District of Massachusetts

 

WASHINGTON – A 131-count criminal indictment was unsealed today in Boston in connection with the 2012 nationwide fungal meningitis outbreak, the Justice Department announced.  Barry J. Cadden, owner and head pharmacist of New England Compounding Center (NECC) and NECC’s supervisory pharmacist Glenn A. Chin were charged with 25 acts of second-degree murder in Florida, Indiana, Maryland, Michigan, North Carolina, Tennessee and Virginia.

The outbreak was caused by contaminated vials of preservative-free methylprednisolone acetate (MPA) manufactured by NECC, located in Framingham, Massachusetts.  The U.S. Centers for Disease Control and Prevention (CDC) reported that 751 patients in 20 states were diagnosed with a fungal infection after receiving injections of NECC’s MPA.  Of those 751 patients, the CDC reported that 64 patients in nine states died.

Twelve other individuals, all associated with NECC, including six other pharmacists, the director of operations, the national sales director, an unlicensed pharmacy technician, two of NECC’s owners, and one other individual were charged with additional crimes including racketeering, mail fraud, conspiracy, contempt, structuring, and violations of the Food, Drug and Cosmetic Act.

“As alleged in the indictment, these employees knew they were producing their medication in an unsafe manner and in insanitary conditions, and authorized it to be shipped out anyway, with fatal results,” said Attorney General Eric Holder.  “With the indictment and these arrests, the Department of Justice is taking decisive action to hold these individuals accountable for their alleged participation in grievous wrongdoing.  Actions like the ones alleged in this case display not only a reckless disregard for health and safety regulations, but also an extreme and appalling indifference to human life.  American consumers have a right to know that their medications are safe to use, and this case proves that the Department of Justice will always stand resolute to ensure that right, to protect the American people, and to hold wrongdoers accountable to the fullest extent of the law.”

“Every patient receiving treatment deserves the peace of mind and knowledge that the medicine they are receiving is safe,” said Acting Associate Attorney General Stuart Delery.  “When people and companies violate that trust and break the law, the consequences to patients and their families can be catastrophic.  That’s why it remains a priority of the Department to use every tool at our disposal to protect patients’ safety and hold bad actors accountable.”
 
“Those who produce and sell the drugs that we take have a special responsibility to make sure that they prepare those drugs under suitable conditions, and that what leaves their facilities is safe,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “The indictment charges that the defendants’ conduct in this case was corrupt and carried out with a complete disregard to the public’s health.  The department‘s Consumer Protection Branch along with our law enforcement partners is steadfast in our commitment to use every criminal and civil tool at our disposal to hold accountable those who are willing to put our lives at risk in the reckless pursuit of their profits.”

“Ever since the outbreak occurred, we have been committed to bringing to justice the individuals responsible for the deaths and suffering of so many innocent victims,” said U.S. Attorney Carmen Ortiz for the District of Massachusetts.  “The indictment announced today is the first step in that process which addresses alleged criminal wrongdoing at NECC, a business that prioritized production and profit over safety.  We will make every effort to ensure that licensed pharmacists, and those working with them, are held to a standard of care that protects the public from unsafe and dangerous medications.”

 “Two years after the fungal meningitis outbreak, our hearts continue to go out to the victims of this tragedy and to their families,” said FDA Commissioner Margaret A. Hamburg M.D.  “Our work on behalf of all patients who want and deserve medicines that do not subject them to undue risk is far from done.  The FDA will continue to work aggressively on many fronts with the states, the Department of Justice, and others to protect the American public from unsafe compounded drug products.”

“Threats to public health, as alleged in today's indictment, are a priority for the FBI,” said Assistant Director Joseph S. Campbell of the FBI’s Criminal Division.  “Together with our law enforcement and regulatory agency partners, we are determined to stop practices that jeopardize patients' health and violate the public trust.  These types of investigations are complex and resource intensive.  We greatly appreciate the efforts of our partners in this case and look forward to working with them to effectively identify criminal activities and combat fraudulent and abusive health practices in the future.”

 The 14 individuals charged in the indictment are Barry J. Cadden, 48, of Wrentham, Massachusetts; Glenn A. Chin, 46, of Canton, Massachusetts; Gene Svirskiy, 33, of Ashland, Massachusetts; Christopher M. Leary, 30, of Shrewsbury, Massachusetts; Joseph M. Evanosky, 42, of Westford, Massachusetts; Scott M. Connolly, 42, of East Greenwich, Rhode Island; Sharon P. Carter, 50, of Hopkinton, Massachusetts; Alla V. Stepanets, 34, of Framingham, Massachusetts; Gregory A. Conigliaro, 49 of Southborough, Massachusetts; Robert A. Ronzio, 40, of North Providence, Rhode Island; Kathy Chin, 42, of Canton, Massachusetts; Michelle Thomas, 31 of Cumberland, Rhode Island; Carla Conigliaro, 51, of Dedham, Massachusetts and Douglas A. Conigliaro, 53, of Dedham, Massachusetts.

The 25 second-degree murders are included in the indictment as predicate racketeering acts under the Racketeer Influenced and Corrupt Organizations Act (RICO).  These charges relate to patients who received NECC MPA and died in Florida, Indiana, Maryland, Michigan, North Carolina, Tennessee and Virginia. As a general matter, and depending on particular state law, second-degree murder does not require the government to prove Cadden and Chin had specific intent to kill the 25 patients, but rather that Cadden and Chin acted with extreme indifference to human life.  According to the indictment, Cadden and Chin knew that NECC was making MPA in a manner and in an environment in which they could not assure that the drug was sterile as it was identified to be.  Despite knowing that they were making the MPA in an unsafe manner and in insanitary conditions, Cadden and Chin nonetheless allegedly directed and authorized the shipping of MPA to NECC customers nationwide.  It is alleged that Cadden and Chin were aware that doctors would inject MPA into their patients’ bodies, and that if the MPA was not in fact sterile, it could kill them.

The 25 murder racketeering acts comprise only a portion of the broad racketeering scheme charged in the indictment.  The indictment also alleges that NECC’s other pharmacists knowingly made and sold numerous drugs in a similar unsafe manner and in insanitary conditions.  The unsafe manner alleged in the indictment includes, among other things, the pharmacists’ failure to properly sterilize NECC’s drugs, failure to properly test NECC’s drugs for sterility, and failure to wait for test results before sending the drugs to customers.  The insanitary conditions alleged in the indictment include, among other things, NECC’s lack of proper cleaning and NECC’s failure to take any action when its own environmental monitoring repeatedly detected mold and bacteria within NECC’s clean room suite of rooms throughout 2012.

It is further alleged that NECC repeatedly took steps to shield its operations from regulatory oversight by the FDA by claiming to be a pharmacy dispensing drugs pursuant to valid, patient-specific prescriptions.  In fact, NECC routinely dispensed drugs in bulk without valid prescriptions.  The indictment alleges that NECC even used fictional and celebrity names on fake prescriptions to dispense drugs.

Finally, the indictment charges Carla Conigliaro, the majority shareholder of NECC, and her husband Douglas Conigliaro with transferring assets following the fungal meningitis outbreak.  Specifically, the indictment charges that after NECC declared bankruptcy, and the bankruptcy court ordered the shareholders not to transfer assets, Carla and Doug Conigliaro transferred approximately $33.3 million to eight different bank accounts opened after the NECC bankruptcy.

Cadden and Chin face a maximum of up to life in prison if convicted on all counts.

“Although no VA patients were affected by the fungal meningitis outbreak, VA unknowingly purchased a variety of pharmaceutical products over a three year period from NECC that were intentionally produced in an unsafe manner under insanitary conditions,” said Assistant Inspector General for Investigations James J. O’Neill for the Office of Inspector General, Department of Veterans Affairs.  “We are pleased to have contributed to this outstanding multi-agency criminal investigation.”

“Today's results are part of an ongoing effort by the Defense Criminal Investigative Service and its law enforcement partners to protect the integrity of the Department of Defense's health care program and the quality of care our service members receive,” said Deputy Inspector General for Investigations James B. Burch for the U.S. Department of Defense Office of the Inspector General.  “The Defense Criminal Investigative Service will continue to pursue allegations of health care fraud that put the Warfighter at risk.”

“The U.S. Postal Inspection Service is pleased to join our federal partners in this announcement” said Postal Inspector in Charge Shelly A. Binkowski of the Boston Division.  “What's particularly disturbing about this case is that through their alleged misrepresentation and greed, these defendants put the health and well-being of others at a high level of risk.  This criminal action today demonstrates the commitment and vigilance of postal inspectors and other federal agents to pursue criminals who prey on the public in such an egregious way.”

In announcing the indictment today, Attorney General Holder and U.S. Attorney Ortiz acknowledged the assistance and cooperation of Michigan State Attorney General Bill Schuette.  The state of Michigan had the most deaths during the outbreak.

The investigation was conducted by the FDA Office of Criminal Investigations and the FBI with assistance by the Defense Criminal Investigative Service, U.S. Department of Defense, Office of Inspector General; Department of Veterans Affairs Office of Inspector General and U.S. Postal Inspection Service. The case is being prosecuted by Assistant U.S. Attorneys George P. Varghese and Amanda P.M. Strachan of the Health Care Fraud Unit for the U.S. Attorney’s Office in the District of Massachusetts, and Trial Attorney John W.M. Claud of the Civil Division’s Consumer Protection Branch.

The details contained in the indictment are allegations.  The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.

Victims with questions about today’s charges may call 1-888-221-6023 or email [email protected].

BOSTON – An Iowan man pretending to be a professional photographer was sentenced today in U.S. District Court in Boston for engaging in sexually explicit conduct via webcam.

Joshua Dunfee, 32, of Oxford Junction, Iowa, was sentenced by U.S. District Court Chief Judge Patti B. Saris to 20 years in prison and 10 years of supervised release.  In March 2014, Dunfee pleaded guilty to coercion and enticement of a child to engage in illicit sexual activity and production of child pornography.

Dunfee posed as a professional photographer from “Hunt Photography” who was seeking models online.  He communicated with a Massachusetts mother and convinced her that he had a client willing to pay $20,000 for a mother-daughter bikini modeling contract.  Over time, as part of his ruse, Dunfee directed the mother to “audition” her daughter via webcam for him to view, first in underwear and then naked.  In November 2011, following the execution of a federal search warrant, a forensic examination of Dunfee’s seized computers recovered evidence of his exploitation of a second child in California.

United States Attorney Carmen M. Ortiz, Assistant Attorney General Leslie R. Caldwell of the Department of Justice’s Criminal Division, and Shelly Binkowski, Inspector in Charge of the U.S. Postal Inspection Service, made the announcement today.  The case was investigated by the U.S. Postal Inspection Service, the Jones County (IA) Sheriff=s Office, the Massachusetts State Police, the Attleboro Police Department, and the Department of Justice’s High Technology Investigative Unit.  Substantial assistance was provided by the U.S. Attorney=s Office for the District of Iowa.  The case is being prosecuted by Assistant U.S. Attorneys Stacy Dawson Belf and David Tobin of Ortiz=s Major Crimes Unit and Trial Attorney Herbrina Sanders of the Department of Justice Child Exploitation & Obscenity Section.

This 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 online exploitation and abuse.  Led by the U.S. Attorneys= Offices, 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.

BOSTON – Two Cape Cod men with extensive criminal histories were arrested and charged today with conspiring to violate federal drug laws.

Duane Gomez, a/k/a “Go-Go” or “G,” 39, of Falmouth, and Antone Andrade, a/k/a “Tank,” 34, of Bourne, were charged in criminal complaints with conspiracy to distribute, and to possess with intent to distribute, over 100 grams of heroin. In addition, Andrade is charged with conspiring to distribute cocaine.

As alleged in the complaint, the federal investigation leading to the two arrests began in fall 2013 and involved audio- and video-recorded drug transactions with both Gomez and Andrade. Over the course of the investigation, Gomez and Andrade allegedly sold cocaine and heroin worth thousands of dollars, and stashed drugs and money in locations in Falmouth, Bourne, and Mashpee. One of the heroin samples from Gomez tested positive for traces of fentanyl, a synthetic opiate that has been linked to overdoses when mixed with heroin.

