Eastern District of Michigan
Press releases recorded for this federal judicial district.
Michigan Man Sentenced for Unlawfully Importing and Distributing Misbranded DrugsRead the Press Release
Matthew Dailey, 36, of Royal Oak, Michigan, was sentenced today to two years in prison for illegally importing kratom—a powerful psychoactive substance—and selling it unlawfully through unapproved claims that it could treat serious diseases and medical conditions, including opiate withdrawal symptoms, the Department of Justice announced.
Dailey pleaded guilty on Jan. 8 in the Eastern District of Michigan to one count of introducing misbranded drugs into interstate commerce and one count of importing merchandise contrary to law. As part of his plea, Dailey agreed to forfeit $1,000,000 in illegal proceeds. Today, Judge Judith E. Levy of the Eastern District of Michigan sentenced Dailey to serve two years in prison, followed by three years supervised release.
Dailey was the owner and operator of Nomad Botanicals, an online business that sold kratom, which is made from the leaves of a tree indigenous to Southeast Asia, to consumers throughout the United States. In pleading guilty, Dailey admitted that he sold kratom with the intention that it be used as a drug to treat a variety of diseases, including chronic pain, Lyme disease, rheumatoid arthritis, and fibromyalgia. Dailey also widely distributed kratom as an opiate withdrawal drug, and as a substitute for drugs of abuse and prescription pills. Dailey further admitted that to circumvent the United States Food and Drug Administration’s (FDA) regulation of drugs under the federal Food, Drug, and Cosmetic Act (FDCA), Dailey knowingly and fraudulently portrayed his kratom products to the FDA as “incense,” “paint pigment,” and other substances not intended for human consumption. By deceiving the FDA in this manner, Dailey was able to import several tons of kratom into the United States.
“We will not tolerate the importation or misbranding of drugs and other products without proper regulatory approvals,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “The Department of Justice will continue to work with the FDA to ensure that drug distributors do not put consumers at risk by circumventing their obligations under the Food, Drug, and Cosmetic Act.”
As part of his plea agreement, Dailey further admitted that he repackaged and labeled the illegally imported kratom in his residence, which he did not register as a facility that manufactured, prepared, and processed drugs, as required under the FDCA. Dailey then sold and shipped kratom products to consumers throughout the United States for use as a drug without providing any directions for use, such as indications, dosage instructions, methods of administration, or contraindications.
This case was prosecuted by Trial Attorneys Clint Narver and Jocelyn Hines of the Department of Justice’s Consumer Protection Branch. The prosecution was assisted by Assistant U.S. Attorney Adriana Dydell of the United States Attorney’s Office for the Eastern District of Michigan. The case was investigated by the FDA’s Office of Criminal Investigations.
For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch.
Fugitive Wanted Since 2015 on Robbery Charges ApprehendedRead the Press Release
A fugitive wanted since 2015 for a Hobbs Act Robbery related to jewelry store smash and grabs in 2014 and 2015 appeared in federal court today. Arthur Berry Jr. was arrested by the FBI’s Phoenix Division on March 18, 2019 and was returned to Michigan earlier this week to face charges for conspiring to interfere with commerce by robbery.
Berry, 32, from Detroit, Michigan, was found in Phoenix, Arizona, where he allegedly fled in 2015 after being indicted by a federal grand jury earlier that year. Berry was a leader of a group that conducted the following robberies:
September 2014: Jared the Galleria of Jewelry in Toledo, Ohio
October 2014: Lux Bond & Green Jewelers in West Hartford, Connecticut
November 2014: Fink’s Jewelers in Sterling, Virginia
November 2014: RF Moeller Jewelry in St. Paul, Minnesota
February 2015: Jared the Galleria of Jewelry in Erie, Pennsylvania
September 2015: Jared the Galleria of Jewelry in Portage, Michigan
Berry was the only remaining fugitive out of nearly two dozen subjects that have been prosecuted since 2014. According to court documents, Berry’s co-defendants all pled guilty and received various sentences, including a fourteen year prison term for one of the group’s leaders, Cedarrius Frost.
“The arrest of Mr. Berry for his involvement in these robberies reflects the dedication, cooperation, and persistence of law enforcement at every level,” said SAC Slater. “We are particularly grateful to the FBI’s Phoenix Division for working diligently over the last few months to locate Mr. Berry and helping us to ensure he faces the consequences for his criminal behavior.”
Berry has been charged with six counts of conspiring to interfere with commerce by robbery. If convicted, Berry would face a statutory maximum sentence of twenty years in federal prison.
This case was investigated by the Federal Bureau of Investigation.
Berry’s arrest involved the participation of and coordination with the FBI Phoenix Division’s Desert Hawk Violent Crimes Task Force and the FBI Detroit Division’s Oakland County Gang and Violent Crime Task Force.
Detroit Man Sentenced to 40 years for Child Exploitation CrimesRead the Press Release
A Detroit man was sentenced yesterday to 40 years’ imprisonment for convictions of producing child pornography and receiving child pornography online, announced United States Attorney Matthew Schneider.
Schneider was joined in the announcement by Special Agent in Charge Steve Francis, Homeland Security Investigations.
Sentenced was Michael Jonathan Pankey, age 38.
In November 2018, Pankey pleaded guilty to sexual exploitation crimes. According to court records, Pankey admitted that he molested and took sexually explicit photographs of a five year old child. He also admitted to downloading child pornography from the internet. Pankey previously worked at an early childhood center.
“Sexual exploitation is one of the most depraved crimes committed, and this case is especially disturbing given the defendant’s former role as a daycare service provider,” said Special Agent in Charge Steve Francis of HSI Detroit. “This sentence serves as a reminder that HSI is committed to collaborating with its community partners to bring to justice those who exploit children.”
This case was investigated by Special Agents of Homeland Security Investigations. The case is part of the Project Safe Childhood initiative, and was prosecuted by Assistant United States Attorney Maggie Smith.
A Washington State Man Was Sentenced to 55 years on Child Exploitation ChargesRead the Press Release
A man from Shoreline, Washington was sentenced yesterday to 55 years’ imprisonment for his role in an international child pornography ring, announced United States Attorney Matthew Schneider.
Schneider was joined in the announcement by Special Agent in Charge Timothy Slater of the Federal Bureau of Investigation, Detroit Division.
“The way that these offenders worked together to manipulate innocent girls for their own sexual gratification is truly horrific. And, the way that this defendant in particular extorted these children is especially heinous,” said United States Attorney Schneider. “Parents, please speak with your children about sextortion and cyberbullying so we can keep all of our children safe.”
Sentenced was Michael Berenson, age 30. In addition to his prison sentence and term of supervised release, Berenson was ordered to pay 5,000 in restitution to each of the identified victims, reaching a total of over 80,000 dollars. United States District Judge Judith Levy of the Eastern District of Michigan imposed the sentence.
According to court records, from at least January 2012 to November 2014, Berenson was part of a group of individuals that worked together, using the Internet, to entice minor females to produce child pornography via web camera on an unmonitored chatroom-based website. The men recruited the victims from common social media platforms by pretending to be teenage boys interested in chatting with the girls in real time. Once the victims arrived in the chatrooms, the group—all pretending to be teenagers—worked together to build trust and convince the children to engage in sexually explicit conduct on web cameras. Group members then recorded that activity. The girls were unaware that the men were making recordings. Berenson is the 25th defendant to be sentenced here in the Eastern District of Michigan for conspiring to exploit children on this unmonitored website.
Berenson participated in this group from its inception in 2012 until this particular group ceased activity. Berenson however, remained active, targeting minors, directing them to engage in sexual acts, recording such acts and blackmailing the minors until the execution of a search warrant at his residence on May 10, 2017. Berenson also encouraged girls to self-harm and recorded them doing so.
Berenson admitted to victimizing over 1,000 minor girls over the course of the last 10 years. Some of the girls were as young as nine years old.
To date, a forensic examination of his devices recovered over 9,600 videos and images of child pornography and 105,347 child exploitive videos and images. Berenson recorded over 1,128 hours of videos of child pornography and over 3,000 hours of child exploitive conduct. Sixteen parents and victims were present for the sentencing hearing and made statements to the Court. Among those present was Carol Todd, the mother of Amanda Todd who died by suicide in October of 2012. A website dedicated to Amanda Todd can be found at http://www.amandatoddlegacy.org/. The FBI has so-far identified approximately 20 victims in the United States.
Assistant United States Attorneys April Russo and Kevin Mulcahy of the Eastern District of Michigan prosecuted the case. The FBI’s Detroit Field Office and Southeast Michigan Trafficking and Exploitation Crimes task force investigated the case.
The case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc.
Former Airport Contractor Pleads Guilty to Conspiring to Steal over $100,000 from the Wayne County Airport AuthorityRead the Press Release
Douglas Earles, 60, of White Lake pleaded guilty to conspiring with co-defendant, James Warner, a field inspector at the Wayne County Airport Authority (WCAA), to steal over $100,000 from the airport between June of 2010 and August of 2013, United States Attorney Matthew Schneider announced today.
Schneider was joined in the announcement by Timothy Slater, Special Agent-in-Charge of the Detroit Field Office of the Federal Bureau of Investigation, and Andrea M. Kropf, Special Agent-in-Charge of the Chicago Field Office of the United States Department of Transportation, Office of Inspector General.
Earles, who owned and operated North Star Water Management and North Star Plumbing, companies which entered into contracts for plumbing installation and maintenance at the Detroit Metropolitan Airport, participated in a scheme in which Warner, posing as Earles, would draft and submit fraudulently-inflated invoices for work which Earles purportedly performed at the airport. Some of the invoices Warner submitted on Earles’s behalf listed parts that Earles had not in fact replaced or repairs that Earles had not in fact performed. Upon payment by the WCAA to Earles, Earles would kickback roughly 40 per cent of the profits to Warner. This scheme is similar to the theft and bribery conspiracy that Warner engaged in with William Pritula, who pleaded guilty last July to paying over $5 million in kickbacks to Warner for pavement and hydrant repairs and maintenance at the airport.
Thus far, law enforcement has seized $11.4 million in criminal proceeds related to this investigation, including $7.5 million from Pritula and $3.9 million from Warner.
The theft charge to which Earles has pleaded guilty carries a maximum sentence of 5 years’ imprisonment and a fine of up to $250,000.
Warner’s trial is scheduled for May.
United States Attorney Schneider stated, “Today’s guilty plea signifies another step forward in dismantling this massive fraud and bribery scheme that stole millions of dollars from the WCAA.”
“The crime to which Mr. Earles pleaded guilty is part of a pattern of corrupt and illegal conduct by a WCAA high-level manager and contractors who were hired to improve the infrastructure at the airport,” said SAC Slater. “The case also highlights the FBI's Detroit Area Public Corruption Task Force's commitment to investigating corruption in settings outside of city government. I would encourage anyone who has information about corruption in any setting to contact the FBI.”
"This investigation demonstrates that entities wishing to do business with the Federal government on transportation infrastructure projects will be held accountable for maintaining the highest level of integrity," said Andrea M. Kropf, DOT-OIG Regional Special Agent-in-Charge. "Working with our law enforcement and prosecutorial partners, we will continue our vigorous efforts in preventing, detecting and prosecuting infrastructure fraud."
The investigation of this case was conducted by the Federal Bureau of Investigation and the Department of Transportation. The case is being prosecuted by Assistant U.S. Attorneys Eaton P. Brown, Paul Kuebler, and R. Michael Bullotta
Canadian Man Sentenced to Life in Prison for Committing Act of Terrorism Transcending National Boundaries and Other OffensesRead the Press Release
Amor M. Ftouhi, 51, of Quebec, Canada, was sentenced today by U.S. District Judge Matthew F. Leitman to life in prison for committing an act of terrorism transcending national boundaries and two other offenses in conjunction with his attack on a Bishop Airport police officer on June 21, 2017. Assistant Attorney General for National Security John C. Demers, U.S. Attorney Matthew Schneider for the Eastern District of Michigan and Special Agent in Charge Timothy R. Slater of the FBI’s Detroit Field Office made the announcement.
“Ftouhi came to the United States to kill American police officers, and then brutally attacked an airport police officer in Flint,” said Assistant Attorney General Demers. “The National Security Division is committed to doing all that it can to protect our women and men in uniform from terrorist violence on our soil, and this sentence is a gratifying reflection of the seriousness of the defendant’s conduct. I want to thank the prosecutors and law enforcement partners who made this result possible.”
“The evidence at trial demonstrated that Ftouhi had a ‘mission’ to kill as many American law enforcement as possible in an act of violent jihad,” stated U.S. Attorney Schneider. “The sentence today reflects his extreme dangerousness and the need to prevent him from further acts of violence in the future. Today’s sentence is the result of the hard work of those who investigated and prosecuted the case, including our foreign partners in the Royal Canadian Mounted Police.”
“The FBI's highest priority remains preventing and combating terrorism here in the U.S. and around the world,” said Special Agent in Charge Slater. “Today's sentencing marks the end of an almost-two year effort - on behalf of the FBI, our partner agencies on the FBI Detroit Joint Terrorism Task Force, and our foreign partners in the Royal Canadian Mounted Police - to hold Mr. Ftouhi accountable for his attempt to kill a police officer in an act of terror. I would like to thank all of our state, federal and international partners for their essential contributions to this case and to acknowledge again the heroic actions of the civilians and law enforcement officers who were present on the day of the attack and likely saved the officer’s life.”
Ftouhi was convicted by a federal jury on Nov. 13, 2018. According to evidence presented at trial, Ftouhi entered the United States from Canada on a professed “mission” for the purpose of killing American police officers in the United States. Before entering the United States on June 16, 2017, while in Canada, Ftouhi conducted online research of American gun laws and for gun shows in Michigan. Ftouhi subsequently traveled to Michigan where he was unsuccessful in repeated attempts to purchase a gun and purchased a knife instead. On June 20, 2017, Ftouhi approached the victim, who is a lieutenant with the Flint Bishop Airport police and was in full uniform, and stabbed the police officer in the neck twice with a knife. Ftouhi referenced killings in Syria, Iraq, and Afghanistan, and yelled “Allahu Akbar.” After his arrest, Ftouhi told law enforcement that he was a “soldier of Allah,” subscribed to the ideology of Al Qaeda and Usama bin Laden and that his plan had been to kill the victim, steal his gun and kill other police officers in the airport. The police officer sustained life-threatening injuries, but survived the attack.
The investigation was conducted by the Detroit Joint Terrorism Task Force, which is led by the FBI with the assistance of the FBI Flint Resident Agency, the Michigan State Police and the Royal Canadian Mounted Police. Additional assistance was provided by the Flint Police Department, the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Genesee County Sheriff’s Office.
This case was prosecuted by Assistant U.S. Attorneys Jules DePorre, Cathleen M. Corken, and Craig Wininger of the U.S. Attorney’s Office for the Eastern District of Michigan with the assistance of the Counterterrorism Section of the National Security Division of the Department of Justice.
Canadian Man Sentenced to Life for Committing Act of Terrorism Transcending National Boundaries and Other OffensesRead the Press Release
FLINT – Amor M. Ftouhi, 51, of Quebec, Canada, was sentenced today by U.S. District Judge Matthew F. Leitman to life in prison for committing an act of terrorism transcending national boundaries and two other offenses in conjunction with his attack on a Bishop Airport police officer on June 21, 2017.
Assistant Attorney General for National Security John C. Demers, U.S. Attorney Matthew Schneider for the Eastern District of Michigan and Special Agent in Charge Timothy R. Slater of the FBI’s Detroit Field Office made the announcement.
“Ftouhi came to the United States to kill American police officers, and then brutally attacked an airport police officer in Flint,” said Assistant Attorney General Demers. “The National Security Division is committed to doing all that it can to protect our women and men in uniform from terrorist violence on our soil, and this sentence is a gratifying reflection of the seriousness of the defendant’s conduct. I want to thank the prosecutors and law enforcement partners who made this result possible.”
“The evidence at trial demonstrated that Ftouhi had a ‘mission’ to kill as many American law enforcement as possible in an act of violent jihad,” stated U.S. Attorney Schneider. “The sentence today reflects his extreme dangerousness and the need to prevent him from further acts of violence in the future. Today’s sentence is the result of the hard work of those who investigated and prosecuted the case, including our foreign partners in the Royal Canadian Mounted Police.”
“The FBI’s highest priority remains preventing and combating terrorism here in the U.S. and around the world,” said SAC Slater. “Today’s sentencing marks the end of an almost-two year effort - on behalf of the FBI, our partner agencies on the FBI Detroit Joint Terrorism Task Force, and our foreign partners in the Royal Canadian Mounted Police - to hold Mr. Ftouhi accountable for his attempt to kill a police officer in an act of terror. I would like to thank all of our state, federal and international partners for their essential contributions to this case and to acknowledge again the heroic actions of the civilians and law enforcement officers who were present on the day of the attack and likely saved the officer’s life.”
