Eastern District of Michigan
Press releases recorded for this federal judicial district.
Bank and Pharmacy Robber Sentenced to 44 YearsRead the Press Release
Raynard Versatile Crowe, 31, formerly of Hazel Park was sentenced yesterday to 535 months in federal prison, following his conviction on March 21, 2013 by a jury in Detroit on charges of bank robbery, pharmacy robbery, using a firearm during a crime of violence, felon in possession of a firearm and conspiracy, U.S. Attorney Barbara L. McQuade announced.
McQuade was joined in the announcement by Special Agent in Charge Robert D. Foley, III of the Federal Bureau of Investigation (“FBI”).
The sentence was handed down by United States District Judge Arthur J. Tarnow.
The evidence presented at trial established that Crowe, on parole for assault with intent to rob while armed, conspired with six other people to commit bank robbery and pharmacy robbery with firearms during the Spring and Summer of 2011. The crew robbed the Grosse Pointe Woods branch of Citizens Bank on May 18, 2011 and Ferndale Pharmacy on July 11, 2011.U.S. Attorney McQuade said, “Violent criminals who use guns can expect to face long prison sentences. Armed robberies risk a loss of life that we cannot tolerate.”
FBI Special Agent in Charge Foley said, "Violent criminals who use guns to threaten lives during robberies and other crimes will face severe penalties for their illegal acts. The FBI is committed to working with it's law enforcement partners to ensure the safety of our communities."The case was investigated by Special Agents of the FBI, the Warren Police Department, the Ferndale Police Department and the Grosse Pointe Woods Department of Public Safety. It was prosecuted by Assistant United States Attorney Kenneth Chadwell.
Former Pontiac City Council Member Sentenced to PrisonRead the Press Release
Former Pontiac City Councilman, Everett Seay, was sentenced today to 26 months in prison for accepting bribes, announced United States Attorney Barbara L. McQuade.
Joining in the announcement was Robert D. Foley, III, Special Agent in Charge of the Detroit Division of the Federal Bureau of Investigation.
Seay, 61, of Pontiac, was also ordered to forfeit $10,800 to the United States. The sentence was imposed by in U.S. District Judge Bernard A. Friedman.
According to court documents, beginning in May 2008, Everett Seay met repeatedly with “J.B.,” a person who purported to be a drug dealer from Chicago, who was seeking the assistance of members of the Pontiac City Council to obtain a “regulated use” ordinance to open a business to buy and sell gold for the purpose of laundering drug proceeds. Unknown to Seay, J.B. was actually an FBI agent acting in an undercover capacity. During several meetings, Seay solicited and accepted bribe payments from J.B. for his assistance in getting the ordinance passed. Between July and December 2008, Seay received $10,800 in bribe payments from J.B.
United States Attorney Barbara L. McQuade said, ““Public officials who take bribes not only betray the people they serve, but they also erode trust in government.”
Special Agent in Charge Robert D. Foley stated “"Those who are fortunate enough to serve in positions of public trust are expected to act with honesty and United States Attorney’s Office Eastern District of Michigan Barbara L. McQuade United States Attorney integrity at all times. The FBI is committed to holding individuals accountable for acts of bribery and other abuses."
The case was investigated by agents of the Federal Bureau of Investigation and prosecuted by Assistant United States Attorney Sheldon Light.
Michigan Orthodontist Pleads Guilty to Tax EvasionRead the Press Release
Samuel Daniels, age 54 of Brighton, Michigan, pleaded guilty to Tax Evasion for the year 2008, United States Attorney Barbara L. McQuade announced today. Ms. McQuade was joined in the announcement by Special Agent in Charge Erick Martinez, Internal Revenue Service Criminal Investigation Division.
According to court records, during 2006 through 2009 tax years, Daniels was working as an orthodontist in Brighton, Howell, and Fowlerville, Michigan operating as Samuel Daniels, DDS MS PLLC. During this time period, Daniels misrepresented personal expenditures as business expenses. Daniels knowingly provided the business check register to his CPA after disguising the payments as legitimate business expenses paid to known business vendors. In so doing, Daniels caused the CPA to prepare an incorrect tax return. In addition, Daniels failed to pay over $198,000 in taxes.
According to the plea agreement, Daniels used the business’ gross receipts to pay his home mortgage payment, home real estate taxes, a home equity line of credit, his daughter’s college tuition, credit card expenses for household furniture and jewelry, and other items.
Daniels entered the guilty plea in United States District Court before Judge David M. Lawson.
“By his guilty plea today, Daniels is acknowledging and accepting the consequences for falsifying his tax return and failing to pay almost $200,000 in taxes due,” said Assistant Special Agent in Charge Carolyn Weber.
A sentencing hearing was set by Judge Lawson for October 3 at 3 p.m. The maximum penalty for Tax Evasion is imprisonment of not more than 5 years and a $250,000 fine.
The investigation of this case was conducted by special agents of the IRS Criminal Investigation and prosecuted by Assistant U.S. Attorney Ross MacKenzie.
Bloomfield Hills Resident Sentenced to Three YearsOn Insurance Fraud and Investment Fraud ChargesRead the Press Release
A Bloomfield Hills resident was sentenced in federal district court late yesterday on charges of defrauding an insurance company and, in a separate case, investment fraud, United States Attorney Barbara L. McQuade announced.
McQuade was joined in the announcement by Special Agent in Charge Daryl McCray, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and Special Agent in Charge Robert D. Foley, III, Federal Bureau of Investigation.
Patrick D. Winter, age 54, of Bloomfield Hills, Michigan, was sentenced by U.S. District Judge Arthur Tarnow to serve a sentence of 3 years imprisonment on charges of mail and wire fraud.
Evidence presented during the August 21, 2012 guilty plea, and at yesterday’s sentencing, established that Winter, as the manager of D.K.E., Inc., which owned a commercial office building at 21751 W. Nine Mile Road in Southfield, Michigan, caused a false, inflated and fraudulent claim to be submitted to the Secura Insurance Company, stemming from a fire that substantially damaged that building on October 4-5, 2004.
According to documents submitted to the Court by the defense, Winter intended to inflate the insurance claim by as much as $232,521. Secura did not pay the nearly $1 million claim, which is the subject of civil litigation in Oakland County.
In a separate case, Winter was sentenced for soliciting over $645,500 from a 60-year-old Nevada woman between July 2008 and August 2010, convincing her to liquidate her entire life savings, and give the proceeds to him. He falsely promised to invest the money in a real estate development which would pay high returns. Winter flew to Nevada, met with the victim, and earned her trust, in part, by showing her a picture of his large family (the defendant has nine children). He corresponded with her about personal bankruptcy and about letting her home go into foreclosure, all the while soliciting tens of thousands of dollars more from her. Winter used the money for personal expenses. The victim lost her house and was forced to live with her parents.