The charging statute provides a sentence of no greater than 40 years in prison, a lifetime of supervised release, and a fine of up to $5 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; Michael J. Ferguson, Acting Special Agent in Charge of the Drug Enforcement Administration, New England Field Division; Colonel Timothy P. Alben, Superintendent of the Massachusetts State Police; Michael D. O’Keefe, Cape and Islands District Attorney; Falmouth Police Chief Edward A. Dunne; Bourne Police Chief Dennis R. Woodside; Mashpee Police Chief Rodney Collins; and Barnstable County Sheriff James M. Cummings, made the announcement today. The case was investigated by the DEA Cape Cod Drug Task Force and the Massachusetts State Police Cape Cod Drug Unit. The case is being prosecuted by William F. Bloomer and Brian A. Pérez-Daple of Ortiz’s Major Crimes Unit.

The details contained in the complaint are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

BOSTON – A Boy Scout leader and YMCA employee was charged today with possessing child pornography.

Patrick Lynch, 22, of Peabody, was arrested on Dec. 12, 2014, and made his initial appearance today in U.S. District Court in Boston on charges that he received and possessed child pornography.

The criminal complaint alleges that Lynch received emails containing child pornography beginning in May 2013.  An investigation by Homeland Security Investigations revealed that Lynch was affiliated with the Boy Scouts, including a position as a Scout leader at the Philmont Training Center for the Boy Scouts of America.  Lynch had also been employed at the Greater Beverly YMCA and had recently begun employment with Beanstalk Adventure Ropes Course in Reading.

The charge of receipt of child pornography provides for a mandatory minimum term of five years and no greater than 20 years in prison.  The charge of possession of child pornography provides for no greater than 20 years in prison.  Both statutes provide for a mandatory minimum of five years and up to a lifetime 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 Bruce M. Foucart, Special Agent in Charge of Homeland Security Investigations in Boston, made the announcement today.  Assistance was also provided by the Massachusetts State Police and the Peabody Police Department.  The case was prosecuted by Eve A. Piemonte Stacey of Ortiz’s Major Crimes Unit.

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.

Members of the public who have questions, concerns or information regarding this case should call 617-748-3274.

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.

BOSTON – A Boston man was sentenced today in connection with the sex trafficking of a 15-year-old girl.

 Mark Pinnock, 23, was sentenced by U.S. District Judge Nathaniel M. Gorton to eight years in prison and five years of supervised release.  In August 2014, Pinnock pleaded guilty to recruiting and transporting a minor to engage in prostitution.  Two co-defendants, Justin Richardson and Martin Pinkney, both of Baltimore, will be sentenced on Dec.19 and 22, respectively.  
 
 In late December 2013, officers responded to an emergency call from a Cambridge hotel, where they found the 15-year old victim and Pinnock.  The minor stated that Richardson and Pinkney had arranged for her to travel by bus from Baltimore to Boston.  Pictures were taken of her in both Baltimore and Boston and used to post ads soliciting prostitution customers on the websites backpage.com and Craigslist.  While in Boston, the minor victim engaged in sex for a fee at the direction of Pinnock at two local hotels.  

 United States Attorney Carmen M. Ortiz; Bruce M. Foucart, Special Agent in Charge of Homeland Security Investigations in Boston; and Cambridge Police Commissioner Robert C. Haas, made the announcement today.  The case is being prosecuted by Assistant U.S. Attorneys Seth Kosto and Carlos Lopez, both members of Ortiz’s Civil Rights Enforcement Team.  The U.S. Attorney’s Office also wishes to thank the Middlesex County District Attorney Marian C. Ryan’s Office for its participation in the investigation.

The enforcement of federal civil rights laws is a high priority of the U.S. Attorney’s Office for the District of Massachusetts.  Since U.S. Attorney Ortiz created the Civil Rights Enforcement Team in 2010, the Office has substantially increased its efforts in civil and criminal civil rights enforcement actions. In the last four years, the office has charged an increasing number of defendants with sex trafficking and other criminal civil rights violations.

BOSTON – A Boston-area mutual fund manager was arrested last night on securities fraud charges in connection with an alleged scheme to use the fund’s money to issue fictitious loans.

Daniel Thibeault, 40, of Framingham, was charged in a criminal complaint with a single count of securities fraud. Thibeault was held overnight and had an initial appearance today before U.S. Magistrate Judge M. Page Kelley.

As set forth in the complaint, Thibeault is the founder and principal owner of Graduate Leverage, LLC, an asset management and financial advisory firm he founded while a student at Harvard Business School, from which he graduated in 2004. Thibeault is also the co-portfolio manager of the GL Beyond Income Fund, a mutual fund launched in March 2012 that purports to invest in consumer loans to individuals “it believes are less susceptible to economic downturns, such as medical doctors, dentists, veterinarians, attorneys and business owners.” As of Jan.31, 2014, the Fund reported net assets of approximately $31 million – a number that the complaint alleges has increased since that time.

The complaint alleges that, although the Fund is marketed as consisting of a diversified pool of hundreds of consumer loans to young professionals, Thibeault caused the Fund to issue, or acquire, a number of fictitious loans to individuals who never requested and did not, in fact, receive such loans. Thibeault allegedly falsified or caused to be falsified the documentation related to those loans.

The charging statute provides for a sentence of no greater than 20 years in prison, three years of supervised release, and a fine of $5 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 Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The United States Attorney’s Office received valuable assistance from the Securities & Exchange Commission in the course of investigating this case. The case is being prosecuted by Stephen E. Frank, Deputy Chief of Ortiz’s Economic Crimes Unit.

The details contained in the complaint are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Boston – Two Chinese nationals, living in Massachusetts, were sentenced today in federal court for importing and reselling counterfeit cases for cell phones.

U.S. District Court Judge F. Dennis Saylor, IV, sentenced Zexiong Chen, 28, to 18 months in prison, one year of supervised release, a fine of $6,000 and restitution in the amount of $4,820. Haotian Chen, 26, was sentenced to time served which was one day in prison, one year of supervised release, a fine of $4,000 and restitution in the amount of $4,829. In September 2014, the defendants pleaded guilty to trafficking in counterfeit goods. In February 2014, Zexiong Chen was arrested at JFK International Airport as he prepared to board a plane to China. He has been in custody since then. Haotian Chen was also arrested in February 2014 and was released by the Court on conditions.

In February 2013, the defendants incorporated Max Wireless Group, Inc. as a vehicle for importing and reselling cell phone cases, many of which were counterfeit. Through Max Wireless, the defendants imported counterfeit cell phone cases from China, sold a small percentage of them through their Wakefield store, and sold the vast majority of them to individuals and companies who resold them at retail locations. Many of these retail locations were kiosks in shopping malls, some of which were in Massachusetts.

On 12 occasions from November 2012 through August 2013, U.S. Customs and Border Patrol officials inspected shipments the defendants imported from China to the United States and determined that these shipments contained counterfeit items. These 12 seizures included more than 10,000 counterfeit cell phone cases, bearing marks of manufacturers including: OtterBox, Speck, Kate Spade, Hello Kitty, Ferrari and LifeProof. On Sept. 4, 2013, federal agents searched the Max Wireless store and found more than 2,500 counterfeit cell phone cases and accessories.

The total of the retail price for the authentic versions of all of the products seized totaled more than $350,000. The defendants paid far less for the counterfeit cases and typically resold the cases for substantially less than the suggested retail price.

United States Attorney Carmen M. Ortiz and Bruce M. Foucart, Special Agent in Charge of Homeland Security Investigations in Boston, made the announcement today. The case was investigated by Homeland Security Investigations and prosecuted by Assistant U.S. Attorney Adam Bookbinder, Chief of Ortiz’s Cyber Crime Unit.

BOSTON – Two Boston-area hedge fund managers pleaded guilty today to conspiring to mislead investors into investing more than $500 million in their fraudulent hedge fund business.

Gabriel Bitran, 69, of Newton, a former professor and associate dean of the Massachusetts Institute of Technology (MIT) Sloan School of Business, and his son Marco Bitran, 39, of Brookline, a Harvard Business School graduate and money manager, pleaded guilty to conspiracy to commit securities fraud, wire fraud and obstruction of justice in connection with their hedge fund businesses, GMB Capital Management and GMB Capital Partners. U.S. Senior District Judge Mark L. Wolf deferred a determination as to whether he will accept the plea until the time of sentencing which is scheduled for March 27, 2015.

“This office continues to pursue complex white-collar crimes no matter who the perpetrator,” said United States Attorney Carmen M. Ortiz. “No one is above the law. Here, a highly respected MIT professor and his well-educated son used their connections to lure investors into a scam which ultimately lost more than $140 million.”

“Gabriel and Marco Bitran cheated their victims out of hundreds of millions of dollars of their retirement money and savings by lying to them over and over again and claiming false returns and profits. Today’s guilty plea is a significant step in our ongoing effort to bring justice to victims of investment fraud. The FBI and our law enforcement partners will keep exposing those responsible for these crimes as long as innocent people are cheated out of their hard earned money,” said Vincent B. Lisi, Special Agent in Charge of the Boston Division of the FBI.

“Investment returns that seem too good to be true – such as those offered by the Bitrans –should be a signal to investors to stay clear” said Special Agent in Charge William P. Offord of IRS Criminal Investigation. “Today's guilty pleas demonstrate our collective efforts to ensure that the financial services industry will not be used for unlawful personal gain, but will be operated in a fair and honest manner to promote the public interest.”

As set forth in the Information to which the they pleaded guilty, 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 managed friends and family funds, delivering average annual returns between 16 and 23%, with no down years. The Bitrans falsely told investors that the money in GMB 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, in the fall of 2008, 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 purporting to support their claimed trading performance.

As they did so, Gabriel and Marco Bitran acknowledged 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 September 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 assets by transferring them out of GMB 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 preferentially transferred out of the GMB hedge funds.

In total, the Bitrans lost more than $140 million of GMB investors’ principal.

If the plea agreements are accepted by the Court, the Bitrans will be sentenced to no less than two years and no more than five years in jail, as well as three years of supervised release, and forfeiture in the amount of $10 million.

U.S. Attorney Ortiz, SAC Lisi, and SAC Offord 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 is being prosecuted by Assistant United States Attorneys Sara Miron Bloom of Ortiz’s Economic Crimes Unit, Brian Pérez-Daple of the Major Crimes Unit and Mary Murrane, Chief of the Asset Forfeiture Unit.

If you believe that you are victim or have any information regarding this case you may contact us at [email protected].

The details contained in the information are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law or the Court accepts their guilty pleas.

BOSTON – A Chelsea man pleaded guilty yesterday to submitting fraudulent financial aid applications to support his daughter’s Harvard College tuition.

Joseph N. Fonge, 59, pleaded guilty to three counts of wire fraud. U.S. District Court Judge William G. Young scheduled sentencing for March 4, 2015.

Fonge filed fraudulent financial information, including false federal tax returns, in support of applications for financial aid for his daughter while she was a student at Harvard College from 2010 through 2012. Based on the applications, Fonge’s daughter was approved for aid totaling more than $160,000 over the three school years. The same false information was used to support a financial aid application in the amount of $46,600 for Fonge’s second daughter who was attending the University of Rochester in 2010.

The charging statute provides 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 Brian Hickey, Special Agent in Charge for the U.S. Department of Education, Office of Inspector General, Regions I & II, made the announcement. The case is being prosecuted by Assistant U.S. Attorney Victor A. Wild of Ortiz’s Economic Crimes Unit.

BOSTON – A Revere woman pleaded guilty today to fraudulently receiving over $88,000 in disability payments and rental assistance benefits.

Emily Lardiero, 64, pleaded guilty to theft of public money. In November 2014, Lardiero was charged in a felony information. U.S. District Court Judge Rya W. Zobel scheduled sentencing for March 11, 2015.

In 2003, Lardiero began receiving Supplemental Security Income disability benefits from the Social Security Administration (SSA). Recipients of these benefits are required to inform SSA if they return to work or if they acquire money or property that might make them financially ineligible to continue receiving benefits. Lardiero did not report any work or income to SSA and stated during a benefits review in November 2013 that she was still disabled and had no income aside from her SSA benefits. In reality, however, Lardiero was working at Action Emergency Services, a family business in Revere. She also drew income from the business, which she did not report to SSA. By failing to disclose her work and income to SSA, Lardiero received $47,671 in benefits to which she was not entitled.