Ftouhi was convicted by a federal jury on Nov. 13, 2018. According to evidence presented at trial, Ftouhi entered the United States from Canada on a professed “mission” for the purpose of killing American police officers in the United States. Before entering the United States on June 16, 2017, while in Canada, Ftouhi conducted online research of American gun laws and for gun shows in Michigan. Ftouhi subsequently traveled to Michigan where he was unsuccessful in repeated attempts to purchase a gun and purchased a knife instead. On June 20, 2017, Ftouhi approached the victim, who is a lieutenant with the Flint Bishop Airport police and was in full uniform, and stabbed the police officer in the neck twice with a knife. Ftouhi referenced killings in Syria, Iraq, and Afghanistan, and yelled “Allahu Akbar.” After his arrest, Ftouhi told law enforcement that he was a “soldier of Allah,” subscribed to the ideology of Al Qaeda and Usama bin Laden and that his plan had been to kill the victim, steal his gun and kill other police officers in the airport. The police officer sustained life-threatening injuries, but survived the attack.
The investigation was conducted by the Detroit Joint Terrorism Task Force, which is led by the FBI with the assistance of the FBI Flint Resident Agency, the Michigan State Police and the Royal Canadian Mounted Police. Additional assistance was provided by the Flint Police Department, the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Genesee County Sheriff’s Office.
This case was prosecuted by Assistant U.S. Attorneys Jules DePorre, Cathleen M. Corken, and Craig Wininger of the U.S. Attorney’s Office for the Eastern District of Michigan with the assistance of the Counterterrorism Section of the National Security Division of the Department of Justice.
Three Men Charged in an Elaborate ATM Skimming SchemeRead the Press Release
An indictment was returned by a Grand Jury charging three Romanian nationals with conducting an elaborate ATM skimming scheme throughout several Michigan cities, announced United States Attorney Matthew Schneider.
This indictment charges CIPRIAN VIOREL VARTOLOMEI, 38 (aka: Eric Rene Fuss, Dumitru Movradin, and Costica Andriesei), CATALIN PUSCASU, 36 (aka: Bjorn Ove Sigbjornsen and Jean Francois Margelli), and ION FLORIN OPROIU, 45 (aka: Dominik Gerza) with two counts of access device fraud (Oprious is charged with only one count) and one count of aggravated identity theft.
According to the indictment, the above defendants obtained fraudulent foreign passports and driver’s licenses to obtain lodging, establish fraudulent bank accounts, wire money, and establish fraudulent accounts with private or commercial interstate shipping carriers. Their scheme included the manufacture of counterfeit access device making equipment, commonly referred to as “skimming” devices. These devices were installed inside ATM machines to capture victims’ bank account numbers. In addition, the defendants installed small hidden cameras along with the skimmer to capture victims PIN numbers. The perpetrators would later recover the skimming devices and hidden cameras and use the captured data to create fraudulent or altered access devices which they used, in conjunction with the victims’ PINs, to steal money from bank accounts through ATM machines.
According to the indictment, the compromised information pertains to members of a few credit unions in several Michigan cities, including Jackson, Hillsdale, Milan, Vandercook, and Battle Creek. Over $90,000 in cash was recovered from the defendants upon their arrest and from an apartment they had rented. Also recovered were numerous equipment and tools used in manufacturing skimming devices and hundreds of fraudulent credit/debit/gift cards.
All three defendants are currently in custody on immigration violations and will be brought to Federal Court in the Eastern District of Michigan for arraignment on the indictment in the next few days.
The case was investigated by the Southeast Michigan Financial Crimes Task Force including members of the United States Secret Service, Homeland Security, West Bloomfield and Royal Oak Police Departments and other agencies.
The case is being prosecuted by Assistant U.S. Attorney Abed Hammoud with the United States Attorney’s Office for the Eastern District of Michigan in Detroit.
An indictment is only a charge and is not evidence of guilt. Every defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Livonia Doctor Sentenced to More Than Twelve Years for Conspiring with Others to Illegally Distribute Prescription DrugsRead the Press Release
Dr. Zongli Chang, M.D., was ordered today to serve a sentence of 135 months for conspiring with seven other patient recruiters (co-defendants in this case) to illegally distribute prescription drugs, U.S. Attorney Matthew Schneider announced today.
Schneider was joined in the announcement by Special Agent in Charge Timothy Slater of the FBI’s Detroit Division and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office.
Dr. Chang previously pleaded guilty, admitting that from approximately January 2012 to May of 2017, he and his coconspirators engaged in large-scale opioid diversion scheme. The scheme, according to Chang, relied upon “patient recruiters” bringing fake patients to his office. Chang would, in turn, write medically unnecessary and highly addictive controlled substance prescriptions in return for cash payments. Chang commonly wrote prescriptions for controlled substances, to include Hydrocodone-Acetaminophen, Oxycodone HCl, Alprazolam, Carisoprodol and Promethazine/codeine syrup. The amount paid for a visit and prescription varied, but according to Chang’s plea agreement, he was typically paid at least $150, up to as high as $400 for more desirable opioid controlled substances. Chang further acknowledged that following the issuance of prescriptions, the recruiters would transport the patients to pharmacies where the prescriptions were filled, and then take possession of the controlled substances for further illegal distribution. These controlled substances had a conservative street value in excess of $18,000.000.
Since the charges in this case were unsealed in January, 2018, six of the seven patient recruiters have also pleaded guilty to engaging in this conspiracy.
In addition to serving a 135-month sentence, United States District Court Judge Sean Cox ordered Chang to pay a $1 million criminal fine. Chang also agreed to the entry of a $3 million forfeiture judgment, satisfied in large part by assets seized near the time of his arrest.
U.S. Attorney Schneider noted that “this sentence sends a strong message to every other physician that deliberately writes unnecessary opioid prescriptions, knowing full well that the drugs will ultimately be sold on the streets, that they will be treated no differently than any other major drug dealer. A medical license will not shield them from criminal consequences.”
“We entrust physicians to care for their patients in a manner that is consistent with their oath to do no harm,” said FBI SAC Slater. “Prescribing opioids with the knowledge that the drugs would ultimately be distributed illegally contributes to the ongoing opioid addiction crisis and cannot be tolerated. The FBI and our federal partners remain committed to identifying and disrupting physicians who engage in this type of drug diversion scheme.”
The Eastern District of Michigan is one of the twelve districts included in the Opioid Fraud Abuse and Detection Unit, a Department of Justice initiative created by Attorney General Sessions, that uses data to target and prosecute individuals that are contributing to the nation’s opioid crisis. Dr. Chang’s suspicious patterns of prescriptions were detectable from data analysis by the Opioid Fraud Abuse and Detection Unit.
The case was investigated by Special Agents of the FBI and HHS and prosecuted by Assistant U.S. Attorneys Brant Cook, John Engstrom and Paul Kuebler.
Canadian Citizen Sentenced in Alien Smuggling Case Involving Underground Cargo Train Tunnel Between Canada and United StatesRead the Press Release
Today, a Guatemalan native and naturalized citizen of Canada, was sentenced to 16 months in prison, a $8,680 fine, a $600 special assessment and one year of supervised release in an alien smuggling case in which illegal aliens were smuggled into the United States through the underground cargo railroad tunnel which runs under the Detroit River between Canada and the United States, announced United States Attorney Matthew Schneider.
Schneider was joined in the announcement by U.S. Border Patrol Chief Patrol Agent Douglas Harrison.
Juan Antonio Garcia-Jimenez, 53, of Windsor, Ontario, was sentenced by Stephen J. Murphy, III. U.S. District Court Judge, Eastern District of Michigan.
The investigation conducted by the U.S. Department of Homeland Security, Customs and Border Protection, Immigration and Customs Enforcement and the Royal Canadian Mounted Police, found that between July 30, 2018 and August 25, 2018, Garcia-Jimenez smuggled six aliens into the United States by instructing them to enter into the underground train tunnel late at night, and walk on the narrow walkway 1.6 miles until they arrived in the United States. U.S. Border Patrol Agents arrested each of the aliens as they exited the tunnel into the United States. The aliens were charged with illegal entry and after sentencing were removed to their native country.
“Today’s sentencing is the direct result of a whole of government approach to border security,” said U.S. Border Patrol Chief Patrol Agent Douglas Harrison. “The teamwork demonstrated in this case should be commended for their actions to arrest and prosecute Garcia-Jimenez who disregarded the safety of 6 aliens for financial gain.”
The case was prosecuted by Assistant United States Attorneys Timothy McDonald and Susan Fairchild with the assistance of DHS/ICE and RCMP.
Michigan Man who Joined ISIS is Charged with Additional OffensesRead the Press Release
A 28-year old man who last resided in Dearborn, Michigan and who was previously indicted in July, 2018, with providing and attempting to provide material support to the Islamic State of Iraq and al-Sham (ISIS), a designated foreign terrorist organization, was today charged with additional offenses of conspiring to provide material support to ISIS, possessing and discharging a machine gun in furtherance of a crime of violence, and receiving military-type training from ISIS. Assistant Attorney General for National Security John C. Demers, United States Attorney Matthew J. Schneider and Special Agent in Charge Timothy R. Slater of the FBI’s Detroit Field Office made the announcement.
The superseding indictment was brought against Ibraheem Izzy Musaibli. Mr. Musaibli will be arraigned on the new indictment in federal court in Detroit.
The superseding indictment alleges that, from April 2015 through June 2018, Mr. Musaibli knowingly provided and attempted to provide material support to ISIS, in the form of personnel and services, knowing that ISIS is a terrorist organization and that ISIS engages in terrorism. The superseding indictment further alleges that Musiabli conspired to provide and provided material support to ISIS and that he received military-type training from and on behalf of ISIS. The superseding indictment also charges Musaibli with knowingly possessing and discharging a machine gun in furtherance of a crime of violence, namely, providing material support to ISIS. Musabli, a natural-born U.S. citizen, was detained overseas by Syrian Democratic Forces (SDF) and was transferred into U.S. custody in July 2018.
“The United States is committed to holding accountable its citizens who leave this country in order to support ISIS,” said Assistant Attorney General Demers. “As alleged in the indictment, the defendant traveled overseas, joined ISIS, and received training from the terrorist organization. He was ultimately detained overseas and turned over to the FBI. With these charges, he will be held accountable for his crimes. I want to thank all of those who are responsible for this investigation and prosecution.”
“The superseding indictment against Musaibli adds charges to more fully capture his conduct while with ISIS for some two and one-half years,” said U.S. Attorney Schneider. “The superseding indictment alleges that, during that substantial period of time, Musaibli provided material support to ISIS, conspired with others to provide support to ISIS, possessed and fired a machine gun in support of ISIS, and attended an ISIS military training camp. This superseding indictment reflects our commitment to prosecute anyone who supports terrorists to the full extent of the law.”
The charges in the superseding indictment carry a statutory mandatory minimum penalty of 40 years in prison and a maximum of up to life in prison.
An indictment is only a charge and is not evidence of guilt. Every defendant is presumed innocent unless and until proven guilty.
This case is being investigated by the FBI’s Joint Terrorism Task Force. The case is being prosecuted by Assistant U.S. Attorneys Cathleen M. Corken and Kevin M. Mulcahy of the Eastern District of Michigan with assistance from the National Security Division’s Counterterrorism Section.
Michigan Man Who Joined ISIS Is Charged with Additional OffensesRead the Press Release
A 28-year old man who last resided in Dearborn, Michigan and who was previously indicted in July, 2018, with providing and attempting to provide material support to the Islamic State of Iraq and al-Sham (ISIS), a designated foreign terrorist organization, was charged yesterday with additional offenses of conspiring to provide material support to ISIS, possessing and discharging a machine gun in furtherance of a crime of violence, and receiving military-type training from ISIS. Assistant Attorney General for National Security John C. Demers, United States Attorney Matthew J. Schneider and Special Agent in Charge Timothy R. Slater of the FBI’s Detroit Field Office made the announcement.
The superseding indictment was brought against Ibraheem Izzy Musaibli. Mr. Musaibli will be arraigned on the new indictment in federal court in Detroit.
The superseding indictment alleges that, from April 2015 through June 2018, Mr. Musaibli knowingly provided and attempted to provide material support to ISIS, in the form of personnel and services, knowing that ISIS is a terrorist organization and that ISIS engages in terrorism. The superseding indictment further alleges that Musiabli conspired to provide and provided material support to ISIS and that he received military-type training from and on behalf of ISIS. The superseding indictment also charges Musaibli with knowingly possessing and discharging a machine gun in furtherance of a crime of violence, namely, providing material support to ISIS. Musabli, a natural-born U.S. citizen, was detained overseas by Syrian Democratic Forces (SDF) and was transferred into U.S. custody in July 2018.
“The United States is committed to holding accountable its citizens who leave this country in order to support ISIS,” stated Assistant Attorney General John C. Demers. “As alleged in the indictment, the defendant traveled overseas, joined ISIS, and received training from the terrorist organization. He was ultimately detained overseas and turned over to the FBI. With these charges, he will be held accountable for his crimes. I want to thank all of those who are responsible for this investigation and prosecution.”
“The superseding indictment against Musaibli adds charges to more fully capture his conduct while with ISIS for some two and one-half years,” said U.S. Attorney Schneider. “The superseding indictment alleges that, during that substantial period of time, Musaibli provided material support to ISIS, conspired with others to provide support to ISIS, possessed and fired a machine gun in support of ISIS, and attended an ISIS military training camp. This superseding indictment reflects our commitment to prosecute anyone who supports terrorists to the full extent of the law.”
The charges in the superseding indictment carry a statutory mandatory minimum penalty of 40 years in prison and a maximum of up to life in prison.
An indictment is only a charge and is not evidence of guilt. Every defendant is presumed innocent unless and until proven guilty.
This case is being investigated by the FBI’s Joint Terrorism Task Force. The case is being prosecuted by Assistant U.S. Attorneys Cathleen M. Corken and Kevin M. Mulcahy of the Eastern District of Michigan with assistance from the National Security Division’s Counterterrorism Section.
Pharmacy Owner and Pharmacist Charged in a Scheme to Bill Insurance for Medications Not DispensedRead the Press Release
An indictment was unsealed today charging Mohamad Ali Makki, R.Ph. and Wansa Nabi Makki with multiple health care fraud offenses, U.S. Attorney Matthew Schneider announced today. At the same time, related criminal complaints were unsealed charging Mamoud Makki and Hossam Tanana (husband of Wansa Makki) of laundering some of the proceeds of the health care fraud scheme.
Schneider was joined in the announcement by Special Agent in Charge Timothy R. Slater of the FBI’s Detroit Division and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office.
Charged in the indictment and criminal complaints are:
Wansa Nabih Makki, 41, of Dearborn
Mohamad Ali Makki, R.Ph., 43, of Dearborn Heights
Mahmoud Makki., 36, of Dearborn
Hossam Tanana, 53 of Dearborn
According to the indictment, between January 2010 and January 2018, Wansa Makki owned and oversaw the operations of two local pharmacies, LifeCare Pharmacy in Livonia and LifeCare of Michigan in Farmington Hills. Mohamad Makki was the pharmacist-in-charge at both pharmacies. Both pharmacies were “closed door” pharmacies, meaning that they were not open to the public and only filled prescriptions for individuals associated with various care facilities. The indictment alleges that during the course of the conspiracy, Wansa Makki and Mohamad Makki billed Medicare, Medicaid and Blue Cross Blue Shield of Michigan for approximately $9.2 million dollars for medications that were never dispensed. The fraud scheme was detected by Medicare, in part, because of a huge deficit between each pharmacy’s recorded inventories and the claims that each submitted for insurance reimbursement. As part of the scheme to defraud, the defendants billed insurance companies for allegedly submitting claims for delivering over 500 medications to people who had died prior to the claimed date of delivery.
According to the indictment and related criminal complaints, proceeds of the fraud scheme were laundered by overpaying consulting and delivery companies operated by close relatives of Wansa and Mohamad Makki. For instance, according to the complaints, Hossam Tanana was previously convicted for diverting controlled substances such as oxycodone, hydrocodone (Vicodin) and alprazolam (Xanax) while being licensed as a pharmacist. Two days after being released from federal custody in April of 2012, Tanana incorporated a pharmacy consulting company. Between the date of incorporation and December of 2013, Tanana’s consulting company received over $400,000 from the LifeCare Pharmacy. LifeCare Pharmacy also paid over one million dollars to a delivery service opened by Wansa Makki’s brother, Mahmoud Makki, in a 14-month period beginning in December of 2013.
An indictment is only a charge and is not evidence of guilt. Each defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.
If convicted of a health care fraud charge, the defendants face a maximum sentence of imprisonment of ten years, and a maximum fine of $250,000. In addition to any sentence imposed for health care fraud, the defendants face a mandatory and consecutive two-year sentence if convicted of aggravated identity theft.
The case was investigated by Special Agents of the HHS and FBI, with cooperation and assistance from the Michigan Department of Health and Human Services - Office of Inspector General.
The case is being prosecuted by Assistant U.S. Attorneys John Engstrom, Philip Ross and Shankar Ramamurthy.
Former City of Detroit Building Authority Official and Former Executive at Adamo Group Plead Guilty to Bribery Conspiracy in Connection with the Detroit Demolition ProgramRead the Press Release
The former Field Operations Manager for the City of Detroit Building Authority overseeing the demolition program in Detroit and a former executive at a Detroit demolition firm pleaded guilty today to conspiracy to commit bribery and conspiracy to commit honest services fraud in connection with the Detroit Demolition Program, announced First Assistant U.S. Attorney Saima Mohsin and Makan Delrahim, Assistant Attorney General of the Antitrust Division of the Department of Justice.