United States Attorney McQuade commended the investigations of the Southfield Fire Department, the Bureau of Alcohol, Tobacco and Firearms, and the Federal Bureau of Investigation for bringing this case to a successful conclusion.
.Detroit Area Doctors Charged with Illegal Distribution of Prescription Drugs and Health Care FraudRead the Press Release
An indictment was unsealed today charging Dr.Hussein “Sam” Awada, 43, and Dr. Luis Collazo, 53, with the illegal distribution of prescription drugs and health care fraud, United States Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by Special Agent in Charge Robert L. Corso, U.S. Drug Enforcement Administration (DEA), Detroit Field Division; Special Agent in Charge Lamont Pugh, Health and Human Services, Office of Inspector General; and Special Agent in Charge,Robert D. Foley, III, Federal Bureau of Investigation.
The 68-count superseding indictment charges that from December 2010 through 2012, Dr. Awada and Dr. Collazo distributed controlled substances, including the highly addictive drugs Oxycodone, Roxicodone, andOpana ER, outside the course of usual medical practice and for no legitimate purpose. Both defendants were also charged with billing Medicare and other health insurance programs for medically unnecessary testing and procedures.
The superseding indictment alleges that Dr. Awada used recruiters, including co-defendant James Lyons, 39, to bring patients to his “Midwest Family Practice” at two locations in Warren. After ordering unnecessary medical procedures, Dr. Awada gave controlled substance prescriptions to the recruiter in exchange for cash payments. The recruiter then sold the pills for profit on the illegal street market.
The superseding indictment also charges that Dr. Awada and Dr. Collazo committed health care fraud by billing for unnecessary office visits, submitting patients brought by recruiters to medically unnecessary testing and procedures (including x-rays, nuclear cardiac stress tests, electrocardiograms, blood work, and injections), and by causing Medicare and other insurance programs to pay for unnecessary controlled substances.
According to the superseding indictment, Dr. Collazo participated in the drug diversion and health care fraud scheme while he worked for Dr. Awada at the Midwest Family Practice on 12 Mile Road in Warren.
More than $600,000 in funds and three automobiles were seized during the course of the underlying investigation. The United States will pursue forfeiture of all proceeds and property traceable to the offenses charged.
U.S. Attorney McQuade said “Health care fraud diverts taxpayer dollars from needy patients to greedy criminals. We hope that our enforcement efforts will deter other doctors from engaging in fraud."
Robert L. Corso, DEA Special Agent in Charge said, "This indictment is another example of DEA's determination to combat the troubling prescription drug abuse problem in this country. These two doctors abused their positions of trust and jeopardized the lives of many individuals by illegally distributing highly addictive opiate painkillers. The DEA and our partners in law enforcement will continue to investigate and bring to justice those individuals that are responsible for the illegal distribution of prescription medicines."
"The improper distribution of controlled substances poses a significant threat not only to the financial health of the Medicare and Medicaid programs but to the wellbeing and safety of the patients that these programs serve", said Lamont Pugh III, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General - Chicago Region. "The OIG, along with out law enforcement partners, will aggressively investigate allegations of this nature in order to protect tax payer dollars and ensure patient safety."
Robert D. Foley III, FBI Special Agent in Charge said, "These charges represent a serious abuse of the health care system. Those motivated by greed who unlawfully take from a system designed to care for patients, will be tirelessly pursued by the FBI and prosecuted for their crimes."
Dr. Collazo will be arraigned on the superseding indictment on Friday, June 21. Dr. Awada will be arraigned on Monday, June 24.
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, HHS-OIG, and FBI. The case is being prosecuted by Assistant U.S. Attorneys Wayne Pratt, Sarah Resnick Cohen and Gjon Juncaj and Special Assistant U.S. Attorney Justin Bidwell.
Local Man Sentenced in Nationwide Fraud SchemeTargeting Prisoners and Their FamiliesRead the Press Release
A Yale, Michigan man was sentenced to 240 months’ imprisonment today on convictions pertaining to a mail fraud scheme that defrauded thousands of prisoners and their families across the country, United States Attorney Barbara McQuade announced today. McQuade was joined in the announcement by Postal Inspector in Charge E.C. Woodson, U.S. Postal Inspection Service, Detroit Division and Special Agent in Charge Erick Martinez, Internal Revenue Service, Criminal Investigation.
John Wilson, age 57 of Yale, Michigan, pleaded guilty last December to devising and executing a scheme to defraud and to obtain more than $2.6 million from the family members and friends of defendants incarcerated across the United States. Specifically, John Wilson raised false hopes that Wilson could overturn the convictions or reduce the sentences of the inmates if their friends and family members hired Wilson’s companies.
According to the indictment, John Wilson operated three businesses in Southeastern Michigan: University Legal Services LLC (ULS), University Research Services LLC (URS), and Appellant Research Services LLC (ARS). Co-defendant, Lari Zeka was an employee of ARS and URS. ULS, URS, and ARS sent direct mailings to inmates across the country offering to conduct legal and appellate work on the inmate’s behalf. When a family member or friend telephoned John Wilson or Lari Zeka, they explained that payment was required for two phases: legal research and attorney retainer. Wilson and/or Zeka promised that legal research would be provided during the first phase which would help win the inmate’s appeal. Wilson and/or Zeka promised during the second phase, the “attorney retainer” phase, that an attorney would be provided to assist in the case. These representations by Wilson and Zeka induced people across the United States to mail large amounts of money to URS and ARS, purportedly for appellate research and appellate representation when, in fact, any research provided would not assist the inmate and no attorney would ever be provided to work on the inmate’s appeal.
According to the indictment, Wilson and/or Zeka frequently used fictitious names in correspondence with the victims and both repeatedly represented themselves as attorneys or represented that attorneys were on the staff. Neither Wilson nor Zeka is licensed to practice law and no attorneys were on staff at any of the companies.
Wilson also pleaded guilty to the federal offense of failing to file income tax returns.
United States Attorney Barbara McQuade said, “This fraud scheme preyed upon family members who were desperate to obtain help for loved ones. Not only did this scheme exploit people in need of legal services, but it also denied them access to justice.”
