggled some of that technology used to process weapons-grade uranium into Iran. As this case illustrates, the FBI will do everything it can to keep U.S. weapons technology and other restricted materials from falling into the wrong hands and hurting our nation’s security.”
“Today’s lengthy sentence serves as a warning to others that stiff penalties are waiting for anyone attempting to steal/sell American technologies or trade them to foreign powers,” said Matthew Etre, Special Agent in Charge of HSI Boston. “HSI and our law enforcement partners take the national security interests of this nation very seriously and will aggressively pursue any criminal or organization engaged in these activities.”
"Today's sentence reaffirms OEE's commitment to identifying, disrupting and enforcing illegal procurement networks and preventing sensitive WMD materials and technology from being exported contrary to U.S. export law,” said Michael S. Imbrogna Acting Special Agent in Charge of the Department of Commerce, Office of Export Enforcement, Boston Field Office. “Our special agents will continue to work hand in hand with our law enforcement partners and the U.S. Attorney's Office to protect Americans worldwide."
In 2013, Cheng was charged in an indictment with conspiring to export, and exporting, highly sensitive U.S. manufactured goods with nuclear applications to Iran from at least 2009 to 2012. Cheng pleaded guilty to conspiring with other individuals in China and Iran to illegally obtain hundreds of U.S. manufactured pressure transducers manufactured by MKS Instruments, Inc., a company headquartered in Massachusetts, and export them to Iran. As established at the sentencing hearing, Cheng knew that the parts were being supplied to Kalaye Electric Co., a U.S. designated Iranian WMD Proliferator responsible for the Government of Iran’s nuclear centrifuge program and the development of weapons-grade uranium. Pressure transducers can be used in gas centrifuges to enrich uranium and produce weapons-grade uranium and are therefore subject to strict export controls. They cannot be shipped from the United States to China without an export license or shipped from the United States to Iran at all.
At today’s sentencing, the government argued that Cheng’s conduct gravely harmed and jeopardized the national security of the United States as well as other countries throughout the world. Cheng even invoked the threat of war between Iran and the United States as a means of increasing his profits. Cheng’s procurement network was responsible for supplying Iran thousands of components for its nuclear proliferation activities and advancing Iran’s nuclear capabilities. Cheng knew he was providing Iran critical components for use in the development of weapons-grade uranium and that the parts he was supplying were going Iran’s nuclear program. Indeed, in 2009, according to evidence at the sentencing hearing, when Cheng supplied his first four shipments of pressure transducers, Iran was secretly constructing the Fordow Fuel Enrichment Plant for the purpose of developing nuclear weapons. Further, based upon expert testimony, from 2009 to 2011, when Cheng supplied Iran 1,185 MKS pressure transducers, Iran was engaged in nuclear proliferation activities.
In imposing the nine year sentence, Judge Saris found that Cheng “knowingly provided material support to develop a nuclear weapon.”
MKS Instruments, Inc., is not a target of this investigation and has been cooperating in this matter.
U.S. Attorney Ortiz, FBI SAC Shaw, HSI SAC Etre, and Commerce Acting SAC Imbrogna, made the announcement today. Assistance was also provided by the U.S. Department of Energy. The case is being prosecuted by Assistant U.S. Attorney B. Stephanie Siegmann of Ortiz’s National Security Unit.
New Hampshire Couple Indicted in $2 Million Union FraudRead the Press Release
BOSTON – A husband and wife who operated an asbestos removal business were arrested today in connection with a fraudulent “double breasted shop” scheme aimed at enabling them to defraud the Massachusetts Laborers Benefit Fund (MLBF) of more than $2 million. A “double breasted shop” is a business which enters into a collective bargaining agreement with a union while at the same time seeking to avoid its contractual obligations by operating an alter ego non-union company.
Christopher Thompson and Kimberly Thompson, both 52, of Windham, NH, were indicted on 18 counts of mail fraud, one count of benefit fund embezzlement, and 18 counts of filing false documents with an ERISA fund. Also charged are the two corporate entities used by the Thompsons to perpetrate the fraud: AQE, Inc. and Air Quality Experts, Inc. The Thompsons will have an initial appearance before U.S. District Court Magistrate Judge Marianne B. Bowler at 3:00 p.m.
According the indictment, the Thompsons employed members of Tewksbury Local 1421 of the Laborers International Union of North America. The Thompsons allegedly paid members of Local 1421 for jobs which required union participation from the AQE, Inc. payroll which was a union signatory corporation. When the jobs did not require a union signatory company, the Thompsons paid the union members from the Air Quality Experts, Inc. payroll. In these instances, the union members did not receive union rates, and benefits were not paid by the Thompsons to the MLBF which provides medical and pension benefits to 8,000 laborers and their families in Massachusetts. The Thompsons allegedly sent “remittance reports” to the MLBF which failed to report thousands of hours worked by members of Local 1421. By significantly under reporting the hours worked by union members, the Thompsons failed to pay over $2 million to the MLBF.
The mail fraud charges each provide for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000 or twice the loss or gain from the offense. The benefit fund embezzlement and false statements charges each provide for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000 or twice the loss or gain from the offense. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Cheryl Garcia, Special Agent in Charge of the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigation, New York Region; and Susan Hensley, Regional Director of the Department of Labor, Employee Benefits and Security Administration, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Fred M. Wyshak, Jr., Chief of Ortiz’s Public Corruption Unit.
The details contained in the charging documents are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Jury Returns Guilty Verdicts Against Andover Attorney in $1 Million IRS ScamRead the Press Release
BOSTON – Following a two-week trial, an Andover attorney was convicted today of laundering more than $1 million in fraudulently-obtained IRS refund checks through several different bank accounts, including the attorney’s trust accounts.
R. David Cohen, 64, was convicted by a federal jury of on one count of conspiracy, 14 counts of conversion and receipt of stolen United States property, and one count conspiracy to commit money laundering. U.S. District Court Judge Leo T. Sorokin scheduled sentencing for April 26, 2016.
The evidence at trial demonstrated a scheme in which individuals filed fraudulent tax returns with fictitious W-2 information, usually a name and social security number of a resident of Puerto Rico, whose residents are not required to file federal income tax returns. Once the fraudulent returns were accepted by the IRS, refund checks were sent to designated addresses in Lawrence, East Boston, and New York controlled by Cohen’s co-conspirators.
Beginning in October 2011, Cohen and his co-conspirators deposited over 100 fraudulently-obtained tax refund checks totaling over $1 million into banks to launder them through Cohen’s “Interest On Lawyer’s Trust Accounts” (IOLTA), as well as through bank accounts in the name of AD Professional Association, Inc. When questioned by bank officials about the large amount of U.S. Treasury checks Cohen was depositing and negotiating through his IOLTA and personal accounts, Cohen falsely claimed that the payees were his clients. When one bank requested proof concerning one of the IRS refund checks, Cohen provided a fake participation agreement and affidavit purporting to state that he had the client’s authority to deposit her IRS refund check into his IOLTA account.
The charge of conspiracy to convert and receive stolen United States property provides for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000 or twice the gross loss or gain from the offense. The charge of conversion and receipt of United States property provides for a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000 or twice the gross loss or gain for each count from the offense. The charge of conspiracy to launder funds provides for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000 or twice the gross loss or gain from the offense. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz and William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today. The case is being prosecuted by S. Theodore Merritt and Ryan M. DiSantis of Ortiz’s Public Corruption Unit.
Everett Man Arrested for Masked Armed Bank RobberyRead the Press Release
BOSTON – An Everett man appeared in federal court today in connection with his alleged armed robbery of the TD Bank in Allston in November 2015.
Joseph G. Rachal, 64, was arraigned today in U.S. District Court in Boston and charged with armed bank robbery, carrying a firearm during the commission of a crime of violence, and being a previously convicted felon in possession of a firearm and ammunition. U.S. District Court Magistrate Judge Marianne B. Bowler scheduled a detention and probable cause hearing for Jan. 28, 2016 at 11:00 a.m.
According to court documents, on Nov.19, 2015, an individual later identified as Rachal, allegedly entered the TD Bank in Allston wearing a dark rubber mask. Rachael approached two tellers, brandished a semi-automatic weapon, and demanded money. The tellers gave Rachal $2,397 and he fled the bank.
Law enforcement officers arrived within minutes of the robbery and observed a man hiding behind a parked SUV one block from the bank. After the officers identified themselves, the man fled carrying a black nylon bag. The man was caught and after a brief struggle and identified as Rachal. The officers found an active radio scanner on Rachal which was tuned to the Boston Police radio frequency. The black bag contained a 9mm Glock semi-automatic pistol with one chambered round and a magazine containing 14 additional rounds, an extra magazine containing 15 rounds of 9mm ammunition, a dark rubber mask, gloves, a tan jacket, and $2,397.
Bank surveillance cameras confirmed that the items recovered from Rachal’s bag were consistent with those used during the robbery.
The charge of armed bank robbery provides for a sentence of no greater than 25 years in prison, five years of supervised release and a fine of $250,000. The charge of being a felon in possession provides for a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000. The charge of brandishing a firearm during the commission of a violent crime provides for a mandatory sentence of seven years to be served consecutive to the other charges. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and Boston Police Commissioner William Evans, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Kenneth G. Shine of Ortiz’ Major Crimes Unit.
Arlington Career Criminal Sentenced for Heroin DistributionRead the Press Release
BOSTON – An Arlington man was sentenced today in U.S. District Court in Boston for selling heroin mixed with fentanyl which creates a toxic mixture substantially more potent, and more dangerous, than heroin alone.
Yrvens Bain, 42, was sentenced today by U.S. District Judge Indira Talwani to 15 years in prison and three years of supervised release. Bain was convicted by a federal jury in October 2015 of distribution of heroin, possession with the intent to distribute heroin and being a felon in possession of a firearm and ammunition.
In February 2014, an investigation of Bain began after it was suspected that he sold the heroin involved in two suspected overdose deaths in Arlington. Federal agents identified Bain as a long-time drug dealer who had been convicted of drug trafficking and firearm offenses on several occasions.
“Heroin laced with fentanyl is literally killing members of our communities,” said United States Attorney Carmen M. Ortiz. “Targeting those who pedal this deadly combination is an essential part of attacking the opioid addition crisis in Massachusetts and beyond.”
“Opioid abuse is at epidemic levels in Massachusetts and throughout New England,” said Special Agent in Charge Michael J. Ferguson of the Drug Enforcement Administration, New England Field Division. “Fentanyl and heroin are causing overdose deaths across the Commonwealth in record numbers, and DEA is committed to bring to justice those that distribute these lethal drugs. This investigation demonstrates the strength of collaborative law enforcement efforts in Massachusetts to aggressively pursue anyone who traffics these drugs.”
Bain was on probation for a state drug dealing and firearm conviction when federal agents recorded him selling heroin mixed with fentanyl to a cooperating witness on Feb. 26, 2014 and March 21, 2014, in Waltham and Malden, respectively.
On April 1, 2014, agents arrested Bain as he left his residence on Laurel Street in Malden. They had to take him to a nearby hospital after he swallowed heroin during the arrest. A search warrant subsequently executed at the Laurel Street residence led to the seizure of a HiPoint .45 caliber firearm with an obliterated serial number, over 26 grams of heroin mixed with fentanyl and thousands of dollars, including $100 of money used by a cooperating witness to purchase heroin from Bain in March 2014. Agents also seized drug paraphernalia including plastic baggies, plastic gloves and a digital scale used to weigh and package drugs for street-level sales.
This case was prosecuted as part of the federal response to New England’s opioid crisis. A substantial increase in the purity of heroin in recent years, as well as a reduction in its price, have persuaded many individuals addicted to prescription medication to switch to heroin. Overdoses from heroin have climbed substantially as a result. Between 2000 and 2014, opioid overdose deaths have more than tripled with a spike in recent years in Massachusetts.
This case was investigated by a Task Force comprised of the Drug Enforcement Administration, New England Field Division; the Massachusetts State Police; the Arlington, Boston, Ipswich, and Somerville Police Departments; and the Essex County Sheriff’s Department. Significant assistance was also provided the Malden Police Department and the Suburban Middlesex County Drug Task Force.
U.S. Attorney Ortiz and DEA SAC Ferguson made the announcement today. The case was prosecuted by Assistant U.S. Attorneys Christopher Pohl and Eugenia M. Carris of Ortiz’s Criminal Division.
Project Safe Childhood Initiative to Visit Smith Vocational Agricultural High SchoolRead the Press Release
BOSTON – On Thursday, January 21, 2016, the U.S. Attorney’s Office will host a presentation on Internet safety for students, parents, and members of surrounding communities at Smith Vocational Agricultural High School.
The presentation, entitled “Keeping Kids Safe and Secure Online: A Project Safe Childhood Presentation for Parents,” will include a variety of Internet safety topics including: Social Media 101; digital footprint; gaming; cyberbullying; sexting; sextortion; Internet predators; and being safe and secure online. Presenters include members of the U.S. Attorney’s Office as well as an agent from the Department of Homeland Security.
The event will be held in the Smith Vocational cafeteria located at 80 Locust Street in Northampton at 6:30 p.m. Parents and students from Northampton and surrounding communities are welcome to attend.