Joining in the announcement were Christy Romero, the Special Inspector General of the Troubled Asset Relief Program (SIGTARP), and Timothy R. Slater, Special Agent in Charge of the Detroit, Michigan office of the Federal Bureau of Investigation (FBI).
Aradondo Haskins, 48, pleaded guilty today before the Honorable Victoria Roberts to conspiring with a contractor to take bribes on city contracts as a public official and to commit honest services fraud by taking bribes while he was employed as an executive at Adamo Group (Adamo) between 2013 and 2016 in connection with the Blight Elimination Program (BEP) in Detroit.
Anthony Daguanno, 62, also pleaded guilty today before the Honorable Victoria Roberts to conspiring with a contractor to commit honest services fraud by taking bribes while he was employed as an executive at Adamo Group.
The United States Treasury Department created the BEP, which focused on helping communities demolish vacant houses. The program was paid for through the Hardest Hit Fund (HHF), a housing support program intended to protect home values, preserve home ownership, and promote economic growth. The City of Detroit was one of the recipients of this HHF money. Approximately $258,656,459 in Hardest Hits Funds have been allocated to the City of Detroit since October 7, 2013.
As stated during Haskins’s guilty plea, from January 2013 through April 2015, Haskins was employed as an “estimator” with Adamo. Adamo is a private, “for profit,” company which provides demolition services throughout the United States and Canada, including the City of Detroit. Haskins’s responsibilities at Adamo included assembling bid packages in response to “Requests for Proposals” (RFPs) issued by the City of Detroit. Adamo responded to the RFPs by submitting bids to the City hoping to secure demolition contracts by being the lowest bidder. In assembling the bid packages, Haskins contacted various subcontractors requesting bids for work to be included in Adamo’s submissions. “Contractor A” was one of the subcontractors who received Haskins’s invitation to bid. On several occasions, Contractor A paid Haskins money for disclosing confidential information about bids from Contractor A’s competitors. In return for these payments, Haskins disclosed confidential information about the lowest competitor bid which allowed Contractor A to submit an even lower bid, ensuring that Contractor A was awarded lucrative contracts. Haskins accepted bribes on at least eight occasions while he worked at Adamo totaling approximately $14,000.00.
According to the plea, due in large part to his experience at Adamo, Haskins was hired by the City of Detroit Building Authority (DBA) as a “Field Operations Manager” for its demolition program. As an official of the City of Detroit, Haskins was the primary point of contact for demolition contractors and he opened and read bids contractors submitted in response to RFPs. Contractor A, knowing that Haskins was still in a position to influence the demolition contract bidding process, continued to pay Haskins to use his official authority to influence the awarding of demolition related contracts to Contractor A. Haskins accepted the cash bribe payments from Contractor A in exchange for providing Contractor A confidential information about bids submitted to the DBA. With the confidential information, Contractor A was able to submit bids low enough to ensure that Contractor A was awarded City of Detroit demolition related contracts. In total, Haskins accepted approximately $11,500 in bribes from Contractor A. After his employment with the City of Detroit, Haskins accepted an additional approximately $1,000 from Contractor A for information Contractor A received while Haskins was employed with the City.
As stated during Daguanno’s guilty plea, from January 2013 through January 2019, Daguanno was employed as a “Senior Estimator” at Adamo. Daguanno’s responsibilities at Adamo included soliciting bids from subcontractors, assembling bid packages in response to RFPs issued by the City of Detroit, and communicating with subcontractors. In assembling the bid packages submitted to the City of Detroit, Daguanno communicated regularly with various subcontractors and kept track of the bids they submitted. “Contractor A” was one of the subcontractors with whom Daguanno communicated. On numerous occasions, Contractor A paid Daguanno money for disclosing confidential information about bids from Contractor A’s competitors. In return for these payments, Daguanno disclosed confidential information about the lowest competitor bid which allowed Contractor A to submit an even lower bid, ensuring that Contractor A was awarded lucrative contracts. In total, Daguanno accepted over $372,000 in bribes and kickbacks on seventy-one occasions over eight years.
Haskins and Daguanno are the first defendants to plead guilty in connection with the criminal investigation into the demolition program in the City of Detroit. The government, as of today’s date, does not anticipate charging any additional public officials.
First Assistant U.S. Attorney Saima Mohsin and Assistant Attorney General Makan Delrahim commended the outstanding work of SIGTARP and the FBI in conducting a comprehensive criminal investigation into the demolition program.
“The City of Detroit and its demolition program were entrusted with millions of taxpayer dollars to tear down abandoned houses in Detroit’s neighborhoods. The corruption of the government contracting process by these two individuals damaged the integrity of the demolition program and broke the public trust. This prosecution serves as a warning to other public officials, as well as to private sector companies working with public officials, that soliciting or accepting bribes will be punished and as a promise to the taxpaying public that such violations of the public trust will not be tolerated,” said First Assistant U.S. Attorney Saima Mohsin.
The guilty pleas today demonstrate the Antitrust Division’s commitment to prosecuting conduct that subverts the competitive process and to protecting taxpayer funds.
“When the bidding process on federally funded contracts is corrupted through bribery and fraud by public officials and contractors, it undermines the public’s confidence and eliminates the benefits of open competition,” said Assistant Attorney General Makan Delrahim. “When bribery tips the scales in favor of corrupt bidders, free market competition is harmed to the loss of taxpayers and honest bidders. The harms didn’t end there, they continue to affect cities like Detroit and states like Michigan. The Antitrust Division will continue to work with the U.S. Attorney’s Office and our investigative partners to uncover and prosecute such conduct.”
“There is no place for corruption in a federal government program like TARP’s Hardest Hit Fund,” said Special Inspector General Christy Goldsmith Romero of SIGTARP. “The convictions announced today detail how two employees of a demolition company deprived the government and taxpayers of full and open competition in the Hardest Hit Fund by providing a contractor confidential information about the lowest bid in exchange for bribes. The bribery continued when one employee later worked for the Detroit Building Authority. I thank First Assistant U.S. Attorney Saima Mohsin, and Assistant Attorney General Makan Delrahim for working with SIGTARP to fight corruption in this program.”
“Mr. Daguanno and Mr. Haskins admitted in federal court today to corrupting the bidding process while seeking contracts through a federally-funded program. Mr. Haskins' illegal behavior continued after he was hired by the City of Detroit,” said SAC Slater. “The FBI’s Detroit Area Public Corruption Task Force will continue to investigate and fight corruption by those who give illegal, preferential treatment at the expense of honest American business. I would encourage anyone with information about potential public corruption in Michigan to contact FBI Detroit's Public Corruption tipline at 313-965-2222 or our main number at 313-965-2323.”
The case is being prosecuted by Assistant U.S. Attorneys Sarah Resnick Cohen and Karen Reynolds, and DOJ Antitrust Trial Attorney Matthew Stegman.
Marquette Man Pleads Guilty to Attempting to Smuggle Goods into the United StatesRead the Press Release
A Marquette, Michigan man pleaded guilty today to smuggling products into the United States using fraudulent shipping invoices, U.S. Attorney Matthew Schneider announced.
Schneider was joined in the announcement by Special Agent in Charge William P. Conway, of the U.S. Food and Drug Administration’s Office of Criminal Investigations.
Pleading guilty was Curtis Wenzlaff, 55.
According to court records, Curtis Wenzlaff operated a domestic profit corporation, Sanno Industries, Inc., out of his residence previously located in Flushing, Michigan. Wenzlaff was acting as a drop shipper for companies outside the United States and was paid to assume the risk and consequences of the U.S. government identifying, seizing, and refusing entry of products illegally imported in to the United States.
Beginning in July 2014 and continuing until April 2016, Wenzlaff was involved with smuggling into the United States products commonly used to make drugs regulated by the U.S. Food and Drug Administration. The products were falsely labeled, among other things, as blueberry extract and sunscreen lotion ingredients. Wenzlaff would accept delivery of the packages. Once a product was successfully delivered to Wenzlaff, other individuals would then provide him with instructions regarding relabeling, repackaging and shipping the product to the intended customer. Wenzlaff received in excess of $25,000 from shippers to receive and reship the packages. Defendant claims that a portion of the money received was reimbursement for shipping expenses associated with the imported product.
Wenzlaff knew that the merchandise imported into the United States was not intended for the uses he claimed on shipping documents. Even so, he knowingly received the product and then concealed it in order to facilitate the sale of the merchandise to a third party. The value of the merchandise/products illegally smuggled into the United States by Wenzlaff was in excess of $1,000,000.00.
“I commend the agents of the FDA’s Office of Criminal Investigations for their work on this case,” stated United States Attorney Schneider. “Our office is always working to protect Michigan consumers from harm, and that’s especially true in cases where people try to evade federal health and safety regulations in exchange for their own personal profits.”
“FDA regulations are in place to protect consumers and help ensure the drug products they receive are safe and effective,” said Special Agent in Charge William P. Conway, FDA Office of Criminal Investigations’ Chicago Field Office. “When unscrupulous importers attempt to evade FDA’s regulations, consumers in the U.S. are put at risk. The FDA will continue to pursue and bring to justice those who participate in fraudulent smuggling schemes to the detriment of public health.”
Wenzlaff’s plea agreement provides for an anticipated sentencing guideline range of 24-30 months’ imprisonment. Wenzlaff entered his guilty plea before U.S. District Judge Matthew Leitman in Flint, Michigan. Sentencing has been set for August 8, 2019 at 1:30 p.m..
The case was investigated by the U.S. Food and Drug Administration’s Office of Criminal Investigations and is being prosecuted by Assistant United States Attorney Nancy Abraham.
Former Port Huron Pharmacist Indicted for Fraudulently Obtaining Powerful PainkillersRead the Press Release
A former pharmacist was arraigned today on an indictment charging him with fraudulently obtaining controlled substances, including opioids, U.S. Attorney Matthew Schneider announced today.
Schneider was joined in the announcement by Special Agent in Charge Timothy Plancon of the Drug Enforcement Administration, Detroit Field Division.
Charged in the indictment is Kyle Wilhelm 40, Marysville.
According to the indictment, between February 2015 and February 2018, Wilhelm utilized his position as a hospital pharmacy manager to fill prescriptions for fictitious patients using false birthdates, false addresses, and by the unauthorized use of a medical doctor’s DEA registration number. Wilhelm exploited his knowledge of his employer’s internal controls to obtain controlled substances, which would go unnoticed during audits. He failed to compensate his employer for more than $35,000 in controlled substances he fraudulently obtained. In total, he obtained more than 200,000 dosage units of controlled substances such as oxycodone, hydromorphone, and hydrocodone acetaminophen.
An indictment is only a charge and is not evidence of guilt. Each defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.
If convicted of a drug charges alleged in the indictment, the defendant faces a maximum sentence of imprisonment of eight years, and a maximum fine of $250,000.
The case was investigated by DEA’s Tactical Diversion Squad. The case is being prosecuted by Assistant U.S. Attorney Philip A. Ross
Former Oakland County Reserve Deputy Sentenced for Unlawful Distribution of OpioidsRead the Press Release
A former Oakland County reserve deputy sheriff will spend 49 months in prison for the unlawful distribution of prescription opioids, U.S. Attorney Matthew Schneider announced today.
Joining Schneider in the announcement was Special Agent in Charge Timothy J. Plancon, U.S. Drug Enforcement Administration, Detroit Field Division and Special Agent in Charge Timothy R. Slater, Federal Bureau of Investigation, Detroit Division.
Daniel Vasquez, 61, was sentenced yesterday by U.S District Court Judge Paul D. Borman after pleading guilty to possession with the intent to distribute and distribution of controlled substances – namely the Schedule II opioid Oxycodone.
The case revealed that Vasquez, a former reserve Oakland County Sheriff’s Deputy, would receive 1,500 Oxycodone pills per month in addition Hydrocodone and other medication. Instead of taking the medication as prescribed, he would sell the pills in the community. Over the course of five years, he distributed more than 30,000 Oxycodone pills on the street. Oxycodone is one of the most diverted controlled substances in our area. It is extremely powerful, addictive and in the opioid class that is easily abused, and can lead to addiction and eventual heroin use. Michigan has seen devastating statistics relating to opioid drug overdoses in the last five years.
“The vast majority of Michigan’s reserve police officers are outstanding public servants, but unfortunately, this one individual decided to violate his oath by selling deadly pills and harming the very community that he was tasked to protect,” stated United States Attorney Schneider.
"When an officer betrays his oath by selling highly addictive opioids to vulnerable members of our community, it undermines trust in law enforcement and puts the public at risk. The facts of this case are especially troubling to those of us in law enforcement. It should be noted, however, that Mr. Vasquez's actions do not represent the hundreds of dedicated men and women of the Oakland County Sheriff's Office who work tirelessly to keep illegal drugs off the streets of Oakland County," said FBI Special Agent in Charge Slater. "The FBI remains committed to working alongside the OCSO and our many federal, state and local partners to prosecute anyone who illegally distributes narcotics and contributes to the epidemic of opioid addiction in Michigan."
“The sentencing of this former reserved deputy sheriff in no way diminishes the hard work provided by so many reserve deputy officers on a daily basis. This individual willingly participated in the destruction that drug trafficking brings to our neighborhoods. Make no mistake, when any member of the law enforcement community crosses the line and becomes a drug trafficker, the DEA and our law enforcement partners will be relentless in bringing them to justice."
The case was investigated by agents and task force officers of the U.S. Drug Enforcement Administration and the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorney Brandy R. McMillion. McMillion serves as the Opioid Fraud Abuse and Detection Unit Prosecutor for the Eastern District of Michigan and is dedicated solely to prosecuting defendants contributing to the nation’s opioid epidemic. The Eastern District of Michigan is one of the twelve districts included in this Department of Justice initiative.
Michigan Fish Dealer Sentenced for Unlawful Trafficking in Michigan Lake TroutRead the Press Release
John H. Cross III (Cross) and John Cross Fisheries Inc. (Cross Fisheries) were sentenced yesterday in Kalamazoo, Michigan, for trafficking in illegally transported and sold lake trout, announced Assistant Attorney General Jeffrey Bossert Clark for the Justice Department’s Environment and Natural Resources Division and United States Attorney Andrew Birge for the Western District of Michigan. Cross Fisheries was also sentenced for making false records about whitefish purchases.
The two defendants previously had pled guilty to one misdemeanor count of violating the Lacey Act by knowingly selling and attempting to sell in interstate commerce lake trout, when they should have known the fish was possessed and sold in violation of underlying State law, specifically Mich. Comp. Laws, Sections 324.47333 and 324.47319 which prohibit any person from marketing, possessing, or offering for sale any fish illegally taken from the relevant waters. Cross Fisheries also pled guilty to one felony count of violating the Lacey Act by knowingly making a false record and account of whitefish that was intended to be sold and transported in interstate commerce.
Cross was ordered to serve 12 months in prison – intermittently during a five year term of probation – for his role in trafficking lake trout. Cross Fisheries was sentenced to five years’ probation. Both defendants were ordered to pay $1,032,132.00 in restitution, jointly and severally, to the National Fish Hatcheries, which stock Lake Michigan with lake trout. In addition, Cross Fisheries was ordered to create and implement a compliance plan to prevent such violations from reoccurring.
“Purchasing illegally caught fish for interstate sale and then covering up the source of those fish by falsifying records is cheating, plain and simple — and where discovered, the Justice Department will seek to punish such conduct,” said Assistant Attorney General Jeffrey Bossert Clark. “For three years, Cross Fisheries harmed law-abiding competitors and the American taxpayers who fund the stocking of Lake Michigan with trout, but that conduct has now come to an end.”
“The federally funded stocking of fish and the regulations designed to preserve these natural and communal resources were simply treated as an opportunity for extra profit here and in other cases stemming from Operation Fishing for Funds. This was essentially stealing from competitors, the government, and ultimately the future,” commented U.S. Attorney Andrew Birge.
“We are pleased to see this long-term illegal commercialization come to an end. This type of large-scale wildlife trafficking can significantly impact the sustainability of the resources we are charged to protect. This is especially relevant because we have been working for years to restore the Great Lakes fishery,” said Edward Grace, Assistant Director of the Office of Law Enforcement.
According to documents filed in court, between September 2011 and October 2013, Cross and Cross Fisheries repeatedly purchased lake trout from “Fisherman A,” who Defendants knew and should have known to be a tribal fisherman who fished from a boat that was converted to trap net gear at taxpayers’ expense and thus could not lawfully harvest lake trout. Cross and Cross Fisheries made and submitted records and accounts of these purchases stating that the seller was “Fisherman B” (who Defendants knew and should have known to be a licensed gillnet fisherman who could legally harvest lake trout).
Between approximately September 2011 and October 2013, Cross Fisheries, through its officers and employees, including Cross, made approximately forty-two purchases of lake trout from “Fisherman A,” totaling approximately 48,498 pounds, all of which was falsely reported by Cross Fisheries on its Wholesale Fish Dealer’s Purchase Records as being from “Fisherman B’s” gillnet license, and subsequently offered for sale and sold by Cross and others in interstate commerce.