Additionally, since 2001, Lardiero was illegally receiving rental assistance benefits from the U.S. Department of Housing and Urban Development (HUD). Under this program, HUD pays a significant portion of the monthly rent to the landlord, and the tenant pays the remainder. To receive this subsidy, tenants are not allowed to have any ownership interest in the housing in which they live. In 2007, Lardiero became the sole trustee of the trust that owned the house she was living in and as such she could control the property as if she were the legal owner. Despite signing annual acknowledgements that she knew she could not have any interest in her housing unit, Lardiero continued to participate in the subsidy program. From 2007 to 2010, an acquaintance of Lardiero’s received the monthly landlord’s payments from HUD, and then forwarded the money to her each month. In this manner, Lardiero illegally received $40,391 in HUD benefits.

This case was brought as part of an ongoing effort by the U.S. Attorney’s Office in partnership with the Social Security Administration to investigate and prosecute fraud pertaining to Social Security disability benefits.

In July 2014, Charles Flynn and Steven Grondell of Georgetown were each sentenced to three years of probation, including six months of home confinement, and were ordered to serve 105 hours of community service and to pay $105,158 in restitution to SSA. Flynn received SSA disability benefits while working under Grondell’s identity, and with his permission, to conceal the work from SSA.

Also in July 2014, Carl Lynch of Ware was sentenced to three years of probation, including six months of home confinement, and was ordered to pay $50,264 in restitution to SSA. Lynch received SSA disability benefits while working under another man’s identity to conceal the work from SSA.

In January 2014, Antonio Pulinario Brea of the Dominican Republic was sentenced to 10 months in prison and was ordered to pay $60,455 in restitution to SSA. Pulinario Brea used the identity of an American citizen to obtain SSA disability benefits that he would not have been entitled to receive under his true identity.

The charging statute in the Lardiero case provides 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 gain or loss, whichever is greater. 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 Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of the Inspector General, Northeast Regional Office, made the announcement today. The Lardiero case is being prosecuted by Special Assistant U.S. Attorney Timothy Landry of Ortiz’s Major Crimes Unit.

BOSTON – Sihai Cheng, a/k/a Chun Hai Cheng, a/k/a Alex Cheng, a citizen of the People’s Republic of China (PRC), arrived to face charges for conspiring to export pressure transducers to Iran which can be used in the production process of weapons-grade uranium. In February 2014, Cheng was arrested by British authorities on U.S. charges during a trip to the United Kingdom. He was detained in the United Kingdom pending extradition to the United States.

Cheng is charged in a ten-count indictment with Seyed Abolfazl Shahab Jamili, an Iranian national, and two Iranian companies, Nicaro Eng. Co., Ltd. (Nicaro) and Eyvaz Technic Manufacturing Company (Eyvaz). They are accused of conspiring to export, and exporting, highly sensitive U.S. manufactured goods with nuclear applications to Iran.

The indictment alleges that Cheng supplied thousands of parts that have nuclear applications, including U.S. origin goods, to Eyvaz, an Iranian company involved in the development and procurement of parts for Iran’s nuclear weapons program. Specifically, it alleges that in 2005, Cheng began doing business with Jamili, an Iranian national who worked for Eyvaz and ran his own importing business in Iran. Jamili remains a fugitive, but the U.S. government, through Interpol, has requested his arrest to face prosecution in the United States.

Since 2005, Cheng sold Jamili thousands of parts with nuclear applications, knowing that these parts were destined for Iran. Significantly, beginning in February 2009, Cheng and Jamili conspired with others in the PRC to illegally obtain hundreds of U.S. manufactured pressure transducers which were manufactured by MKS Instruments, Inc., a company headquartered in Massachusetts, on behalf of Eyvaz. As a result, hundreds of MKS pressure transducers were illegally exported from the United States to China. Upon receipt of these parts in China, Cheng caused the MKS pressure transducers to be exported to Eyvaz or Jamili in Tehran, Iran, in violation of U.S. export laws.

The indictment further alleges that by 2007, Iran was operating thousands of gas centrifuges at the Natanz uranium enrichment facility. Iran has sought and illicitly obtained MKS pressure transducers to use in its centrifuge plants. Those transducers can be seen in publicly available photographs of Natanz, an Iranian uranium nuclear enrichment facility, with then President Mahmoud Ahmadinejad, showing numerous transducers attached to Iran’s gas centrifuge cascades. Because pressure transducers can be used in gas centrifuges to convert natural uranium into a form that can be used in nuclear weapons, they are subject to export controls and cannot be shipped to China without an export license or to Iran at all.

In 2011, the Council of the European Union designated Eyvaz as an entity “involved in [Iran’s] nuclear or ballistic missile activities” and imposed restrictive measures against it. In so doing, it found that Eyvaz had produced vacuum equipment, which it supplied to Natanz and Fordow, another of Iran’s uranium nuclear enrichment facilities, and that it also had supplied pressure transducers to Kalaye Electric Company, an Iranian company which has been designated by the United States and United Nations as a proliferator of weapons of mass destruction.

The charging statutes provide a sentence of no greater than 20 years in prison on the charges of conspiracy to commit export violations and illegal exports of goods to Iran; no greater than 10 years in prison on the charges of smuggling goods, and no greater than five years on the charge of conspiracy, 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; Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Bruce M. Foucart, 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 Anti-Terrorism and National Security 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 a court of law.

BOSTON – Elmer Reyes, 32, of Chelsea, was indicted yesterday on charges that he sexually exploited a child. A federal grand jury handed down a two count indictment charging Reyes with producing a pornographic image of a child and possession of child pornography. The indictment alleges that the conduct occurred on October 1, 2014.

The charging statutes provide a mandatory minimum sentence of 15 years and a maximum sentence of 30 years in prison on the child exploitation charge, and no greater than 10 years in prison on the possession of child pornography charge. The charging statutes also provide a mandatory minimum of five years and a maximum of a lifetime 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 and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, made the announcement. The case was investigated by the Chelsea Police Department and the Federal Bureau of Investigation’s Boston Child Exploitation Task Force, which is comprised of members from the FBI, the Arlington, Boston, and Malden Police Departments, the Massachusetts State Police, and Department of Correction. The case is being prosecuted by Eve A. Piemonte Stacey and David G. Tobin of Ortiz’s Major Crimes Unit.

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 Criminal Division=s CEOS, 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/.

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.

BOSTON – A federal grand jury returned a superseding indictment yesterday adding three additional charges against a Saco, Maine man.

Dillan Letellier, 30, was charged in a seven-count superseding indictment with two counts of coercion and enticement of a minor involving two minor victims, one count of attempted coercion and enticement of a minor, three counts of travel with intent to engage in illicit sexual conduct, and one count of possession of child pornography. In October 2013, Letellier was originally indicted on coercion and travel relating to one minor victim.

The indictment alleges that Letellier met the minor victims on the Internet and thereafter persuaded each minor to meet with him in person. On two separate occasions, Letellier traveled from Maine to one of the minor’s town in Massachusetts where he engaged in sexual intercourse with the minor. On another occasion, Letellier traveled from Maine to a second minor’s town to engage in sexual intercourse with the minor. On Oct. 3, 2013, Letellier was arrested on federal charges. A search warrant was executed at his residence in Maine that day and officers located child pornography on computers. Letellier has remained in federal custody since his arrest in October, 2013.

The charging statutes provide a sentence of no greater than life in prison and a 10 year mandatory minimum in addition to a mandatory minimum of five years of supervised release and a maximum of a lifetime of supervised release, and a fine of $250,000 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 United States Sentencing Guidelines and other statutory factors.

United States Attorney Carmen M. Ortiz; Shelly Binkowski, Special Agent in Charge of the U.S. Postal Inspection Service; and Colonel Timothy P. Alben, Superintendent of the Massachusetts State Police, made the announcement today. The case was also investigated the police department in the town(s) in which the minor victims reside. The case is being prosecuted by Assistant U.S. Attorney Suzanne Sullivan Jacobus of Ortiz's Major Crimes Unit.

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 Criminal Division=s CEOS, 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/.

BOSTON – A previously convicted federal bank robber, most recently living in Brockton, was charged today with robbing five banks and attempting to rob a sixth.

James Patterson, 46, was charged today with five counts of bank robbery and one count of attempted bank robbery while on supervised release. According to court records, in 2001, Patterson was convicted in U.S. District Court in Boston of bank robbery and sentenced to 151 months in federal prison and three years of supervised release.

The indictment alleges that between April 16, 2014, and July 20, 2014, Patterson robbed the Beverly Bank on Dodge Street in Beverly, the People’s United Bank on Dodge Street in Beverly, the Century Bank on Fellsway West in Somerville, the South Shore Bank on Turnpike Street in Stoughton, and the North Shore Bank on Highland Avenue in Salem. Court filings allege that, on each occasion, the robber was wearing sunglasses and latex or rubber gloves and covering his lower face with a bandana or clothing. After entering each bank, Patterson allegedly announced that it was a robbery, told those present to put their hands up, and demanded large bills.

On Aug. 4, 2014, federal agents, who were conducting physical surveillance on Patterson, arrested him as he allegedly approached and attempted to rob the Century Bank on Cambridge Street in Burlington. Patterson was on federal supervised release during all of the events.

The charging statutes provide a sentence of no greater than 20 years in prison, three years of supervised release, a fine of $250,000, and restitution. The charging statutes also provide an additional consecutive sentence of no greater than 10 years in prison if the offense was committed while on federal supervised release. 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 Vincent B. Lisi, 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 Alexander H. Berlin of Ortiz’s Major Crimes Unit.

The details contained in the indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

BOSTON – A Florida man was sentenced in U.S. District Court in Worcester yesterday for leading a scheme to steal and launder over $100,000 in government funds.

Sniders Jean-Jacques, 27, of Sunny Isles Beach, Fla., was sentenced by U.S. District Court Judge Timothy S. Hillman to 24 months in prison, three years of supervised release, and was ordered to pay $110,299 in restitution to the federal government. In July 2014, Jean-Jacques pleaded guilty to theft of government money.

In early 2013, Jean-Jacques and a Worcester man, Marvin Lubin, recruited couriers in Worcester to open bank accounts in the name of sham businesses. Social Security benefits and IRS tax refund payments, all illegally obtained using stolen identities, were then deposited to the accounts. At the direction of Lubin and Jean-Jacques, cash was immediately withdrawn following each deposit and delivered by the couriers as instructed. All of the money involved represents funds stolen from the United States government.

Forty-five victims had their identities used as part of Jean-Jacques’s scheme: 13 victims’ identities were used to steal Social Security payments, and 32 victims’ identities were used to steal tax refunds.

“Identity theft wreaks havoc in people’s financial lives and Social Security fraud deprives citizens in need of important benefits,” said United States Attorney Carmen M. Ortiz. “Targeting such schemes is a federal enforcement priority.”

“Our office is committed to partnering with law enforcement agencies and pursuing perpetrators of identity theft and electronic government fraud schemes similar to the Worcester-based operation directed by Mr. Jean-Jacques,” said Scott Antolik, Special Agent in Charge of the Office of Inspector General, Social Security Administration, Office of Investigations, Boston Field Division. “To protect themselves from similar identity theft schemes, all citizens should safeguard their personal information, regularly monitor their financial accounts and any government benefit accounts, and report any suspicious account activity to the appropriate authorities.”

In October 2014, Lubin was sentenced to one year and one day in prison for his role in this scheme. Four others have pleaded guilty in connection with this scheme: couriers Juanita Hall, Natalia Santana, and Shantelle Smith; and Emeline Lubin, Marvin Lubin’s sister, who stole names and Social Security numbers from her then employer, Tufts Health Plan, and supplied the stolen information to Jean-Jacques for use in the scheme.

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; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; Lisa A. Quinn, Special Agent in Charge of the U.S. Secret Service; Phillip Coyne, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of the Inspector General; Worcester Police Chief Gary J. Gemme; and Norwood Police Chief William G. Brooks III, made the announcement. The case was prosecuted by Special Assistant U.S. Attorney Timothy Landry of Ortiz’s Major Crimes Unit.