In 2006, the Department of Justice created Project Safe Childhood, a nationwide initiative designed to protect children from exploitation and abuse. Led by the U.S. Attorney’s Offices and the DOJ’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/
Massachusetts Company Charged in Connection with Disadvantaged Business Enterprise FraudRead the Press Release
BOSTON – Transit Safety Management, Inc., a Georgetown, Mass. consulting company, was charged today with making a false statement in connection with its certification for favored contracting status.
Transit Safety Management, Inc. (TSM), was charged by an Information with one count of making a false statement to a state agency in order to maintain its status as a "disadvantaged business enterprise" (DBE).
In order to qualify as a DBE, a company’s management must be controlled by a socially or economically disadvantaged individual such as a woman or minority. The purpose of the program is to give an economic advantage to minorities and women who run their own companies. However, the manager of the DBE cannot also engage in employment that would prevent her from devoting sufficient attention to the affairs of the DBE. In this case investigators discovered that TSM’s purported owner was a full-time employee of a federal agency and the business was really operated by her husband making it ineligible for certification as a DBE.
TSM provided consulting services to the railroad industry, focusing on safety and operations management. Shortly after it was founded in 1999, TSM's owner certified the company as a "disadvantaged business enterprise" (DBE). As such, TSM was able to take advantage of federal regulations aimed at promoting the participation of minority and disadvantaged businesses in federally-funded public construction contracts. Under the DBE regulations, a contractor to transportation projects must either subcontract a percentage of its work to a DBE or show that it made a good faith effort to subcontract work to a DBE but was unable to do so. This requirement makes the DBE status a valuable and potentially lucrative designation.
In order to maintain its DBE certification, TSM had to make yearly affirmations that it was still eligible and that nothing had changed that would affect its eligibility for the favored DBE status. Despite this, TSM lied about whether it met the criteria for DBE status. According to court documents, TSM’s owner was hired as a full-time employee with a federal agency in 2005. As a full time federal employee, TSM’s purported manager could not control TSM under the regulations. Nevertheless, TSM failed to disclose this change and continued to make its yearly affirmations to maintain is DBE status.
As part of its plea agreement, TSM has agreed to pay a fine of $84,000 and dissolve its operations.
United States Attorney Carmen M. Ortiz; Todd Damiani, Special Agent in Charge of the U.S. Department of Transportation, Office of Inspector General, Office of Investigations; and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Eugenia M. Carris of Ortiz’s Public Corruption Unit.
The details contained in the Information are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Fitchburg Woman Charged with Embezzling over $1.3 Million from EmployerRead the Press Release
BOSTON – An office manager for a Woburn life science technology firm was charged today with embezzling over $1.3 million dollars from her employer.
Dawnmarie Prince, 47, was indicted on eight counts of bank fraud and one count of aggravated identity theft.
According to the indictment, Prince worked as an office manager at a Woburn-based life science technology firm where she was responsible for handling the firm’s accounts payable. Since at least 2005 through May 2015, Prince allegedly used her position as office manager to steal hundreds of the company’s checks, which she made payable to herself or to her son. Prince then allegedly forged her boss’s signature on the stolen checks, and deposited them into her personal bank accounts.
To conceal her criminal conduct and avoid detection, it is alleged that Prince removed copies of the negotiated checks when sent back by the bank, and she falsified entries into the bookkeeping software program to make it appear as if the stolen checks had been used to pay legitimate vendors. In total, Prince is alleged to have embezzled over $1.3 million which she spent on personal expenses.
In 2001, Prince was convicted of mail fraud for defrauding another previous employer and sentenced to three years of probation and ordered to pay restitution. Prince was employed as a claims analyst for a subsidiary company of a Boston-based health plan. Shortly after starting that job, Prince created and submitted numerous false medical provider claims to the health plan. As a result, Prince received almost $50,000 in claims checks, which she endorsed and deposited into her personal bank account.
The charge of bank fraud provides for a sentence of no greater than 30 years in prison, three years of supervised release, and a fine of $1million on each count. The charge of aggravated identity theft provides for a mandatory consecutive term of two years in prison, one year of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz and Shelly Binkowski, Inspector in Charge of the U.S. Postal Inspection Service made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Jordi de Llano of Ortiz’s Major Crimes Unit.
Organized Crime Member Sentenced for Drug ConspiracyRead the Press Release
BOSTON – An alleged member of the New England Family of La Cosa Nostra was sentenced yesterday in U.S. District Court in Boston for conspiring to traffic over 40 kilograms of marijuana from July 2013 to February 2014.
Louis L. DiNunzio, 29, of Medford, was sentenced by U.S. District Court Chief Judge Patti B. Saris to 18 months in prison and ordered to forfeit $10,000. In September 2015, DiNunzio pleaded guilty to conspiracy to distribute marijuana.
In 2013, law enforcement initiated a long-term investigation, known as Operation Excalibur, into drug-trafficking, illegal gambling, extortion, and other criminal activity by the members and associates of the New England Family of La Cosa Nostra (NELCN). DiNunzio allegedly was a member of the NELCN and is the son of former NELCN Boss Anthony DiNunzio, who is currently in federal prison for RICO conspiracy. As part of the conspiracy, DiNunzio and others purchased large quantities of marijuana and shipped them via UPS under fictitious names to Massachusetts.
Earlier this month, two other alleged NELCN associates involved in the conspiracy were sentenced. Joseph Spagnuolo-Kazonis, 30, of Boston, was sentenced to 18 months in prison and ordered to forfeit $10,000. John Woodman, 43, of Braintree, was sentenced to one year and one day in prison, and ordered to pay a fine of $4,000 and to forfeit $5,000.
In additional cases arising from this investigation, Anthony Spagnolo, 67, and Pryce Quintina, 75, both of Revere, pleaded guilty in December 2015 to conspiracy to interfere with interstate commerce by extortion and will be sentenced in March 2016. On Jan. 13, 2016, John Evans, 68, of Middleborough, and Joseph Petrucelli, 24, of Winthrop, pleaded guilty to conducting an illegal gambling business and will be sentenced in April 2016.
United States Attorney Carmen M. Ortiz: Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and Colonel Richard D. McKeon, Superintendent of the Massachusetts State Police, made the announcement today. Assistance was also provided by the Internal Revenue Service’s Criminal Investigations, the Massachusetts Department of Correction, and the Boston, Braintree, Everett, Medford and Quincy Police Departments and the FBI’s San Diego Division. The case was prosecuted by Assistant U.S. Attorneys Timothy E. Moran and Seth B. Kosto of Ortiz's Criminal Division.
Hyde Park Man Pleads Guilty to Child Pornography ChargesRead the Press Release
BOSTON – A Hyde Park man pleaded guilty yesterday in U.S. District Court in Boston to child pornography charges.
Geraldo Christiano DeSouza, 44, pleaded guilty to one count of possession of child pornography, one count of distribution of child pornography, one count of sexual exploitation of children and two counts of coercion and enticement of a minor to engage in sexual activity. U.S. District Court Judge George A. O’Toole scheduled sentencing for April 26, 2016.
In October 2012, law enforcement identified DeSouza after an undercover officer accessed a peer-to-peer file sharing program and discovered another user offering to share files containing child pornography. Investigators determined that the child pornography had been distributed from DeSouza’s residential address and executed a search warrant. The search uncovered multiple laptops and other computer media in DeSouza’s bedroom. Forensic review of the devices revealed numerous files of child pornography as well as evidence that DeSouza had engaged in sexual activity with a minor. Among other things, DeSouza “chatted” with his minor victims using various forms of social media and a webcam, and directed the minors to display themselves in a sexually explicit manner. Using his cell phone, DeSouza also filmed himself having sexual intercourse with one of his minor victims.
Under the terms of the plea agreement, the parties have agreed to recommend to the Court a sentence of 15 years in prison and five years of supervised release. Following release from prison, DeSouza will be required to register as a sex offender and will face immigration proceedings and removal from the United States.
The charge of possession of child pornography provides a sentence of no greater than 10 years in prison. The charge of distribution of child pornography provides a mandatory minimum sentence of five years and no greater than 20 years in prison. The charge of exploitation of children provides a mandatory minimum sentence of 15 years and no greater than 20 years in prison. The charge of coercion and enticement of a minor to engage in sexual activity each provide a mandatory minimum sentence of 10 years and no greater than a lifetime in prison. All charges also provide for five years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Matthew Etre, Special Agent in Charge of Homeland Security Investigations in Boston; Colonel Richard D. McKeon, Superintendent of the Massachusetts State Police; and Boston Police Commissioner William Evans, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Eve A. Piemonte.
The case is brought as part of Project Safe Childhood. In 2006, the Department of Justice created Project Safe Childhood, a nationwide initiative designed to protect children from exploitation and abuse. Led by the U.S. Attorneys’ Offices and the DOJ’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.
Sutton Man Convicted of Attempted Extortion of Family FarmRead the Press Release
BOSTON – A former salesman for a cattle farm in Maine, was convicted by a federal jury on Friday, Jan. 15 in U.S. District Court in Worcester for attempting to extort the farm’s owners.
James P. DiDonna, 50, of Sutton, Mass., was convicted following a week-long trial on one count of attempted extortion and one count of attempted collection of an extension of credit by extortionate means. U.S. District Court Judge Timothy S. Hillman scheduled sentencing for April 8, 2016.
In 2011, DiDonna was hired by Archer Angus, a family run cattle farm in Chesterville, Maine, as an independent salesman of its beef products. Archer Angus terminated DiDonna in July 2012. Between June and October 2013, DiDonna threatened the owners that if he was not paid, he would reveal supposedly damaging information about the farm – the complete nature of which he refused to reveal. Ultimately, DiDonna demanded $40,000 for his silence.
The charges each provide for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation made the announcement today. The case is being prosecuted by Assistant U.S. Attorneys William F. Bloomer and Giselle J. Joffre of Ortiz’s Major Crimes Unit.
Dorchester Man Sentenced to 15 Years for Sex TraffickingRead the Press Release
BOSTON – A Dorchester man was sentenced today in U.S. District Court in Boston in connection with his participation in a long-running sex trafficking conspiracy.
Corey Norris, a/k/a “Case,” a/k/a “Jacorey Johnson,” 26, of Dorchester, was sentenced today by U.S. District Court Judge Denise J. Casper to 15 years in prison and five years of supervised release. In September 2015, Norris pleaded guilty to one count each of conspiracy to sex traffic minors by force, fraud and coercion; sex trafficking and attempted sex trafficking of a minor; sex trafficking and attempted sex trafficking by force, fraud, and coercion; transportation of a minor to engage in criminal sexual activity; and conspiracy to transport a minor to engage in criminal sexual activity.
Norris’s conspiracy charge was based on his long relationship with co-defendant Raymond Jeffreys, 27, of Dorchester, Jamaica Plain, and Portland, Maine. Norris, Jeffreys, and others engaged in a long-running cross-country sex trafficking conspiracy from approximately August 2008 to May 2014 in Massachusetts, Maine, New Hampshire, Vermont, Rhode Island, Connecticut, Pennsylvania, New Jersey, New York, Maryland, Nevada, Georgia, Florida, and California. Norris was charged for both his involvement in the conspiracy, and for specific counts involving the sex trafficking of two 17-year-old girls. One of the girls was trafficked in the fall of 2011 in Massachusetts, Maine, Nevada, and California. The other girl was trafficked in Massachusetts and Rhode Island the following year.
During today’s sentencing hearing, U.S. District Judge Denise J. Casper described Norris’s crimes as “horrific,” noting that the victims were “targeted specifically because of their vulnerability.” Judge Casper also noted that the fact that “prostitution still finds paying customers” did not change the fact that the women who engaged in the sex acts were actual victims.
United States Attorney Carmen M. Ortiz, Matthew Etre, Special Agent in Charge of Homeland Security Investigations in Boston and Boston Police Commissioner William Evans, made the announcement today. Also assisting in the case were: Shawn Meehan, Resident Agent in Charge of the HSI Portland Office; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Aaron Steps, Supervisory Senior Resident Agent in Charge of the FBI Maine Office; the Suffolk County District Attorney’s Office; Cumberland County (Maine) District Attorney’s Office; the United States Attorney’s Office for the District of Maine; the Massachusetts State Police; the Portland (Maine), Old Town (Maine), Braintree, and South Portland (Maine) Police Departments; the Maine Drug Enforcement Agency; and the Cumberland County Sheriff’s Office. This case is being prosecuted by Assistant U.S. Attorneys Amy Harman Burkart and David J. D’Addio of Ortiz’s Civil Rights Enforcement Team and Special Assistant U.S. Attorney David S. Bradley of the Suffolk County District Attorney’s Office.
Sharon Men Indicted for Tobacco Tax Fraud and Money LaunderingRead the Press Release
BOSTON – Two Sharon men were charged today in U.S. District Court in Boston in connection with illegally selling tobacco products and laundering the proceeds.
Muhammad Saleem Iqbal, 53, and Kaleem Ahmad, 47, were indicted on one count of wholesale tobacco tax fraud and one count of money laundering conspiracy.