This sentencing is one of the final pending cases arising from Operation Fishing for Funds, an undercover operation run for approximately two years by Special Agents of the U.S. Fish and Wildlife Service (USFWS). This undercover operation investigated the illegal harvest and sale of fish (primarily walleye and trout) taken from the Great Lakes. As part of the investigation, USFWS agents established and operated an undercover wholesale fish business in Baraga, Michigan, named Upper Peninsula North Fish Company (UPNFC). UPNFC bought and sold fish wholesale from individuals across the region, and also sold fish retail.
The Operation has resulted in twenty-one convictions, seven in tribal courts and fourteen in federal courts. To date, over $1.6 million in total restitution has been ordered to the USFWS National Fish Hatcheries and tribal fish hatcheries; this amount reflects the funds needed to restock hatchery fingerlings necessary to replace the illegally harvested fish.
The Lacey Act, 16 U.S.C. §§ 3371-3378, prohibits trafficking in fish and wildlife or plants taken, possessed, transported, or sold in violation of underlying federal, state, foreign, or Indian tribal law. The Lacey Act also prohibits making or submitting a false label, record, or account of fish, wildlife, or plant that has been or is intended to be transported in interstate or foreign commence.
Operation Fishing for Funds was investigated by the U.S. Fish and Wildlife Service Office of Law Enforcement with assistance of the Michigan and Wisconsin Departments of Natural Resources. The prosecutions were handled by prosecutors from the Environmental Crimes Section of the U.S. Department of Justice, with assistance from the U.S. Attorney’s Offices for the Western and Eastern Districts of Michigan, and the Eastern District of Wisconsin, as well as The Grand Traverse Band of the Ottawa & Chippewa Indians, the Red Cliff Band of Lake Superior Chippewa, and the Sault St. Marie Tribe of Chippewa Indians.
Former UAW Vice President Pleads Guilty to Conspiracy with Fiat Chrysler ExecutivesRead the Press Release
Norwood Jewell, the former Vice President of the UAW and the highest official in the UAW’s Chrysler Department, pleaded guilty today to conspiring with other UAW officials and Fiat Chrysler executives to make illegal payments to union officials announced U.S. Attorney Matthew Schneider.
Joining in the announcement were Irene Lindow, Acting Special Agent in Charge of the U.S. Department of Labor – Office of Inspector General, Timothy R. Slater, Special Agent in Charge of the Detroit, Michigan office of the Federal Bureau of Investigation, Manny Muriel, Special Agent in Charge of the Detroit, Michigan office of the Internal Revenue Service – Criminal Investigations, and Thomas Murray, District Director, U.S. Department of Labor – Office of Labor-Management Standards.
Norwood Jewell, 61, of Swartz Creek, Michigan pleaded guilty to conspiring to violate the Labor Management Relations Act by accepting, arranging for, and approving illegal payments from Fiat Chrysler executives to high-level UAW officials from 2014 through 2016. After the now-deceased UAW Vice President General Holiefield retired in 2014, Jewell and other UAW officials began running the UAW’s Chrysler Department, responsible for dealing with executives at Fiat Chrysler. During the plea hearing, Jewell admitted to participating in a conspiracy that had existed at least from 2009 through 2016 whereby Fiat Chrysler executives conspired with one another, with Fiat Chrysler, with UAW officials, and with the UAW to funnel money and things of value worth millions of dollars from Fiat Chrysler to UAW officials and the UAW. Fiat Chrysler and the UAW, and their executives and officials, used the joint UAW-Chrysler National Training Center in order to conceal and make the payoffs from Fiat Chrysler to senior UAW officials.
The things of value funneled to UAW officials from Fiat Chrysler included personal travel, golf resort fees, lavish meals and parties, theme park tickets at Disney World and Universal Studios, limousine services, designer clothing, designer shoes, golf equipment, electronics, and custom-labeled bottles of wine. Jewell admitted that in 2014 he had knowingly joined a “culture of corruption” and a conspiracy at the UAW that had been in place since 2009, whereby Fiat Chrysler illegally paid for lavish entertainment and other things of value for UAW officials.
Jewell himself admitted to approving tens of thousands of dollars in extravagant meals for high-level UAW officials paid for by Fiat Chrysler at Detroit’s London Chop House and at multiple high-end steakhouses in Palm Springs, California in 2015 and 2016. For example, in July 2015, Fiat Chrysler paid $8,494.37 so that the UAW’s National Negotiating Committee, including Jewell, could dine at the London Chop House right before collective bargaining negotiations with Fiat Chrysler began. After the UAW and Fiat Chrysler negotiated a new collective bargaining agreement in September 2015, Fiat Chrysler paid $6,912.81 for the UAW’s negotiators, including Jewell, to again dine at the London Chop House in order to celebrate. The agreement that had been negotiated was then voted down by the UAW’s membership. Jewell and other UAW officials also accepted almost ten thousand dollars from Fiat Chrysler through the National Training Center in order to pay for multiple rounds of golf at the Indian Canyons Golf Resort in Palm Springs for senior UAW officials.
As part of his plea, Jewell stated that other Fiat Chrysler executives continued the conspiracy to make illegal payoffs to senior UAW officials up through the end of 2016 after co-defendants and Fiat Chrysler executives Alphons Iacobelli and Jerome Durden left the company in June 2015.
Jewell is the eighth defendant to plead guilty in connection with the ongoing criminal investigation into illegal payoffs involving UAW officials and FCA executives. The following individuals have already pleaded guilty to their participation in the scheme and have been sentenced: former FCA Vice President for Employee Relations Alphons Iacobelli (66 months in prison), former FCA Financial Analyst Jerome Durden (15 months in prison), former Director of FCA’s Employee Relations Department Michael Brown (12 months in prison), former senior UAW officials Virdell King (60 days in prison), Keith Mickens (12 months in prison), and Nancy A. Johnson (12 months in prison), and Monica Morgan, the widow of UAW Vice President General Holiefield (18 months in prison).
U.S. Attorney Schneider commended the outstanding work of the Internal Revenue Service – Criminal Investigations, the U.S. Department of Labor – Office of Labor-Management Standards and Office of Inspector General, and the Federal Bureau of Investigation in conducting a comprehensive criminal investigation into labor corruption activities involving a vital sector of the local and national economy.
“Today’s conviction of a UAW Vice President demonstrates that our efforts to clean up labor corruption will not rest until the 400,000 UAW members and their families are represented by union officials of honor and integrity,” said United States Attorney Matthew Schneider. “Labor leaders must always put the best interests of the hard working men and women of the union over their own personal interests.”
“Mr. Jewell chose to forsake his obligation to serve the rank and file of the UAW when he accepted and authorized his subordinates to spend in excess of $40,000 in FCA funds on lavish meals, liquor, and entertainment. We will continue to work with our law enforcement partners to investigate those who facilitate illegal payments to union officials entrusted to negotiate on behalf of union members,” said Irene Lindow, Acting Special Agent-in-Charge, Chicago Region, U.S. Department of Labor Office of Inspector General.
"Mr. Jewell’s criminal actions were an effort to enrich himself and his colleagues at the expense of dues-paying UAW members and denied those same hard-working men and women the assurance that union leadership was bargaining in their best interests," said SAC Slater. "The FBI will continue to work alongside our federal partners to expose these conspiracies and ensure those who violate the law are held accountable.”
“Mr. Jewell callously conspired with other UAW officials and Fiat Chrysler executives to accept illegal payments from funds meant for the hard working rank and file members of the UAW. IRS-CI is prepared to investigate any disregard of fiduciary responsibilities entrusted to corporate and union officials who aim to selfishly enrich their own pockets.”
“Protecting members against corruption perpetrated by their union leaders is critical to the mission of OLMS,” said Thomas Murray, District Director of the Office of Labor-Management Standards (OLMS) Detroit-Milwaukee District Office. “We will continue to work cooperatively with our law enforcement partners to ensure that anyone who abuses their union position for personal financial gain will be brought to justice.”
The case is being prosecuted by Assistant U.S. Attorneys David A. Gardey, Erin Shaw, and Steven Cares.
Former Oakley Police Chief Pleads Guilty to Wire and Tax FraudRead the Press Release
The former police chief of the Village of Oakley, located in Saginaw County, Michigan, pleaded guilty today to charges of wire fraud and filing a false income tax return for 2012, stated United States Attorney Matthew Schneider.
Schneider was joined in the announcement by Special Agent in Charge James Dier, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and Special Agent in Charge Manny Muriel, Internal Revenue Service, Criminal Investigations (IRS-CI).
Robert J. Reznick, of Swartz Creek, Michigan, pleaded guilty before United States Magistrate Judge Patricia Morris in Bay City, Michigan.
According to court records, Reznick fraudulently used his position as a police chief to obtain reduced prices on firearms, ammunition, and other equipment from suppliers located both in and outside of Michigan. He then sold the merchandise to his “reserve officers” for his personal profit. Though the population of the Village of Oakley, located in Saginaw County, was under 300 people, Reznick recruited and maintained a roster of approximately 120 reserve officers for the Oakley Police Department, most of whom were affluent professionals or otherwise prominent individuals who lived outside of, and distant from, the Village of Oakley. Reznick also used his position as police chief to facilitate the sale of assault shotguns, with the capacity to hold 16 rounds, from an out-of-state vendor for some of his customers and thereby enabled the purchasers of those shotguns to evade the federal and state taxes on the transactions.
In addition to the wire fraud charge, Reznick pleaded guilty to willfully filing a false 2012 federal income tax return, and acknowledged under-reporting his income on tax returns for additional years. The criminal tax loss that resulted from Reznick failing to truthfully report all of his personal income totals approximately $87,702.
“Former Police Chief Reznick’s guilty plea demonstrates that no one is above the law in Michigan — and that includes those who enforce the law,” United States Attorney Matthew Schneider said. “The Justice Department is committed to ensuring that those entrusted with enforcing the law follow it themselves, and when they do not, we will hold them fully accountable.”
“Instead of protecting and serving his community, Robert Reznick made the decision to break the law for personal gain, and in doing so violated the public’s trust. ATF will never waver in our commitment to protecting the community and we will continue to work with our law enforcement partners to hold all citizens accountable.” said ATF Special Agent in Charge James Deir.
Manny Muriel, Special Agent in Charge of the Detroit’s IRS Criminal Investigation, stated, “Mr. Reznick dishonored his position as police chief and victimized the American taxpayers in the process. IRS‐CI will continue to work diligently with our law enforcement partners to investigate fraudulent tax allegations; no matter who is trying to destroy the integrity of our tax system.”
This case was investigated by special agents from both ATF and IRS-CI and is being prosecuted by Assistant U.S. Attorneys from the Flint and Bay City branch offices
Shelby Township Resident Sentenced for Tax EvasionRead the Press Release
A Shelby Township resident will spend 14 months in prison for tax evasion and pay restitution and a $20,000 fine, U.S. Attorney Matthew Schneider announced today.
Joining Schneider in the announcement was Manny Muriel, Special Agent in Charge of the Detroit Office of the Internal Revenue Service ‐ Criminal Investigation.
The defendant, Mersed Bebanic, 35, owned and operated three businesses, including Century Trucking Inc, Century Trucking Services LLC, and Century Innovations. Bebanic was required to file personal income tax returns for tax years 2011 through 2014 and had a duty to report an accurate net profit of his business on Form 1120S of his U.S. Income Tax Return for S Corporation and to pay any income tax due. Instead, in April 2014, Bebanic prepared and filed a Form 1040 Individual Income Tax Return with the IRS for the 2013 tax year and underreported his total income. Bebanic reported his taxable 2013 income as $34,073.00 and the total taxes on his income as $10,790.00 when Bebanic knew his total income for 2013 was substantially higher. As a result, the tax due and owing on his income for 2013 was also substantially higher, totaling $281,368.00.
Factoring in penalties, the loss associated with Bebanic’s tax evasion scheme from 2011 through 2014 totaled $1,224,461. Bebanic agreed to pay the total amount of his restitution by applying funds seized from his home during the execution of a search warrant in August 2016.
Bebanic filed a false 2013 individual income tax return knowing that the total income and tax due reported on his 2013 return were false. Bebanic admitted in court he met with his accountant in April of 2014 and provided information that overstated his business expenses, therefore, understating his profit. The inaccurate profit transferred to his personal income tax return. Despite knowing the information was not accurate, Bebanic signed and caused a false return.
Manny Muriel, Special Agent in Charge of the Detroit’s IRS Criminal Investigation, stated, “Mr. Bebanic deliberately underreported business income to evade a true assessment of tax due and owed to the U.S. Treasury; however, Mr. Bebanic’s actions could not escape the attention of IRS-CI and he’ll no longer be able to cheat the American taxpayers.”
The case was investigated by agents of the Internal Revenue Service – Criminal Investigation.
Detroit Man Sentenced to 6 Months in Prison for Stealing More than $280,000 in Government BenefitsRead the Press Release
A Detroit man was sentenced yesterday to six months in prison for stealing more than two-hundred and eighty thousand dollars from the Social Security Administration and the Department of Veteran’s Affairs, U.S. Attorney Matthew Schneider announced.
Schneider was joined in the announcement by Resident Agent in Charge Adam Lowder, Social Security Administration Office of the Inspector General, Office of Investigations, Detroit Office; and Special Agent in Charge Gregg Hirstein, Department Veterans Affairs Office of the Inspector General.
Walter Terrell Sr., 76, was sentenced by U.S. District Judge George Caram Steeh, III in Detroit, Michigan. After the conclusion of his prison term, Terrell must also spend three years on supervised release. The Court further ordered Terrell to pay full restitution to the government.
According to court records, Terrell’s mother passed away in the fall of 1981. She was receiving Social Security retirement insurance benefits at the time and because SSA was unaware of her death, SSA continued to issue monthly Treasury checks in her name. The erroneous payments continued for approximately 37 years—$253,327.00 in total. Terrell then unlawfully converted those benefits by forging his late mother’s name and cashing hundreds of checks. During the same period, Terrell also unlawfully retained $35,649.00 in payments made to his mother by the Department of Veterans Affairs.
In 2014, as part of the Medicare Non-Utilization Project, an SSA initiative designed to fight fraud by contacting elderly beneficiaries who have not used their Medicare in three or more years, SSA made contact with Mr. Terrell, who reported that his mother was “on vacation.” Terrell then arranged for someone to impersonate his mother during a subsequent phone call with the agency, allowing his scheme to continue for another three and a half years. The fraud was finally exposed after a 2018 SSA-OIG audit identified a death certificate for a woman who was ultimately confirmed to be Terrell’s mother.
This case was investigated by special agents from both SSA-OIG and VA-OIG and was prosecuted by Special Assistant U.S. Attorney Ryan A. Particka.
Two Men Charged with Conspiring to Steal Automobiles and Sale or Possession of Stolen AutomobilesRead the Press Release
Two men have been charged in an indictment with conspiring to steal Volkswagen and Audi vehicles from a lot in Pontiac, Michigan, announced United States Attorney Matthew Schneider.
Schneider was joined in the announcement by Special Agent in Charge Timothy R. Slater, Federal Bureau of Investigation, Detroit Division and Sheriff Michael Bouchard, Oakland County Sheriff’s Office.
Charged were Romane Porter, 42, of Farmington Hills, Michigan and Daniel Onorati, 41, of Eastpointe, Michigan. Onorati was arraigned last week on the charges in federal court in Detroit and was released on an unsecured bond. Porter is scheduled to be arraigned on the charges on April 12, 2019. The charges stem from an investigation initiated by the Oakland County Sheriff’s Office Auto Theft Unit.
According to the seven count indictment, beginning in March, 2017 and continuing through September, 2017, Porter and Onorati conspired with each other and others to steal approximately 61 Volkswagen and Audi vehicles that were parked in a lot at the site of the former Pontiac Silverdome in Pontiac, Michigan. Once in possession of the stolen vehicles, the defendants and others stored and sold or attempted to sell many of these stolen vehicles. Of those 61 stolen vehicles, the Indictment alleges that 46 left the state of Michigan.
If convicted on the charge of sale or possession of stolen motor vehicles, the defendants each face a maximum penalty of ten years in prison. If convicted on the charge of conspiracy, the defendants each face a maximum penalty of no more than five years in prison and a fine of not more than $250,000.
“The Oakland County Sheriff’s Office and the FBI have done an outstanding job of working together on this complex criminal case,” United States Attorney Schneider stated. “We are fortunate to have such outstanding public servants on our law enforcement team."
"These indictments are the result of an exceptional collaborative investigation by the FBI's Detroit Metropolitan Identity Theft Task Force and the Oakland County Sheriff Office's Auto-Theft Unit," said SAC Slater. "The FBI is committed to working with our State and County partners to hold those who break the law to account."
“I am grateful for the partnership between our Auto Theft Unit, the FBI, and the US Attorney’s Office who brought this organized auto theft activity to a close,” said Sheriff Michael J. Bouchard. “These individuals were bold in their behavior in stealing such a large volume of vehicles from a well-known location. These criminals deserve to be punished to the fullest extent of the law.”