BOSTON – After deliberating for less than four hours, a federal jury convicted the owner of a home nursing agency for fraudulently billing millions of dollars of services to Medicare and then laundering the proceeds. The jury also decided that the defendant’s $750,000 home in Natick is forfeitable because it was purchased with the fraud proceeds.

Following a 15-day trial, Michael Galatis, 63, was convicted of conspiracy to commit health care fraud, ten counts of health care fraud, and seven counts of money laundering. U.S. District Court Judge Douglas P. Woodlock scheduled sentencing for Feb. 26, 2015.

The jury also found that Galatis used portions of the proceeds of the fraud scheme to purchase a $750,000 house in Natick in 2010. Over the course of 14 months, Galatis purchased the house, and paid off a mortgage, in increments including $50,000 and in excess of $100,000, until he owned it free and clear of a mortgage. The jury’s finding renders Galatis’s home forfeitable. In addition, the jury found that $50,000 contained in two bank accounts related to the fraud scheme is forfeitable.

Galatis, a registered nurse, owned and operated At Home VNA (AHVNA), a home health agency located in Waltham. The Medicare program pays for home health services under specified conditions. From 2006 to 2012, Galatis caused AHVNA to submit more than $27 million in false and fraudulent claims to Medicare, and Medicare paid AHVNA more than $20 million for home health services.

Galatis, along with his co-conspirator, trained AHVNA nurses to recruit older patients on Medicare who lived in large apartment buildings. Galatis held “wellness clinics” at these buildings where nurses convinced senior citizens to enroll with AHVNA and have a nurse visit them in their home. 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. The home health orders were signed by AHVNA’s paid medical director, Dr. Spencer Wilking, who has separately pleaded guilty to health care fraud.

The elderly patients’ primary care physicians were unaware that AHVNA was sending nurses to see their patients in their homes. A number of primary care physicians complained to Galatis and asked him to stop seeing the patients, but he ignored these complaints. Similarly, AHVNA’s nurses asked Galatis if they could stop seeing the patients, because they did not need home health services, but Galatis refused these requests as well.

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, Galatis continued to bill Medicare for millions of dollars of home health care even though Dr. Wilking continued to sign each order without examining any of the patients.

The charging statutes provide a sentence of no greater than 10 years in prison, three years of supervised release, a fine of $250,000 or twice the gross gain or loss resulting from the offense, and restitution to the Medicare program. 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.

Dr. Wilking is scheduled to be sentenced on Feb. 3, 2015. Janice Troisi, also a registered nurse and the AHVNA clinical director, is expected to go to trial on June 22, 2015.

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; Vincent B. Lisi, 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 case is being prosecuted by Assistant U.S. Attorneys David S. Schumacher and Lisa A. Schlatz of Ortiz’s Health Care Fraud Unit. The trial team was also assisted by the New England Benefit Integrity Support Center, a fraud contractor for the Medicare program.

BOSTON – Regional Home Care, Inc., (d/b/a North Atlantic Medical Services) (NAMS), a durable medical equipment supplier based in Leominster, Mass., has agreed to pay $852,378 to resolve allegations that it violated the False Claims Act by submitting claims to Medicare and Medicaid for respiratory care services provided by unlicensed personnel. NAMS provides equipment and services for the treatment of respiratory ailments, such as oxygen deficiency and sleep apnea.

“This respiratory care company flouted important licensure requirements, failed to provide patients the standard of care that they deserve, and fraudulently billed the federal government for improperly rendered services,” said U.S. Attorney Carmen M. Ortiz. “With the important assistance of whistleblowers, our health care fraud team seeks to ensure patient safety and protect the public fisc.”

“Respiratory care services should be performed by properly licensed personnel,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “We will not tolerate companies prioritizing their own profits and convenience at the expense of patient safeguards.”

The Massachusetts Department of Public Health requires respiratory therapists to meet professional licensure requirements in order to provide respiratory care. To apply for a Massachusetts license, one must first earn an Associate’s Degree in Respiratory Therapy, or its equivalent, and then, must pass a licensure examination administered by the National Board for Respiratory Care. This settlement resolves allegations that, from September 2010 through January 2013, NAMS sent unlicensed employees into patients’ homes to set up sleep apnea masks and oxygen therapy equipment. The government alleged that, even after the Massachusetts Department of Public Health informed the company that the practice was illegal, NAMS continued to use unlicensed personnel and billed Medicare and Medicaid for these services as if they had been performed by licensed personnel.

Medicaid is jointly funded by the states and federal government. The Commonwealth of Massachusetts, which paid in part for the Medicaid claims at issue, will receive $229,210 of the settlement amount.

The case was investigated by the Department of Health and Human Services, Office of the Inspector General, and the Federal Bureau of Investigation, and was handled by District of Massachusetts Assistant United States Attorneys Giselle Joffre and George Henderson and Department of Justice Trial Attorney Benjamin Young.

The claims resolved by this settlement are allegations only; there has been no determination of liability

On October 25, the Rebecca M. Johnson Middle School in Springfield hosted U.S. Attorney Carmen Ortiz for the Youth Future, Your Decision Program. About 100 students attended the event which focused on the importance of good decision making.   A resource fair and student essay contest was held in concert with the event.  The following are the winners of the essay contest.

 Elaysha

 Demetrius

 Saranaya

BOSTON – A Massachusetts businessman pleaded guilty to tax evasion for using nominee entities to hide ownership and control over his businesses and assets from the Internal Revenue Service (IRS), announced Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department’s Tax Division and U.S. Attorney Carmen M. Ortiz for the District of Massachusetts.

According to the indictment, Richard L. Furnelli, a former resident of Holyoke and South Hadley, Mass., evaded payment of his federal income taxes for 2006 through 2009, among other years, and also failed to file his federal individual income tax returns for those years.

The indictment alleges that from 2006 through 2009, Furnelli earned more than $2 million in income. Furnelli operated or held substantial interest in Solid Gold Inc. and Gold Club-SF LLC, which owned and operated the Gold Club, an adult entertainment venue in San Francisco. These corporations allegedly earned annual gross receipts ranging from $2.5 million to more than $10 million dollars. During that time period, the indictment also alleges that Furnelli directed the payment of his income to a nominee entity, RLF Ventures LLC, and utilized a bank account held in a nominee name.

According to the plea documents, Furnelli has agreed to pay his outstanding federal income taxes owed to the IRS for the years 1998 through 2009.

Furnelli faces a statutory maximum sentence of five years in prison and a $250,000 fine for tax evasion at his April 29, 2015 sentencing before U.S. District Judge Michael A. Ponsor.

The case was investigated by special agents of IRS–Criminal Investigation of the Springfield, Massachusetts, Field Office. Trial Attorneys Mark S. McDonald and Thomas G. Voracek of the Tax Division are prosecuting the case.

BOSTON – A California man was sentenced today for remotely hacking into the computerized cash registers of a number of Subway restaurants and fraudulently obtaining more than $40,000 in gift cards.

Shahin Abdollahi, aka Sean Holdt, 46, of Lake Elsinore, Calif., was sentenced by U.S. District Judge Richard G. Stearns to serve 18 months in prison, two years of supervised release, and ordered to pay $43,712 in restitution to Subway. In May 2014, Abdollahi pleaded guilty to one count of conspiracy to commit computer intrusion and wire fraud and one count of wire fraud. Abdollahi’s co-conspirator, Jeffrey Wilkinson, 37, of Rialto, Calif., was sentenced to six months in prison in May 2014.

Abdollahi owned Subway franchises in Southern California from 2005 to 2008 and later operated a California company called POS Doctor, which sold and installed point-of-sale (POS) computer systems to Subway restaurant franchises around the country. POS systems are a type of computerized checkout register that allows merchants to manage customer purchases made by credit, debit and gift cards.

Beginning in 2011, Abdollahi and Wilkinson conspired to remotely hack into POS systems in Subway restaurant franchises around the country. Members of the conspiracy hacked into at least 13 Subway POS systems that Abdollahi sold through his company and fraudulently added at least $40,000 in value to Subway gift cards. Abdollahi and Wilkinson used the fraudulent gift cards to make purchases at Subway, and Wilkinson also sold fraudulent gift cards to others using eBay and Craigslist.

United States Attorney Carmen M. Ortiz of the District of Massachusetts, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, and Resident Agent in Charge Holly Fraumeni of the United States Secret Service in Manchester, New Hampshire, made the announcement. The case was prosecuted by Assistant U.S. Attorney Adam J. Bookbinder, the chief of Ortiz’s Cybercrime Unit and Senior Trial Attorney Mona Sedky, with the Department of Justice’s Computer Crime & Intellectual Property Section.

BOSTON – A former Foxboro man was sentenced yesterday for mortgage fraud in connection with the purchases of residential properties.

Christopher A. Chasse, 45, was sentenced by U.S. District Judge George A. O’Toole, Jr. to eight years in prison and three years of supervised release. In August 2014, Chasse pleaded guilty to 10 counts of wire fraud in connection with a mortgage fraud scheme.

From June to September 2006, Chasse fraudulently caused mortgage lenders to finance $5.25 million for his purchases of residential properties in the greater Boston area. Chasse submitted false loan applications containing bogus information about his employment, income, assets, closing costs and related matters. Chasse created false identification documents, phony income tax returns and other IRS forms, fictitious employment records and bogus bank account statements, all to support false loan applications to 11 lenders. Chasse also recruited other buyers for fraudulent mortgage loans. All of the properties went almost immediately into foreclosure for lack of payments, and the lenders suffered more than $4 million in losses.

United States Attorney Carmen M. Ortiz; Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; and Bruce Foucart, Special Agent in Charge of Homeland Security Investigations in Boston, made the announcement today. The case was prosecuted by Victor A. Wild of Ortiz’s Economic Crimes Unit and Carlos A. López of Ortiz’s Drug Task Force.

Today’s action is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s Securities and Commodities Fraud Working Group. The interagency FFETF was created to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.

BOSTON – The United States Attorney’s Office in Boston reached a civil settlement today with PharmaHealth Specialty Pharmacy in Fairhaven, Mass., in connection with allegations that the company violated federal regulations related to the sale of prescription drugs.

The government contended that PharmaHealth violated the Controlled Substances Act by dispensing controlled substances to physicians instead of patients, failing to keep complete and accurate records of controlled substances, and failing to maintain readily retrievable records of controlled substances. PharmaHealth has agreed to pay $20,000 in settlement of these claims.

“The mishandling of prescription drugs is of great concern to federal authorities,” said United States Attorney Carmen M. Ortiz. “For the sake of patient safety, and to ensure that medications end up in the hands of patients rather than addicts, we will continue to monitor pharmacies to make certain that they abide by regulations while conducting business.”

U.S. Attorney Ortiz and Michael J. Ferguson, Acting Special Agent in Charge of the Drug Enforcement Administration, Boston Field Division, made the announcement today. The investigation was conducted by Diversion Investigators with the DEA’s Boston Field Division. The case was handled by Assistant U.S. Attorney Christine Wichers of Ortiz’s Civil Division.

BOSTON – A former inspector for the Massachusetts Department of Agriculture pleaded guilty in U.S. District Court in Springfield yesterday to making false statements on inspection reports he submitted to federal regulators.

Paul Ricco, 54, of Springfield, pleaded guilty to 15 counts of making false statements after being charged in September 2014. U.S. District Judge Mark G. Mastroianni scheduled sentencing for Feb. 11, 2015.

From March 2010 through May 2012, Ricco was in charge of the Producer Establishment Inspection program at the Massachusetts Department of Agriculture where he inspected establishments that produce, sell and/or distribute pesticides. During that time period, Ricco submitted 15 false reports of purported inspections that he never performed. Ricco submitted the false reports to EPA to conceal the fact that he was not performing environmental inspections which he was required to perform. Those inspections were necessary to insure that pesticide manufacturers across the state were producing and packaging pesticides safely.

The charging statute provides a statutory maximum 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 judge based upon the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Carmen M. Ortiz and John K. Gauthier, Acting Special Agent in Charge of the U.S. Environmental Protection Agency, Criminal Investigation Division, Boston Field Office, made the announcement. The case is being prosecuted by Assistant U.S. Attorney Carlos A. López of Ortiz’s Major Crimes Unit.

BOSTON – A Bellingham man was arraigned today on federal charges relating to the production of child pornography.