The indictment alleges that Iqbal and a business partner operated a wholesale business under the name “Pick N Dip,” in Norwood that sold tobacco products, including cigars and smokeless tobacco (such as snuff and chewing tobacco), as well as other non-tobacco items, to convenience stores, gas stations and other retail businesses. Under state law, smokeless tobacco wholesalers must file an excise tax form monthly and pay a 210% excise tax on smokeless tobacco brought into Massachusetts. Cigar wholesalers must file an excise tax form quarterly and must pay a 40% excise tax on cigars brought into Massachusetts
It is alleged that in order to evade tobacco taxes, beginning around 2010, Iqbal, Ahmad and business partner repeatedly purchased tens of thousands of dollars at a time worth of smokeless tobacco and cigars in Pennsylvania where no taxes are imposed for these tobacco products. They then arranged to have these tobacco products covertly transported to Massachusetts for resale, without filing the records required by Massachusetts state law and federal law, and without paying excise taxes.
Ahmad and others are alleged to have repeatedly engaged in large cash transactions in order to conceal and disguise the nature, location, source, ownership and control of the proceeds of their illegal tobacco business and to avoid transaction reporting requirements under federal and state law. The indictment alleges that Ahmad and others transported more than $50,000 in cash at a time from Massachusetts to Pennsylvania where the money was used to purchase additional untaxed smokeless tobacco and cigars.
The charges of wholesale tobacco tax fraud and money laundering conspirary each provide for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston; and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Stephen P. Heymann of Ortiz’s Economic Crimes Unit.
The details contained in the Indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Pennsylvania Man Pleads Guilty to Cyberstalking and “Sextorting” Massachusetts College StudentRead the Press Release
BOSTON – A Pennsylvania man pleaded guilty today in U.S. District Court in Boston to engaging in a “sextortion” campaign against a Boston-area college student.
James F. Connor V, 20, of West Chester, Penn., pleaded guilty to one count of cyberstalking and one count of extortion. U.S. District Court Judge William G. Young scheduled sentencing for April 7, 2016.
In 2012, Connor and the victim met through social media and developed an online relationship. In the course of that relationship, the victim sent Connor naked pictures of herself through Snapchat and engaged in sexually explicit video chats with him using FaceTime. Connor preserved many of these images without her consent. After the relationship ended, Connor attempted to continue communications with the victim and initiated a campaign of harassment and intimidation. He threatened to harm her physically and harm her reputation by publicly disseminating the sexually explicit images. Connor also repeatedly threatened to commit suicide if the victim did not take his calls, and sent her pictures of him holding a knife to his throat with blood, which was later determined to be fake, dripping down his neck.
In September 2015, Connor escalated his campaign of harassment when he began blackmailing the victim and threatening to send the sexually explicit images to her parents and Twitter followers if she did not send additional naked pictures and engage in sexually explicit video chats with him. As part of Connor’s cyberstalking and sextortion campaign, he sent the victim a detailed list of sexual demands, which included, among other things, that she send him five sexually explicit pictures and have five sexually explicit video chat sessions per week over a five week period. Connor also insisted that she break up with her current boyfriend.
Connor frequently employed a telephone and text message spoofing, or anonymizing, application that allows users to easily change telephone numbers to conceal their identity. In October 2015, Connor was arrested and charged via criminal complaint after the victim reported the threats and prior pattern of harassment to law enforcement authorities.
The charge of cyberstalking carries a sentence of no greater than five years in prison, three years supervised release and a fine of $250,000. The charge of extortion provides for a sentence of no greater than two years in prison, one year supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz, Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Jordi de Llano of Ortiz’s Major Crimes Unit.
Two Men Charged with Sex Trafficking WomenRead the Press Release
BOSTON – A Brockton man and a Boston man have been arrested and charged in U.S. District Court in Boston with sex trafficking. The indictment was unsealed in federal court today.
Kwamaine J. Wells, 26, was indicted on two counts of sex trafficking by force, fraud or coercion, four counts of transportation of an individual with intent to engage in prostitution, and one count of conspiracy to transport an individual for prostitution. Akil J. DeCoteau, 27, was indicted on one count of transportation of an individual with intent to engage in prostitution and one count of conspiracy.
According to the indictment, between April 2013 and February 2014, Wells transported four women between Maine, Massachusetts and New York with the intent that they engage in prostitution, and used force and threats to coerce two of the women to engage in prostitution. In January 2014, DeCoteau transported a woman between Maine, Massachusetts and New York with the intent that she engage in prostitution. The indictment further alleges that from May 2013 to January 2014, Wells and DeCoteau conspired together to transport women between Massachusetts, New Jersey and New York with the intent that they engage in prostitution.
The charge of sex trafficking provides for a mandatory minimum sentence of 15 years and a maximum penalty of life in prison, three years of supervised release and a fine of $250,000. The charge of transportation to engage in prostitution provides for a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz and Matthew Etre, Special Agent in Charge of the Homeland Security Investigations in Boston made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Miranda Hooker of Ortiz’s Civil Rights Enforcement Team.
The details contained in the indictment are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Three Indicted in Worcester Armory TheftRead the Press Release
BOSTON – Three individuals previously charged by complaint in connection with the theft of handguns and machineguns from the U.S. Army Reserve Center in Worcester, Mass. were indicted today by a federal grand jury.
James W. Morales, 34, of Cambridge, was indicted for being a felon in possession of firearms, possession of a machinegun, possession of stolen weapons, theft of government property, and conspiracy to possess stolen weapons. Tyrone James, 28, and Ashley Bigsbee, 26, both of Dorchester, were indicted for possession of stolen weapons, conspiracy to possess stolen weapons, and making false statements to federal agents. James was also indicted on being a felon in possession of firearms.
According to court documents it is alleged that, on Nov.14, 2015, Morales broke into the weapons vault at a U.S. Army Reserve Facility in Worcester, Mass. and stole six M-4 rifles and 10 Sig Sauer M11 9mm pistols. The rifles, which are capable of firing three round bursts, are machine guns under federal law. At the time of the robbery, Morales was wearing a state court mandated GPS device as a condition of his release on charges, including child rape, which are currently pending in Middlesex Superior Court.
According to court documents, DNA evidence left at the scene of the robbery and information from the GPS device allegedly placed Morales at the scene of the robbery. On Nov. 18, Morales was arrested in New York and found in possession of four of the stolen M-4 machineguns and two of the stolen M-11 handguns.
Subsequently the investigation began to focus on events that occurred on Page Street in Dorchester following the robbery. Electronic evidence, including evidence recovered from mobile phones belonging to James and Bigsbee, revealed that they had possessed the stolen weapons and negotiated to sell them. James and Bigsbee were both interviewed by federal agents and allegedly made false statements about their involvement with the stolen firearms. To date, all six of stolen the M-4 machineguns have been recovered and four of the ten M-11 handguns have been recovered.
The charges of being a felon in possession of a firearm, possession of a machinegun, and possession of stolen weapons provide for a sentence of no greater than 10 years in prison, three years of supervised release and a fine of up to $250,000 on each count. The charges of conspiracy to possess stolen weapons and making false statements to federal agents provide for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000 on each count. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors
United States Attorney Carmen M. Ortiz; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Daniel Kumor, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives, Boston Field Division; Matthew Etre, Special Agent in Charge of Homeland Security Investigations in Boston; Colonel Richard D. McKeon, Superintendent of the Massachusetts State Police; Chief Gary Gemme of the Worcester Police Department; Boston Police Commissioner William Evans; Sheriff Steven W. Tompkins of the Suffolk County Sheriff’s Department; and Commissioner Robert C. Haas of the Cambridge Police Department made the announcement today.
The case is being prosecuted by Assistant U.S. Attorneys Mark Grady and Cory Flashner of Ortiz’s Worcester Branch Office.
Saugus Store Owner and Brother Charged with Trafficking in Counterfeit iPhone ComponentsRead the Press Release
BOSTON – Two Peabody men were charged today in U.S. District Court in Boston with trafficking in counterfeit iPhone components at Accessory Unlimited, a store in Square One Mall in Saugus.
Micky Punjabi, 36, and his brother Hitesh Punjabi, 33, of Peabody, were charged with conspiring to traffick in counterfeit goods, specifically iPhone components that bore Apple trademarks but were not genuine Apple products. Micky Punjabi, who owned the store, was also charged with trafficking in the counterfeit Apple components.
According to court documents, from approximately December 2010 to February 2015, the Punjabis sold counterfeit Apple merchandise at Accessory Unlimited. Micky Punjabi also repaired genuine iPhones using counterfeit components allegedly purchased from sources outside the United States and from a supplier within the United States. Micky Punjabi knew that the goods he was selling were counterfeit, but sold and attempted to sell thousands of pieces of counterfeit merchandise.
The charge of conspiring to traffick in counterfeit goods provides a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000. The charge of trafficking in counterfeit goods provides a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $2 million. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz and Matthew Etre, Special Agent in Charge of Homeland Security Investigations in Boston, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Amy Harman Burkart of Ortiz’s Cybercrime Unit.
The details contained in the Information are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
United States Recovers over $133 Million for Fraudulent Nursing Home Therapy ClaimsRead the Press Release
BOSTON – United States Attorney Carmen M. Ortiz announced today settlement agreements totaling over $133 million with the nation’s largest nursing home rehabilitation therapy provider, RehabCare, now a part of Kindred Healthcare, of Louisville, Ky., and with four skilled nursing facility operators, Wingate Healthcare, Essex Group Management, Fundamental Administrative Services, and Frederick County (Maryland). The settlements resolve allegations that RehabCare and these nursing facility operators falsely inflated therapy reimbursement claims to Medicare. The false claims were based on unreasonable, unnecessary, or unskilled therapy, or on therapy that never occurred.
In conjunction with the finalization of the settlement, the government’s complaint and exhibits against RehabCare were unsealed.
“These False Claims Act settlements address allegations that RehabCare and its nursing facility customers engaged in a systematic and broad-ranging scheme to increase profits by delivering, or purporting to deliver, therapy in a manner that was focused on increasing Medicare reimbursement rather than on the clinical needs of patients,” said U.S. Attorney Ortiz. “The complaint outlines the extent and sophistication of this fraud, and the government’s continuing work to ensure that the provision of care in skilled nursing facilities is based on patients’ clinical needs.”
The complaint alleges that RehabCare’s schemes included the following:
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Presumptively placing patients in the highest therapy category, rather than relying on individualized evaluations to determine the level of care most suitable for each patient’s clinical needs;
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“Ramping,” i.e., during the period prior to October 1, 2011, boosting the amount of reported therapy during so-called “assessment reference periods,” thereby causing and enabling nursing facilities to bill for the care of their Medicare patients at the highest therapy reimbursement level, while providing materially less therapy to those same patients outside the assessment reference periods when the nursing facilities were not required to report to Medicare the amount of provided therapy;
Scheduling and reporting the provision of therapy to patients even after the patients’ treating therapists had recommended that they be discharged from therapy;
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Arbitrarily shifting the number of minutes of planned therapy between different therapy disciplines to ensure targeted therapy reimbursement levels were achieved, regardless of the clinical need for the therapy;
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Providing significantly higher amounts of therapy at the end of a therapy measurement period not due to medical necessity but to reach the minimum time threshold for the highest therapy reimbursement level and thus to cause and enable nursing facilities to bill for the care of their Medicare patients accordingly, even though the patients were receiving materially less therapy on preceding days;
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Inflating initial reimbursement levels by reporting time spent on initial evaluations as therapy time in violation of the Medicare prohibition on counting initial evaluation time as therapy time;
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Reporting that skilled therapy had been provided to patients when in fact the patients were asleep or otherwise unable to undergo or benefit from skilled therapy, e.g., when a patient had been transitioned to palliative end-of-life care; and
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Reporting estimated or rounded minutes instead of reporting the actual minutes of therapy provided.
“Medicare beneficiaries are entitled to receive care that is dictated by their clinical needs rather than the fiscal interests of healthcare providers,” said Acting Assistant Attorney General Benjamin C. Mizer for the Justice Department’s Civil Division. “All providers, whether contractors or direct billers of taxpayer-funded federal healthcare programs, must be held accountable when their actions knowingly cause bills for unnecessary services.”
“Patients and taxpayers rightly expect nothing less than suitable, high-quality health care,” said Phillip M. Coyne, Special Agent in Charge, Office of Inspector General of the U.S. Department of Health and Human Service’s Boston Regional Office. “Providers more concerned with increasing Medicare profits, though, can expect an aggressive investigation and prosecution.”
"Whether it’s false billing or unnecessary medical treatments, the FBI will continue to aggressively investigate healthcare providers that fraudulently bill Medicare,” said Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division. “Together, with our law enforcement partners, we’ll pursue those individuals and institutions that look to abuse the healthcare system in favor of their bottom line."
The settlements announced today include: a $125 million settlement with RehabCare; a $3.9 million settlement with Wingate Healthcare and 16 of its nursing facilities in Massachusetts and New York; a $1.375 million settlement with Essex Group Management and two of its Massachusetts nursing facilities, Brandon Woods of Dartmouth and Blaire House of Milford; a $2.2 million settlement with Fundamental and two of its nursing facilities, Broomall (Pennsylvania) Rehabilitation and Nursing Center and The Courtyards at Fort Worth (Texas); and a $750,000 settlement with Frederick County, Maryland, which formerly operated the Citizens Care nursing facility in Frederick, Md.