An indictment is only a charge and is not evidence of guilt. Every defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The case was investigated by agents of the Federal Bureau of Investigation and the Oakland County Sheriff’s Office Auto Theft Unit. The Sheriff’s Office Auto Theft Unit is comprised of investigators from the Oakland County Sheriff’s Office, Southfield Police Department, Royal Oak Police Department, Hazel Park Police Department, Farmington Hills Police Department, and Detroit Police Department. The case is being prosecuted by Assistant United States Attorney Hank Moon.
Man Found Guilty for Evasion of Federal Tax PaymentsRead the Press Release
James D. Pieron Jr., a former resident of Mount Pleasant, Michigan, was found guilty on March 7, 2019 of one count of evasion of payment of his federal income taxes for 2008 and 2009, U.S. Attorney Matthew Schneider announced today.
Joining Schneider in the announcement was Manny Muriel, Special Agent in Charge of the Detroit Office of the Internal Revenue Service - Criminal Investigation.
The seven-day jury trial was conducted by U.S. District Judge Thomas L. Ludington in Bay City, Michigan.
The jury found that from approximately April of 2009 until July 18, 2018, James D. Pieron Jr. willfully evaded payment of income taxes due and owing by him for the calendar years 2008 and 2009.
Pieron, a U.S. citizen, operated a foreign currency exchange business in Zurich, Switzerland before he moved back to Mount Pleasant, Michigan in 2009. Pieron earned capital gains on a stock sale while living in Switzerland. Pieron wired millions of dollars from Swiss bank accounts to business accounts of his corporate interests in Mount Pleasant. Pieron filed his 2008 and 2009 personal income tax returns in 2011, reporting capital gains from his sale of stock but without paying the taxes he owed on those gains. Instead of paying his taxes, Pieron kept his personal money in his business accountants and purchased luxury items such as an $18,900 custom motorcycle, a $38,000 Steinway piano, and a $139,500 Mercedes SUV for his own use. In 2012, Pieron submitted an installment agreement request to the IRS, acknowledging that he owed $444,880 in taxes for 2007, 2008 and 2009, and claiming that he could only afford to pay $1,500 per month to get current on his taxes.
Manny Muriel, Special Agent in Charge of the Detroit’s IRS Criminal Investigation, stated, “Our tax system is based on voluntary compliance. Mr. Pieron intentionally failed to pay over his fair share.” Muriel continued, “The jury’s verdict demonstrates that there are consequences for those who willfully evade their taxes."
The maximum penalty for tax evasion is 5 years of imprisonment and a fine of twice the gain or loss.
Pieron’s sentencing hearing currently is set for June 20, 2019.
The case was investigated by agents of the Internal Revenue Service – Criminal Investigation. The case was prosecuted by attorneys from the Flint and Bay City branch offices of the U.S. Attorney’s Office.
Macomb Mother Indicted for Wire Fraud Related to Fraudulent Adoption SchemeRead the Press Release
On March 7, 2018, a federal grand jury returned an indictment charging Macomb County resident Tara Lynn Lee with eighteen counts of wire fraud, announced United States Attorney Matthew Schneider.
Schneider was joined in the announcement by Special Agent in Charge Timothy R. Slater, Federal Bureau of Investigation.
Lee operated in Michigan under the name Always Hope Pregnancy and Education Center. Neither Lee nor her organization were licensed by the State of Michigan to facilitate adoptions or match birth mothers to adoptive families. Yet from 2014 to 2018, Lee repeatedly paired birth mothers with adoptive parents. Lee represented herself to adoptive parents as a licensed social worker with a legitimate adoption agency.
The indictment sets forth specific allegations of wire fraud. On several occasions, Lee matched more than one set of adoptive parents to a birth mother. Other times, Lee matched adoptive parents with birth mothers that did not exist, were not pregnant, or had not decided to place their child into adoption. Lee accepted payment from prospective adoptive parents for these fraudulent matches. The indictment identifies over $200,000 that Lee received from fraudulent matches in 2018 alone.
“The evidence in this case will show that this is a terrible scam of parents who simply want to make our world better by adopting a child. We are encouraging any victims of this dishonest scheme to come forward and call the FBI hotline at 313-965-2227.”
“The wire fraud allegations against Ms. Lee do not begin to address the devastating emotional impact her cruel behavior has had on expectant mothers, adoptive parents, and families across the United States,” said SAC Slater. “The FBI Detroit Field Office is continuing to identify additional victims and investigate new allegations against Ms. Lee. We encourage anyone with information on Tara Lee or her organizations to contact the FBI’s hotline at 313-965-2227.”
A webpage has been created to provide case related information to those effected by the alleged offenses. Please visit www.justice.gov/usaeo-edmi and click the link titled U.S. v. Tara Lee.
The case is assigned to U.S. District Court Judge Bernard A. Friedman. The case was investigated by the Detroit FBI, and it is being prosecuted by Assistant U.S. Attorney Sara Woodward
Former President of Union Local Sentenced for Embezzling More than $300,000 in Union FundsRead the Press Release
Southfield resident Mervin E. Hawk, 59, the former president of Local 1640 of the American Federation of State, County, and Municipal Employees (AFSCME), was sentenced yesterday for embezzling over $300,000 in union funds, U.S. Attorney Matthew Schneider announced.
Schneider was joined in the announcement by Special Agent in Charge Timothy Slater of the Detroit, Michigan Office of the Federal Bureau of Investigation (FBI) and by Irene Lindow, Acting Special Agent-in-Charge, Chicago Region, U.S. Department of Labor Office of Inspector General.
United States District Judge Gershwin Drain sentenced Hawk to serve a prison term of 30 months. Hawk was also ordered to pay restitution in the amount of $362,623 and, upon release from incarceration, to serve a three-year term of supervised release.
Hawk pleaded guilty on November 16, 2018 to one count of Embezzlement of Union Funds. According to court records, Hawk was the president of AFSCME Local 1640 in Detroit, Michigan from approximately 2013 through 2015. As president, Hawk had signatory authority on the Local’s primary bank account. Hawk embezzled over $100,000 from this account, diverting the great bulk of these funds into his personal bank account for his personal use. In addition, acting without authorization of the Local’s Executive Board, Hawk opened two additional bank accounts in the name of AFSCME Local 1640. Hawk was the sole signor on these additional accounts. Over the course of his scheme, Hawk deposited some $200,000 in union dues into these unauthorized accounts, and used these monies for his personal enrichment and enjoyment, including considerable expenditures at Detroit casinos. All told, Hawk willfully stole over $300,000 in union monies, dues, and assets.
“Union leaders hold positions of trust and union members deserve honest representation,” stated United States Attorney Matthew Schneider. “When leaders use their positions to line their pockets rather than represent their members, they should expect to face justice.”
“Mervin Hawk abused his fiduciary position as the former President of AFSCME Local 1640 by embezzling over $330,000 in union dues for personal gain. We will continue to work with our law enforcement partners to safeguard the assets of union members,” stated Irene Lindow, Acting Special Agent-in-Charge, Chicago Region, U.S. Department of Labor Office of Inspector General.
This case was investigated by special agents from both the FBI and the DOL-OIG, and was prosecuted by Assistant United States Attorney John K. Neal and former Assistant United States Attorney Charles J. Kalil II.
Two Men Sentenced to Lengthy Prison Terms for Their Roles in One of the Largest Fentanyl Seizure in the United StatesRead the Press Release
Two men from California were sentenced this month for their role in a drug conspiracy that resulted in, what was at the time, the third largest fentanyl seizure in the United States, announced United States Attorney Matthew Schneider.
Schneider was joined in the announcement by Special Agent in Charge Timothy Plancon, U.S. Drug Enforcement Administration, Detroit Field Division.
Sentenced were Manual Arnulfo Barajas, age 23, of West Covina, California, and Andre Lee Scott, age 27, of San Bernadino, California. Barajas was sentenced to 135 months on February 21, 2019. Scott was sentenced to 141 months today. In addition to the prison sentences, both defendants were ordered to serve five years of supervised release. United States District Judge Terrence G. Berg of the Eastern District of Michigan imposed the sentences.
According to court records, the men were arrested in July 2017 at a condominium in Novi, Michigan with more than 10 kilograms of pure fentanyl, 20 kilograms of fentanyl laced with heroin, and more than half a million dollars in cash. It is estimated that the fentanyl seized could have killed at least five million people. Manual Barajas admitted he traveled to Michigan on behalf of the source of supply when drug shipments arrived. Andre Lee Scott was responsible for overseeing the drug distribution and money collection at the condominium. The seizure was the result of DEA agent’s creative investigative work after they traced a UPC code off a Sony PlayStation box that was used to deliver heroin to a drug customer. That UPC code led to the Novi condominium where the PlayStation was active.
“Fentanyl is now the leading cause of overdose deaths in America — it is inherently dangerous and 50 times more potent than heroin,” United States Attorney Schneider stated. “This fentanyl seizure has literally saved lives by keeping this poison off our streets. Criminals who harm our community like this will be held accountable for the venomous drugs they spread.”
“The recent sentencing of BARAJAS and SCOTT sends a strong unified message that drug trafficking will not be tolerated. The commitment and relentless efforts of the men and woman of the DEA, along with our law enforcement partners, took a record amount of fentanyl off of the streets of communities throughout southeast Michigan. Dismantling fentanyl trafficking organizations, and preventing devastation caused by them, is a top priority to law enforcement. We will tirelessly continue to identify, investigate, and disrupt those involved in such ruthless criminal activity and bring them to justice.”
Six additional defendants have been indicted as part of the ongoing investigation. All six are awaiting trial, currently scheduled for April 30, 2019.
The investigation of the case was conducted by the Organized Crime Drug Enforcement (OCDETF) Southeast Regional Strike Force. Assistant United States Attorneys Andrea Hutting and Craig Wininger prosecuted the case for the United States.
Four Family Members Charged with Federal Program Fraud, Money Laundering and PerjuryRead the Press Release
Four individuals were charged in an eight-count indictment, unsealed today, which alleges federal program fraud, money laundering and perjury, announced U.S. Attorney Matthew Schneider.
Schneider was joined in the announcement by Brad Geary, Special Agent in Charge of the U. S. Department of Housing and Urban Development, Office of Inspector General and Special Agent in Charge Timothy R. Slater, Federal Bureau of Investigation, Detroit Division.
The indictment charges Brian Leslie Loren, 57, of Daytona Beach, Florida, Ryan Adam Loren, 32, of Orlando, Florida, Kayla Jean Loren, 29 of Orlando, Florida and Jaime Michael Johnson, 41, of South Daytona, Florida with conspiracy to commit federal program fraud between August 2008 and August 2016. Brian Loren, Ryan Loren, and Jaime Johnson are also charged with money laundering. Ryan Loren and Kayla Loren are also charged with perjury. The defendants are relatives of the former Executive Director of the St. Clair Housing Commission Lorena Loren, who was convicted of conspiring with the defendants to steal federal funds provided to the Commission by the U.S. Department of Housing and Urban Development (‘‘HUD”) to administer HUD’s low-income housing programs for assisting low-income families, the elderly and the disabled. The defendants are alleged to have unlawfully obtained over $150,000 in federal funds over the course of the conspiracy. The indictment further alleges that the defendants established joint bank accounts to facilitate access to the ill-gotten funds by the defendants and others. In addition, Defendants Ryan Loren and Kayla Loren are alleged to have testified falsely before the grand jury during the investigation of the matter.
United States Attorney Matthew Schneider said, “When we weed out corruption, our prosecutions will spread from the branches to the very roots of this poisonous, corrupt tree. No one involved in perpetrating fraud and exploiting federal programs — especially those designed for our most vulnerable citizens — is immune from prosecution.”
Brad Geary, Special Agent in Charge, HUD Office of Inspector General stated, "The charges disclosed today prove our continuing resolve to root out fraud in all forms, especially when the funds involved should have been used to help our neediest families. It is our continuing core mission to work jointly with our Federal law enforcement partners and the United States Attorney's Office to protect the integrity of our housing programs and to take strong action against those who seek to personally benefit from taxpayer funded subsidies."
"These defendants are alleged to have participated in and attempted to cover up fraud against public programs that are intended to subsidize housing costs for those with a legitimate need," said FBI SAC Slater. "The FBI and its law enforcement partners remain committed to investigating and prosecuting this type of fraud."
This case was investigated by agents of the Detroit HUD office of Inspector General and FBI Macomb. The case is being prosecuted by Assistant United States Attorneys Dawn N. Ison and Shankur Ramamurthy.
An Indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Detroit Man Arrested for Production, Possession of Child PornographyRead the Press Release
A Detroit man charged with production and possession of child pornography was arrested Tuesday following an investigation by the Michigan ICAC and Homeland Security Investigations.
Gabriel Fournier, 35, was arrested without incident at his place of residence in Detroit for alleged possession and production of child pornography.
The criminal complaint charges that Fournier uploaded images of suspected child sexually abusive material to his Google account, including images/videos capturing the hands-on abuse of a child. The charging document also alleges that Fournier possessed child pornography. An early HSI computer forensics examination of the content revealed images and video of Fournier engaging in criminal sexual conduct with prepubescent minors.
If convicted, Fournier could face a mandatory sentence of 15 years up to 30 years in federal prison.
A complaint is only a charge and is not evidence of guilt. Trial cannot be held on felony charges in a complaint. When the investigation is completed a determination will be made whether to seek a felony indictment.
Michigan Patient Recruiter Pleads Guilty in $1.2 Million Kickback SchemeRead the Press Release
A Michigan woman pleaded guilty today for her role as a patient recruiter in a scheme involving approximately $1.2 million in fraudulent Medicare claims for home health care procured through the payment of kickbacks.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Matthew Schneider of the Eastern District of Michigan, Special Agent in Charge Timothy Slater of the FBI’s Detroit Division and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office made the announcement.
Ghalia Savaya, 50, of Sterling Heights, Michigan, pleaded guilty to one count of conspiracy to receive kickbacks in connection with a federal health care program before U.S. District Judge David Lawson of the Eastern District of Michigan. Sentencing has been scheduled for May 30 before Judge Lawson.
Savaya was indicted in June 2018. As part of her guilty plea, Savaya admitted that, from approximately April 2015 to approximately Nov. 2017, she received illegal kickbacks in exchange for referring Medicare beneficiaries to Franklin Health Care LLC of Troy, Michigan, which billed Medicare for claims procured through these illegal kickbacks. Medicare paid over $1.25 million for claims related to beneficiaries referred by Savaya, which included claims for beneficiaries who were not eligible to receive home health care services.
The FBI and HHS-OIG investigated the case, which was brought as part of the Medicare Fraud Strike Force under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. Trial Attorneys Howard Locker and Steven Scott of the Criminal Division’s Fraud Section are prosecuting the case.
The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion.
Michigan Man and His Company Plead Guilty to Illegally Storing Hazardous Waste in Madison Heights, MichiganRead the Press Release
Gary Alfred Sayers and his company, Electro-Plating Services Inc., both pleaded guilty in federal court in Detroit, Michigan, to illegally storing hazardous wastes at the company’s premises in Madison Heights, Michigan, in knowing violation of the Resource Conservation and Recovery Act, the Department of Justice and U.S. Environmental Protection Agency (EPA) announced. Under the terms of the plea agreement, Sayers and Electro-Plating Services each pleaded guilty to a felony charge of illegally storing hazardous waste and will pay the EPA $1,444,510 for its direct costs to clean up the plating facility. The court will decide any term of incarceration and fine at sentencing.
According to the plea agreement, Sayers — who owns and has been the President of Electro-Plating Services from the late 1990s — used various dangerous chemicals in his electroplating business that became hazardous wastes when they no longer fulfilled their industrial purpose. Sayers almost never sent those wastes away for proper disposal, preferring to keep them on site indefinitely.
“Sayers’s knowing, illegal storage of waste cyanide, highly corrosive wastes, toxic chromium waste, and reactive wastes posed a significant danger and threat to nearby communities and the environment. He and his company continued their illegal and poor handling despite many years of warnings by environmental regulators, and they are now being held accountable for their willful refusal to comply with the law,” said Jeffrey Bossert Clark, Assistant Attorney General for the Environment and Natural Resources Division.
“Illegal storing of hazardous waste is a danger not only to the environment but to communities as well,” stated United States Attorney Matthew Schneider. “The actions by this defendant showed a blatant disregard for the law. It is our hope that prosecutions such as this one will serve as a deterrent to others who seek to serve their own interests rather than the safety of the environment.”
“Hazardous wastes pose serious risks to the health of entire communities, so it’s imperative they be handled and disposed of safely and legally,” said EPA Assistant Administrator for the Office of Enforcement and Compliance Assurance Susan Bodine. “EPA and its law enforcement partners are committed to the protection of public health and will continue to pursue those who blatantly undermine those efforts.”
According to the plea agreement, Sayers knew that such storage was illegal because he also managed the company’s former Detroit facility — where he kept hazardous wastes illegally until 2005 — and because the Michigan Department of Environmental Quality (MDEQ) repeatedly sent him warnings. In 2005, Sayers was charged with and pleaded guilty to illegally transporting hazardous wastes. During the ensuing years, MDEQ attempted to get Sayers and Electro-Plating Services to properly manage the amounts of hazardous wastes piling up at the Madison Heights location. MDEQ issued numerous Letters of Warning and Violation Notices to the company regarding its hazardous wastes.