E.C. Woodson US Postal Inspector in Charge said, “Today marks a victory for all who entrust their money to others within the U.S. economy, including individuals who are incarcerated. 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 John Henry Wilson demonstrates the Postal Inspection Service's continuing commitment to protect all citizens of the United States.”"Wilson both took advantage of his clients and failed to file his tax returns claiming his income," said IRS Special Agent in Charge Erick Martinez. "He now faces prison time for his actions."
In addition to a sentence of 240 months, the district court ordered over $2 million in a money judgment for the monies he obtained from the victims of his scheme. In a companion civil forfeiture lawsuit, the government has already successfully forfeited a 2003 auto trailer and two vintage Jeeps restored by Wilson with proceeds from the fraud. As part of his plea, Wilson also agreed to abandon thirteen firearms seized from his home.
McQuade congratulated the hard work of the inspectors at the United States Postal Service and the agents at the Criminal Investigations Division of the Internal Revenue Service for their efforts in pursuing this case.
The case was prosecuted by Assistant U.S. Attorney Sarah Resnick Cohen and Assistant U.S. Attorney Margaret Smith. Assistant U.S. Attorney Gjon Juncaj handled the criminal forfeiture allegations and the civil forfeiture action.
Former Union Officers Sentenced to PrisonRead the Press Release
A former President and Secretary-Treasurer of Communication Workers Local 84555 in Webberville have been sentenced to prison for embezzling union funds, United States Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by District Director Ian Burg, Office of Labor-Management Standards of the United States Department of Labor.
U.S. District Judge Gershwin A. Drain sentenced former union President James Killingsworth, 40, of Webberville, and Billie Jo Killingsworth, 42, of Williamston, to six months’ imprisonment restitution of $19,197.02. Judge Drain emphasized that the money had been embezzled from the defendants’ fellow union members. The defendants were married at the time of the offense, but have since divorced.
Both defendants pleaded guilty on February 21, 2013. As part of their plea agreements, they admitted that between January 30, 2008 and June 21, 2010 they had cooperated in embezzling the money by making cash withdrawals from the local’s bank account and using it for their personal expenses.
“Labor union officials who steal from the workers they are entrusted to represent will be held accountable for their actions,” McQuade said.
The case was investigated by the Office of Labor-Management Standards of the United States Department of Labor.
Woman Receives Prison TimeFor Defrauding Social Security AdministrationRead the Press Release
Rita Marie Strickland, 57, was sentenced to a custodial sentence of a year and a day by U.S. District Judge Thomas L. Ludington yesterday in federal court in Bay City, Michigan, announced United States Attorney Barbara L. McQuade.
Srickland, a resident at various times of Saginaw and Bay City, Michigan, had previously pleaded guilty to embezzling public funds from the Social Security Administration.
According to court records, Strickland shared a bank account with her father when her father died in December of 1994. As the designated payee for her father’s Social Security benefits, Strickland continued to receive monthly deposits made by Social Security into that shared account until December of 2010. For sixteen years, Strickland withdrew the funds that had been deposited by Social Security for her father’s benefit and used the money herself. Strickland also took $250 in American Recovery and Reinvestment Act funds deposited into the same account by the U.S. Treasury on behalf of her father. As a result, Strickland was ordered to pay a total of $154,196.80 in restitution to the United States.
The case was investigated by the U.S. Secret Service office in Saginaw and the Office of Inspector General for the Social Security Administration in Detroit. The prosecution was handled by the U.S. Attorney’s Office in Bay City, Michigan.
During his sentencing hearing, Klosowski told the court that his drug addiction led him to and kept him involved in drug trafficking. Judge Ludington noted that Kloswski had been convicted six times over a period of a few years, but had not completed any of the court-ordered drug treatment programs that had been made available to Klosowski as a result of those convictions. The judge observed that Klosowski’s addiction victimized not just the defendant, but so clouded Klosowski’s judgment that everyone else became disposable to the defendant, even his own son. Judge Ludington concluded the sentencing hearing by telling Klosowski that, given his current age, he will have a life to live after serving his lengthy sentence and recommending to Klosowski that he use the time in custody to prepare himself to make the best use of the life that will follow his release from custody.
The case was investigated by the Federal Bureau of Investigations and the Mid-Michigan Safe Streets Task Force embedded in the FBI field office located in Bay City, Michigan. The public was represented in court by the U.S. Attorney’s Office in Bay City, Michigan.
Former Official of Teamsters Local 337 Indicted on ConspiracyAnd Bribery ChargesRead the Press Release
A former business agent and trustee of Teamsters Local 337 was indicted yesterday by a federal grand jury in Detroit on bribery and conspiracy charges, announced United States Attorney Barbara L. McQuade. McQuade was joined in the announcement by Special Agent in Charge James Vanderberg, Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, and Patrick Kawa, District Supervisor, Department of Labor, Employee Benefits Security Administration.
Indicted was Michael Townsend, age 68 of Dearborn Heights, Michigan.
According to the indictment, from April 2003 through August 2008, Townsend conspired with others to prevent Teamsters Local 337 from organizing the employees of LaGrasso Brothers Produce, Inc. by creating a front company known as Sam LaGrasso Produce Company. Townsend and his co-conspirators would then use LaGrasso family members and managers of LaGrasso Brothers Produce, Inc. to pose as employees of Sam LaGrasso Produce Company and enroll them as union members of Teamsters Local 337. Townsend and his co-conspirators would then enter into collective bargaining agreements between Local 337 and Sam LaGrasso Produce Company to create the appearance that the employees of LaGrasso Brothers Produce, Inc were unionized. In exchange for his actions in preventing the unionization of employees of LaGrasso Brothers Produce, by Teamsters Local 337, Townsend took bribes in the form of cash payments from LaGrasso Brothers Produce, Inc.
"This defendant was a union official who was entrusted to help working people organize," McQuade said. "He betrayed the Teamsters and workers for his own profit. We are seeking to hold him and the company accountable for their conduct."
Townsend is facing a maximum of five years in prison and a fine of up to $250,000.
On January 10, 2013, Sam LaGrasso Produce, Inc. pleaded guilty to a one count Information charging that it made and agreed to make prohibited payments to a labor official. The company is awaiting sentencing where it faces a fine of $6,300,000 up to $12,600,000. The plea agreement contains a cooperation agreement requiring corporate officers to assist in the investigation and prosecution of others and the possibility of a reduced sentence based on that cooperation.
An indictment is only a charge and it is the government’s responsibility to prove guilty beyond a reasonable doubt.