Several other nursing facility operators previously settled with the United States for their role in submitting to Medicare claims that were false because of RehabCare’s alleged misconduct:
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Life Care Services LLC and CoreCare V LLP
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Episcopal Ministries to the Aging Inc.
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Catholic Health Care System
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Ross Manor
HHS Hotline. The government encourages anyone with information about the practices described in the government’s complaint, or similar practices involving rehabilitation therapy in nursing facilities, to contact the Department of Health and Human Services, Office of Inspector General hotline via telephone, 1-800-HHS-TIPS (1-800-447-8477), or in writing via https://oig.hhs.gov/fraud/report-fraud/.
The settlements with RehabCare and Wingate Healthcare arise from a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act. See United States ex rel. Halpin and Fahey v. Kindred Healthcare, Inc., No. 11-12139-RGS (D. Mass.). The False Claims Act permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery.
This matter was investigated by the U.S. Department of Health and Human Services, Office of the Inspector General and the Federal Bureau of Investigation. It was handled by Assistant U.S. Attorneys Gregg Shapiro, Patrick Callahan, and Kriss Basil of Ortiz’s Civil Division and Department of Justice Trial Attorneys Christelle Klovers and Rohith Srinivas.
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Former State Representative’s Cash Stash GrowsRead the Press Release
BOSTON – The U.S. Attorney’s Office, working with the U.S. Marshals Service and the Internal Revenue Service, have recovered more than an additional $1 million in cash as well as jewelry and luxury watches as a result of seizures Thursday, Jan. 7, 2016 and in late December 2015. In total, more than $2.5 million in concealed cash and other valuables have been recovered from safe deposit boxes controlled by John George, a former Dartmouth Selectman and State Representative. George was convicted and sentenced in 2015 on federal charges related to his embezzlement from a taxpayer-subsidized bus company which he controlled.
Thursday, special agents with the IRS seized over $800,000 in cash, as well as four Rolex watches and jewelry from three safe deposit boxes controlled by George. In several related seizures in December, U.S. Marshals discovered over $1.6 million in cash.
The money was recovered from seven safe deposit boxes filled with cash tied up in rolls of $100s, $50s, and other denominations. The safe deposit boxes were located at three banks in New Bedford and Fairhaven. Thursday’s actions followed court authorization to recover the additional funds discovered while executing the original search and seizure warrants in December.
George, 68, was sentenced to 70 months in prison in July 2015 for embezzling hundreds of thousands of dollars from the Southeastern Regional Transit Authority (SRTA).
George owned Union Street Bus Company (USBC), a New Bedford-based company that operated public buses. During the same period, George operated John George Farms (JG Farm), a large produce farm based in Dartmouth. From approximately 1991 to 2011, USBC was awarded the Southeastern Regional Transit Authority (SRTA) contract to operate the SRTA public bus system that served a region that included New Bedford, Fall River, and several other neighboring towns.
While USBC had the SRTA contract, George conspired to have USBC employees work at JG Farm during their assigned USBC work hours. Such farm work included plowing, loading produce, and operating a produce stand at JG Farm, all during USBC business hours. As part of the conspiracy, George deployed USBC workers to JG Farm to repair farm equipment and used USBC equipment and labor to provide personal out-of-state roadside assistance. George also inflated his final yearly salary from $75,000 to $275,000 in an attempt to fraudulently boost his SRTA pension.
From 2007 to 2011, George deposited only $5,000 in cash into his JG Farm business checking account despite the fact that JG Farm was the largest retail produce farm in Southeastern Massachusetts and did most of its business in cash.
Prior to his July 2015 sentencing, George was required to disclose his financial status to the Court. At that time, he stated that his liquid assets only consisted of about $160,000 in bank accounts and approximately $28,000 in cash.
United States Attorney Carmen M. Ortiz, William P. Offord, Special Agent in Charge of the IRS-Criminal Investigation and John Gibbons, U.S. Marshal for the District of Massachusetts, made the announcement today. The criminal forfeiture was handled by Assistant U.S. Attorney Doreen Rachal of Ortiz’s Asset Forfeiture Unit working in conjunction with the U.S. Marshal’s Asset Forfeiture Unit. The criminal case was investigated by the U.S. Department of Transportation, Office of the Inspector General, and was prosecuted by Assistant U.S. Attorneys Dustin Chao and Ryan M. DiSantis of Ortiz’s Public Corruption Unit.
New Bedford Woman Pleads Guilty to Stealing over $60,000 in Social Security BenefitsRead the Press Release
BOSTON – Lynn Medeiros, 49, of New Bedford, pleaded guilty today in U.S. District Court in Boston to stealing over $60,000 in Social Security benefits by continuing to collect her disabled son’s benefits after he left her custody. U. S. District Court Judge Nathaniel M. Gorton scheduled sentencing for April 13, 2016.
In April 2005, Medeiros applied for Social Security Supplemental Security Income (SSI) disability benefits on behalf of her son. By signing the application, Medeiros acknowledged her responsibility to notify Social Security if her son left her custody or otherwise changed his living arrangements. Her son was approved for benefits, and his monthly Social Security checks were issued to Medeiros as his representative payee.
Beginning in August 2007, Medeiros’s son ceased to reside with her. However, each year from 2008 to 2013, Medeiros submitted forms to Social Security falsely stating that her son was still living with her and that she was spending the Social Security money on his behalf. In this manner, from August 2007 through August 2014, Medeiros converted $63,798 in benefits to her own use.
United States Attorney Carmen M. Ortiz and Scott Antolik, Special Agent in Charge of the Social Security Administration, Office of Inspector General, Office of Investigations, Boston Field Division, made the announcement today. The case is being prosecuted by Special Assistant U.S. Attorney Timothy Landry of Ortiz’s Major Crimes Unit.
Former State Representative’s Cash Stash GrowsRead the Press Release
BOSTON – The U.S. Attorney’s Office, working with the U.S. Marshals Service and the Internal Revenue Service, have recovered more than an additional $1 million in cash as well as jewelry and luxury watches as a result of seizures yesterday and in late December 2015. In total, more than $2.5 million in concealed cash and other valuables have been recovered from safe deposit boxes controlled by John George, a former Dartmouth Selectman and State Representative. George was convicted and sentenced in 2015 on federal charges related to his embezzlement from a taxpayer-subsidized bus company which he controlled.
Yesterday, special agents with the IRS seized over $800,000 in cash, as well as four Rolex watches and jewelry from three safe deposit boxes controlled by George. In several related seizures in December, U.S. Marshals discovered over $1.6 million in cash.
The money was recovered from seven safe deposit boxes filled with cash tied up in rolls of $100s, $50s, and other denominations. The safe deposit boxes were located at three banks in New Bedford and Fairhaven. Yesterday’s actions followed court authorization to recover the additional funds discovered while executing the original search and seizure warrants in December.
George, 68, was sentenced to 70 months in prison in July 2015 for embezzling hundreds of thousands of dollars from the Southeastern Regional Transit Authority (SRTA).
George owned Union Street Bus Company (USBC), a New Bedford-based company that operated public buses. During the same period, George operated John George Farms (JG Farm), a large produce farm based in Dartmouth. From approximately 1991 to 2011, USBC was awarded the Southeastern Regional Transit Authority (SRTA) contract to operate the SRTA public bus system that served a region that included New Bedford, Fall River, and several other neighboring towns.
While USBC had the SRTA contract, George conspired to have USBC employees work at JG Farm during their assigned USBC work hours. Such farm work included plowing, loading produce, and operating a produce stand at JG Farm, all during USBC business hours. As part of the conspiracy, George deployed USBC workers to JG Farm to repair farm equipment and used USBC equipment and labor to provide personal out-of-state roadside assistance. George also inflated his final yearly salary from $75,000 to $275,000 in an attempt to fraudulently boost his SRTA pension.
From 2007 to 2011, George deposited only $5,000 in cash into his JG Farm business checking account despite the fact that JG Farm was the largest retail produce farm in Southeastern Massachusetts and did most of its business in cash.
Prior to his July 2015 sentencing, George was required to disclose his financial status to the Court. At that time, he stated that his liquid assets only consisted of about $160,000 in bank accounts and approximately $28,000 in cash.
United States Attorney Carmen M. Ortiz, William P. Offord, Special Agent in Charge of the IRS-Criminal Investigation and John Gibbons, U.S. Marshal for the District of Massachusetts, made the announcement today. The criminal forfeiture was handled by Assistant U.S. Attorney Doreen Rachal of Ortiz’s Asset Forfeiture Unit working in conjunction with the U.S. Marshal’s Asset Forfeiture Unit. The criminal case was investigated by the U.S. Department of Transportation, Office of the Inspector General, and was prosecuted by Assistant U.S. Attorneys Dustin Chao and Ryan M. DiSantis of Ortiz’s Public Corruption Unit.
Former Nurse Pleads Guilty to Stealing Narcotics from HospitalRead the Press Release
BOSTON – A former nurse at Franklin Baystate Medical Center in Greenfield, Mass. pleaded guilty today in U.S. District Court in Springfield to stealing pain medication from the hospital’s automated drug dispensing machine.
Daniel Herlocker, 41, of Brattleboro, Vt., pleaded guilty to an Information charging him with acquiring and obtaining controlled substances by deception and subterfuge.
In fall 2014, while Herlocker was employed as a nurse at Franklin County Medical Center, he diverted Dilaudid, also known as hydromorphone, as well as morphine from sterile cartridge units known as carpujects. The carpujects were stored in an automated drug dispensing machine. Herlocker syphoned the drugs from the carpujects with sterile needles and replaced the medications with sterile saline solution.
The charging statute provides a sentence of no greater than four years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Spencer Morrison, Acting Special Agent in Charge of the Food and Drug Administration, Office of Criminal Investigations, New York Field Office; and Monica Bharel, MD, MPH, Commissioner of the Massachusetts Department of Public Health, Division of Food and Drugs, Drug Control Program, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Karen L. Goodwin of Ortiz’s Springfield Branch Office.
Boston Man Arrested for Multiple RobberiesRead the Press Release
BOSTON – A Boston man was arrested today and charged with robbing three financial institutions: the East Cambridge Saving Bank and Naveo Credit Union in Cambridge and Rockland Trust in Allston.
Kim N. Daley, 46, was charged by criminal complaint with three counts of bank robbery. U.S. District Court Magistrate Judge Donald L. Cabell scheduled a detention and probable cause hearing for Jan. 14, 2016.
According to court documents, on June 1, 2015, an individual later identified as Daley, entered the East Cambridge Savings Bank in Cambridge and gave the teller a note demanding money. The teller handed Daley money from her drawer and he fled the bank. Surveillance video recorded the robbery and Daley’s image was circulated on the Massachusetts Crime Network. A state parole officer recognized Daley as the robber and notified the Cambridge Police Department.
On Aug. 7, 2015, an individual, later identified as Daley, entered the Rockland Trust in Allston. Once again, Daley gave the teller a note demanding money. The teller handed Daley money from her drawer and he fled the bank. Following the robbery, Daley was identified by bank employees from a photo array.
On Aug.14, 2015, an individual, later identified as Daley, entered the Naveo Credit Union in Cambridge. Daley gave the teller a note demanding money and stated, “hurry up, I have a gun.” The teller handed Daley money from her drawer and he then fled the bank. Surveillance cameras recorded the robbery which law enforcement reviewed and identified Daley.
On Aug. 21, 2015, Daley was arrested in New York City and transported to Massachusetts to face charges.
The charging statue provides for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of up to $250,000 on each count. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Boston Police Commissioner William Evans; Cambridge Police Commissioner Robert C. Haas; and John Gibbon, U.S. Marshal for the District of Massachusetts, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Kenneth G. Shine of Ortiz’s Major Crimes Unit.
Notice to Potential Victims Concerning Manipulation of Medical Authorizations for Actonel® and Atelvia®Read the Press Release
BOSTON - Pharmaceutical company WARNER CHILCOTT has agreed to plead guilty to health care fraud and pay $125 million to resolve criminal and civil liability arising from the illegal promotion of various drugs. A portion of the illegal conduct related to the manipulation of “prior authorizations” for the osteoporosis medications Actonel® and Atelvia®. A prior authorization is a medical form that some insurance companies require when a physician prescribes a drug that the insurance company does not ordinarily cover. A prior authorization generally contains a medical justification for the prescription of the drug. In some instances, WARNER CHILCOTT sales representatives falsified prior authorizations for Actonel® and Atelvia®, using false medical justifications, so that insurance companies would pay for these drugs.
Insurance companies who paid for Actonel® and/or Atelvia®, or individuals who paid co-payments for these drugs, based on manipulated prior authorizations between June 2010 and February 2012, may be eligible for restitution. For information on submitting a victim restitution claim, please visit the U.S. Attorney’s Office website http://www.justice.gov/usao-ma/united-states-v-warner-chilcott-sales-us-llc to access the link for the Warner Chilcott case. Potentially affected individuals/companies have until March 31, 2016 to submit the restitution claim form.
Former State Representative’s Safety Deposit Boxes Reveal a Trove of Bundled CashRead the Press Release
BOSTON – This week U.S. Marshals discovered and seized over one million dollars in small bundles of cash concealed in several safe deposit boxes controlled by John George, a former Dartmouth Selectman and State Representative. George was convicted and sentenced earlier this year on federal charges related to his embezzlement from a taxpayer-subsidized bus company which he controlled.