John E. Kalinowski, 26, appeared before Chief Magistrate Judge Jennifer C. Boal on a three count federal indictment charging him with production, distribution, and possession of child pornography. Kalinowski had been arrested on similar charges on Sept. 8, 2014, following the execution of a search warrant at his Bellingham home. He has been held in federal custody since September 8.

As alleged in an affidavit filed in the case, during the execution of the search warrant in September, law enforcement agents located and seized numerous digital devices including computers, hard drives, and other media storage devices. A preliminary review of the digital media revealed numerous images of children engaged in sexually explicit conduct, including images which revealed that Kalinowski was involved in the production of that material. Law enforcement officers also recovered numerous articles of children’s undergarments from Kalinowski’s home.

The charging statutes provide maximum sentences ranging from 10 to 30 years in prison. The production charge provides a 15 year mandatory minimum term and the distribution charge provides a five year mandatory minimum term. Kalinowski also faces a potential lifetime of supervised release. 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; Shelly Binkowski, Inspector in Charge of the U.S. Postal Inspection Service; Whitman Police Chief Scott D. Benton, and Bellingham Police Chief Gerard L. Daigle, Jr., made the announcement today. The case is being prosecuted by Kenneth G. Shine of Ortiz’s Major Crime Unit.

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/.

Members of the public who have questions, concerns or information regarding this case should call 617-748-3274.

The details contained in the indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

BOSTON – Two former members of a powerful Boston Teamsters local, including its principal officer and a member who had been convicted of a prior felony, were convicted today by a federal jury of extortion and racketeering, including charges that they extorted local non-profits.

John Perry, 62, of Woburn and Joseph “Jo Jo” Burhoe, 46, of Braintree, were convicted on multiple felony counts after a seven week trial. Perry, the former Secretary/Treasurer of Boston Teamster’s Local 82, and Burhoe, a member who acted as Perry’s enforcer, were convicted of extorting non-profits and other non-union businesses in Boston, as well as extorting other union members of their wages and benefits. Among the extortion victims were Brigham and Women’s Hospital, Massachusetts General Hospital, and the United States Green Building Council. Since the time of the crimes, Local 82 has been merged with Teamsters Local 25. Those Locals load and unload trucks at major business and entertainment venues in downtown Boston. Judge Denise Jefferson Casper set sentencing for Perry on Feb. 25, 2015 and Feb. 26, 2015 for Burhoe.

“Today’s verdict reconfirms our commitment to protecting those doing business in Boston from unions’ extortionate demands for personal payoffs or other illegitimate labor objectives,” said U.S. Attorney Carmen Ortiz. “We will also protect union members’ rights to democratic participation in the affairs of their union, including the right to vote on contracts that effect their livelihood, their right to file grievances, and their right to appear in court as a witness, without fear of intimidation or physical assault by union officials.”

United States Department of Labor Inspector General Scott S. Dahl stated, “Today’s convictions represent the Department of Labor, Office of Inspector General’s commitment to protect the American workforce from those who abuse their positions of trust and instill fear in others desiring simply to conduct an honest business. John Perry and his co-conspirator created a climate of fear and intimidation that deprived workers of their rights under the Labor Management Reporting and Disclosure Act. My office stands firmly committed to working with our law enforcement partners to combat this criminal activity.”

“I want to commend the great work and collaboration between the Boston Police Special Investigations Unit, the United States Attorney’s Office and the U.S. Department of Labor to bring about this verdict,” said Boston Police Commissioner William B. Evans. “Their efforts throughout this investigation were tireless and will ensure that Boston remains a world class city that attracts world class events.”

Perry, Director of Trade Shows and Convention Centers for the International Brotherhood of Teamsters Local 82, and Burhoe, a convicted felon who was a member of the union, worked in the trade show and moving industries. Since 2007 the defendants engaged in illegal activities in order to generate money for themselves, their friends, and family members. The defendants extorted various entities throughout Boston including hotels, event planners, catering companies, pharmaceutical companies, hospitals, music entertainment companies, and non-profit organizations, none of which had collective bargaining agreements with Local 82.

The defendants threatened to picket and disrupt business, sometimes just hours before an event, if the entity did not accede to the defendants’ demand for unwanted, unnecessary and superfluous jobs for themselves, their friends and family. Payment was demanded for these unnecessary Ajobs.@ They also used threats of physical and economic harm to deprive members of Local 82 of their legally-protected rights as union members.

The statutory maximum for each RICO/RICO Conspiracy and Hobbs Act extortion count is 20 years in prison to be followed by five years of supervised release, and a $250,000 fine for each count. The statutory maximum for other counts of conviction is up to 10 years in prison to be followed by three years of supervised release and a $10,000 fine. 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.

Two other defendants were on trial with Perry and Burhoe. The jury was unable to reach a unanimous decision as to James Deamicis, a/k/a “Jimmy the Bull,” 51, of Quincy, and the Court declared a mistrial as to Deamicis. Thomas Flaherty, 50, of Braintree was acquitted.

U.S. Attorney Ortiz; Inspector General Scott S. Dahl; Mark J. Neylon, District Director, Office of Labor-Management Standards, U.S. Department of Labor; Susan A. Hensley, Regional Director of The Employee Benefits Security Administration, U.S. Department of Labor; and Commissioner Evans made the announcement today. The case is being prosecuted by Laura J. Kaplan and Susan G. Winkler of Ortiz’s Strike Force and Drug Task Force Units, respectively.

BOSTON – A former East Longmeadow woman was arrested today in Virginia after being charged in U.S. District Court in Springfield with embezzling funds from a retirement community.

Alice Lacroix, 53, was indicted on eight counts of wire fraud, eight counts of money laundering, and two counts of aiding and abetting the filing of false tax returns.

The indictment alleges that Lacroix, who was the manager of Bluebird Estates, a retirement living community in East Longmeadow, embezzled funds from her employer by stealing rent checks paid by tenants, as well as other checks and property belonging to her employer. It is alleged that Lacroix established a bank account in the name of Bluebird Estates into which she deposited the embezzled funds and then engaged in financial transactions designed to disguise the proceeds of the fraudulent scheme. Lacroix deceived her employer through emails that provided false information about the rent payments she took. The indictment also alleges that Lacroix aided and abetted in the filing of false income tax returns.

The maximum sentence under the wire fraud and money laundering statutes is 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 Investigation in Boston; Colonel Timothy P. Alben, Superintendent of the Massachusetts State Police; and East Longmeadow Police Chief Douglas Mellis, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Alex Grant of Ortiz’s Springfield Branch Office.

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.

BOSTON – A former Lowell man and convicted felon pleaded guilty yesterday to illegally possessing multiple firearms, including a semi-automatic pistol.

Eric Texeira, 34, pleaded guilty yesterday to being a felon in possession of firearms and ammunition. U.S. District Judge Denise J. Casper scheduled sentencing for Feb. 10, 2015. On May 16, 2014, Texeira, a convicted felon, possessed a Glock semi-automatic pistol and sold multiple other firearms, including two revolvers and a rifle, to another individual for $1,300. Some of the firearms had obliterated serial numbers.

The maximum sentence under the statute is 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 Bureau of Alcohol, Tobacco, Firearms and Explosives, Boston Field Division; Lowell Police Superintendent William Taylor, made the announcement. The case is being prosecuted by Assistant U.S. Attorney Suzanne Sullivan Jacobus of Ortiz's Major Crimes Unit.

BOSTON – A Cambridge man pleaded guilty yesterday to identity fraud related to the theft and sale of a book stolen from Boston’s historic Old South Church.

Michael Ford, 66, pleaded guilty to using the identity of another man in August 2008 in connection with the sale of the diary. U.S. District Judge George A. O’Toole scheduled sentencing for Feb. 27, 2015.

The diary, which was written by James Hull in the 1600s, had been stolen from a display case in the Old South Church in the summer of 2008. On Aug. 11, 2008, a man sold the diary to a bookstore near Harvard Square for $750, using the driver’s license of another man as identification. Within 40 minutes of this transaction, Ford had obtained the check and the driver’s license and, using the license as identification, cashed the check at a bank in Harvard Square. The bookstore thereafter realized the diary had substantial historic significance and sold it to a collector for $40,000. After the sale, upon learning that the diary had been stolen, the bookstore bought it back and restored it to the Church.

According to the plea agreement, Ford faces no greater than five years in prison 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; Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Boston Police Commission William Evans; Harvard University Police Chief Francis D. Riley; and Boston University Police Chief Thomas G. Robbins made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Robert E. Richardson of Ortiz’s Major Crimes Unit.

BOSTON – A California man pleaded guilty today defrauding borrowers who sought loans from Quest Capital Finance.

Damien John Hess, 36, of Laguna Niguel, Calif., pleaded guilty to conspiracy to commit wire fraud and seven counts of wire fraud. U.S. District Court Chief Judge Patti B. Saris scheduled sentencing for Feb. 27, 2015 at 2:00 p.m.

Hess, who was the Chief Executive Officer of Quest Capital Finance, stole millions of dollars in deposits from people and companies who sought to borrow money from Quest. Hess, and others working for him, falsely represented that Quest was a financing company that could provide hundreds of millions of dollars of loans for businesses.

From 2008 through 2011, Hess and others at Quest persuaded businesses and individuals to put hundreds of thousands of dollars into escrow accounts, that is, into an account where the funds would be held by a third party until all contingencies for the loan were resolved, as deposits towards future loans. Hess and others at Quest promised the borrowers that the deposits would not be moved out of escrow unless and until the loan was being funded. In fact, shortly after the prospective borrower had deposited the money in escrow, Hess took all or most of the escrowed money and transferred it to his company, and, in some instances, transferred it to his personal accounts. Hess repeatedly took the escrowed funds without actually arranging financing for the borrowers, let alone making the first draws of financing available to the borrowers. In order to prevent prospective buyers from detecting the fraud, Hess, and others acting on behalf of Quest, continued to promise the prospective borrowers that Quest would soon be providing millions of dollars of financing. Quest did not provide financing nor did it refund the purportedly escrowed or refundable deposits.

The charging statutes provide sentences of no greater than five years in prison for the conspiracy count and 20 years in prison for each for the wire fraud counts, three years of supervised release, and a $250,000 fine or twice the gross loss or gain, whichever is greater, restitution 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; Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and Shelly Binkowski, Inspector in Charge of the U.S. Postal Inspection Service, made the announcement. The case is being prosecuted by Assistant United States Attorneys Sara Miron Bloom of Ortiz’s Economic Crimes Unit, Patrick Callahan of the Civil Division and Doreen Rachal of the Asset Forfeiture Unit.

BOSTON – A Springfield man appeared in federal court this afternoon on a charge of impersonating a Deputy United States Marshal.

Dennis Wilhite, 49, was arrested on Nov. 10, 2014, and appeared in U.S. District Court today before Magistrate Judge Judith G. Dein. It is alleged in a criminal complaint that Wilhite falsely represented himself as a Deputy United States Marshal in an effort to secure the release of a friend from state custody. In posing as a U.S. Marshal, Wilhite claimed that his friend was working with law enforcement on a sex trafficking investigation involving minors, and should be released from custody to assist in that investigation. Wilhite is also alleged to have posed as a U.S. Marshal in calls made to a victim in a state criminal case filed against Whilhite’s friend.

The charging statute provides a sentence of three years in prison, one year of supervised release and a maximum $250,000 fine. 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 United States Marshal John Gibbons made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Jordi de Llano of Ortiz’s Major Crimes Unit.

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.

BOSTON – A Boston-area real estate developer was arrested today and charged with participating in an insider trading conspiracy for buying – and later selling – shares of Wainwright Bank & Trust Company based on a tip that the company would be acquired. Prior to the acquisition, shares of Wainwright traded on the NASDAQ Stock Market.

Robert H. Bray, 77, of Watertown, was charged in a criminal complaint with conspiracy to commit securities fraud. As set forth in the complaint, Bray worked for, and at one time owned, R&B Construction, a construction and real estate development company.