The case was investigated by agents and officers of the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations and the Department of Labor, Employee Benefits Security Administration. It is being prosecuted by Assistant United States Attorneys David Morris and Mark Chutkow.Bay City Man Sentenced to 22 Years in Federal PrisonRead the Press Release
Joshua Edmond Klosowski, 27, of Bay City, Michigan, was sentenced to a 262 month prison sentence by U.S. District Judge Thomas L. Ludington yesterday in federal court in Bay City, announced United States Attorney Barbara L. McQuade.
McQuade was joined in the announcement by Special Agent in Charge Robert D. Foley, III, Federal Bureau of Investigation.
Klosowski had previously pleaded guilty to a heroin trafficking conspiracy charge pursuant to a plea agreement. The plea agreement allowed Klosowski to avoid a potential life sentence. The 21-plus year custodial sentence was based on Klosowski’s extensive criminal history and a variety of factors taken into consideration as part of his current offense conduct.
Part of the factual basis for his guilty plea, Klosowski acknowledged that he resumed trafficking in drugs immediately upon his release from state custody in 2010 for earlier drug convictions. While still on parole for those prior offenses, Klosowski traveled to Detroit, Lansing and Saginaw to buy heroin, then returned to Bay City to sell the heroin to several customers in the Bay County area.
Klosowski was arrested on May 7, 2012, after having made a heroin purchase for himself and a customer in Saginaw, Michigan. At the time of his arrest, Klosowski was preparing to inject himself with heroin while behind the wheel of a vehicle occupied by his 10-month old son. Klosowski later admitted that he had trafficked in approximately a kilogram of heroin between his release from custody in 2010 and that May 7, 2012 arrest.
During his sentencing hearing, Klosowski told the court that his drug addiction led him to and kept him involved in drug trafficking. Judge Ludington noted that Klosowski had been convicted six times over a period of a few years, but had not completed any of the court-ordered drug treatment programs that had been made available to Klosowski as a result of those convictions. The judge observed that Klosowski’s addiction victimized not just the defendant, but so clouded Klosowski’s judgment that everyone else became disposable to the defendant, even his own son. Judge Ludington concluded the sentencing hearing by telling Klosowski that, given his current age, he will have a life to live after serving his lengthy sentence and recommending to Klosowski that he use the time in custody to prepare himself to make the best use of the life that will follow his release from custody.
The case was investigated by the Federal Bureau of Investigations and the Mid-Michigan Safe Streets Task Force embedded in the FBI field office located in Bay City, Michigan. The public was represented in court by the U.S. Attorney’s Office in Bay City, Michigan.
Two Detroit Teenagers Plead GuiltyFor Their Roles in Armed RobberiesRead the Press Release
The collaboration of local, state, and federal law enforcement under the Detroit One program is beginning to show dividends with the investigation, arrests, and now convictions stemming from a string of armed robberies that occurred in the east side of Detroit and surrounding cities last winter, United States Attorney Barbara L. McQuade announced.
Last week, Jesse Dismukes Jr., 18, of Detroit, admitted his role in two of these robberies when he pleaded guilty on to two counts of Robbery Affecting Interstate Commerce and two Counts of Using or Carrying a Firearm During and in Relation to a Federal Crime of Violence. The charges stem from armed robberies of a Radio Shack store in Eastpointe on December 1, 2012, and an AT&T store in Warren on January 26, 2013. Dismukes used an AK-47 to steal cellular telephones at gunpoint.
A few weeks earlier, on May 2, 2013, David Lamont Holland, 19, of Detroit, also admitted responsibility for his role in the armed robbery of the Radio Shack in Eastpointe, as well as his role in another armed robbery of a T-Mobile store in Detroit on December 7, 2012.The pleas were entered before U.S. District Judge Lawrence P. Zatkoff. Both individuals are in custody awaiting sentencing. Dismukes and Holland each face mandatory minimum sentences of 32 years in custody.
Earlier this year, a multi-agency task force, including representatives of the Federal Bureau of Investigation; Bureau of Alcohol, Tobacco, Firearms and Explosives; Homeland Security Investigations; Detroit Police Department; Michigan State Police; Wayne County Sheriff’s Office; Michigan Department of Corrections; and other local police departments, began investigating the string of armed robberies involving cellular telephone and electronic stores in Detroit, Warren, Eastpointe, and Highland Park, which occurred in December 2012 through January 2013. Through effective collaboration, this task force was able to identify numerous suspects and charge nine individuals in federal court.
“Detroit One is bringing together law enforcement agencies to identify and prosecute dangerous criminals and get them off the streets,” McQuade said. “Violent, armed robbers like these defendants endanger lives and are not welcome in our neighborhoods.”
FBI Special Agent in Charge Robert D. Foley, III stated, "These convictions send a strong message that dangerous criminals who carry out acts of violence, will face severe penalties for their crimes. The FBI is committed to the Detroit One initiative and to ensuring the safety of citizens."
Detroit One is a collaborative effort launched in March between law enforcement and the community to reduce homicide and other violent crime in Detroit. By working collaboratively, local, state, and federal law enforcement is striving to maximize its ability to identify and arrest the persons and groups initiating the violence in Detroit. These convictions are some of the tangible and significant results of this joint effort.
Hustle Boys Gang Member Sentenced to 30 Years in Prison for Drug Trafficking Conspiracy and Witness TamperingRead the Press Release
A 22-year-old Detroit man was sentenced to 30 years in federal prison for drug trafficking on Tuesday, June 4, 2013, U.S. Attorney Barbara McQuade announced today.
McQuade was joined in the announcement by Robert D. Foley, III, Special Agent in Charge of the Federal Bureau of Investigation, Detroit Division.
U.S. District Judge Patrick J. Duggan imposed sentence on Jeron Gaskin in federal court in Detroit.
In November 2012, a jury found Gaskin, a member of a violent Detroit street gang known as the Hustle Boys, guilty of one count of participating in a drug conspiracy, and two counts of possession with intent to distribute illegal drugs. On Tuesday, Gaskin also pleaded guilty to one count of witness tampering, admitting that he had threatened the life of a witness, the witness’s minor child and the child’s mother before the drug trafficking trial. He received a sentence on the witness tampering charge of 46 months in prison concurrent to the 30-year drug trafficking sentence.
Evidence presented at trial showed that beginning in 2007 and continuing to March 2011, Gaskin, other members and associates of the Hustle Boys, and others engaged in drug trafficking by possessing marijuana for distribution and by illegally transporting thousands of OxyContin, Opana, and other controlled, prescription pain pills from Detroit to southern Ohio and West Virginia, where they sold pills out of hotel rooms and three residences they maintained in the area for drug distribution purposes. At times, members of the conspiracy traded pills for firearms and brought some of the firearms back to Detroit. The evidence also showed that Gaskin and other members of the conspiracy used a house on Hamburg Street in Detroit to store controlled substances including marijuana and pills, count and package pills for shipment to Ohio and West Virginia, and store firearms and cash proceeds of drug trafficking.