In July 2015, George, 68, was sentenced to 70 months in prison for embezzling hundreds of thousands of dollars from the Southeastern Regional Transit Authority (SRTA). As part of his sentence, U.S. District Court Judge Denise J. Casper ordered George to pay $688,772 in restitution and forfeit an additional $1.38 million to the United States. Pursuant to the money judgment and sentence, the U.S. Attorney’s Office and U.S. Marshals sought search and seizure warrants from the Court to obtain assets which they believed were being concealed by George. Over the last two days, U.S. Marshals gained access to George’s safe deposit boxes at banks in New Bedford and Fairhaven. They discovered over-sized safe deposit boxes filled to the brim with cash tied up in rolls of $100s, $50s, and other denominations.
George owned Union Street Bus Company (USBC), a New Bedford-based company that operated public buses. During the same period, George operated John George Farms (JG Farm), a large produce farm based in Dartmouth. From approximately 1991 to 2011, USBC was awarded the Southeastern Regional Transit Authority (SRTA) contract to operate the SRTA public bus system that served a region that included New Bedford, Fall River, and several other neighboring towns.
While USBC had the SRTA contract, George conspired to have USBC employees work at JG Farm during their assigned USBC work hours. Such farm work included plowing, loading produce, and operating a produce stand at JG Farm, all during USBC business hours. As part of the conspiracy, George deployed USBC workers to JG Farm to repair farm equipment and used USBC equipment and labor to provide personal out-of-state roadside assistance. George also inflated his final yearly salary from $75,000 to $275,000 in an attempt to fraudulently boost his SRTA pension.
From 2007 to 2011, George deposited only $5,000 in cash into his JG Farm business checking account despite the fact that JG Farm was the largest retail produce farm in Southeastern Massachusetts and did most of its business in cash.
Prior to his July 2015 sentencing, George was required to disclose his financial status to the Court. At that time, he stated that his liquid assets only consisted of about $160,000 in bank accounts and approximately $28,000 in cash.United States Attorney Carmen M. Ortiz and John Gibbons, U.S. Marshal for the District of Massachusetts, made the announcement today. The criminal forfeiture was handled by Assistant United States Attorney Doreen Rachal of Ortiz’s Asset Forfeiture Unit and the U.S. Marshal’s Asset Forfeiture Unit in the District of Massachusetts.
The criminal case was investigated by the U.S. Department of Transportation, Office of the Inspector General, and was prosecuted by Assistant U.S. Attorneys Dustin Chao and Ryan M. DiSantis of Ortiz’s Public Corruption Unit.
Third Arrest Made in Worcester Armory TheftRead the Press Release
BOSTON – A Dorchester man was arraigned in U.S. District Court in Worcester yesterday in connection with selling weapons that were stolen from the U.S. Army Reserve Center in Worcester (Worcester Armory) and for making false statements to federal agents.
Tyrone James, 28, was charged with one count of being a felon in possession of a firearm and one count of making false statements. James was returned to state custody following his initial appearance. U.S. District Court Magistrate Judge David H. Hennessy scheduled a detention and probable cause hearing for Jan. 4, 2016.
According to court documents, On Nov. 19, 2015, James Morales was arrested and charged in connection with the theft of 16 weapons from the Worcester Amory. On Nov. 20, 2015, federal agents searched the residence of Ashlee Bigsbee and Tyrone James who had met with Morales the day after the robbery. According to Morales, Bigsbee introduced Morales to James who then arranged the sale of five handguns in two separate transactions. During an interview with federal agents, it is alleged that James falsely denied having knowledge of the stolen weapons or having been involved in their sale. However, forensic examiners recovered numerous previously-deleted text messages in which James allegedly offered to arrange for the sale of weapons stolen from the Worcester Armory. For example, on Nov. 15, 2015 Tyrone texted one contact, “Bro hit me if u know anyone lookin for any blicks.” In a separate conversation, James allegedly negotiated the sale of three M-11 handguns for $900.
On Nov. 19, 2015, James Morales was arrested and charged with one count of unlawful possession of a machine gun, one count of unlawful possession of stolen firearms and one count of theft of government property. Ashley Bigsbee has been charged with one count of unlawful possession of stolen firearms and one count of false statements.
The FBI is offering up to a $15,000 reward for information which leads to the recovery of the remaining missing firearms. Anyone with information should call the FBI at 617-742-5533 or visit https://www.fbi.gov/boston/press-releases/2015/fbi-offers-15-000-reward-to-recover-stolen-firearms.
The charge of being a felon in possession of firearms provides for a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000. The charge of making a false statement provides for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Daniel J. Kumor, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms & Explosives, Boston Field Division; Matthew Etre, Special Agent in Charge of Homeland Security Investigations in Boston; Colonel Richard D. McKeon, Superintendent of the Massachusetts State Police; Boston Police Commissioner William Evans; Chief Gary Gemme of the Worcester Police Department; and Commissioner Haas of the Cambridge Police Department, made the announcement today. The case is being prosecuted by Assistant U.S. Attorneys Mark Grady and Corey Flashner of Ortiz’s Worcester Branch Office.
The details contained in the charging document are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in the court of law.
Coloplast Corp. and Liberator Medical Agree to Pay $3.6 Million to Resolve Kickback AllegationsRead the Press Release
BOSTON – The U.S. Attorney’s Office announced today that Coloplast Corp., a manufacturer of ostomy and continence care products, and Liberator Medical Supply, Inc., a medical products supplier, have agreed to pay $3,160,000 and $500,000, respectively, to resolve allegations that Coloplast paid unlawful kickbacks to several medical suppliers, including Liberator, to induce them to conduct promotional campaigns designed to refer individual users to Coloplast products.
“The payment of kickbacks to induce purchases of medical supplies undermines our federal health care programs, ultimately distorting consumer purchasing decisions, and increasing health care costs,” said United States Attorney Carmen M. Ortiz. “Investigating claims of misguided business practices, at the expense of patient health, will continue to be a top priority in our healthcare enforcement efforts.”
The Justice Department’s Principal Deputy Assistant Attorney General Benjamin C. Mizer stated that “this settlement displays the commitment of the Justice Department to protect vulnerable patients in federal health care programs from corporate marketing practices that are not in those patients’ best interests.”
“Both of these companies acted with their own self-interests in mind, putting profits over patient care,” said Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division. “The decision on which medical products to refer should be based on what is best for the patient, not on cash incentives or rebates.”
The settlement with Coloplast resolves allegations that it paid kickbacks to Byram Healthcare Centers, Inc.; CCS Medical, Inc.; Liberator; Liberty Medical, Inc.; and Handi Medical, Inc. in return for marketing promotions and conversion campaigns. In the case of Byram, Liberty, and Handi, Coloplast’s promotional campaigns allegedly included kickbacks in the form of funding for cash incentives – sometimes known as “spiffs” – paid to the suppliers’ sales personnel to induce them to refer patients to Coloplast products. In other instances, Coloplast allegedly gave rebates or price concessions as inducements for the promotional campaigns.
The settlement with Liberator resolves allegations that Liberator received kickbacks from Coloplast, in the form of price concessions, in return for Liberator’s agreement to conduct two campaigns promoting Coloplast ostomy products to Liberator’s customers.
The settlements resolve allegations brought forth in a whistleblower lawsuit filed by two former employees and one current employee of Coloplast under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery. The whistleblowers’ share of the Coloplast and Liberator settlements has not been determined. Claims against other defendants in the case remain outstanding.
The investigation was conducted by the Federal Bureau of Investigation and the Department of Health and Human Services Office of Inspector General. The case is being handled by Assistant U.S. Attorneys George Henderson and Kriss Basil in Ortiz’s Civil Division and Trial Attorney Jay Majors in the Justice Department’s Civil Division, Commercial Litigation Branch.
The case is captioned United States ex rel. Herman, et al. v. Coloplast Corp., et al. Case No. 11-cv-12131-RWZ (D. Mass.).
Clinical Director of Home Care Agency Sentenced in Medicare Fraud SchemeRead the Press Release
BOSTON – The clinical director of a home nursing agency was sentenced yesterday in U.S. District Court in Boston in connection with her role in a multi-million dollar scheme to defraud Medicare.
Janie Troisi, 66, of Revere, was sentenced by U.S. District Court Judge Douglas P. Woodlock to three years in prison and three years of supervised release. In August 2015, Troisi was convicted following a five-day trial of conspiracy to commit health care fraud and 10 counts of health care fraud.
Troisi, a registered nurse, was the Clinical Director of At Home VNA (AHVNA), a home health agency located in Waltham, which was owned and operated by her co-conspirator, Michael Galatis, also a registered nurse. From 2009 to 2012, Troisi conspired with Galatis to submit more than $3.5 million in fraudulent home health care claims to Medicare.
The Medicare program only pays for home health services under certain conditions, including that a physician has certified that the patient is homebound and needs certain skilled services. Troisi ignored these requirements and trained AHVNA nurses to recruit healthy individuals with Medicare insurance who lived in large apartment buildings. Troisi held “wellness clinics” at these buildings where nurses convinced senior citizens to enroll with AHVNA and have a nurse visit them in their home. Troisi and Galatis trained AHVNA nurses to manipulate the patients’ Medicare assessment forms to make it appear as though the patients qualified for Medicare home health services, when that was often not the case. Troisi also worked in concert with Dr. Spencer Wilking, AHVNA’s in-house Medical Director, who was paid to sign the home health care orders, even though Dr. Wilking did not examine the vast majority of AHVNA’s patients.
The patients’ primary care physicians did not refer the patients to AHVNA and were unaware that AHVNA was sending nurses to see their patients in their homes. A number of primary care physicians who learned of AHVNA’s services complained to Troisi, informing her that the patients did not need a visiting nurse, but Troisi ignored these complaints. Similarly, AHVNA’s nurses frequently informed Troisi that the patients did not need a visiting nurse, but Troisi refused to discharge the patients and continued to cause Medicare billing.
In 2011, Medicare passed a new requirement that a physician certify that she or he had a face-to-face encounter with the patient about the need for home health care. Even after this regulation was enacted, Troisi continued to cause the submission of millions of dollars of Medicare claims for home health care even though Dr. Wilking continued to sign each order without examining any of the patients.
Galatis was convicted of conspiracy to commit health care fraud, 10 counts of health care fraud, and seven counts of money laundering. He was sentenced in February 2015 to 92 months in prison. Dr. Wilking pleaded guilty to health care fraud and sentenced to one year of home confinement and a fine of $7,500.
United States Attorney Carmen M. Ortiz; Philip Coyne, Special Agent in Charge of the U.S. Health and Human Services, Office of Inspector General, Office of Investigations; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today. Assistance was also provided by the New England Benefit Integrity Support Center, a fraud contractor for the Medicare program. The case was prosecuted by Assistant U.S. Attorneys Lisa Asiaf Schlatz and David S. Schumacher of Ortiz’s Health Care Fraud Unit.
Randolph Man Charged with Defrauding Dreamworks by Falsely Claiming He Created Kung Fu PandaRead the Press Release
BOSTON – A Randolph man was indicted on wire fraud and perjury charges in connection with his scheme to defraud DreamWorks Animation SKG, Inc., by falsely claiming that the company stole the characters and story for its animated movie, Kung Fu Panda.
Jayme Gordon, 51, was charged in an indictment unsealed today in U.S. District Court in Boston with four counts of wire fraud and three counts of perjury. He is scheduled to appear before U.S. District Court Magistrate Judge Judith D. Dein at 1:30 p.m. today.
“Our intellectual property laws are designed to protect creative artists, not defraud them,” said U.S. Attorney Carmen M. Ortiz. “The misuse of civil litigation as part of a fraud scheme, and lying under oath, as alleged in this case, warp our federal judicial system and must be addressed with appropriate criminal sanctions.”
“As alleged, Mr. Gordon went to great lengths to orchestrate and maintain this fraudulent scheme, trying to take credit for ideas he did not come up with nor work he simply did not do,” said Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division. “This case demonstrates the FBI’s commitment to root out individuals who try to steal ideas and information from hard-working American companies.”
According to the indictment, Gordon filed the lawsuit as part of a fraud scheme designed to obtain a multi-million-dollar settlement from DreamWorks. To further his fraud and persuade DreamWorks to agree to a settlement, Gordon fabricated and backdated drawings of characters similar to those in Kung Fu Panda, lied repeatedly during his deposition, and destroyed computer evidence that he was required to produce in civil discovery.
The indictment alleges that beyond the superficial similarities, the panda characters (pictured below) and story that Gordon created during the 1990s has very little in common with DreamWorks’ movie, Kung Fu Panda.
The indictment alleges that, in early 2008, several months before the movie’s June 2008 release, Gordon saw a trailer for Kung Fu Panda. After seeing that trailer, Gordon revised his “Panda Power” drawings and story, which he renamed “Kung Fu Panda Power.” He made these revisions as part of his scheme, so that his work would appear to be more similar to the DreamWorks pandas he had seen in the trailer. In February 2011, Gordon filed a copyright infringement suit against DreamWorks in U.S. District Court in Massachusetts, and later that year, he proposed that DreamWorks agree to settle the suit by paying him $12 million. DreamWorks rejected that proposal, and the litigation continued for another two years.