In 2016, MDEQ identified over 5,000 containers of liquid and solid wastes at the Madison Heights location. That same year, the City of Madison Heights revoked the company’s occupancy permit. In January 2017, EPA initiated a Superfund removal action, after determining that the nature and threats posed by the stored hazardous waste required a time-critical response. The cleanup was completed in January 2018.
Sentencing is scheduled for May 16, 2019.
Assistant Attorney General Clark and U.S. Attorney Schneider thanked the U.S. Environmental Protection Agency’s Criminal Investigation Division and the Michigan Department of Environmental Quality for their work in this investigation. The case is being prosecuted by Senior Counsel Krishna Dighe of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division and Assistant U.S. Attorney Sara Woodward of the U.S. Attorney’s Office for the Eastern District of Michigan.
Husband and Wife Charged with Conspiring to Defraud the United States; Wife Charged with Aiding and Assisting to File False Tax ReturnsRead the Press Release
A Waterford, Michigan husband and wife were arraigned this week on a number of charges including conspiracy to defraud the United States, fraudulent withholdings of records and falsification of records in bankruptcy. In addition, the wife was charged with aiding and assisting the filing of false tax returns, U.S. Attorney Matthew Schneider announced today.
Joining Schneider in the announcement was Manny Muriel, Special Agent in Charge of the Detroit Office of the Internal Revenue Service - Criminal Investigation.
The arraignment was heard before U.S. Magistrate Judge Anthony Patti
According to the indictment, from 2012 through 2015, Stephanie Sumner of Waterford, Michigan was employed as the Director of Elections by the City of Oak Park. Part of her responsibilities there was to submit invoices for payment by the City of Oak Park for election related services. Stephanie Sumner created false City of Oak Park invoices listing her husband, Michael Sumner, as a vendor-payee. Only months before the scheme, in September 2012, the couple filed for Chapter 13 bankruptcy. From about January, 2013 to February 2015, checks from the City of Oak Park totaling over $430,000 in payment of the fraudulent invoices which were deposited by the couple into a shared bank account used by them.
The City of Oak Park generated Forms 1999 (Independent Contractor tax forms) which would have been required to be turned over to the Chapter 13 Trustee as part of their yearly tax information, but they failed to do so. They also did not report the embezzled funds on their 1040 tax form transcripts and 1040s. Stephanie Sumner failed to report the embezzled funds on their 2013, 2014 and 2015 federal tax returns when she knew she should have included them.
The maximum penalty for conspiracy to defraud the United States is imprisonment of no more than five years and a fine of not more than $250,000, while aiding or assisting in filing false tax returns is imprisonment of no more than three years and a fine of no more than $100,000.
An indictment is only a charge and is not evidence of guilt. Every defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The case was investigated by agents of the Internal Revenue Service – Criminal Investigation. The case is being prosecuted by AUSA John Neal and SAUSA Richard Roble.
Financial Advisor Who Pled Guilty to Embezzling More Than 3.7 Million Dollars from His Clients Sentenced to 9 Years in PrisonRead the Press Release
An Oakland County financial advisor who pled guilty last September to embezzling over 3.7 million dollars from his clients at UBS Financial Services, was sentenced by Judge Bernard Friedman to 9 years in prison yesterday, announced United States Attorney Matthew Schneider.
Schneider was joined in the announcement by Timothy R. Slater, Special Agent in Charge of the FBI, Detroit Field Office and Mark Clemens, Birmingham Police Chief.
John Maccoll, 65, of Rochester Hills, Michigan pled guilty to wire fraud in relation to the theft of approximately $3.7 million from his clients at UBS Financial Services (UBS) located in Birmingham, Michigan.
According to the plea agreement, Maccoll advised some of his clients at UBS to wire transfer money or write checks to his personal accounts in order to take advantage of investment vehicles which he claimed were not available through UBS. Subsequently, Maccoll would falsely tell the clients who sent money to his personal accounts that the funds they “invested” in were performing well and that they should send more money. Instead of investing the clients’ funds sent to his personal account, Maccoll converted these funds to his personal use. More than a dozen individuals who sought advice from Maccoll through UBS became victims of his scheme. It is estimated that these victims lost over $3.7 million during the period from April 2010 until March 2018.
United States Attorney Schneider stated, "Let this sentence be a deterrent to anyone who tries to take advantage of those who seek to invest their hard earned money for their retirement. Our office is committed to vigorously prosecute these types of economic crimes because of their damaging effect on our society.”
The case was investigated by the FBI’s Detroit Metro Identity Theft and Financial Crimes Task Force.
The case was prosecuted by Assistant U.S. Attorney Abed Hammoud with the United States Attorney’s Office for the Eastern District of Michigan in Detroit.
Farmington Hills Man Sentenced to 116 Months in Prison for Title-Washing SchemeRead the Press Release
A Farmington Hills man was sentenced to 116 months in prison yesterday for having devised and executed an elaborate vehicle title fraud scheme, announced United States Attorney Matthew Schneider.
Schneider was joined in the announcement by U.S. Postal Inspector in Charge Patricia Armstrong.
According to court records, Solomon Israel, 60, of Farmington Hills, ran a business that fraudulently retitled vehicles worth hundreds of thousands of dollars. In carrying out his scheme, Israel obtained fraudulent Michigan titles that purported to give him “free and clear” ownership to vehicles that, in fact, had third-party security interests from financing companies. Israel then traveled to other states and used those false titles to acquire new out-of-state titles, thereby fraudulently extinguishing the third-party security interests. After obtaining the out-of-state titles, Israel returned to Michigan and resold many of the vehicles, ultimately causing hundreds of thousands of dollars in losses to the financing companies.
In carrying out his scheme, Israel falsely assumed the identity of an incarcerated man in Ohio. Israel also used that incarcerated man’s identity to engage in illicit banking transactions—conduct that resulted in additional convictions for bank fraud and aggravated identity theft.
“Our office is committed to aggressively investigating and prosecuting fraud in all of its forms,” stated United States Attorney Matthew Schneider. “Whether the victims are government authorities, private companies, or other individuals, we’ll hold criminals accountable when they choose to lie and cheat for their own financial gain.”
U.S. Postal Inspector in Charge Patricia Armstrong said, “Protecting the public is a key function for law enforcement. In fact, Postal Inspectors have protected Americans from those who use the U.S. Mail for fraudulent purposes since the passage of the Mail Fraud Statute in 1872. The sentencing of Solomon Israel demonstrates our continuing commitment to protect all citizens of the United States.”
Israel was sentenced by U.S. District Judge Mark A. Goldsmith. Judge Goldsmith ordered Israel to pay $616,087.00 in restitution.
The case was investigated by the United States Postal Inspection Service and was prosecuted by Assistant U.S. Attorney Andrew J. Yahkind
New Jersey Man Sentenced to 155 Months on Kidnapping ChargesRead the Press Release
An Elizabeth, New Jersey man was sentenced today to 155 months in federal prison after having pleaded guilty in August, 2018, to a charge of kidnapping, announced United States Attorney Matthew Schneider.
Schneider was joined in the announcement by Special Agent in Charge Timothy R. Slater, Federal Bureau of Investigation.
Trace Rod Stewart, 50, was sentenced before United States District Judge Judith Levy. He was ordered to serve 155 months in prison, followed by five years of supervised release. He was also ordered to pay 6,000 dollars in restitution.
According to court records, during the middle of the night on October 20, 2017, the victim awoke to Stewart leaning over her with a gasoline can. Stewart punched her in the face and forced her into a vehicle using a knife, stealing her keys, cellular phone, and credit card. For the next nine hours, Stewart drove the victim to New Jersey without telling her where they were going or allowing her to use the restroom. He threatened to light the container of gasoline and blow them both up if the police got behind them and refused to take her home.
Stewart’s criminal activity spans a period of 26 years. Most of his prior offenses involve violence against women. Stewart has several prior convictions, one of them for kidnapping. That offense involved him pointing a gun at a female victim, threatening to kill her, and holding her against her will. Stewart received probationary sentences or a fine for the majority of his prior assaultive behavior.
This case was investigated by special agents of the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney April Russo.
Engineering Contractor Sentenced to Prison for Bribery in Macomb County Corruption ProbeRead the Press Release
A former civil engineering contractor in Macomb County, Paulin Modi, 50, of Troy, Michigan, was sentenced today to twelve months in prison followed by two years of supervised release based on his conviction for conspiracy to commit bribery, United States Attorney Matthew Schneider announced.
Schneider was joined in the announcement by Timothy R. Slater, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation and Manny Muriel, Special Agent in Charge of the Detroit Field Office of the Internal Revenue Service.
In September 2017, Modi pleaded guilty to conspiring to bribe Steven Hohensee, who was then the Superintendent of the Department of Public Works for Washington Township, Michigan. Modi paid multiple cash bribes amounting to $5,000 to Hohensee in 2013 and 2014 in an effort to secure a $1 million per year engineering contract between Modi’s company and Washington Township. In addition, Modi assisted two executives from another engineering firm to pay a $2,000 bribe to Hohensee with the hope of securing more business for this other engineering firm. Unbeknownst to Modi, Hohensee was cooperating with the FBI at the time, and Hohensee recorded the bribe payment and related discussions. Modi also provided a $25,000 “loan” to another Washington Township official in order to protect his firm’s contract with the township.
After being confronted by the FBI back in 2015, Modi has worked diligently to cooperate with the government’s investigation into cooperation in Macomb County. His sentence was reduced based on that cooperation, including his June 2018 testimony at the trial of Clinton Township Trustee Dean Reynolds. Reynolds, who failed to take responsibility for his actions and did not cooperate in the investigation, was sentenced to 17 years in prison on February 6, 2019, based on his convictions for multiple conspiracies to commit bribery.
This case is part of the government’s wide-ranging corruption investigation centered in Macomb County, Michigan. The investigation of this case was conducted by the Federal Bureau of Investigation and the Internal Revenue Service. The case is being prosecuted by Assistant U.S. Attorneys David A. Gardey and R. Michael Bullotta.
Former Clinton Township Trustee Dean Reynolds Sentenced to 17 Years in Prison for Multiple Bribery SchemesRead the Press Release
Former Clinton Township Trustee Dean Reynolds, 51, of Clinton Township, Michigan, was sentenced today to seventeen years in prison and ordered to pay $15,000 in fines based on his convictions at trial on four counts of bribery conspiracy and ten counts of accepting bribes, in connection with millions of dollars in township garbage, towing, and engineering contracts, United States Attorney Matthew Schneider announced today.
During the trial of this matter, the evidence showed that Reynolds demanded and took over $150,000 in bribes in four separate bribery conspiracies involving four different government contracts. The bribes included over $75,000 in cash, $50,000 in free legal services for Reynolds’ divorce, and an all-expenses paid trip to Disney World, including an eight-night stay in a deluxe-level room costing over $600 per night. The jury found that Reynolds demanded bribes in connection with the Clinton Township garbage-hauling contract worth over $16 million, the township engineering contract worth over $500,000 per year, and the township towing contract. In addition, the jury convicted Reynolds of conspiring to pay bribes to former New Haven, Michigan Trustee Brett Harris and to corrupt the garbage contract for New Haven. Reynolds was convicted of taking multiple bribes from convicted garbage executive Chuck Rizzo, from Paulin Modi, a former managing partner of Giffels Webster Engineering, who was also convicted of bribery, and from Gasper Fiore, the owner of multiple towing companies in southeast Michigan, who was also previously convicted of bribery conspiracy.
Schneider was joined in the announcement by Timothy Slater, Special Agent In Charge of the Detroit Field Office of the Federal Bureau of Investigation and Manny Muriel, Special Agent in Charge of the Detroit Field Office of the Internal Revenue Service.
United States Attorney Schneider said, “The Court’s sentence today shows that public officials who violate the trust of their communities by taking bribes and betraying their oaths of office will not escape our pursuit of justice.”
“Today’s sentence serves as a reminder that there are consequences for robbing our communities of the honest government they deserve,” said SAC Slater. “The FBI and the Detroit Area Public Corruption Task Force will continue to pursue those who - like Mr. Reynolds - abuse their position for personal financial gain.”
This case is part of the government’s wide-ranging corruption investigation centered in Macomb County, Michigan. The investigation of this case was conducted by the Federal Bureau of Investigation and the Internal Revenue Service. The case is being prosecuted by Assistant U.S. Attorneys David A. Gardey, R. Michael Bullotta, and Adriana Dydell.
Eight Individuals Indicted for Fraudulently Facilitating Hundreds of Foreign Nationals in Illegally Remaining in the U.S. in Immigration Fraud SchemeRead the Press Release
Three indictments were unsealed today charging eight individuals from around the country with conspiracy to commit visa fraud and harboring aliens for profit, announced United States Attorney Matthew Schneider. Six of the defendants were arrested in metro Detroit. Two others were arrested in Lake Mary, Florida; and Culpeper, Virginia.
Schneider was joined in the announcement by Special Agent in Charge Steve Francis of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Detroit.
Charged in the indictments were:
Barath Kakireddy, 29, of Lake Mary, FL
Suresh Kandala, 31, of Culpeper, VA
Phanideep Karnati, 35, of Louisville, KY
Prem Rampeesa, 26, of Charlotte, NC
Santosh Sama, 28, of Fremont, CA
Avinash Thakkallapally, 28, of Harrisburg, PA
Aswanth Nune, 26, of Atlanta, GA.
Naveen Prathipati, 26, of Dallas, TX
According to the indictments, from approximately February 2017 through January 2019, the defendants, a group of foreign citizens, conspired with each other and others to fraudulently facilitate hundreds of foreign nationals in illegally remaining and working in the United States by actively recruiting them to enroll into a metro Detroit private university that, unbeknownst to the conspirators, was operated by HSI special agents as part of an undercover operation. As part of the scheme, the defendants/recruiters assisted foreign citizen “students” in fraudulently obtaining immigration documents from the school and facilitated the creation of false student records, including transcripts, for the purpose of deceiving immigration authorities. The illegal documents obtained as a result of the conspirators’ actions were based on false claims, false statements, and fraud since the purported foreign students had no intention of attending school, nor attended a single class, and were not bona fide students. All participants in the scheme knew that the school had no instructors or actual classes. The defendants intended to help shield and hide their customers/”students” from United States immigration authorities for money and collectively profited in excess of a quarter of a million dollars as a result of their scheme.
“We are all aware that international students can be a valuable asset to our country, but as this case shows, the well-intended international student visa program can also be exploited and abused,” stated United States Attorney Matthew Schneider.
“Homeland Security Investigations special agents uncovered a nationwide network that grossly exploited U.S. immigration laws. These suspects aided hundreds of foreign nationals to remain in the United States illegally by helping to portray them as students, which they most certainly were not. HSI remains vigilant to ensure the integrity of U.S. immigration laws and will continue to investigate this and other transnational crimes,” said Special Agent in Charge Francis.
If convicted, the defendants face a statutory maximum penalty of five years in federal prison.
Since 2015, the case was investigated by special agents from the Detroit HSI field office.
The case is being prosecuted by Assistant U.S. Attorneys Ronald Waterstreet, Timothy McDonald and Brandon Helms with the United States Attorney’s Office for the Eastern District of Michigan in Detroit.
An indictment is only a charge and is not evidence of guilt. Every defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
IAV GmbH to Pay $35 Million Criminal Fine in Guilty Plea for Its Role in Volkswagen AG Emissions FraudRead the Press Release
IAV GmbH (IAV), a German company that engineers and designs automotive systems, has agreed to plead guilty to one criminal felony count and pay a $35 million criminal fine as a result of the company’s role in a long-running scheme for Volkswagen AG (VW) to sell diesel vehicles in the United States by using a defeat device to cheat on U.S. vehicle emissions tests required by federal law.
Principal Deputy Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Matthew J. Schneider of the Eastern District of Michigan, Deputy Assistant Attorney General Jean E. Williams of the Justice Department’s Environment and Natural Resources Division, Assistant Administrator Susan Bodine of the EPA’s Office of Enforcement and Compliance Assurance and Special Agent in Charge Timothy R. Slater of FBI’s Detroit Division made the announcement.
IAV is charged with and has agreed to plead guilty to one count of conspiracy to defraud the United States and VW’s U.S. customers and to violate the Clean Air Act by misleading the EPA and U.S. customers about whether certain VW- and Audi-branded diesel vehicles complied with U.S. vehicle emissions standards. IAV and its co-conspirators knew the vehicles did not meet U.S. emissions standards, worked collaboratively to design, test, and implement cheating software to cheat the U.S. testing process, and IAV was aware the VW concealed material facts about its cheating from federal and state regulators and U.S. customers. Under the terms of the plea agreement, which must be accepted by the court, IAV will plead guilty to this crime, will serve probation for two years, will be under an independent corporate compliance monitor who will oversee the company for two years, and will fully cooperate in the Justice Department’s ongoing investigation and prosecution of individuals responsible for these crimes. Pursuant to the U.S. Sentencing Guidelines, IAV’s $35 million fine was set according to the company’s inability to pay a higher fine amount without jeopardizing its continued viability. IAV is scheduled to appear for a change of plea hearing before the Honorable Sean F. Cox of the U.S. District Court for the Eastern District of Michigan on Jan. 18, 2019 at 9:30 a.m.