Gaskin and nine other members of the conspiracy were indicted for the conspiracy offense for which Gaskin was found guilty on November 30, 2011. The following co-defendants pleaded guilty prior to trial and were previously sentenced:
- Mark Davis was sentenced on January 29, 2013 to 155 months in federal prison. Davis also is serving a three-year sentence in the Ohio Department of Rehabilitation and Correction.
- William Crews was sentenced on May 6, 2013 to 50 months in federal prison. Crews also is serving a three-year sentence in the Ohio Department of Rehabilitation and Correction.
- Darrell Ewing was sentenced on January 28, 2013 to 180 months in federal prison. Ewing also is serving a life sentence for murder in the Michigan Department of Corrections.
- Deonte Morris was sentenced on January 15, 2013 to 130 months in federal prison.
- Delmerey Morris was sentenced on February 26, 2013 to 144 months in federal prison. Delmerey Morris also is serving a 35 to 60 year sentence for murder in the Michigan Department of Corrections.
- Ashley Sallad was sentenced on January 14, 2013 to 1 day of imprisonment and three years of supervised release.
- Pinkie Lewis was sentenced on January 23, 2013 to one year plus one day in federal prison.
Co-defendant Randi Fortner was recently indicted, arrested, and is facing pretrial detention and removal proceedings in the United States District Court for the Southern District of West Virginia. The drug trafficking conspiracy charge was dismissed against co-defendant William Beal following Beal’s guilty plea and sentence in a federal carjacking case.
United States Attorney Barbara McQuade stated: “Armed drug trafficking brings violent crime to our neighborhoods. We hope that strong sentences like these can help remove these organizations from our community.”
U.S. Attorney McQaude applauded the cooperative efforts of the Federal Bureau of Investigation's Violent Crime Task Force and the Ohio State Highway Patrol. Assistant United States Attorneys Mark Chasteen and Margaret Smith of the office’s Violent and Organized Crime Unit and General Crimes Unit represented the United States at trial. Assistant United States Attorney Jeanine Brunson assisted throughout the FBI’s lengthy investigation.
Former Wayne County Assistant County Executive Pleads Guilty to Honest Services FraudRead the Press Release
Former Wayne County Assistant County Executive Michael Demetrus Grundy, of Detroit, Michigan, pleaded guilty today to Conspiracy to Commit Honest Services Wire Fraud in connection with his position as Executive Director of HealthChoice of Michigan, United States Attorney Barbara L. McQuade announced today.
Joining McQuade in the announcement were Special Agent in Charge Robert D. Foley, III, Federal Bureau of Investigation and Special Agent in Charge Erick Martinez, Internal Revenue Service, Criminal Investigation.
According to court records, on October 19, 2011, Grundy caused the accountant of HealthChoice to wire transfer $400,000.00 to a company called Medtrix, falsely representing that the payment was pursuant to a contract between HealthChoice and Medtrix executed on March 1, 2011 for Medtrix to develop and implement an electronic medical records (“EMR”) system for HealthChoice medical providers. However, the contract was actually not executed until October of 2011, and it was not approved by the HealthChoice Board of Trustees. Further, Medtrix never created or obtained any EMR programming, and an EMR system that was developed by another company was already being offered to HealthChoice networks and medical providers.
Co-conspirator Keith Griffin pleaded guilty on May 10, 2012 to the wire fraud scheme. He admitted that Grundy used his position as Executive Director of HealthChoice to authorize fraudulent payments to Medtrix and Advertise Me (also owned by Griffin), and that Griffin kicked back substantial portions of those payments to Grundy. In his plea agreement, Grundy admits that he was receiving kickbacks of funds that were supposed to be used for the benefit of the participants of HealthChoice insurance programs.
Grundy faces a maximum of twenty years in prison, a fine of up to $250,000, and forfeiture of the unlawful payments he received.
United States Attorney McQuade said, "The citizens of Wayne County deserve honest services from their public officials. It is particularly offensive when corruption comes from officials entrusted to promote health and welfare. We will continue to prosecute public officials who enrich themselves instead of serve the people.”
FBI Special Agent in Charge Robert D. Foley III said, "We will aggressively pursue public officials like Michael Grundy who are charged with promoting the health and welfare of our citizens, but who instead corruptly use their positions of power for self-gain."
"Grundy abused his powers by utilizing his positions to discreetly conduct illegal activities and receive kickbacks," said IRS-CI Special Agent in Charge Erick Martinez. "IRS-CI is committed to following the money trail to ensure that public officials who use their office to line their own pockets are brought to justice and deprived of their ill-gotten gains."
The case was investigated by agents of the FBI and IRS. This case is being prosecuted by Assistant United States Attorneys Elizabeth A. Stafford, Gjon Juncaj and Chantale Fiebig.
Former Michigan Supreme Court Justice Diane Marie Hathaway Sentenced on Bank Fraud ChargeRead the Press Release
Diane M. Hathaway, a former Michigan Supreme Court Justice, was sentenced today to one year and one day in federal prison, after having pleaded guilty in January to committing bank fraud in connection with a property in Grosse Pointe Park, Michigan, United States Attorney Barbara L. McQuade announced today. McQuade was joined in the announcement by Special Agent in Charge Robert D. Foley, III of the Federal Bureau of Investigation ("FBI"), and Michigan Attorney General, Bill Schuette.
At the time of the plea before United States District Judge John Corbett O’Meara, Hathaway, 58, of Grosse Pointe, Michigan, admitted that between 2010 and 2011 she knowingly engaged in a scheme to defraud ING Direct bank by concealing assets from the bank to qualify for a “short sale.” A short sale is a forgiveness of debt by the bank to a borrower who claims financial hardship.
Hathaway was also ordered to pay restitution in the amount of $90,000.
United States Attorney McQuade said, "We have made mortgage fraud a priority in this district because of the harm this crime causes to our housing markets in the aggregate. Homeowners who play by the rules should know that those who don't will be held accountable, no matter who they are."Michigan Attorney General Schuette said, “Public corruption scandals have damaged the public's trust in government and tarnished our state's reputation. No matter who you are or what position you hold, the same rules apply. I supported U.S. Attorney Barbara McQuade’s request for prison time, and I appreciate her efforts, along with those of FBI Special Agent in Charge Bob Foley, to bring this case to a close.”