During the course of the litigation, it is alleged that Gordon intentionally deleted relevant evidence on his computer that he was required to produce in discovery and lied during his civil deposition. Furthermore, Gordon fabricated and backdated sketches that served as support for his suit. The full nature of Gordon’s scheme came to light when DreamWorks discovered that Gordon had traced some of his panda drawings from a Disney Lion King coloring book (shown below).
The indictment also alleges that Gordon’s other sketches, which were dated 1993 or 1994, were copied from this coloring book, which was not published until 1996, therefore demonstrating that Gordon drew these sketches after 1996 and backdated them. After DreamWorks discovered the tracing from the coloring book, Gordon agreed to dismiss his suit. By this point, however, DreamWorks had spent more than two years defending the fraudulent suit, at a cost of approximately $3 million.
The charge of wire fraud provides for a sentence of no greater than 20 years in prison, three years of supervised release, a fine of $250,000 and restitution. The charge of perjury provides for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
U.S. Attorney Ortiz and FBI SAC Shaw made the announcement today. The case is being prosecuted by Assistant U.S. Attorneys Adam Bookbinder and Amy Harman Burkart of Ortiz’s Cybercrime Unit. The U.S. Attorney’s Office and FBI would like to thank DreamWorks for its assistance during the investigation of this case.
The details contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Attachments:
- Gordon's Characters
- Dreamworks Po and Master Shifu
- 1996 Disney Coloring Book
- Gordon's 2000 Registration
Former Department of Defense Contractor Pleads Guilty to Making False Statement and Damaging Army ComputersRead the Press Release
BOSTON – A Westfield resident who previously served in the Chinese People’s Liberation Army pleaded guilty in U.S. District Court in Springfield on Friday, Dec. 18, 2015, to lying on his security clearance form and damaging U.S. Army computers.
Wei Chen, 62, pleaded guilty to making a false statement and damaging a U.S. Army computer. U.S. District Court Judge Mark G. Mastroianni scheduled sentencing for March 29, 2016.
Prior to immigrating to the United States and becoming a citizen in 2006, Chen served in the People’s Liberation Army. In 2010, Chen applied for a job as a computer system administrator for a Department of Defense (DOD) contractor, which required him to have a Secret-level security clearance. To obtain that clearance, Chen completed a questionnaire on which he certified that he understood that a false statement could be punished by imprisonment. Nonetheless, in response to the form’s question about whether he had ever served in a foreign country’s military, Chen falsely answered, “no.” Chen lied on this form because he believed that a truthful answer would reduce his chances of receiving the security clearance he needed to work as a DOD contractor. After submitting the form with false information, Chen received a secret level security clearance and was assigned to work for the U.S. Army as a system administrator at Camp Buehring in Kuwait.
On June 15 and 16, 2013, Chen connected one or more of his own thumb drives to computers at Camp Buehring that were connected to the Army’s unclassified network and the classified Secret-level network. Chen then made an effort to cover his tracks and hide his security violation. Specifically, he cleared network logs on the server that would have documented the connection of the thumb drive to the network server. Chen also copied a computer file, containing saved e-mail and documents, from his Secret-level workstation onto his thumb drive.
The charging statutes provides a sentence of no greater than five years in prison on the false statement charge and 10 years in prison on the charge of damaging a computer, three years of supervised release, a fine of $250,000 for each charge, and forfeiture. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and Daniel Andrews, Director of the Computer Crime Investigative Unit of the U.S. Army Criminal Investigation Command, made the announcement. The case is being prosecuted by Assistant U.S. Attorneys Adam Bookbinder and B. Stephanie Siegmann of Ortiz’s Criminal Division.
Extradited Chinese National Guilty of Supplying Iran with Goods Used to Make Nuclear Weapons-Grade UraniumRead the Press Release
BOSTON – A Chinese national pleaded guilty today in U.S. District Court in Boston in connection with supplying Iran with pressure transducers which could be used to make nuclear weapons-grade uranium.
Sihai Cheng, a/k/a Chun Hai Cheng, a/k/a Alex Cheng, 35, a citizen of the People’s Republic of China (PRC), pleaded guilty to two counts of conspiring to commit export violations and smuggle goods from the United States to Iran and four counts of illegally exporting U.S. manufactured pressure transducers to Iran. U.S. District Court Chief Judge Patti B. Saris scheduled sentencing for Jan. 27, 2016.
In 2013, Cheng was charged in an indictment along with Seyed Abolfazl Shahab Jamili, an Iranian national, and two Iranian companies, Nicaro Eng. Co., Ltd. (Nicaro) and Eyvaz Technic Manufacturing Company (Eyvaz), with conspiring to export, and exporting, highly sensitive U.S. manufactured goods with nuclear applications to Iran from at least 2009 to 2012. In December 2014, Cheng was extradited from the United Kingdom to this county and has remained in U.S. custody since then. Jamili remains a fugitive, and the U.S. government, through Interpol, has requested his arrest to face prosecution in the United States.
From February 2009 through at least 2011, Cheng, Jamili, and a third individual conspired with each other and others in the PRC and Iran to illegally obtain hundreds of U.S. manufactured pressure transducers manufactured by MKS Instruments, Inc., a company headquartered in Massachusetts, and export them to Iran. Pressure transducers can be used in gas centrifuges to enrich uranium and produce weapons-grade uranium and are therefore subject to strict export controls. They cannot be shipped from the United States to China without an export license or shipped from the United States to Iran at all. Today, Cheng admitted to causing the export of 185 pressure transducers from the United States to Iran in 2009.
Initially, the parts were exported to the PRC using fraudulently obtained U.S. Department of Commerce export licenses. When they arrived in the PRC, Cheng inspected them in the Shanghai Free Trade Zone and removed their U.S./MKS serial numbers to conceal the fact that he was violating U.S. law. Cheng then caused the MKS pressure transducers to be exported to Iran knowing that the parts were being supplied to the Government of Iran. Jamili advised Cheng that the Iranian end-user was Kalaye Electronic Company, which the U.S. Government designated as a proliferator of weapons of mass destruction in 2007 for its work with Iran’s nuclear centrifuge program.
MKS Instruments, Inc., is not a target of this investigation and has been cooperating in this matter.
The charging statutes provide a sentence of no greater than 20 years in prison on the charge of conspiracy to commit export violations and on each of the four counts of illegally exporting U.S. goods to Iran; and no greater than five years in prison on the charge of conspiracy to smuggle U.S. goods to Iran, in addition to five years of supervised release and a fine of $4 million. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Matthew Etre, Special Agent in Charge of Homeland Security Investigations in Boston; and John J. McKenna, Special Agent in Charge of the Department of Commerce, Office of Export Enforcement, Boston Field Office, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney B. Stephanie Siegmann of Ortiz’s National Security Unit.
Martha’s Vineyard Man Pleads Guilty to Social Security Fraud and Tax EvasionRead the Press Release
BOSTON – An Oak Bluffs man pleaded guilty today in U.S. District Court in Boston to stealing $160,025 in Social Security benefits and falsifying his 2010 tax return.
Vernon Harris, 63, pleaded guilty to theft of public money and tax evasion after being charged in an Information in November 2015. U.S. District Court Judge Douglas P. Woodlock scheduled sentencing for March 10, 2016.
In 2002, Harris applied for Social Security Disability Insurance benefits. In his application, Harris stated that he stopped working in 2001 due to his disabilities; however, in reality, Harris was running a trucking brokerage firm called SilkRoad Logistics out of his home on Martha’s Vineyard when he applied for benefits. Harris wrote himself checks from the business’s account totaling as much as $60,000 to $70,000 in some years and concealed the business from the Social Security Administration (SSA). In a 2012 letter Harris sent to the SSA, he falsely affirmed that “my wife is and has been the sole income earner in our household since my disability in 2001.” Harris continued to collect disability benefits while running SilkRoad Logistics until 2015. In total, he illegally received $160,025 in benefits. Harris also falsified information pertaining to SilkRoad Logistics on his 2010 federal income tax return.
United States Attorney Carmen M. Ortiz; Scott Antolik, Special Agent in Charge of the Social Security Administration, Office of Inspector General, Office of Investigations, Boston Field Division; and William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today. The case is being prosecuted by Special Assistant U.S. Attorney Timothy Landry of Ortiz’s Major Crimes Unit.
Harwich Man Indicted on Firearms and Drug ChargesRead the Press Release
BOSTON – Timothy Fletcher, 33, of Harwich, Mass., was indicted today on being a felon in possession of firearms and ammunition, possession of cocaine base with intent to distribute and possession of cocaine with intent to distribute.
On April 3, 2015, Fletcher possessed a Taurus, .380 caliber pistol, a Tisas, .45 caliber pistol, six rounds of .380 caliber ammunition, 58 rounds of .45 caliber ammunition and 60 rounds of 9mm ammunition.
In this matter, the government alleges that the defendant was an armed career criminal. The charge of being a felon in possession provides for a mandatory minimum sentence of 15 years and no greater than a lifetime in prison, a minimum of five years and up to a lifetime of supervised release and a fine of $250,000. Each of the narcotics charges provides for a sentence of no greater than 30 years in prison, three years of supervised release and a fine of $2 million. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors
United States Attorney Carmen M. Ortiz; Daniel J. Kumor, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives, Boston Field Division; Barnstable Police Chief Paul MacDonald; and Yarmouth Police Chief Frank Frederickson, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Suzanne Sullivan Jacobus of Ortiz's Major Crimes Unit.
Four Cape Cod Residents Charged in Drug and Money Laundering RingRead the Press Release
BOSTON – Four Cape Cod residents were charged in an indictment unseal today in U.S. District Court in Boston in connection with drug and money laundering offenses.
David Landry, 27; his mother, Diane Johnson, 50, both of Mashpee; Justin Groom, 26, of Hyannis; and Evan Lopes, 27, of East Wareham, were named in an indictment charging possession with intent to distribute marijuana, conspiracy to manufacture marijuana, money laundering, possession with intent to distribute methylone (also known as “molly”), being a felon in possession of a firearm and money laundering conspiracy.
The indictment alleges that from May 2014 to January 2015, Landry and Groom conspired to manufacture and distribute marijuana, and possessed marijuana with the intent to distribute it. Landry, who was arrested and has been in custody since Sept. 12, 2014, is alleged to have continued participating in the criminal offense while in jail on state charges. Groom is also charged with eight counts of money laundering in connection with using the proceeds of the illegal activities to pay the rent of the Cheryl Lane house. It is also alleged that Lopes, aided by Landry, possessed with intent to distribute methylone on Jan. 15, 2015. The indictment further alleges that Landry, a convicted felon, constructively possessed a CZ model CZ100, .40 caliber semi-automatic pistol on Jan. 21, 2015.
Finally, the indictment alleges that from 2010 to 2015 Landry and his mother, Diane Johnson, conspired to launder drug proceeds in order to disguise the nature of the funds and continue the drug trafficking activity.
The charges of conspiracy to distribute marijuana and possession of marijuana and methylone with intent to distribute provide for a sentence of no greater than 20 years in prison, a mandatory minimum of three years of supervised release and up to a lifetime, and a fine of $1 million. The charges of money laundering and money laundering conspiracy provide for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000. The charge of being a felon in possession of a firearm provides for a sentence of no greater than 10 years in prison, three years of supervised release, and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Daniel J. Kumor, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms, and Explosives, Boston Field Division; Barnstable Police Chief Paul MacDonald; Barnstable County Sheriff James M. Cummings; Colonel Richard D. McKeon, Superintendent of the Massachusetts State Police; and Cape & Islands District Attorney Michael O'Keefe, made the announcement. The case is being prosecuted by Assistant U.S. Attorney Ted Heinrich of Ortiz’s Narcotics and Money Laundering Unit.
The details contained in the indictment are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in the court of law.
Former Associate Dean of MIT Sloan School and Harvard MBA Son Sentenced to Prison for Hedge Fund ScamRead the Press Release
BOSTON – Two former Boston-area hedge fund managers were sentenced on Dec. 14, 2015, for conspiring to mislead investors into investing more than $500 million in their fraudulent hedge fund business.
Gabriel Bitran, 70, of Newton, a former professor and associate dean of the Massachusetts Institute of Technology (MIT) Sloan School of Business, and his son Marco Bitran, 40, of Brookline, a Harvard Business School graduate and money manager, were each sentenced by U.S. District Court Senior Judge Mark L. Wolf to 45 months in prison, three years of supervised release, forfeiture and restitution of more than $11 million.
From 2005 through 2011, Gabriel and Marco Bitran solicited and maintained investors in their hedge fund and investment advisory businesses through false claims that, for eight or more years they had delivered average annual returns between 16 and 23%, with no down years. The Bitrans falsely told investors that the money in their hedge funds would be invested according to a complex mathematical trading model developed by Gabriel Bitran and based upon his MIT research on optimal pricing theory. The Bitrans also routinely concealed from investors that certain of their hedge funds were simply “funds of funds,” that is, hedge funds in which values of investments are determined by the value of investments in other independently managed hedge funds, some of which were themselves broad-based funds of funds.
By means of their fraudulent representations, the Bitrans induced investors to entrust over $500 million to their businesses. From this money, the Bitrans paid themselves millions of dollars in management fees.