“Today’s guilty plea shows that this scheme to evade automotive emissions tests and cheat the American public and the U.S. government extended well beyond Volkswagen,” said Principal Deputy Assistant Attorney General Cronan. “Our investigation into emissions cheating is ongoing and we will follow the evidence wherever it leads.”
“By helping VW cheat on U.S. emissions tests in violation of the Clean Air Act, IAV put its corporate success over public health and unfairly disadvantaged its competitors,” said Deputy Assistant Attorney General Williams. “The Department of Justice will continue to work with its law enforcement partners to ensure that companies like IAV play fair and that all Americans can enjoy the protections of our nation’s environmental laws.”
“IAV participated in Volkswagen’s deception of American regulators and fraud on American consumers,” said U.S. Attorney Matthew Schneider. “As this guilty plea demonstrates, our office will continue to aggressively prosecute corporate criminals, even when they work at some of the world’s largest, most prominent companies.”
“IAV designed the software that allowed VW to cheat U.S. air emissions standards,” said EPA Office of Enforcement and Compliance Assurance Assistant Administrator Susan Bodine. “EPA and its law enforcement partners will not tolerate actions like this that put profit above public health and environmental protection.”
“Americans rightly expect corporations to operate honestly,” said FBI Special Agent in Charge Slater. “This case sends a clear message that the FBI and its partners will hold corporations accountable when they defraud consumers and violate federal laws.”
The guilty plea of IAV represents the most recent charges in an ongoing investigation by U.S. criminal authorities into unprecedented emissions cheating by VW. In March 2017, VW pleaded guilty to criminal charges that it deceived U.S. regulatory agencies, including the EPA and the California Air Resources Board, by installing defeat devices in diesel vehicles emissions control systems that were designed to cheat emissions tests. As part of its plea agreement with the Department, VW paid a criminal fine of $2.8 billion and agreed to an independent corporate compliance monitor for three years. Eight individuals were previously indicted in connection with this matter, two of whom have pleaded guilty and been sentenced. The other six charged defendants are believed to reside in Germany.
According to the statement of facts that will be filed with the court in IAV’s case, in 2006, VW engineers began to design a new diesel engine to meet stricter U.S. emissions standards that would take effect by model year 2007. This new engine would be the cornerstone of a new project to sell diesel vehicles in the United States that would be marketed to buyers as “clean diesel.” When the co-conspirators realized that they could not design a diesel engine that would both meet the stricter standards for nitrogen oxides (Nox) and attract sufficient customer demand in the U.S. market, they decided they would use a software function to cheat the U.S. emissions tests.
VW delegated certain tasks associated with designing its new “Gen 1” diesel engine to IAV, including parts of software development, diesel development and exhaust after-treatment. In November 2006, a VW employee requested that an IAV employee assist in the design of defeat device software for use in the diesel engine. The IAV employee agreed to do so and prepared documentation for a software design change to recognize whether a vehicle was undergoing standard U.S. emissions testing on a dynamometer or it was being driven on the road under normal driving conditions. If the software detected that the vehicle was not being tested, the vehicle’s emissions control systems were reduced substantially, causing the vehicle to emit substantially higher NOx, sometimes 35 times higher than U.S. standards.
By at least 2008, an IAV manager knew the purpose of the defeat device software, instructed IAV employees to continue working on the project and directed IAV employees to route VW’s requests regarding the defeat device software through him; the manager was involved in coordinating IAV’s continued work on it.
Starting with the first model year (2009) of VW’s new “clean diesel” Gen 1 engine, through model year 2014, IAV and its co-conspirators caused defeat device software to be installed on all of the approximately 335,000 Gen 1 vehicles that VW sold in the United States.
This case was investigated by the FBI and EPA-Criminal Investigation Division. The prosecution and corporate investigation are being handled by Trial Attorneys Philip Trout, Mark Cipolletti and Gary Winters of the Criminal Division’s Fraud Section; Senior Trial Attorney Jennifer Blackwell of the Environment and Natural Resources Division’s Environmental Crimes Section; and White Collar Crime Unit Chief John K. Neal of the Eastern District of Michigan. The Criminal Division’s Office of International Affairs also assisted in the case. The Justice Department also extends its thanks to the Office of the Public Prosecutor in Braunschweig, Germany.
Rochester Hills Man Sentenced on Charge of Sexual Abuse on an AircraftRead the Press Release
A Rochester Hills man was sentenced today to nine years in prison after having been convicted of sexual abuse onboard an aircraft, announced United States Attorney Matthew Schneider.
Schneider was joined in the announcement by Special Agent in Charge Timothy R. Stater, Federal Bureau of Investigation, Detroit Field Division.
Sentenced was Prabhu Ramamoorthy, 35. Ramamoorthy is in the United States on a work visa and will be deported once he has served his sentence.
Ramamoorthy was convicted in August after a five-day trial that was conducted before United States District Judge Terrence Berg. The jury deliberated approximately 3 1/2 hours before returning the guilty verdict.
According to evidence presented at trial, on January 3, 2018, Ramamoorthy engaged in a sexual act with a female, while she was sleeping. During the trial, the government admitted evidence demonstrating that Ramamoorthy digitally penetrated the woman sleeping next to him during an overnight flight from Las Vegas to Detroit. The sexual assault woke her up, she found her pants unbuttoned and unzipped, and she sought help from the flight attendants.
United States Attorney Matthew Schneider stated, ““Everyone has the right to be secure and safe when they travel on airplanes. We will not tolerate the behavior of anyone who takes advantage of victims who are in a vulnerable position. We appreciate the victim in this case for her courage to speak out.”
“The sentence announced today is proof that the safety and security of all aircraft passengers is a priority for the FBI, our local and federal law enforcement partners, and airline personnel,” said Timothy R. Slater, Special Agent in Charge, Detroit Division of the FBI. “If you, or someone you know, is the victim of a crime during air travel, immediately notify a flight crew member, airport security police, and the FBI.”
This case was investigated by the Wayne County Metropolitan Airport Authority, and Special Agents of the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorneys Amanda Jawad and Maggie Smith.
Former University of Michigan Doctor Sentenced on Child Exploitation ChargesRead the Press Release
DETROIT – A former University of Michigan doctor was sentenced today to 10 years in prison on child exploitation charges, announced United States Attorney Matthew Schneider.
Schneider was joined in the announcement by Special Agent in Charge Steve Francis, Department of Homeland Security Investigation (HSI).
Sentenced was Mark Hoeltzel, 47, of Ann Arbor, Michigan. Hoeltzel pleaded guilty on September 13, 2018 before U.S. District Judge Arthur Tarnow to online enticement of a minor.
According to court records, in 2017, Hoeltzel, a pediatric rheumatoid arthritis doctor, created a Facebook account for a fictitious teenage boy and used this persona to engage in online conversations with numerous minor girls across the country. During these conversations, Hoeltzel was able to convince the minor girls to produce child pornography.
“The Department of Justice is committed to the safety and well-being of the most vulnerable members of our society – our children,” stated United States Attorney Matthew Schneider. “This defendant pretended to be a teenage boy in order to sexually exploit minors, many the same age as the patients he treated.”
"The sentencing handed down in this case reflects the serious nature of the crimes committed, which are particularly troubling given the defendant's role in the community as a physician,'" said Steve Francis. “Mr. Hoeltzel abandoned his oath to "do no harm" and instead sought opportunities to harm and exploit innocent children. This case shows that HSI is committed to investigating child predators regardless of the positions they hold in society.”
This case was investigated by agents of the HSI and detectives from the University of Michigan Police Department, Special Victims Unit. Assistant U.S. Attorney Sara Woodward prosecuted the case.
Detroit Man Sentenced to 36 Months in Prison for Unemployment Insurance Fraud, Illegal Gun PossessionRead the Press Release
A Detroit man was sentenced to 36 months in prison today for having conspired to engage in mail fraud and being a felon in possession of a firearm, U.S. Attorney Matthew Schneider announced.
Schneider was joined in the announcement by James Vanderberg, Special Agent-in-Charge, Chicago Region, U.S. Department of Labor Office of Inspector General and Wanda M. Stokes, Director of the Talent Investment Agency
According to court records, Charles H. Alexander, 54, of Detroit, participated in a multi-year scheme to fraudulently obtain unemployment insurance benefits. As part of the scheme, Alexander obtained personal identifying information of third parties and caused unemployment benefits to be issued in the names of those third parties—even though those individuals has no legitimate entitlement to such benefits. Alexander also impersonated others in order to withdraw fraudulently-obtained unemployment insurance benefits.
Alexander, who has prior convictions for illegal weapons activity, drug activity, and aggravated domestic violence, was also sentenced for having illegally possessed a loaded firearm.
“Unemployment insurance fraud hurts honest employers and employees by driving up rates and making it more difficult for legitimate claimants to receive their benefits,” stated United States Attorney Matthew Schneider. “Charles Alexander took that damaging fraud activity and made it even worse when he chose to endanger others through his illicit possession of a loaded gun. “
“Charles Alexander and his co-conspirators defrauded the Michigan Unemployment Insurance Agency by falsely obtaining and using debit cards containing over $330,000 in unemployment insurance benefits issued in the names of claimants who were not entitled to such benefits. We will continue to work with our law enforcement partners and state workforce agencies to protect the integrity of unemployment insurance benefit programs,” said James Vanderberg, Special Agent-in-Charge, Chicago Region, U.S. Department of Labor Office of Inspector General.
"Stealing unemployment benefits hurts us all," Wanda M. Stokes, Director of the Talent Investment Agency said. "We are vigilant in bringing these criminals to justice and making certain they face stiff penalties for their crime. I commend Regulation Agent Kurt Eggly for his efforts to bring this criminal to justice," Stokes added.
Alexander was sentenced by U.S. District Judge Bernard A. Friedman. Judge Friedman ordered Alexander to pay $330,561 in restitution.
The case was investigated by the Department of Labor, Office of Inspector General and the State of Michigan Unemployment Insurance Agency, and was prosecuted by Assistant United States Attorney Andrew J. Yahkind.
Two Brothers from Ohio Indicted for Overdose Death from FentanylRead the Press Release
Two brothers from Oregon, Ohio have been indicted on charges of distributing and conspiring to distribute fentanyl resulting in the overdose death of a victim, announced United States Attorney Matthew Schneider.
Joining Schneider in the announcement were Special Agent in Charge Timothy J. Plancon, Drug Enforcement Administration, Detroit Division, and Chief Charles F. McCormick IV, Monroe Police Department.
Charged were Harry Clifford Wise, 36, and James Allen Wise, 29. Both were arrested on December 6, 2018, and appeared this afternoon in federal court for their detention hearings.
On April 1, 2017, the Monroe Police Department responded to a house in the 300 block of E. 4th St. on a report of a deceased 33 year old male. An investigation revealed that the male victim had died of an opioid overdose. The Monroe Police Department conducted a thorough investigation which uncovered that two brothers from Oregon, Ohio had supplied the victim with the opioids that took his life. On December 4, 2018, the two brothers, Harry Wise III and James Wise, were indicted on charges of delivery of opioids causing death and conspiracy to distribute opioids.
"Overdose deaths from heroin and fentanyl have become a national epidemic, including here in Michigan," Schneider said. "Law enforcement agencies are working closely together to investigate and prosecute traffickers who are contributing to this epidemic."
DEA Special Agent in Charge Plancon said, “It is a priority of DEA to identify and investigate those who distribute drugs that result in overdose and death. The charges announced today should make it clear to all drug dealers that they will face consequences, for the harm that they inflict on the user and on society. The Monroe Police Department deserves significant credit for devoting the time and effort needed to successfully investigate and bring these individuals to prosecution.”
Monroe Police Chief Charles F. McCormick IV stated, “I would like to thank the DEA for their partnership in this investigation, and a special thank you to MPD’s D/Lt. Derek Lindsay for his relentless efforts to seek justice in this case”.
The charges in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
This investigation was led by the Monroe Police Department in partnership with the Drug Enforcement Administration. The case is being prosecuted by Assistant U.S. Attorney Andrew Lievense.
Six Area Doctors Charged in Connection with $464 Million Health Care Fraud Scheme Involving Unnecessary Injections and Unlawfully Prescribed OpioidsRead the Press Release
UPDATE
Defendants Rajendra Bothra, Ganiu Edu, David Lewis and Christopher Russo, were acquitted of the charges alleged in the indictment described in the press release below.
A grand jury returned an indictment Tuesday that charges six doctors as part of an investigation into a $464 million health care fraud scheme that involved over 13 million unlawfully prescribed opioid prescription drugs, United States Attorney Matthew Schneider announced today.
Schneider was joined in the announcement by Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office and Special Agent in Charge Timothy R. Slater of the FBI’s Detroit Division.
The 56-count Indictment charges that Dr. Rajendra Bothra, 77, of Bloomfield Hills, owned and operated a pain clinic in Warren, Michigan that sought to bill insurance companies for the maximum number of services and procedures possible with no regard to the patients’ needs. Dr. Eric Backos, 65, of Bloomfield Hills; Dr. Ganiu Edu, 50, of Southfield; Dr. David Lewis, 41, of Detroit; Dr. Christopher Russo, 50 of Birmingham; and Dr. Ronald Kufner, 68 of Ada, all worked at the clinic in varying capacities but each prescribed opioid pain medication to induce patients to come in for office visits. Once there, in order to receive the highly addictive opioid prescriptions, patients were forced to undergo ancillary services, such as painful facet joint and facet block injections
“The damage that opioid distribution has done to our community and to the United States as a whole has been devastating,” said U.S. Attorney Schneider. “Healthcare professionals who prey on patients who are addicted to opioids in order to line their pockets is particularly egregious. We will continue to prosecute such individuals who choose to violate federal law and their ethical oaths.”
“Our enforcement actions underscore the commitment of the FBI and our partners to investigate vigorously physicians who use opioid prescriptions to induce patients to submit to unnecessary medical procedures,” said Timothy R. Slater, Special Agent in Charge of the FBI’s Detroit Division. “Today’s charges should signal to the community that we take these cases seriously and I encourage anyone who has information about this case - or about any other activity of this type - to contact the FBI at 313-965-2323.”
“Physicians who engage in the illegal and negligent prescribing of controlled substance in order to unjustly enrich themselves of taxpayer dollars will be held accountable” said Lamont Pugh III, Special Agent in Charge, U.S. Department of Health & Human Services, Office of Inspector General – Chicago Region. “The OIG will continue to prioritize the investigation of allegations involving fraud schemes that incorporate the illegitimate prescribing of Opioid medications in order to protect the health and safety of patients. We will continue to work diligently with our federal, state and local partners to preserve the integrity of federal funded health care programs such as Medicare and Medicaid and the people that these programs support.”
The case was investigated by the U.S. Department of Health and Human Services, Office of Inspector General and the Federal Bureau of Investigation with the assistance of the Drug Enforcement Administration, the City of Warren Police Department, and Blue Cross/Blue Shield - Corporate and Financial Investigations. It is being prosecuted by Assistant United States Attorney Brandy R. McMillion.
McMillion serves as the Opioid Fraud Abuse and Detection Unit Prosecutor for the Eastern District of Michigan. This Department of Justice initiative uses data to target and prosecute individuals that are contributing to the nation’s opioid crisis. The Eastern District of Michigan is one of the twelve districts included in the Opioid Fraud Abuse and Detection Unit.
An indictment is only a charge and is not evidence of guilt. Each defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Eight Men Sentenced for Their Roles in an International Child Pornography Production RingRead the Press Release
Eight men from around the country were sentenced today and yesterday for participating in an international child pornography production ring, announced United States Attorney Matthew Schneider of the Eastern District of Michigan, and Special Agent in Charge Timothy Slater of the Federal Bureau of Investigation, Detroit Division.
Sentenced were:
- Christian Maire, age 40 Binghamton, New York, was sentenced to 40 years
- Arthur Simpatico, age 47 Mississauga, Ontario, Canada, was sentenced to 38 years
- Jonathan Negroni Rodriguez, age 37 West Hollywood, California, was sentenced to 35 years
- Michal Figura, age 36 Swarthmore, Pennsylvania, was sentenced to 31 ¼ years
- Odell Ortega, age 37 Miami, Florida, was sentenced to 37 ½ years
- Brett Jonathan Sinta, age 36 Hickory, North Carolina, was sentenced to 30 ½ years
- Caleb Young, age 38 Cuyahoga Falls, Ohio, was sentenced to 30 years
- Daniel Walton, age 34 Saginaw, Texas, was sentenced to 30 ½ years
In addition to their prison sentences and terms of supervised release, all of the defendants were ordered to pay $5000 in restitution to each of the identified victims, reaching a total of over one million dollars. United States District Judge Stephen J. Murphy, III of the Eastern District of Michigan imposed the sentences.