Robert Foley, Special Agent in Charge of the FBI said, "Regardless of a person's stature or position in life, we must all follow the same set of rules. In this case, an individual in a prominent position of public trust made extremely poor choices that have resulted in criminal activity. The FBI is committed to stopping these illegal acts."
This case was investigated by the FBI with assistance from Michigan Attorney General’s Office.Former Highland Park Police Officer Pleads GuiltyTo Bribery and Extortion ConspiracyRead the Press Release
A former Highland Park Police officer pleaded guilty today to conspiring with three other police officers to protect shipments of cocaine and to take bribes in return for not appearing in court as a witness, U.S. Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by FBI Special Agent in Charge Robert D. Foley, III.
During a hearing before U.S. District Judge Avern Cohn, Anthony Bynum, 29, of Highland Park, Michigan, admitted that he and another Highland Park police officer accepted a $10,000 bribe from a man they had arrested on gun charges in return for agreeing not to appear as witnesses at the man’s November 7, 2012 criminal trial.
Bynum also admitted that in late 2012 and early 2013, he agreed with three other Highland Park police officers to take money in exchange for protecting shipments of cocaine. Bynum admitted that on November 15, 2012, he and another Highland Park police officer protected and delivered a shipment of what they believed were two kilograms of cocaine in exchange for $1,500 in cash. Bynum further admitted that on January 23, 2013, he protected two cars containing what he believed to be a total of four kilograms of cocaine. Bynum brought his police badge and gun to protect the shipments. Two other Highland Park police officers drove the cars containing what they believed to be cocaine. Later, Bynum accepted $1,500 in cash from an FBI informant for his work in delivering and protecting the drug shipment.
United States Attorney McQuade said, "Police officers who take bribes have no place in law enforcement. They will be prosecuted for violating their duties to serve the public.”
FBI Special Agent in Charge Foley stated, "Police officers who swear an oath to serve and protect must be held to the highest standards of ethics and integrity. The FBI is committed to ensuring those standards are maintained, and in cases of unlawful abuse, will pursue and prosecute those responsible."
Based on his guilty plea and felony conviction for conspiring to commit bribery and extortion, Bynum is facing a maximum of five years in prison and a fine of up to $250,000.
Thus far, three out of the four former Highland Park police officers arrested for extortion and bribery in this investigation have pleaded guilty.
The case was investigated by agents of the FBI. It is being prosecuted by Assistant United States Attorney David A. Gardey.Serial Bank Robber Sentenced to 45 Years in Federal PrisonRead the Press Release
Quentin A. Sherer, 33, a resident of Toledo, Ohio, was sentenced on Tuesday to 45 years in federal prison after having been found guilty by a jury of bank robbery and brandishing a firearm during that bank robbery, announced United States Attorney Barbara L. McQuade. McQuade was joined in the announcement by Robert D. Foley, III, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation.
Sherer and Martin L. Tucker, 33, were found guilty after a week-long trial before the Honorable Judge Robert H. Cleland in U.S. District Court in Detroit in December 2012.
The evidence presented during the trial showed that on July 16, 2009, Sherer and Tucker, armed with semi-automatic pistols, entered the Monroe County Community Credit Union in Temperance, Michigan, and ran to the teller counter. Sherer pointed the gun at one teller and demanded money. Tucker ran to another teller window, pushed a customer out of the way, pointed the gun at the customer and teller and demanded money. Both Sherer and Tucker wore masks and hooded sweatshirts. After taking money, both ran out of the credit union into an awaiting getaway car. A customer at the drive through window followed the getaway car a couple miles away into Toledo, where the robbers abandoned the car in the driveway of a private residence. When officers from the Monroe County Sheriff’s Office responded to that residence, they retrieved several items of clothing that were worn during the robbery along the path where Sherer and Tucker had fled. The FBI Laboratory in Quantico, Virginia conducted a DNA examination of the evidence recovered in and around the getaway car and found matches between the DNA extracted from several pieces of the evidence and Sherer and Tucker’s DNA.
This conviction was Sherer’s third federal conviction for bank robbery and second federal conviction for using a firearm during a crime of violence. Sherer committed this bank robbery less than 8 months after being released from prison for his previous bank robbery convictions.
Sentencing of Tucker is scheduled for August 27, 2013.
“Criminals who use guns to commit violent crimes are not welcome in our community, and we hope that strong sentences like this one will deter these kinds of crimes,” McQuade said.
FBI Special Agent in Charge Foley stated, “"Those who engage in violent crime and other illegal activity pose a serious threat to the safety of citizens. The FBI is committed to stopping these dangerous acts and protecting our communities."
The case was investigated by the Federal Bureau of Investigation and the Monroe County Sheriff’s Office. It was prosecuted by Assistant United States Attorneys Patrick Hurford and Frances Carlson.
Adrian Resident Pleads Guilty to Health Care Fraudand Filing A False Tax ReturnRead the Press Release
The operator of a human resource company pleaded guilty to health care fraud and filing a false tax return, announced U.S. Attorney Barbara McQuade.
Ms. McQuade was joined in the announcement with Special Agent in Charge Erick Martinez of the Internal Revenue Service Criminal Investigation (IRS-CI) Detroit Field Office and Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office.
Jason Syrek, age 39, of Adrian pleaded guilty before United States District Judge Paul D. Borman on May 15, 2013.
According to court records, between May 2008 and December 2010, Syrek engaged in health care fraud and tax fraud while operating CAS Resources of Adrian, Michigan. CAS Resources provided outsourcing of human resource services, such as payroll, taxes and employee benefits administration, including health care coverage.CAS collected $1.75 million in premiums from client companies in November and December 2010, an amount due to Blue Cross Blue Shield of Michigan (BCBSM), but never paid by Syrek. He admitted diverting these funds for personal use.
According to the plea agreement, in January, 2011, Syrek as the Director of CAS Resources filed a Form 941 for 2010: Employer’s Quarterly Federal Tax return for the third quarter. The Form 941 was filed with the IRS and stated that CAS Resources paid $1,862,902 in payroll taxes. Syrek knew he had diverted these funds for his own personal use and only paid $633,332 in payroll taxes. In addition to the third quarter Form 941 for 2010, Syrek filed approximately 7 other Form 941s with the IRS which he did not pay. In total, from 2010 through 2011, Syrek’s tax due is $13.4 million.