According to the complaint, in June 2010, Bray was tipped by friend who was an executive at Boston-based Eastern Bank Corp. that Wainwright would be acquired. The tip – more than two weeks before the acquisition was publicly announced – occurred during a face-to-face encounter in a bar at the Watertown country club where both men are members. On the next trading day, Bray called his broker to ask how he could buy 25,000 shares of Wainwright stock, which he acknowledged “kinda sounds crazy,” given how thinly the stock traded. Bray ultimately purchased a total of 31,000 Wainwright shares over the next two weeks, at prices between $8.85 and $9.90 per share, single-handedly accounting for some 56 percent of the total trading volume in Wainwright shares during that period. On June 29, 2010, Eastern Bank announced its agreement to acquire Wainwright for $19 per share in cash, a premium of nearly 100% over the stock’s prior closing price. Bray ultimately sold his shares for a profit of more than $300,000.

“Whether overheard in a board room, bar room, or county club, trading on insider information is a federal felony,” said United States Attorney Carmen M. Ortiz. “Today’s arrest makes clear our commitment to keeping the financial markets fair for everyone – and to protecting investors who put their money to work in the markets each and every day, without the benefit of well-placed friends willing to tip them off about pending deals.”

“As alleged, Mr. Bray engaged in the scheme to get rich quick,” said Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division. “Time and time again FBI agents arrest those who trade on insider information. Today’s arrest is another example of the FBI’s efforts to protect the integrity and transparency of the financial markets.”

The maximum sentence under the statute is five years in prison, three years of supervised release and a fine of the greater of $250,00 or twice the gross 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.

U.S. Attorney Ortiz and SAC Lisi made the announcement today. The United States Attorney’s Office received valuable assistance from the Securities & Exchange Commission in the course of investigating this case. The case is being prosecuted by Assistant U.S. Attorneys Stephen E. Frank and Eric P. Christofferson of Ortiz’s Economic Crimes Unit.

The details contained in the complaint are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

BOSTON – Mark Gardner, 56, of Abington, was indicted in U.S. District Court in Boston on theft of public money. The indictment alleges that from July 2009 to January 2014, Gardner stole $65,311 in Social Security benefits.

The charging statute provides a sentence of no greater than ten years in prison, three years of supervised release, a fine of $250,000 or twice the gross gain or loss, whichever is greater, and restitution. 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 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.

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.

BOSTON – Three men were arrested today for conspiracy to distribute and possess more than 1,000 kilos of marijuana.

In an indictment unsealed today, Michael Gordon, 45, and Andrean Jaggon, 37, both of Randolph and Dagoberto Olea, 43, of Mendocino County, California, were charged in a federal indictment with conspiracy to distribute and to possess with intent to distribute 1000 Kilograms or more of marijuana. Gordon was also charged with two counts of structuring fraudulent transactions.

The government alleges that between July 2011 and the present, Gordon obtained large amounts of marijuana from Olea in California and shipped the marijuana to the Boston area via the US Postal Service and Federal Express. Gordon then distributed the marijuana in the Boston area. Jaggon assisted Gordon in the operation which produced millions of dollars in profits, and Gordon and others engaged in various structured financial transactions with the proceeds generated by the sale of that marijuana in Massachusetts and elsewhere.

Under the statute, Gordon and Olea face a mandatory minimum sentence of 10 years in prison and maximum sentence of life, a $10 million fine, and at least five years of supervised release following any period of incarceration. Jaggon faces a maximum sentence of 20 years in prison, a $1 million fine, and at least three years of supervised release. 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; Bruce M. Foucart, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations in Boston; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; Michael J. Ferguson, Acting Special Agent in Charge of the Drug Enforcement Administration, Boston Field Division; Shelly A. Binkowski, Inspector in Charge of the U.S. Postal Inspection Service; and Colonel Timothy P. Alben, Superintendent of the Massachusetts State Police made the announcement today. Substantial assistance was also provided by Homeland Security Investigations in San Francisco, the Transportation Security Administration, Boston Police Department, Norwood, Randolph, and Needham Police Departments.

The case is being prosecuted by Karen Beausey of Ortiz’s Organized Crime Drug Enforcement Task Force.

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.

BOSTON – A Stoughton man pleaded guilty yesterday to engaging in a fraud scheme involving the creation of phony invoices for annual dues that purported to come from legitimate business and trade associations.

Darren Stokes, 42, pleaded guilty yesterday to eight counts of wire fraud and seven counts of mail fraud. U.S. District Judge Richard G. Stearns scheduled sentencing for Feb. 5, 2015.

From 2008 to 2012, Stokes caused tens of thousands of fraudulent invoices to be faxed to businesses throughout the United States which purported to be from business or trade associations and sought payment for annual membership dues. In fact, Stokes had no authorization from the business and trade associations to collect such payments. Stokes caused invoices to be sent to members of associations including the American Dental Association, the National Association of Manufacturers, the Automotive Parts Remanufacturers Association, the American Trucking Association, the Associated General Contractors of America, and the National Hospital Association. In response to the fraudulent invoices, hundreds of businesses mailed checks to addresses controlled by Stokes who then cashed many of the checks.

The maximum sentence under the statutes is 20 years in prison, three years of supervised release and a $250,000 fine or twice the gross gain or loss, whichever is greater. 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 in Boston, made the announcement. The case is being prosecuted by Assistant U.S. Attorneys Mark J. Balthazard of Ortiz’s Economic Crimes Unit and Doreen M. Rachal of Ortiz’s Asset Forfeiture Unit.

BOSTON – A securities attorney based in California was arrested this morning on securities fraud charges arising out of his participation in a scheme to manipulate the stock of a Boston-based company.

Richard Weed, 52, was charged with conspiracy, securities fraud and wire fraud based on his involvement in the manipulation of the stock of CitySide Tickets, Inc., a Boston-based ticket reseller.

According to the complaint, Weed, along with at least two others, conspired to create the appearance that CitySide was a growing company when, in fact, it was in dire financial straits. Weed, who served as CitySide’s Secretary and as one of two members of CitySide’s Board, was responsible for drafting false and misleading legal opinion letters so that his co-conspirators could obtain free trading stock. Weed also helped his co-conspirators to conceal their control and ownership of CitySide by directing the stock to be distributed to different entities that they controlled. This allowed the conspirators to manipulate CitySide’s stock and sell their shares at artificially high prices. In addition to assisting with the manipulation itself, Weed was also charged with responding to any inquiries from investors or securities regulators.

Two Boston-based stock promoters, Coleman Flaherty and Thomas Brazil, also were charged with conspiracy, securities fraud, and wire fraud arising from their participation in the stock manipulation.

The Securities and Exchange Commission (SEC) filed suit today against Weed, Flaherty and Brazil based on the CitySide market manipulation scheme.

“The prosecution of corporate and securities fraud is a top priority of the Department of Justice and a top priority for this Office,” said United States Attorney Carmen M. Ortiz. “Securities attorneys are the gatekeepers, entrusted with the responsibility of the fair and efficient functioning of our markets. We are committed to working with our regulatory and law enforcement partners to detect and prosecute those engaged in market abuse.”

"Attorney Weed joins more than a dozen CEOs, traders, fund managers, equities analysts, lawyers and publicists caught in the FBI's long-running undercover investigation of the manipulation of micro-cap stocks,” said Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division. “We expect that our ongoing undercover operations to find people like Mr. Weed will continue to return high yields far into the future."

The charges follow 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 SEC.

The latest charges follow a series of cases filed by the SEC and the U.S. Attorney for the District of Massachusetts in which 27 individuals have been criminally charged, and 20 convicted, for using kickbacks and other schemes to trigger investment in, or manipulate the stock of, thinly-traded stocks.

The statutory maximum penalties for the securities and wire fraud charges are 20 years in prison, and three years of supervised release. The maximum fine for securities fraud is $5 million and the maximum fine for wire fraud is $250,000, or twice the gross loss to the victim. The statutory maximum penalties for the conspiracy charge is five years in prison, three years of supervised release, and a fine of $250,000, or twice the gross loss to the victim. 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 Lisi made the announcement today. The criminal case is being prosecuted by Assistant U.S. Attorney Sarah E. Walters, Chief of Ortiz’s Economic Crimes Unit and SEC Attorney Eric A. Forni, who was appointed as a Special Assistant U.S. Attorney.

The details contained in the complaint are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

BOSTON – A Revere man was sentenced today in U.S. District Court in Boston for his role in a stolen identity refund fraud scheme.

Carlos Mauricio Gonzalez, 30, was sentenced by U.S. District Judge Nathaniel M. Gorton to 30 months in prison, and ordered to pay $326,802 in restitution to the Internal Revenue Service. On Nov. 13, 2013, Fernandez pleaded guilty to a one count of conspiracy to convert public money.

Gonzalez, who worked as a supervisor at a Citizens Bank branch in Stoneham, agreed to open business and personal bank accounts that were to receive proceeds from stolen identity refund fraud (SIRF) by which conspirators obtain refunds by filing fraudulent income tax returns using the identities of other people. Gonzalez opened bank accounts himself, and also directed other bank employees to open accounts although he did not inform these employees about the scheme. Gonzalez withdrew and directed other employees to withdraw the SIRF proceeds in cash amounts below $10,000. Between December 2011 and April 2012, Gonzalez facilitated the opening of 32 bank accounts, which received 75 deposits totaling $402,897. For his actions, Gonzalez received $14,000.

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 Special Assistant United States Attorney Sean R. Delaney of Ortiz’s Economic Crimes Unit.

BOSTON – A Chelsea man pleaded guilty yesterday to fraudulently accepting over $46,000 in unemployment insurance benefits.

Oscar P. Valles-Lopez, a/k/a Oscar Valle, 44, pleaded guilty to a one-count Information charging him with mail fraud. U.S. District Court Judge George A. O’Toole scheduled sentencing for Feb. 13, 2014. Valles-Lopez is an El Salvadorian national who illegally reentered the United States in July 2003 after previously living in this country from 1996 to 2001. After working for several years under fraudulently obtained immigration papers, he lost his job in 2009. Although Valles-Lopez knew he was not entitled to unemployment insurance benefits without a valid work permit, he paid $400 for a false permit and made three claims for benefits in 2009, 2010, and 2012. Over the course of several years, Valles-Lopez cashed 111 unemployment checks totaling $46,218.

Valles-Lopez entered into a plea agreement with the government in which the parties agreed to recommend a sentence of one year of probation with the special condition that the first four months be served under home confinement. The defendant also agreed to restitution in the full amount of the benefits obtained under this scheme. 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 U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, New York Regional Office; Bruce M. Foucart, Special Agent in Charge of Homeland Security Investigations in Boston; and Colonel Timothy P. Alben, Superintendent of the Massachusetts State Police, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Eugenia M. Carris of Ortiz’s Public Corruption Unit.

BOSTON – A Springfield man pleaded guilty today in U.S. District Court in Springfield to illegally possessing a firearm.

Jamel Bolden, 21, pleaded guilty to possessing a firearm and ammunition after being previously convicted of a felony. U.S. District Court Judge Timothy S. Hillman scheduled sentencing for Jan. 28, 2015.

On June 3, 2013, during a dispute with his mother and his stepfather, Bolden brandished a Ruger Single Six .22 Magnum caliber revolver and told stepfather that he would “lay him down.” Bolden had been previously convicted of three counts of armed robbery and was currently on probation for these offenses. After Bolden’s mother and stepfather reported the incident, Bolden fled, narrowly escaping the police. On June 7, 2013, Bolden was arrested at his girlfriend’s home. After the arrest, local law enforcement officials executed a search warrant for an automobile used by his girlfriend, and they recovered the revolver loaded with six rounds of ammunition. Federal agents later executed another search warrant for his girlfriend’s cell phone and recovered a photograph of Bolden posing with the revolver.

According to terms of the plea agreement, Bolden has also agreed to plead guilty to assault with a dangerous weapon in a related case in Hampden Superior Court.

The charging statute provides a sentence of no greater than 10 years in prison, three years of supervised release, 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 Office, and Springfield Police Department Commissioner John Barbieri made the announcement. The case is being prosecuted by Assistant U.S. Attorney Steven H. Breslow of Ortiz's Springfield Branch Office.

BOSTON – A former Barnstable man who was residing in Missouri pleaded guilty today to failing to register as a sex offender.

David W. Lacouture, 52, pleaded guilty before U.S. District Court Judge Nathaniel M. Gorton to a one-count Indictment charging him with failing to register as a sex offender. Sentencing is scheduled for Feb. 11, 2015.