In the fall of 2008, several of the Bitrans’ hedge funds had disastrous losses, resulting in investors losing 50–75% of their principal in many instances. Nonetheless, as their funds were experiencing these losses, Gabriel and Marco Bitran redeemed approximately $12 million of their own money from these hedge funds, while deferring other investors’ requests for redemption. The Bitrans thereby extracted much of the value of their own investments while leaving other investors to suffer more losses as the funds’ values declined precipitously.
In January 2009, while investigating potential victims of the Madoff fraud, examiners from the United States Securities and Exchange Commission (SEC) learned of the Bitrans’ performance claims and asked for supporting documentation. In response, the Bitrans made false statements to the SEC examiners and provided fabricated records.
At the same time they were lying to investigators and investors, Gabriel and Marco Bitran privately admitted to each other that they had made false statements to investors and owed them restitution. For example, in July 2009, Gabriel Bitran emailed Marco Bitran and discussed the fact that they had misled investors:
“We have mislead [sic] a lot of people with a range of statements that were incorrect simply to increase our income. . . . A person with the experience and knowledge of the financial sector and a veteran professor of MIT should not have engaged in this type of behavior. . . . I certainly do not blame you for everything that happened; we both share responsibility. . . . With [several named individuals] and probably a few others . . . we told them a story that was not true! . . . In my view you are discarding their anger as bad losers. This is not the whole story. They are not idiots, they know that they were mislead [sic]. The penalty for this type of action is Full [sic] restitution, which obviously we cannot afford.”
Similarly, in a Sept. 1, 2009 email, Marco Bitran acknowledged to his father that he had not acted honestly. He stated:
“We are certainly sharing equally in this dad. . . . Lots of our problems were caused by my good intentions but very poor actions when it came to true honesty.”
Still, from early 2009 through 2010, the Bitrans took steps to shield their personal assets by transferring them out of their businesses and into entities with less obvious affiliations to Gabriel and Marco Bitran. To effect some of these transfers, they used the identity of a family member without that person’s knowledge, obtaining falsely notarized signatures in that person’s name, to shield millions of dollars that they had siphoned out of the hedge funds.
In total, the Bitrans lost more than $140 million of their investors’ principal.
United States Attorney Carmen M. Ortiz; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today. The United States Attorney’s Office received valuable assistance from the Securities and Exchange Commission in the course of investigating this case. The case was prosecuted by Assistant U.S. Attorneys Sara Miron Bloom, Brian Pérez-Daple and Mary Murrane of Ortiz’s Criminal Division.
Springfield Man Pleads Guilty to Federal Firearm ChargeRead the Press Release
BOSTON – Joshua Ortiz, 23, of Springfield, pleaded guilty yesterday to being a felon in possession of a firearm and ammunition. U.S. District Judge Mark G. Mastroianni scheduled sentencing for March 25, 2016.
On Oct. 10, 2014, Ortiz possessed a HiPoint Model JHP .45 caliber firearm and eight rounds of .45 caliber ammunition. After being spotted with the firearm by law enforcement officers, Ortiz fled and was later arrested when he appeared in Court on an unrelated matter.
The charge of being a felon in possession of a firearm provides a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz and Springfield Police Commissioner John Barbieri made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Deepika Bains Shukla of Ortiz’s Springfield Branch Office.
Middleton Mortgage Broker Sentenced to Federal Prison for Bank FraudRead the Press Release
BOSTON – A Middleton, Mass. mortgage broker was sentenced yesterday in U.S. District Court in Boston in connection with his role in 20 fraudulent loan transactions in the North Shore area.
Michael P. O’Donnell, 54, was sentenced by U.S. District Judge Douglas P. Woodlock to three years in prison, two years of supervised release and ordered to pay a fine of $150,000. In July 2015, O’Donnell was convicted following a three-day bench trial of attempted bank fraud.
From 2004 to 2007, O’Donnell, through his company AMEX Home Mortgage, engaged in a scheme to submit false loan applications to lenders to obtain mortgage loans on behalf of borrowers seeking loans to purchase or refinance real estate. O’Donnell submitted loan applications and other documents on behalf of borrowers that falsified income, employment and asset information, and supplied closing funds which the borrowers were supposed to provide as part of their loan obligation, for which he was later reimbursed. O’Donnell also had an arrangement with a tax accountant to provide false letters, tax documents and verbal verifications of employment to lenders for loans O’Donnell sought on behalf of his clients. O’Donnell also obstructed the government’s investigation by destroying his computer hard-drive.
During the three year scheme, O’Donnell participated in 20 fraudulent loan transactions in which more than $3.7 million in financing was obtained, causing losses of nearly $1.5 million, and earning him nearly $150,000. The properties involved, most of which ended in foreclosure, were located in several North Shore towns, including Haverhill, Salem, Swampscott, Salisbury, and Bradford.
United States Attorney Carmen M. Ortiz and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case was prosecuted by Assistant U.S. Attorney Mark J. Balthazard of Ortiz’s Economic Crimes Unit.
Former Operative of Boston “Boiler Room” Convicted by Jury of Fraud and Conspiracy ChargesRead the Press Release
BOSTON – A former Boston resident was convicted yesterday in U.S. District Court in Boston in connection with his participation in a fraudulent “boiler room” operation that misled investors and caused over $4 million in losses.
Jonathan Fraiman, 36, was convicted following an 11-day trial of conspiracy to commit mail and wire fraud and mail fraud. U.S. District Court Judge F. Dennis Saylor, IV scheduled sentencing for March 10, 2015.
In December 2007, Fraiman joined Envit Capital LLC (Envit), a company which, with its various related entities, purported to invest in and manage a hedge fund and private equity funds. Envit was originally operated in Boston, and later opened an office in Boca Raton, Fla. Upon joining Envit, and through August 2009, Fraiman conspired with Envit’s CEO and Chairman, co-defendant Edward Laborio, to solicit investments, by, among other things, making fraudulent misrepresentations about the historical rate of return of certain Envit entities and falsely promising certain investors quarterly fixed dividends on their investments. As part of the scheme, Fraiman purported to act as some investors’ investment adviser, a position he exploited to convince his clients to invest monies, including retirement assets and trust monies, in Envit through bogus promises of guaranteed dividends and false assurances regarding the financial health of the company. As part of the conspiracy, Fraiman and Laborio periodically rolled out new Envit “offerings,” which invariably were based on deceptive representations about the company, to both existing and new investors in order to raise more funds for Envit, from which they both personally profited. Investors lost over $4 million through their investment in Envit and its related entities.
Laborio, who was also charged in the indictment, was a fugitive and was found deceased in Barcelona, Spain earlier this year.
The charging statutes each provide for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000 or twice the gain or loss. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement. The U.S. Attorney’s Office also acknowledges the valuable assistance provided by the U.S. Securities and Exchange Commission, Boston Regional Office. The case is being prosecuted by Assistant U.S. Attorney Vassili Thomadakis and Eric P. Christofferson of Ortiz’s Criminal Division.
Owners of Nick’s Roast Beef Charged with Skimming Nearly $6 Million in CashRead the Press Release
BOSTON – The two owners of Nick’s Famous Roast Beef in Beverly, and the wife of one of the owners, were charged in an indictment unsealed today in U.S. District Court in Boston in connection with skimming nearly $6 million in cash receipts from the business over a six year period, and not reporting that cash income on their business or personal tax returns.
Nicholas Koudanis, 65, of Topsfield, Nicholas Markos, 69, of Lynn, and Eleni Koudanis, 60, were charged with one count of conspiracy to defraud the United States by obstructing the IRS and 10 counts of aiding and assisting in the filing of false tax returns. Steven Koudanis, 39, the son of Nicholas and Eleni Koudanis, was charged with one count of endeavoring to obstruct and impede the due administration of the Internal Revenue Laws.
According to the indictment, Nicholas Koudanis and Nicholas Markos own Nick’s Famous Roast Beef in Beverly, which only accepts cash payment. From 2008 to 2013, Nicholas Koudanis and Markos allegedly skimmed more than $1 million in cash receipts each year which they failed to report on either the corporate tax returns or their personal tax returns, thereby avoiding the payment of nearly $1 million each in personal income taxes during that period. According to the indictment, the two personally split up the cash receipts every week, determining how much to deposit into the business’s bank account and report on their tax returns, how much to use to pay suppliers and employees, and how much to keep for themselves. The indictment alleges that Eleni Koudanis had primary responsibility for the book-keeping functions of the business, and also recruited employees, including her son Steven Koudanis, to create false cash register receipts to use in connection with an IRS tax audit of Nick’s Famous Roast Beef. The true cash register receipts were allegedly destroyed and not provided to the tax preparer who prepared the business and personal tax returns. According to the indictment, Nicholas and Eleni Koudanis also amassed more than $1.6 million in cash as of December 2014, which they kept in a safe in their home.
The charge of conspiracy to defraud the United States provides for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000. Each tax charge provides a sentence of no greater than three years in prison, one year of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; and William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Mark J. Balthazard of Ortiz’s Economic Crimes Unit.
The details contained in the indictment are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Former Stockbroker Pleads Guilty to Fraud and Tax EvasionRead the Press Release
BOSTON – A previously convicted former stockbroker pleaded today in U.S. District Court in Springfield in connection with an investment scheme which defrauded victims of more than $600,000.
Jeffrey Eldred Gallagher, 72, of Bradenton Beach, Fla., pleaded guilty to one count of wire fraud, three counts of engaging in an illegal monetary transaction and two counts of tax evasion. As alleged in the Information, in 1989, Gallagher was convicted in an earlier federal case of one count of mail fraud and three counts of interstate transportation of stolen property in connection with illegal options trading while he was a stockbroker at Paine Webber, Inc. U.S. District Court Judge Mark G. Mastroianni scheduled sentencing for Feb. 29, 2016.
From at least 2008 through early 2012, Gallagher persuaded friends and associates to pay him money to invest on their behalf, and made promises that the investments would yield guaranteed returns of 10 to 15 percent. Gallagher then commingled investor funds with his own personal funds, and paid some investors with monies given to him by other investors. When investors asked Gallagher for the return of their investments, he provided numerous false explanations concerning his attempts to repay them, such as by falsely claiming that his mother, who is still alive, had died on several different dates. In a similar effort to stall for time, Gallagher wrote investors more than 40 bad checks totaling $1,783,375. In sum, 23 investors lost a total of approximately $617,475.
As part of the scheme, in 2009 and 2010, Gallagher used approximately $249,703 of investor monies for his personal benefit, but did not report any of this income on his federal income tax returns for those years.
The charges of wire fraud and engaging in an illegal monetary transaction each provide for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000. The charge of tax evasion provides for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000 on each count. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Steven H. Breslow of Ortiz's Springfield Branch Office.
Federal Detainee Sentenced for Importing “Molly” and then Smuggling Designer Drug into Essex Correctional FacilityRead the Press Release
Boston – A federal detainee being held at the Essex County Correctional Facility was sentenced today in connection with importing several kilograms of methylone, also known as “molly,” from China and distributing it in Massachusetts. He also admitted to smuggling a small quantity of the designer drug alpha-PVP, also known as “flakka,” into the Essex County Correctional Facility.
Harold Bates, 33, of Rockland, was sentenced by U.S. District Court Chief Judge Patti B. Saris to 100 months in prison and three years of supervised release. In September 2015, Bates pleaded guilty to one count each of conspiracy to import methylone, importation of methylone, possession with intent to distribute methylone, and possession of a controlled substance by an inmate.
In October 2013, Bates began ordering substantial quantities of methylone over the Internet from his supplier based in China. Bates and the supplier discussed methods of concealing the drugs to avoid detection. When the methylone packages were shipped to Bates, the Chinese supplier included documents that falsely described the packages as containing samples of household items such as cosmetics with a value of $10 to $20 when, in fact, the drugs were worth considerably more.
Federal agents discovered Bates’s scheme and, in December 2013, obtained search warrants for two international packages. Both packages contained half a kilogram of methylone, which is a synthetic cathinone or “designer drug.”
In March 2014, Bates was arrested and charged with importing and distributing methylone. He was ordered detained and sent to the Essex County Correctional Facility. Shortly after Bates’s arrival, law enforcement officers learned that Bates had smuggled 4.70 grams of alpha-PVP, another synthetic cathinone (also known as “flakka”), into the facility by inserting the drugs into his rectum.
United States Attorney Carmen M. Ortiz; James V. Buthorn, Inspector in Charge of the U.S. Postal Inspection Service; Plymouth County District Attorney Timothy J. Cruz; Rockland Police Chief John R. Llewellyn; and Essex County Sheriff Frank G. Cousins, Jr., made the announcement today. The case is being prosecuted by Assistant U.S. Attorney James E. Arnold of Ortiz’s Narcotics and Money Laundering Unit.
Dominican Man Pleads Guilty to Identity TheftRead the Press Release
BOSTON – Daniel Araujo Guerrero, 36, of the Dominican Republic, pleaded guilty today in U.S. District Court in Boston to fraudulently using the identity of an American citizen. U.S. District Judge Denise J. Casper scheduled sentencing for Jan. 5, 2016.
In July 2014, Guerrero, who resided in Lawrence, went to the Massachusetts Registry of Motor Vehicles and submitted an application for a license using a name and Social Security number belonging to an individual from Puerto Rico.