Syrek used the money to buy beachfront properties, several cars, a boat and investment properties. In order to pay his debt, Syrek will forfeit his homes, beach properties in Florida, 2009 32.5’ Sea Ray Boat and cars to include a 2008 Ferrari F430 and 2008 Porsche Boxster.
“Fraud schemes like this one may involve sophisticated methods, but they are nothing more than stealing. This defendant robbed health care programs and taxpayers for his personal benefit,” McQuade said.
“Syrek’s conduct was egregious in that he effectively stole funds that were withheld on behalf of employees,” said Erick Martinez. “His actions cost the government $13.4 million dollars in tax loss alone.”"Those who commit health care fraud and other related crimes will face severe penalties for their illegal acts,” stated FBI Special Agent in Charge Foley. “The FBI is committed to working with the IRS and other agencies to bring these individuals to justice."
Sentencing is scheduled for August 13, 2013. Syrek faces a maximum sentence of 87 months imprisonment under the terms of the plea agreement which was taken under advisement by the court, and a fine of up to $250,000. In addition, Syrek has agreed to pay restitution in the amount of $1,754,922.98 to BCBSM and $13,405,212 to the IRS.
This case is being prosecuted by Assistant United States Attorneys Sarah Resnick Cohen and Linda Aouate and investigated by special agents of the IRS Criminal Investigation and the FBI.Leader of an Arson Ring Was Sentenced Today to 137 Years in PrisonRead the Press Release
A resident of Beverly Hills, Michigan was sentenced today to 137 years after having been found guilty of arson and other charges related to wire fraud, mail fraud, and money laundering, announced United States Attorney Barbara L. McQuade. McQuade was joined in the announcement by Special Agent in Charge Robert D. Foley, III, Federal Bureau of Investigation, Detroit Division, Special Agent in Charge Erick Martinez, Internal Revenue Service, Criminal Investigation and William Hayes, Acting Special Agent in Charge, Homeland Security Investigations.
Ali Darwich, 31, of Beverly Hills, Michigan, was convicted of 33 counts of wire and mail fraud, arson and money laundering following a jury trial before the Honorable Robert H. Cleland in U.S. District Court in Detroit in December 2012.
Evidence presented at trial showed that beginning in 2005, Ali Darwich, along with eight co-defendants, ran an arson for profit ring in the greater Detroit metropolitan area. Their crimes involved burning down numerous houses and businesses, committing insurance fraud, and submitting false claims for reimbursement. Specifically, Darwich, along with his co-conspirators, would purchase insurance for various dwellings, businesses and vehicles. After purchasing the insurance, Darwich and others would intentionally burn, vandalize, or flood the various properties or vehicles and then file false insurance claims seeking reimbursement for such things as structural repair, contents replacement, loss of profits and alternative living costs. One of those properties included a building located at 14909-14911 Cheyenne in Detroit Darwich set ablaze on December 30, 2008. Darwich was seen entering the house carrying a bottle of liquid. Minutes later he was seen running from the house empty handed. He was arrested after the police noticed the house going up in flames. In another incident, Darwich set a delayed fire at Warrendale Hardware located at 16041 W. Warren in Detroit. That fire resulted in more than $500,000 dollars in damage.
Darwich also placed the ownership of various properties in the names of friends and family members in order to hide their true ownership. Seven insurance companies were defrauded for over $5 million.
The eight co-conspirators were convicted by guilty pleas and were sentenced. Those include:Fatima Toufaili, 29, of Beverly Hills, Michigan
Ashak Ashaq, 43, of Warren, Michigan
Mazen Mazraani, 32, of Dearborn, Michigan
Ali Alaouie, 34, of Dearborn, Michigan
Benjamin Youhanna, 40, of Farmington Hills, Michigan
Fayez Debouk, 26, of Dearborn, Michigan
Rabhi Ali, 29, of Dearborn, Michigan
Jad Alawie, 38 of Dearborn, MichiganFBI Special Agent in Charge Foley, stated, "This guilty verdict comes as the result of countless hours of hard work by the FBI and our law enforcement partners. The FBI is committed to stopping arson for profit and ensuring criminals face severe penalties for these illegal acts."
Special Agent in Charge Martinez stated, "Ali Darwich and his associates hatched a plan to set fire to several houses, scam the insurance companies with false claims and launder the illegal proceeds in order to enrich themselves. IRS agents used their financial expertise in solving these crimes."
Special Agent in Charge Hays stated, "Today’s sentencing sends a crystal clear message that federal law enforcement will continue to aggressively target and take down criminal groups responsible for perpetuating crime and blight in metro Detroit."
Arson is a very dangerous crime that can cause loss of life,” McQuade said. “We hope that this conviction sends a strong message that individuals who commit arson for profit will be brought to justice.”
The investigation was led by the Federal Bureau of Investigation with assistance from the Internal Revenue Service, Homeland Security Investigations, the Dearborn Police Department and the Detroit Fire Department. Assistant United States Attorney Ron Waterstreet represented the United States at trial.
Justice Department Settles Lawsuit Against Golden Corral Restaurantfor Violation of the Americans with Disabilities ActRead the Press Release
DETROIT, MI - The United States Attorney’s Office for the Eastern District of Michigan announced today the settlement of its lawsuit against the Golden Corral restaurant in Westland, Michigan, which alleged that the owners and operators of the Golden Corral violated the Americans with Disabilities Act (ADA) by denying service to a mother and her minor children based on the appearance of the children’s skin due to a genetic skin disorder.
The Justice Department’s lawsuit, filed in the U.S. District Court for the Eastern District of Michigan in Detroit, alleged that the manager of the Golden Corral restaurant demanded that Danielle Duford and her four daughters leave the restaurant based on the appearance of the children’s skin caused by a genetic skin disorder, epidermolysis bullosa, which causes blisters to form on the skin in response to minor injuries and temperature changes. Despite Ms. Duford informing the restaurant manager of her children’s disability and repeatedly emphasizing that they did not have a contagious disease, the manager required the family to immediately leave the restaurant, claiming that he had received complaints from other customers. Title III of the ADA prohibits public accommodations, such as restaurants, from discriminating against people on the basis of disability, or their association with an individual with a disability, in the full and equal enjoyment of the goods or services offered.
Under the settlement agreement, which must still be approved by U.S. District Court Judge Stephen J. Murphy III, the defendants will pay $50,000 in damages to Ms. Duford and her children and $10,000 in civil penalties to the United States. The defendants will also develop and maintain a non-discrimination policy which covers service to customers with disabilities at the Golden Corral restaurant, and provide training to their employees on their obligations under the ADA.