According to court records, these eight men worked together from 2012 through 2017, with other men both inside and outside of the United States, to lure juvenile girls to an unmonitored video chat website and then sexually exploit them. The men recruited the victims from common social media platforms by pretending to be teenage boys interested in chatting with the girls in real time. Once the victims arrived in the chatrooms, the group—all pretending to be teenagers—worked together to build trust and convince the children to engage in sexually explicit conduct on web cameras. Group members then recorded that activity. The girls were unaware that the men were making recordings, or what they dubbed “captures,” of the sexual activity.
Through their scheme, the group successfully targeted hundreds of minors, some as young as ten years old. The forensic examination of their devices recovered over 450,000 child exploitive and child pornography videos of these minors, some of whom were present for the sentencing hearing and made statements to the Court. Still other victims have not been identified. The FBI has so-far identified more than two dozen victims in the United States.
“These predators committed truly horrific crimes against innocent girls and they deserve decades in prison. Shockingly, some of these defendants have young children themselves,” said United States Attorney Schneider. “Parents, please speak with your children about the dangers of chatting online so we can keep all of our children safe.”
“Those who abuse children by enticing them to produce pornographic images of themselves cause grave harm to their victims and to our community,” said FBI Special Agent in Charge Slater. “The FBI, our partners in the SEMTEC task force, and our global law enforcement network will continue to work together to identify these criminal networks and aggressively pursue charges against those who victimize and exploit innocent children.”
Assistant United States Attorneys April Russo and Kevin Mulcahy of the Eastern District of Michigan prosecuted the case. The FBI’s Detroit Field Office and Southeast Michigan Trafficking and Exploitation Crimes task force investigated the case.
The case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc.
Two Gang Members Convicted of Attempted Murder in Drive-By ShootingRead the Press Release
The Detroit One collaboration of local, state, and federal law enforcement has led to the convictions of two members of a Detroit street gang known as “Bandgang” for attempted murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, and discharging a firearm during and in relation to a crime of violence, announced U.S. Attorney Matthew Schneider.
Joining in the announcement was Timothy R. Slater, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation.
Martez Bailey, 24, of Detroit, pleaded guilty before U.S. District Judge David M. Lawson. Bailey’s plea agreement calls for a sentence of 25 to 30 years in prison. Bailey’s co-defendant, and fellow Bandgang member, Khalil Wilson, 25, previously pleaded guilty for his role in the drive-by shooting. Wilson’s plea agreement also calls for a sentence of 25 to 30 years in prison.
According to court records, Bailey and Wilson were both part of Bandgang, a local street gang on the west side of Detroit. On June 21, 2016, Bailey and Wilson drove to Biltmore Street in Detroit and fired repeatedly into a house, hoping to kill two rival gang members. Bailey fired a .45 caliber handgun repeatedly while Wilson unloaded an Uzi with an extended magazine capable of holding 50 rounds. A woman in the house unrelated to the gangs was severely injured in the shooting. The attempted murder stemmed from a dispute with two rival gangs, Trust No One (TNO) and Too Much Cash (TMC), prompted, in large part, by jealously over credit card fraud, as well as an earlier shooting by Bandgang members in February 2016 that left a five-year-old girl permanently disabled.
“This type of credit card fraud and identity theft is actually a deadly crime, because gangs are using extreme violence to protect their illegal income,” United States Attorney Matthew Schneider said. “But if gangs in Michigan think they will get off easy, they are wrong - several gang members have been sentenced to a decade or more in prison for credit card fraud.”
This case is the latest in the FBI Violent Gang Task Force’s investigation into Bandgang. In total, twenty-four members and associates of the gang have been charged in sixteen different cases and have received sentences ranging from 36 to 154 months on charges related to attempted murder, credit card fraud, identity theft, firearm offenses, and obstruction of justice. Four different credit card labs have been seized from Bandgang members during the investigation (not counting individual skimmers and embossers), and over 15,000 stolen credit card accounts have been linked to Bandgang members.
The case was prosecuted by Assistant United States Attorneys Shane Cralle and Terrence Haugabook.
Owner of Michigan Trucking Business Sentenced for $2.9 Million Theft and Failure to File Tax ReturnsRead the Press Release
The owner of a Michigan trucking business was sentenced today in federal court in Detroit, Michigan, to 33 months in prison for wire fraud and willfully failing to file a tax return, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division, and Matthew J. Schneider, U.S. Attorney for the Eastern District of Michigan.
According to court documents, Arshawn Kenard Hall, a resident of Farmington, Michigan, operated a truck hauling business called RAMA Enterprise Inc. (RAMA). An automobile company hired Hall to transport plastic crates filled with automobile parts. After transporting the parts, Hall was required to return the empty crates to a facility in Detroit. Instead, Hall took the plastic crates and sold them to a plastic recycling company for approximately $460,000. The value of the stolen plastic crates to their owner was approximately $2,921,000.
Hall also willfully failed to file a 2012 federal income tax return on behalf of RAMA and failed to pay the taxes due. The tax loss associated with Hall’s conduct is $142,069.
In addition to the term of imprisonment, U.S. Court Judge Terrence G. Berg ordered Hall to serve three years of supervised release, to pay restitution of $2,919,265 to the automobile company and $142,069 to the Internal Revenue Service (IRS). Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Schneider commended special agents of IRS Criminal Investigation, who conducted the investigation, and Tax Division Trial Attorneys Abigail Burger Chingos and Kenneth C. Vert and Assistant U.S. Attorney Adriana Dydell, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the Division’s website.
National President of the Devils Diciples Motorcycle Gang Sentenced to Life Imprisonment in Connection with Racketeering and Drug-Trafficking ChargesRead the Press Release
The former National President of the Devils Diciples Motorcycle Club (DDMC), Jeff Garvin Smith, aka “Fat Dog,” 64, of Mt. Clemens, Michigan was sentenced November 13, 2018, to life in prison by the Honorable Judge Robert H. Cleland in Detroit, announced United States Attorney Matthew Schneider.
Schneider was joined in the announcement by Special Agent in Charge Timothy R. Slater, Federal Bureau of Investigation, Detroit Field Office.
Smith’s sentencing arises out of his having been convicted of several offenses after a six-month jury trial in 2014-2015 in federal court in the Eastern District of Michigan. Following a second, four-month trial in 2015, additional members of the Devils Diciples were convicted. In total, eight members of the Devils Diciples Motorcycle Club were convicted during two trials, including the national president (Smith), the national vice president and national warlord, and three others, for their participation in various criminal acts, including RICO, violent crimes in aid of racketeering, methamphetamine production and trafficking, illegal firearms offenses, obstruction of justice, subornation of perjury and other federal offenses.
“This brings to a close, in part, the years’ long effort of the federal government to bring down the leadership of a dangerous organized crime biker gang that terrorized innocent victims throughout the United States. For over three decades, the Devils Diciples spread fear, violence and their poisonous drugs throughout Michigan and the country,” said United States Attorney Matthew Schneider. “The extent of the crimes committed by members of this outlaw motorcycle gang is staggering, and they avoided prosecution over the years through witness intimidation and obstruction of justice at all levels. Very appropriately, the National President of the Devils Diciples will spend the rest of his life in federal prison. These sentencings help secure justice for the communities and all the individuals they harmed.”
“The life sentence imposed on this Defendant is a clear indication of the seriousness of the violence he engaged in and how committed the law enforcement community is to stop this kind of organized violence,” said Special Agent in Charge Timothy R. Slater, Detroit Division of the FBI. “The FBI, our state and local partners and the US Attorney’s offices across the region will not rest until all who would harm the peace and safety of our residents are brought to justice, regardless of where those threats originate.“
In addition to Smith, Devils Diciples National Warlord Cary Dale Vandiver, a/k/a “Gun Control,” 59, of Sand Mountain, Alabama, was sentenced to life imprisonment on November 1, 2018, methamphetamine cook Patrick Michael McKeoun, a/k/a “Magoo,” 59, of Birmingham, Alabama, was sentenced to 372 months on November 8, 2018, and Alabama leader, Michael Rich, a/k/a “Tatu,” 62 of Anniston, Alabama was sentenced to 360 months imprisonment on October 26, 2018.
Awaiting sentencing are four remaining defendants who were found guilty by a jury of engaging in a RICO conspiracy, methamphetamine trafficking conspiracy, conspiracy to obstruct justice, violent crimes in aid of racketeering and various substantive charges. Those individuals include: National Vice President Paul Anthony Darrah, aka “Pauli,” 54, of Macomb Township, Michigan; and “West Cost Boss” Vincent John Witort, a/k/a “Holiday,” 68, of Fontana, California. Victor Castano, 46, of St. Clair Shores, Michigan and David Randy Drozdowski, a/k/a “D,” 42, of Fair Haven, Michigan, were also found guilty in a second trial in late 2015 of engaging in a RICO conspiracy and methamphetamine trafficking conspiracy. Drozdowski was separately found guilty by a jury of committing violent crimes in aid of racketeering and being a felon in possession of ammunition, while Castano was separately found guilty of obstruction of justice and subornation of perjury. The remaining sentencings have been set at later dates before U.S. District Judge Robert H. Cleland of the Eastern District of Michigan.
According to evidence presented at these trials, the Devils Diciples (which is intentionally misspelled) is a motorcycle gang with its national headquarters in Clinton Township, Michigan. For decades, the Devils Diciples operated regional chapters in cities throughout Michigan, Alabama, Arizona, California, Illinois, Indiana, Ohio and elsewhere, and engaged in criminal activities to protect the enterprise and for financial gain.
Evidence presented at trial demonstrated that membership in the Devils Diciples is based in part on successful compleion of a probationary period, followed by formal approval by one or more members or leaders. Members, commonly referred to as “full patched members,” are required to own Harley Davidson motorcycles and are required to follow orders from the gang’s leadership, including orders to assault, threaten and intimidate others, to transport and distribute drugs, to lie to law enforcement and to hide or destroy evidence. Members are also required to follow the Devils Diciples by-laws and attend regular meetings referred to as “church.”
According to evidence presented at trial, Smith was the National President and Darrah was the National Vice President of the gang. In those roles, they were responsible for overall management of the activities of the other Devils Diciples members and chapters, including giving final approval to any activity generally affecting the gang as a whole. Vandiver was the National Warlord – or enforcer – of the gang. With other gang members, the leaders also participated directly in criminal activities both for financial gain on behalf of the Devils Diciples, and to protect the gang and its members.
Specifically, the evidence showed that at Smith’s direction, individuals including members and associates of the gang were beaten and robbed, and that Smith also participated in this activity directly. For instance, in late 1998, Smith shot a Devils Diciples member who failed to abide by the gang’s rules. And, in August 2008, Smith brutally assaulted the girlfriend of another Devils Diciples member because he believed she disrespected him and the gang.
Additionally, the evidence showed that Smith possessed state and federal law enforcement manuals regarding outlaw motorcycle gangs marked “For Official Use Only” and “Law Enforcement Sensitive,” and numerous documents related to criminal matters involving members of the Devils Diciples, including police reports, search warrants, affidavits, indictments and witness interview transcripts. The evidence showed that the documents were used for the purposes of counter-surveillance and to identify suspected informants. Suspected informants or members who failed to follow the gang’s rules were frequently thrown out of the gang, or “run down the road.” The evidence showed that when a member was stripped of his membership, the gang seized the member’s property and motorcycle, by violent means if necessary. For instance, the evidence at trial showed that in the mid-1990s, members of the gang murdered a former member for retaking motorcycle after the gang had “run him down the road” and seized his motorcycle.
The other defendants were also full patched members of the gang, who committed several other acts of violence.
For example, in August 2003, Witort and other gang members traveled from California and elsewhere to Arizona where they robbed, kidnapped and attempted to murder members of the gang’s Arizona Chapter for violating the gang’s rules. Inside the Arizona clubhouse, the victims were bound with duct tape and zip ties, and severely beaten with baseball bats, firearms, tasers, knives, and other weapons. The victims’ were stripped of personal possessions, such as phones, wallets, and shoes. They were then loaded into the bed of a pick-up truck, driven out into the desert, beaten further, and dumped into ravines, and left to die. The evidence showed that the beatings were planned by the national leaders, including Witort, and that Smith later congratulated participants, telling him in a letter that the Devils Diciples were “all proud of you.”
Additionally, the evidence demonstrated that in 2012, at a bar in Chesterfield Township, Michigan, Drozdowski and another Devils Diciples member assaulted a man who they mistaken believed to be a rival motorcycle gang member for being present in Devils Diciples territory. The victim was knocked unconscious and suffered multiple fractures to his face and jaw. Drozdowski and the other Devils Diciples member then ripped the leather vest off of the unconscious victim.
In addition to the four trial defendants sentenced recently, over 50 members and associates of the Devil’s Diciples have pleaded guilty to various crimes as result of this investigation. The investigation further resulted in the seizure of more than 60 firearms and more than 6,000 rounds of ammunition and the dismantling of eight methamphetamine manufacturing laboratories across the country.
The case was investigated by the FBI, the Michigan State Police, the Macomb County Sheriff’s Office and the County of Macomb Enforcement Team (COMET), with assistance from the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the St. Clair County Sheriff’s Office. The case is being prosecuted by the U.S. Attorney’s Office for the Eastern District of Michigan, and the Criminal Division’s Organized Crime and Gang Section
Former Superintendent of Chesterfield Township Sentenced to Prison for BriberyRead the Press Release
Former Chesterfield Township Supervisor, Michael Lovelock, 59, of New Baltimore, Michigan, was sentenced to 24 months in prison today based on his conviction for conspiracy to commit bribery, announced U.S. Attorney Matthew Schneider.
Schneider was joined in the announcement by Timothy R. Slater, Special Agent In Charge of the Detroit Field Office of the Federal Bureau of Investigation.
Lovelock was convicted of conspiring with Rizzo Environmental CEO Charles B “Chuck” Rizzo to accept $30,000 in cash bribes from Rizzo between 2010 and 2016. The bribes were paid by Rizzo in exchange for favorable treatment from Lovelock in connection with Rizzo’s municipal garbage-hauling contract with the township.
Lovelock is one of twenty defendants charged in the government’s wide-ranging corruption investigation centered in Macomb County, Michigan. The sentence for Lovelock was reduced based on his cooperation with the government against Rizzo and others.
“Public officials who desecrate their elected office by selling out for bribes from contractors are among the most deserving of federal prosecution and will be held to account for each and every one of their corrupt misdeeds,” stated United States Attorney Matthew Schneider.
“Public officials who misuse their position of trust for personal gain, undermine the integrity of their office and deny honest services to the residents they purport to serve” said Timothy R. Slater, Special Agent in Charge, Detroit Division of the Federal Bureau of Investigation. "The FBI led Detroit Area Public Corruption Task Force will continue to aggressively investigate cases involving any federal, state, or local public officials who solicit and accept bribes in exchange for official acts and will work with our partners to ensure that those who violate their obligation to the public are held accountable.”
This case is part of the government’s wide-ranging corruption investigation centered in Macomb County, Michigan. The investigation of this case was conducted by the Federal Bureau of Investigation and the Internal Revenue Service. The case is being prosecuted by Assistant U.S. Attorneys David A. Gardey, R. Michael Bullotta, Steven Cares, and Adriana Dydell.
Detroit Doctor, Office Manager and Patient Recruiter Charged with Illegal Distribution of Prescription DrugsRead the Press Release
An indictment was unsealed today charging Dr. Otis Leon Crawford, D.O., and two other individuals with conspiracy to illegally distribute prescription drugs, U.S. Attorney Matthew Schneider announced today.
Schneider was joined in the announcement by Special Agent in Charge Timothy Plancon of the Drug Enforcement Administration, Detroit Division and Special Agent in Charge Lamont Pugh, of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office.
Charged in the indictment are:
Otis Leon Crawford, 80, of Detroit
Debbie Ann Taylor, 37, of Detroit
Earnie Ronnie-Jaew Taylor, 49, of River Rouge
The indictment alleges that in July of 2016, Dr. Crawford and Debbie Ann Taylor opened a medical clinic called Doctors Creative Care, located at 16125 Mack Avenue in Detroit. Dr. Crawford was the only doctor associated with the clinic and Debbie Ann Taylor was the office manager. Debbie Taylor scheduled appointments, collected payments, and accompanied patients into the examination room with Dr. Crawford. Although she had no medical license or training, she recommended that particular patients be prescribed particular controlled substances, in particular dosage units. With little or no medical examination, Dr. Crawford wrote and signed prescriptions for various opioids, as well as other drugs with substantial street value, such as Xanax, Soma, Valium and Promethazine/codeine cough syrup. It is further alleged that Debbie Taylor’s brother, Earnie Ronnie-Jaew Taylor, recruited fake patients from his neighborhood in River Rouge who would visit Dr. Crawford and receive unnecessary prescriptions for opioids and other controlled substances. Once the prescriptions were filled, Earnie Taylor took possession of the controlled substances for future illegal distribution. According to the Indictment, the top ten prescribed controlled substances prescribed by Dr. Crawford, from June 2015 to date, had a conservative street value in excess of $2,556,550.
An indictment is only a charge and is not evidence of guilt. Each defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.
The case was investigated by Special Agents of the DEA and HHS. The case is being prosecuted by Assistant U.S. Attorney John Engstrom.