The charge of identity theft provides a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Scott Antolik, Special Agent in Charge of the Social Security Administration, Office of Inspector General, Office of Investigations, Boston Field Division; and Matthew Etre, Special Agent in Charge of Homeland Security Investigations in Boston, made the announcement today. The case was investigated by the Homeland Security Investigations Document and Benefit Fraud Task Force. The case is being prosecuted by Assistant U.S. Attorney David G. Tobin and Special Assistant U.S. Attorney Timothy Landry of Ortiz’s Major Crimes Unit.
Lynn Man Pleads Guilty to Charges of Naturalization, Passport, and Social Security FraudRead the Press Release
BOSTON – A Lynn man pleaded guilty yesterday in U.S. District Court in Boston in connection with his attempts, following an illegal entry to the United States approximately 25 years ago, to gain citizenship and remain in the country.
Princehakeem Awolesi, 48, pleaded guilty to illegally obtaining United States citizenship and a U.S. passport, and using a false Social Security number. Awolesi was arrested in August 2015 and charged with violating various federal immigration and social security laws. U.S. District Court Judge Indira Talwani scheduled sentencing for March 17, 2016.
In 2005, as part of his application for naturalization, Awolesi submitted a false birth certificate and made numerous false statements to the officials deciding whether he qualified for citizenship, including his use of a prior identity. Awolesi was granted citizenship in 2005 and applied for a passport the same year, again concealing his use of another identity. Later, when applying for a replacement passport, Awolesi used a social security number he had obtained by making false statements to the Social Security Administration.
As a result of the conviction on the citizenship charge, Awolesi’s United States citizenship will be revoked.
The charges of naturalization and passport fraud each provide a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000. The charge of falsely obtaining a social security number provides for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Matthew Etre, Special Agent in Charge of Homeland Security Investigations in Boston; David W. Hall, Special Agent in Charge of U.S. Department of State, Bureau of Diplomatic Security, Boston Field Office; and Scott Antolik, Special Agent in Charge of the U.S. Social Security Administration, Office of the Inspector General, Office of Investigations, Boston Field Division, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Brian A. Pérez-Daple of Ortiz’s Criminal Division.
California Attorney Indicted and New Jersey Stock Promoter Convicted in Stock Manipulation SchemeRead the Press Release
BOSTON – A California-licensed attorney was indicted in U.S. District Court in Boston yesterday on charges arising out of his participation in a scheme to manipulate the shares of a publicly-traded microcap company. Earlier this week, a New Jersey man pleaded guilty to charges related to his participation in the same scheme.
Jehu Hand, 59, was indicted on charges of conspiracy to commit securities fraud and wire fraud, securities fraud and wire fraud based on his involvement in a pump-and-dump scheme to manipulate the market and to sell unregistered shares of the stock of Greenway Technology. Greenway was a microcap or “penny stock” company that claimed to be on the verge of acquiring hotels that would cater to gay travelers in several major cities.
On Tuesday, Dec. 8, 2015, Mitchell Brown, 50, pleaded guilty to one count of conspiracy and one count of securities fraud for his participation in the Greenway pump-and-dump scheme. U.S. District Court Judge William G. Young scheduled sentencing for Jan. 21, 2016.
According to court documents, in 2012, Hand, Brown and their co-conspirators engaged in a scheme to obtain and conceal their control over the majority of Greenway’s stock so that they could “pump” up the company’s share price and then secretly “dump” their shares into the market by selling at the inflated price. Hand issued false legal opinion letters to Greenway’s transfer agent and to stock brokers. The opinion letters, which intentionally disguised the conspirators’ control over Greenway’s stock, enabled Hand, Brown and their co-conspirators to obtain and sell Greenway’s stock in the open market in violation of federal securities laws. Hand also created and backdated convertible promissory notes. Hand then relied on the false date on the convertible promissory notes when providing his legal opinion that federal securities laws had been followed and that the notes could be converted into seven million shares of Greenway stock, which were then issued to entities controlled by Brown.
With millions of shares of Greenway stock at the conspirators’ disposal, Brown and another co-conspirator, proceeded to hire stock promoters to send blast e-mails that reached many potential investors, including those in Massachusetts, and contained misleading information touting Greenway’s stock. As a result of the hype created by the false and misleading promotional campaign, Hand, Brown and their co-conspirators were able to sell their Greenway stock to unwitting investors at artificially high prices.
These charges arise out of a multi-year investigation focusing on preventing fraud in the microcap stock markets. Microcap companies are small publicly traded companies whose stock often trades at pennies per share. Fraud in the microcap markets is of increasing concern to regulators as such markets have proven to be fertile grounds for fraud and abuse. This is, in part, because accurate information about microcap stocks may be difficult for the average investor to find, since many microcap companies do not file financial reports with the Securities and Exchange Commission (SEC).
The charges and conviction follow a series of cases filed by the U.S. Attorney for the District of Massachusetts and the SEC in which more than 30 individuals have been criminally charged and convicted for using kickbacks and other schemes to trigger investment in, or manipulate the stock of, thinly-traded stocks.
The charge of conspiracy to commit securities fraud provides for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000 or twice the gain or loss to the victim. The charge of securities fraud and wire fraud provides for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000 or twice the gain or loss. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz and Harold H. Shaw, Special Agent in Chargeof the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Vassili Thomadakis and SEC attorneys Andrew Palid and Eric Forni, who were appointed as Special Assistant U.S. Attorneys.
The details contained in the charging document are allegations. Hand is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Blackstone Man Sentenced for Tax CrimeRead the Press Release
BOSTON – A Blackstone, Mass. man was sentenced today in U.S. District Court in Boston to charges that he impeded the IRS by cashing nearly $3 million in checks from his masonry business at check cashing services to evade the IRS.
John W. Lippolis, 56, was sentenced by U.S. District Judge Richard G. Stearns to one year and one day in prison, one year of supervised release and restitution of $172,759 to the IRS. In June 2015, he pleaded guilty to one count of corruptly endeavoring to impede the IRS.
From 2005 to 2011, Lippolis was the sole proprietor of JW Masonry, a masonry company which operated in Rhode Island and Massachusetts. At various times, he also worked for his son’s business, JM Masonry Inc. When Lippolis was paid by check for work performed, he used check cashing services to cash the checks instead of depositing the funds into a bank account in an effort to avoid IRS scrutiny. Lippolis operated his business in cash, paid workers in cash, and requested that customers not write checks to him for amounts exceeding $10,000, which would trigger a reporting requirement for financial institutions that cashed the checks. Lippolis also failed to file tax returns for many years.
United States Attorney Carmen M. Ortiz and William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today. The case was prosecuted by Assistant U.S. Attorney Sandra S. Bower of Ortiz’s Economic Crimes Unit.
Tobacco Wholesaler Charged in Tax Fraud SchemeRead the Press Release
BOSTON – The owner of tobacco wholesale businesses in Massachusetts and New Hampshire was charged in an indictment unsealed on Dec. 7, 2015 in U.S. District Court in Springfield in connection with his scheme to defraud Massachusetts and New Hampshire of substantial tobacco tax revenue.Khalid Siddique, 59, of Attleboro, was charged in a 28-count indictment with two counts of conspiracy to commit wire fraud, 10 counts wire fraud, five counts of trafficking in contraband smokeless tobacco and 11 counts of money laundering.
The indictment alleges that between 2006 and 2012, Siddique defrauded Massachusetts and New Hampshire by failing to pay excise taxes on smokeless tobacco and cigars purchased from businesses he owned. It is alleged that co-conspirator Syed Bokhari transferred smokeless tobacco to the Attleboro business without reporting such transfers to the appropriate state tax authorities, as required under the Prevent All Cigarette Trafficking (PACT) Act. Siddique distributed smokeless tobacco without paying any of the required taxes, and filed false tobacco tax returns for cigars which vastly under-stated the amount of tax he owed.
On Thursday, Dec. 3, 2015, additional charges were handed down by a federal grand jury against co-defendant Syed I. Bokhari, 51, in connection with his role in the scheme which defrauded Massachusetts and Connecticut of substantial tobacco tax revenue.
The charges of conspiracy and wire fraud provide for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss for each count. The change of trafficking in contraband smokeless tobacco provides for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss for each count. The charge of money laundering provides for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $500,000 or twice the value of the property involved in the transaction for each count. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Daniel J. Kumor, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms & Explosives, Boston Field Division; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; Matthew Etre, Special Agent in Charge of Homeland Security Investigations in Boston; Commissioner Mark Nunnelly of the Massachusetts Department of Revenue; and Commissioner Kevin B. Sullivan of the Connecticut Department of Revenue Services, made the announcement today. The cases are being prosecuted by Assistant U.S. Attorneys Alex J. Grant and Katharine Wagner of Ortiz’s Springfield Branch Office.
The details contained in the charging document are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Pembroke Man Sentenced for Tax EvasionRead the Press Release
A Pembroke, Mass., man was sentenced today in U.S. District Court in Boston in connection with failing to pay taxes on more than $1.1 million he earned as a carpenter from 1998 to 2006.
Theodore Hammond, Jr., 61, was sentenced by U.S. District Judge F. Dennis Saylor IV to six months in prison, one year of supervised release and ordered to pay the IRS restitution of $406,458. Hammond pleaded guilty in July 2015 to two counts of tax evasion and seven counts of subscribing to false tax returns.
Hammond was a self-employed carpenter for many years. From1998 to 2006, he earned $1.1 million, but failed to timely file federal income tax returns and, when he did file, he falsely reported zero income.
At sentencing, Hammond argued that he had based his conduct on information he learned from tax-defier websites, lectures, and books, such as those promoted by Irwin Schiff, who wrote The Great Income Tax Hoax: Why You Can Immediately Stop Paying This Illegally Enforced Tax, and Peter Hendrickson, who wrote Cracking the Code: The Fascinating Truth About Taxation in America. Judge Saylor noted the importance of deterring others from believing the misguided and misleading theories promoted by individuals such as Schiff and Hendrickson, both of whom served federal prison sentences.
United States Attorney Carmen M. Ortiz; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; and Robert E. O’Malley, Special Agent in Charge of the Treasury Inspector General for Tax Administration, New York Field Division, made the announcement today. The case was prosecuted by Assistant U.S. Attorneys Sandra S. Bower of Ortiz’s Economic Crimes Unit and Christine Wichers of Ortiz’s Civil Division.
Lawrence Man Pleads Guilty to Federal Firearms ChargesRead the Press Release
BOSTON – Angel Ortiz, 31, of Lawrence, pleaded guilty to one count of dealing in firearms without a license and five counts of being a felon in possession of firearms and ammunition. U.S. District Court Judge F. Dennis Saylor, IV, scheduled sentencing for Feb. 29, 2016.
Ortiz, who had previously been convicted of a felony offense, was involved in the sale of six firearms to a cooperating witness on five occasions between June 10, 2014 and July 23, 2014. On some occasions, Ortiz also provided ammunition for the weapons. It is a federal crime for a convicted felon to possess a firearm or ammunition and also a federal crime to sell firearms without a license.
The charge of dealing firearms without a license provides for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000. The charge of being a felon in possession of a firearm provides for a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Daniel J. Kumor, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives, Boston Field Division; Colonel Richard D. McKeon, Superintendent of the Massachusetts State Police, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Robert E. Richardson of Ortiz’s Major Crimes Unit.
Gardner Woman Sentenced for Fraudulently Receiving Disability Benefits and Food StampsRead the Press Release
BOSTON – A Gardner, Mass. woman was sentenced today in U.S. District Court in Worcester for fraudulently receiving over $100,000 in public benefits.
Heidi Narcisse, 46, was sentenced by U.S. District Judge Timothy S. Hillman to three years of probation and ordered to pay $117,524 in restitution. Narcisse pleaded guilty in September 2015.
Narcisse began collecting Social Security Supplemental Security Income (SSI) disability benefits in 1999 and Supplemental Nutrition Assistance Program (SNAP) benefits in 2011. In order to be eligible for these benefits, a person must have very limited income and financial resources; furthermore, income provided by a spouse can make a person ineligible for benefits. In order to receive these benefits, Narcisse repeatedly and falsely stated that she was separated from her husband, lived alone with her children and had no outside support.
In reality, in July 2006, Narcisse and her husband bought a house together in Gardner using a subsidized government loan, listed that house as their residential address on their respective driver’s licenses and filed joint tax returns listing the same address. In addition, Narcisse’s husband, who had income from his job, regularly gave Narcisse money for household expenses. If Narcisse had truthfully reported her living situation and her husband’s financial support, she would not have been eligible to receive the SSI and SNAP benefits. From 2006 to 2014, Narcisse illegally received $100,512 in SSI benefits, and from 2011 to 2015 she received $17,012 in SNAP benefits. The investigation also revealed that Narcisse spent a portion of this money at a casino in Connecticut.
United States Attorney Carmen M. Ortiz; Scott Antolik, Special Agent in Charge of the Social Security Administration, Office of Inspector General, Office of Investigations, Boston Field Division; and Massachusetts State Auditor Suzanne M. Bump, made the announcement today. The case was prosecuted by Special Assistant U.S. Attorney Timothy Landry of Ortiz’s Major Crimes Unit.