In September 2010, Lacouture pleaded guilty in Barnstable County to indecent assault and battery on a child under 14 years of age. As a result of that conviction, Lacouture was required to register as a Level 3 sex offender. At some point, Lacouture relocated without permission or notification to Missouri where he failed to register as a sex offender. In April 2013, he was arrested under an alias on unrelated state charges and returned to Massachusetts.

The maximum sentence under the statute is 10 years in prison, three years of supervised release, and a $250,000 fine. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based on the United States Sentencing Guidelines and other statutory factors.

United States Attorney Carmen M. Ortiz and John Gibbons, U.S. Marshal for the District of Massachusetts, made the announcement. The case is being prosecuted by Assistant U.S. Attorney Suzanne Sullivan Jacobus of Ortiz's Major Crimes Unit.

BOSTON – United States Attorney Carmen M. Ortiz announced today that Assistant United States Attorney Robert A. Fisher will lead the efforts of her Office in connection with the Justice Department's nationwide Election Day Program for the upcoming November 4, 2014, general elections. AUSA Robert A. Fisher has been appointed to serve as the District Election Officer (DEO) for the District of Massachusetts, and in that capacity is responsible for overseeing the District’s handling of complaints of election fraud and voting rights abuses in consultation with Justice Department Headquarters in Washington.

U.S. Attorney Ortiz said, “Every citizen must be able to vote without interference or discrimination and to have that vote counted without it being stolen because of fraud. The Department of Justice will act promptly and aggressively to protect the integrity of the election process.”

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

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

The franchise is the cornerstone of American democracy. We all must ensure that those who are entitled to the franchise exercise it if they choose, and that those who seek to corrupt it are brought to justice. In order to respond to complaints of election fraud or voting rights abuses on November 4, 2014, and to ensure that such complaints are directed to the appropriate authorities, United States Attorney Carmen M. Ortiz stated that AUSA Robert A. Fisher will be on duty in this District while the polls are open. He can be reached by the public at 617-748-3612.

In addition, the FBI will have special agents available in each field office and resident agency office throughout the country to receive allegations of election fraud and other election abuses on election day. The local FBI field office can be reached by the public at 617-742-5533.

Complaints about possible violations of the federal voting rights laws can be made directly to the Department of Justice Civil Rights Division’s Voting Section in Washington by phone at 1-800-253-3931 or (202) 307-2767, by fax at (202) 307-3961, by email to [email protected] or by complaint form at http://www.justice.gov/crt/complaint/votintake/index.php.

United States Attorney Carmen M. Ortiz said, “Ensuring free and fair elections depends in large part on the cooperation of the American electorate. It is imperative that those who have specific information about discrimination or election fraud make that information available immediately to my Office, the FBI, or the Civil Rights Division.”

BOSTON – A Manchester man pleaded guilty today to stealing more than $160,000 in government benefits.

Charles Gerbutavich, 70, pleaded guilty before U.S. District Judge Rya W. Zobel to theft of public money. In October 2014, Gerbutavich was charged in a felony information. Sentencing is scheduled for Feb. 3, 2015.

Gerbutavich’s father died in 1993, but his monthly Social Security benefits continued to be directly deposited into a joint bank account in his and Gerbutavich’s names. From 1993 to 2014, Gerbutavich continued to receive his deceased father’s benefits totaling $161,587.

This case was brought as part of an ongoing effort by the U.S. Attorney’s Office in partnership with the Social Security Administration to investigate and prosecute the posthumous fraud of Social Security benefits. In many of these cases, family members, knowing they are not entitled to government benefits, continue to withdraw and spend the funds after a relative has died. Since October 2013, the U.S. Attorney’s Office has prosecuted several such cases involving a total of more than $1 million in stolen government money.

In October 2014, Mary Murphy of Dorchester was sentenced to 18 months of home confinement, 10 hours per week of community service, and was ordered to pay a fine of $40,000 and $331,630 in restitution – which she paid in full in October. Murphy pleaded guilty in connection with taking her deceased mother’s Social Security and Civil Service retirement benefits, which were directly deposited into a joint bank account after her death in 1977.

Also in October 2014, Richard Oldham of Old Orchard Beach, Maine, was sentenced to four months in prison, six months of home confinement, and was ordered to pay $195,862 in restitution for endorsing Social Security checks in his deceased mother’s name following her death in 1993.

In September 2014, Frances Kenney Moseley of Boston, pleaded guilty to stealing over $220,000 in Social Security benefits, which were directly deposited into her father’s bank account after his death in 2003. Moseley is scheduled to be sentenced on Dec. 22, 2014.

In August 2014, George Bergstrom of Shrewsbury, was sentenced to one year of probation and was ordered to pay $57,948 in restitution – which he paid in full in August – for taking his deceased mother’s Social Security benefits, which were directly deposited into a joint bank account after her death in 2009.

In October 2013, John Flaherty of Newburyport, was sentenced to 10 months in prison and was ordered to pay $168,830 in restitution for taking his deceased mother’s Social Security benefits, which were directly deposited into a joint bank account after her death in 1993.

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 Gerbutavich case is being prosecuted by Special Assistant U.S. Attorney Timothy Landry of Ortiz’s Major Crimes Unit.

BOSTON – The United States Attorney's Office and the Anti-Defamation League’s (ADL) New England Division hosted an event yesterday commemorating the 5th anniversary of the signing of the Matthew Shepard and James Byrd, Jr. Hate Crimes Prevention Act.

On Oct. 28, 2009, President Barack Obama signed this landmark legislation which greatly expanded the federal government’s ability to prosecute hate crimes. The law enables the Justice Department to prosecute crimes motivated by race, color, religion and national origin without having to show that the defendant was engaged in a federally protected activity. The Shepard-Byrd Act also empowers the Department of Justice to prosecute assaults committed because of a person’s sexual orientation, gender identity, gender or disability as hate crimes. The law also marked the first time that the words, "lesbian, gay, bisexual and transgender" appeared in the United States Code.

“For over a decade, a coalition of civil rights, religious and law enforcement leaders from across the nation persistently advocated for a law to strengthen the protections against crimes based on race, color, religion, national origin, sexual orientation and gender identity -- a law, which in a perfect union, would not be necessary,” said United State Attorney Carmen Ortiz.

The law, which was a rider to the National Defense Authorization Act of 2010, was also fiercely advocated by the families of Matthew Shepard and James Byrd, Jr. In 1998, Matthew Shepard— a 21-year-old gay college student at the University of Wyoming was robbed, tortured, tied to a fence along a country road and left to die by two men who offered him a ride home from a local bar. That same year, James Byrd Jr.—a 49-year-old African-American man living in Jasper, Texas—accepted a ride home from three men who drove him to the remote edge of town where they beat him severely, tied him by the ankles to the back of a pickup truck, and dragged him to his death.

While the men responsible for the Shepard and Byrd killings were later convicted of murder, none of them were prosecuted for committing a hate crime. At the time these murders were committed, neither Wyoming nor Texas had a hate crimes law, and existing federal hate crimes protections did not include violent acts based on the victim’s sexual orientation and only covered racial violence against those engaged in a federally protected activity, such as voting or attending school.

During his remarks yesterday, Robert Trestan, Regional Director of ADL’s New England Division, said, “In the United States bigotry cannot be outlawed, but hate crime laws demonstrate an important commitment to confront and deter criminal activity motivated by prejudice. Hate crimes continue to impact communities at a rate of almost one every hour. Today’s anniversary is an opportunity for us to increase our efforts at preventing these crimes from happening in the first place by focusing on training and outreach.”

The event also featured Mary L. Bonauto, Civil Rights Project Director at Gay & Lesbian Advocates & Defenders (GLAD). Attorney Bonauto has litigated groundbreaking cases expanding the rights of same-sex couples. Her work has been recognized with numerous awards, including most recently the 2014 MacArthur Fellowship.

Among other reflections, Ms. Bonauto shared her view on the impact of this law: “Laws affect attitudes. This law says that criminal acts committed with bias will be punished more severely because they strike beyond the individual and his or her family to a wider community.”

The Macedonia and First Church of God in Christ in Springfield is one of those communities that had been affected by bias and prejudice. On Nov. 5, 2008, hours after President Barack Obama was elected as the nation’s first black president, Thomas Gleason, Michael Jacques and Benjamin Haskell set fire to the predominantly black church.

Bishop Bryant Robinson, Jr., Pastor of the Macedonia and First Church of God in Christ also made remarks at the event. He expressed his gratitude for those who helped to bring those responsible to justice which provided “a degree of healing” to his congregation. In his message, he stated that, “we have much that we can celebrate, but we have so many more miles to journey.”

Individuals are encouraged to report incidents of hate to their local police department, the FBI or an advocacy group.

More about the Shepard-Byrd Act can be found at http://www.justice.gov/crt/about/crm/matthewshepard.php

BOSTON – EBI LLC (d/b/a Biomet Spine and Bone Healing Technologies) and Biomet Inc. have paid $6.07 million to resolve allegations that EBI violated the False Claims Act by paying kickbacks to induce use of its bone growth stimulators and billing federal health care programs for refurbished stimulators, the Department of Justice announced today. EBI is a medical device company located in Parsippany, New Jersey, that sells bone growth stimulators, which are used to repair fractures that are slow to heal. It is a subsidiary of Warsaw, Indiana, based Biomet.

The United States alleged that, from 2001 to 2008, EBI paid staff at doctors’ offices to induce doctors to order its bone growth stimulators. These payments were allegedly provided pursuant to personal service agreements with staff members. The United States concluded that these payments violated the federal anti-kickback statute and resulted in false billings to various federal health care programs, including Medicare. The settlement also resolves EBI’s disclosure that it received federal reimbursements for bone growth stimulators that had been refurbished.

“This settlement demonstrates our resolve in ensuring that patients receive, and the government pays for, health care that is based on sound medical judgment, and not compromised by kickbacks,” said U.S. Attorney Carmen M. Ortiz of the District of Massachusetts.”

“Medical device companies must not use improper financial incentives to influence the decision to use their products,” said Acting Deputy Assistant Attorney General August Flentje of the Justice Department’s Civil Division. “This settlement demonstrates the Department’s commitment to protect patients, and the taxpayers who fund their care, by ensuring that medical decisions are based on the patients’ medical needs rather than the financial interests of others.”

“Kickbacks taint medical decision-making, cause overutilization of services, and lead to increased taxpayer and patient costs,” said Special Agent in Charge Phillip Coyne of the Office of Inspector General, United States Department of Health and Human Services. “These improper inducements have no place in government health programs relied on by millions of Americans.”

The settlement resolves in part an allegation filed in a lawsuit by Yu Yue, a former product manager for EBI, in federal court in New Jersey. The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. Yu’s share has not yet been determined.

The settlement was the result of a coordinated effort by the United States Attorney’s Office for the District of Massachusetts; Commercial Litigation Branch of the Department of Justice’s Civil Division; the Department of Health and Human Services Office of Inspector General; the U.S. Postal Service Office of Inspector General; the Defense Criminal Investigative Service; the U.S. Department of Veterans Affairs, Office of Inspector General and the U.S. Food and Drug Administration, Office of Criminal Investigations.

BOSTON – Following an eight-day trial, the jury convicted a college friend of alleged Boston Marathon bomber, Dzhokhar Tsarnaev, for making false statements to investigators assigned to the FBI’s Joint Terrorism Task Force.

The jury found Robel Phillipos, 21, of Cambridge, guilty of making false statements during the terrorism investigation of the Boston Marathon bombings on April 20, 2013 and April 25, 2013. U.S. District Judge Douglas P. Woodlock scheduled sentencing for Jan. 29, 2015.

U.S. Attorney Carmen Ortiz said, “In the wake of one of the most significant events in this City’s modern history – an event which left two young women and a child dead, and many more injured – thousands of ordinary citizens assisted law enforcement in identifying and locating the perpetrators. Today, a federal jury concluded that Robel Phillipos did just the opposite. He lied to agents when he could have helped. He concealed when he could have assisted. It is a crime to lie to law enforcement agents, and that is why Robel Phillipos was charged and why the jury found him guilty today. But this case also reminds us that our public safety network relies on every citizen in the Commonwealth. We look to all of our citizens – our neighbors, our friends, our colleagues, even strangers whom we have never met before – to assist law enforcement in detecting, preventing, and solving crimes. Mr. Phillipos made a choice: a choice to lie instead of tell the truth. With its verdict today, the jury got it exactly right.”

In August 2014, Dias Kadyrbayev pleaded guilty to obstruction of justice charges related to the Boston Marathon bombing investigation. Kadyrbayev admitted to removing evidence from Tsarnaev’s dormitory room at University of Massachusetts Dartmouth and discarding Tsarnaev’s backpack with fireworks, some of which appeared to have been emptied of their explosive powder, in a garbage dumpster. In July 2014, Azamat Tazhayakov was found guilty by a federal jury in Boston of obstruction of justice charges for his role in impeding the Boston Marathon bombing investigation. His conduct was related to the same conduct as charged against Kadyrbayev that occurred in Tsarnaev’s dormitory room on the evening of April 18, 2013.

At the Phillipos trial, the government proved that Phillipos lied about his knowledge and activities on the evening of April 18, 2013. Specifically, Phillipos repeatedly lied to investigators when he denied that, on the evening of April 18, 2013, he entered Tsarnaev’s dormitory room and saw Kadyrbayev remove a backpack containing fireworks.

According to evidence presented at trial, at 7:00 p.m. on April 18, 2013, Phillipos saw the images released by the FBI of the two suspected bombers and immediately recognized one of them as Dzhokhar Tsarnaev. At 10:00 p.m., Phillipos went with Tazhayakov to Tsarnaev’s dormitory room where he and Tazhayakov watched, as Kadyrbayev searched through Tsarnaev’s belongings and found a backpack containing fireworks. When Kadyrbayev, Tazhayakov and Phillipos left Tsarnaev’s room at 10:30 p.m., Kadyrbayev removed Tsarnaev’s backpack containing fireworks, a jar of Vaseline, and Tsarnaev’s laptop computer. Later that night while Tazhayakov and Phillipos were monitoring the manhunt for the Tsarnaevs on television, Kadyrbayev discussed getting rid of the backpack containing the fireworks with them. Tazhayakov agreed with Kadyrbayev that they should get rid of it. After this conversation, Kadrybayev placed Dzhokhar Tsarnaev’s backpack in a garbage bag and placed it in a dumpster outside their New Bedford apartment. The FBI recovered the backpack a week later, after 30 agents spent two days searching a landfill in New Bedford.

Between April 19, 2013 and April 26, 2013, Phillipos was interviewed five times by investigators conducting the Boston Marathon bombing investigation and during each of those interviews Phillipos lied. At the conclusion of the fifth interview, Phillipos finally admitted that he did go into Tsarnaev’s dormitory room on the evening of April 18, 2013 and that he saw Kadyrbayev remove evidence from Tsarnaev’s room. After he confessed, Phillipos indicated he regretted his decisions. In his signed statement, Phillipos stated: “In retrospect, I should have notified the Police once I knew Jahar was the bomber. Further, I should have turned over the backpack to the authorities.”

The charging statute provides a sentence of no greater than eight years in prison for each of the two false statement counts, three years of supervised release, and a fine of $250,000 for each charge. 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.

The sentencing hearing for Kadyrbayev is scheduled for Nov. 18, 2014 and Tazhayakov’s sentencing is scheduled for Nov. 19, 2014.

United States Attorney Carmen M. Ortiz and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation’s Boston Field Division, made the announcement today. This investigation was conducted by the FBI's Boston Division and member agencies of the Boston Joint Terrorism Task Force (JTTF) which is comprised of more than 30 federal, state and local enforcement agencies. Essex County Sheriff’s Office, U.S. Department of Transportation – Office of Inspector General, Massachusetts State Police, University of Massachusetts Dartmouth Department of Public Safety, New Bedford Police Department, Dartmouth Police Department, U.S. Treasury Inspector General for Tax Administration (TIGTA), Internal Revenue Service, Criminal Investigations, and Homeland Security Investigations in Boston provided assistance to this investigation.

The case is being prosecuted by Assistant U.S. Attorneys B. Stephanie Siegmann and John A. Capin of Ortiz’s Anti-Terrorism and National Security Unit.

BOSTON – A Chelsea man pleaded guilty today in connection with a scheme to produce fraudulent identification documents.

Leonel Sanchez, 52, pleaded guilty to conspiracy to produce false identification documents and aggravated identity theft. U.S. District Court Judge Douglas P. Woodlock scheduled sentencing for Jan. 20, 2015 at 2:00 pm. From December 2012 through January 2013, Sanchez bribed an employee of the Massachusetts Registry of Motor Vehicles in connection with a scheme to issue Massachusetts driver’s licenses to individuals who presented fraudulently obtained Puerto Rican identification documents.

This plea is the most recent development in investigations involving identity theft and public corruption relating to the Massachusetts Registry of Motor Vehicles.

United States Attorney Carmen M. Ortiz; Bruce M. Foucart, Special Agent in Charge of Homeland Security Investigations in Boston; Colonel Timothy P. Alben, Superintendent of the Massachusetts States Police; David W. Hall, Special Agent in Charge of the U.S. Department of State, Bureau of Diplomatic Security, Boston Field Office; and Cheryl Garcia, Special Agent in Charge of the U.S. Department of Labor, Office of Inspector General, New York Regional Office, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Eugenia M. Carris of Ortiz’s Public Corruption Unit.

BOSTON – A New Bedford man was sentenced today for hacking into computer networks around the country, including networks belonging to law enforcement agencies and a local college.

Cameron Lacroix, 25, was sentenced by U.S. District Judge Mark L. Wolf to four years in prison, and three years of supervised release. In June 2014, Lacroix pleaded guilty to two counts of computer intrusion and access device fraud.

Between May 2011 and May 2013, Lacroix illegally obtained and possessed payment card data for more than 14,000 account holders. For some of these account holders, Lacroix also unlawfully obtained other personally identifiable information. From August 2012 through November 2012, Lacroix repeatedly hacked into law enforcement computer servers containing sensitive information including police reports, intelligence reports, arrest warrants, and sex offender information. In September 2012, Lacroix hacked into a computer server operated by a local Massachusetts police department and accessed an e-mail account belonging to the chief of police.

Additionally, between September 2012 and November 2013, Lacroix, who was a student at Bristol Community College (BCC), repeatedly hacked into BCC’s computer servers and used stolen log-in credentials belonging to three instructors to change grades for himself and two other students.

The U.S. Attorney’s Office for the Northern District of California has also filed hacking charges against Lacroix. That case has been transferred to the District of Massachusetts and is before U.S. Chief Judge Saris.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; United States Attorney Carmen M. Ortiz; Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and Colonel Timothy P. Alben, Superintendent of the Massachusetts State Police made the announcement today. The case is being prosecuted by Senior Trial Attorney Mona Sedky from the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Adam Bookbinder of Ortiz’s Cyber Crime Unit.

BOSTON – A Pittsfield man was sentenced today in U.S. District Court in Springfield for producing material involving the sexual exploitation of minors.

Jason Gendron, 34, was sentenced by U.S. District Judge William G. Young to 50 years in prison to be followed by 10 years of supervised release. On July 29, 2014, Gendron pleaded guilty to 16 counts of sexual exploitation of minors by producing child pornography and one count of possessing child pornography.

Between May 13, 2011 and August 24, 2012, Gendron created16 video clips of Gendron raping three girls, aged approximately three, eight, and 13 years old, and sexually explicit photographs of another girl, aged approximately two years old, all of whom were in his direct care. Gendron also possessed approximately 20,000 digital files of child pornography, including videos files depicting the rape and sexual torture of very young children.

At today’s sentencing, Judge Young told Gendron, “I have been a judge longer than you have been alive. But for cold-blooded murder, I have never seen a case that descends to the depths of depravity that this case demonstrates. You are a serial child abuser of the worst sort.”

In a related state case, on Oct. 16, 2014, in connection with this abuse, the defendant pleaded guilty to six counts of rape and abuse of a child aggravated by age difference and four counts of indecent assault and battery on a child under the age of 14, in Berkshire Superior Court. Gendron will be sentenced in the state case on Oct. 28, 2014.

United States Attorney Carmen M. Ortiz; Colonel Timothy Alben, Superintendent of the Massachusetts State Police; Bruce M. Foucart, Special Agent in Charge of the Department of Homeland Security, Homeland Security Investigations in Boston; Chief Michael Wynn of the Pittsfield Police Department; and Berkshire District Attorney David F. Capeless made the announcement. The case was prosecuted by Assistant U.S. Attorney Steven H. Breslow.

BOSTON – Charles Knights, 43, of Weymouth, was sentenced today for attempted bank robbery and two counts of bank robbery. U.S. District Judge Nathaniel M. Gorton sentenced Knights to six years in prison and three years of supervised release on each count, all to run concurrently. Knights was on supervised release at the time of his offenses and was previously sentenced to six months’ incarceration on a supervised release violation.

On Feb. 25, 2013, Knights attempted to rob the Citizens Bank at 607 Boylston Street in Boston by means of a demand note. Later that day, while law enforcement units were on scene at Citizens Bank, Knights robbed the Sovereign Bank at 279 Massachusetts Avenue in Boston and stole $415 in cash. On March 4, 2013, Knights robbed the TD Bank at 1840 Massachusetts Avenue in Lexington and obtained $865.

United States Attorney Carmen M. Ortiz; Vincent B. Lisi, 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 Stacy Dawson Belf of Ortiz’s Major Crimes Unit.

BOSTON – Keith Gage, 43, of Middleboro, was sentenced yesterday for coercing and enticing a minor for the purpose of engaging in sexual intercourse. U.S. District Judge F. Dennis Saylor IV sentenced Gage to 13 years in prison and five years of supervised release. Gage is also required to register as a sex offender, and must refrain from contact with his victim during the period of his incarceration and supervised release. In July 2014, Gage pleaded guilty.

Gage met the 14-year-old victim on TeenSpot.com, a website designed for young teens but which has been increasingly used by predators to contact young victims. He persuaded her to meet with him and engage in sexual intercourse on multiple occasions. Gage also videotaped his victim performing sexual acts. Gage was apprehended when the victim came forward and reported his criminal acts, at which time an undercover federal agent assumed the victim’s identity online, ultimately leading to Gage’s arrest.

United States Attorney Carmen M. Ortiz; Shelly Binkowski, Inspector in Charge of the United States Postal Inspection Service; Colonel Timothy P. Alben, Superintendent of the Massachusetts State Police; and Easton Chief of Police Allen Krajcik, made the announcement today. This case was prosecuted by Assistant U.S. Attorney Suzanne Sullivan Jacobus of Ortiz's Major Crimes Unit.

BOSTON – A former Boston Police Officer was charged today in U.S. District Court in Boston with making false statements to the FBI relating to an investigation of the Academy Homes Street Gang (AHSG), a violent narcotics-trafficking gang that operated out of the Academy Homes housing development in Roxbury.

Mel Steele, 36, of Boston, was charged in an Information with one count of making false statements to the FBI during the course of a federal investigation. At the time, Steele was an officer with the Boston Police Department. Steele recently resigned from his position.

It is alleged that Steele, who was assigned to the Boston Police Department’s (BPD) Youth Violence Task Force (YVTF), was a long-time friend of an associate of the AHSG. During the course of joint FBI-BPD investigation of the AHSG from 2009 to 2011, Steele provided assistance to the AHSG associate. On one occasion, Steele allegedly used his BPD computer to run a license plate check on a vehicle which was later determined to be an unmarked BPD vehicle operated by a detective who was conducting surveillance on the AHSG. On another occasion Steele contacted a Massachusetts State Trooper to glean information about a gang member’s pending charges on another criminal case. In May 2011, Steele allegedly made false statements about these matters when confronted by FBI agents.

The charging statutes provide a sentence of no greater than five years in prison, three years of supervised release, and a fine of up to $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 Ortiz, Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, and Boston Police Commissioner William Evans, made the announcement today. The investigation was conducted jointly by the FBI Public Corruption Unit and the Boston Police Department Anti-Corruption Division. The case is being prosecuted by Assistant U.S. Attorney Dustin Chao of Ortiz’s Public Corruption and Special Prosecutions Unit.