“We hope that today’s settlement will help prevent discrimination based on unfounded fears by raising awareness of the duties to accommodate individuals with less common disabilities,” said Barbara L. McQuade, the United States Attorney for the Eastern District of Michigan.
“No one should be excluded from participating in the basic activities of daily living on account of fears of their disability, nor should children be shamed from going out in public,” said Eve Hill, Senior Counselor to the Assistant Attorney General for the Civil Rights Division. “We are confident today’s settlement sends that message.”
The case was handled by Assistant U.S. Attorney Susan K. DeClercq in the U.S. Attorney’s Office for the Eastern District of Michigan, in collaboration with the Disability Rights Section of the Civil Rights Division of the Justice Department.
More information about the ADA is available at the Justice Department’s toll-free ADA Information line at (800) 514-0301 or (800) 514-0383 (TTY) and via the ADA website at http://www.ada.gov or through contacting the U.S. Attorney’s civil rights hotline at 313-226-9151.
Trenton Resident Who Manufactured BombsSentenced Nine Years in PrisonRead the Press Release
A Trenton man was sentenced yesterday to nine years in prison for possessing explosives and making bombs, United States Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by Acting Special Agent in Charge Daryl McCrary, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).
John Robert Kennedy 43, formerly of St. Joe, Indiana, was sentenced to 108 months in prison by United States District Judge John Corbett O'Meara and ordered to pay a $20,000 fine.
Kennedy was convicted following a three-week jury trial of Possession of a Destructive Device, Felon in Possession of a Destructive Device and Manufacture of a Destructive Device. Prior to trial he pleaded guilty to being a Felon in Possession of Ammunition and Explosives.
The evidence presented at trial showed that on April 28, 2011, defendant, disguising his voice in a foreign accent, made a telephonic bomb threat to Trenton High School. Defendant threatened that four bombs would be detonated in the school within the hour. The school was evacuated and searched. Later that evening a device was found in the parking lot area of the school by a teacher. On April 29, 2011, defendant detonated another device in the parking lot of an ACO hardware store in Trenton. Witnesses described an explosion with clouds of white smoke. Remnants of a destructive device were found and were determined by forensic experts to contain explosive materials. Defendant was identified as the suspect who placed the devices through the use of a Crime Stoppers announcement on local television. Kennedy was previously convicted of similar criminal charges involving explosives.
Kennedy has been in custody since his indictment in July 2011.The case was prosecuted by Assistant United States Attorney Susan Gillooly with the assistance of ATF, Detroit Field Division and the Trenton Police Department.
Former Highland Park Police Officer Pleads Guilty ToExtortion Conspiracy to Protect A Cocaine ShipmentRead the Press Release
A Highland Park Police officer pleaded guilty today to conspiring with three other police officers to commit extortion and protect a shipment of cocaine, U.S. Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by FBI Special Agent in Charge Robert D. Foley, III.
During a hearing before U.S. District Judge Avern Cohn, Shawn Williams, 33, of Detroit, Michigan, admitted that in late 2012 and early 2013, he agreed with three other Highland Park police officers to take money in exchange for protecting a shipment of cocaine. Williams admitted that on January 23, 2013, he protected two cars containing what he believed to be a total of four kilograms of cocaine. Williams brought his police badge and gun to protect the shipment. Two other Highland Park police officers drove the cars containing what they believed to be cocaine. Later, Williams accepted $1,000 in cash from an FBI informant for his work in delivering and protecting the drug shipment.
United States Attorney McQuade said, "Police officers who take bribes have no place in law enforcement. They will be prosecuted for violating their duties to serve the public."
FBI Special Agent in Charge Foley stated, "Police officers who swear an oath to serve and protect are held to the highest standards of ethics and integrity. The FBI is committed to ensuring those standards are maintained, and in cases of abuse, will pursue and prosecute those responsible."Based on his guilty plea and felony conviction for conspiring to commit extortion, Clayton is facing a maximum of twenty years in prison and a fine of up to $250,000.
The case was investigated by agents of the FBI. It is being prosecuted by Assistant United States Attorney David A. Gardey.Dearborn Heights Man Pleads Guilty to Bankruptcy Fraudand Money LaunderingRead the Press Release
Adnan Hassan Tageddine, age 42, of Dearborn Heights, Michigan, pleaded guilty to three counts of Bankruptcy Fraud and one count of Money Laundering, United States Attorney Barbara L. McQuade announced today. Ms. McQuade was joined in the announcement by Special Agent in Charge Erick Martinez, Internal Revenue Service Criminal Investigation Division.
In August of 2009, Tageddine filed bankruptcy in Detroit, Michigan. The bankruptcy filing, which he declared under penalty of perjury, included a schedule of all of his personal property that he knew to be false. He failed to identify multiple luxury assets he owned which included luxury cars, jewelry and cash.
Special Agent in Charge Erick Martinez commended the work done by the IRS criminal investigator who unraveled Tageddine's scheme, adding "Hiding assets from the bankruptcy court is a very serious offense and is extremely costly to the American public."A sentencing date was set for August 12, 2013 at 3:00 pm before U.S. District Judge Arthur Tarnow.
The maximum penalty for Bankruptcy Fraud Concealment of Assets is imprisonment of not more than five years and/or a $250,000 fine per each count and the maximum penalty for Laundering of Monetary Instruments is not more than 20 years and/or a $500,000 fine.
The investigation was prosecuted by Assistant U.S. Attorneys Richard Roble and Ross MacKenzie.
East Tawas Man Pleads Guilty to Filing False Tax ReturnsRead the Press Release
A 47-year old East Tawas man pleaded guilty to willfully filing a false tax return for 2007, United States Attorney Barbara L. McQuade announced today.
Ms. McQuade was joined in the announcement by Special Agent in Charge Erick Martinez, Internal Revenue Service Criminal Investigation Division.
According to court records, during 2006 through 2009, Paul Galea was the manager and owner of G’s Pizzeria & Deli of East Tawas He gave incorrect information to his tax return preparer, underreporting his gross receipts, causing both his business tax returns and the personal tax returns to be false.
In addition, Galea admits that by failing to report all of the gross income during 2006 – 2009 he caused a tax loss to the United States in the amount of more than $80,000.
Galea entered the guilty plea in United States District Court before United States Magistrate Judge Charles E. Binder
"As filing season comes to an end this case serves as a reminder that it is important to note that those who do not file accurate returns and pay their fair share of taxes face severe consequences, in fairness to the vast majority of business owners that abide by the law," said Special Agent in Charge Erick Martinez.
Galea’s guilty plea will be considered by United States District Judge Thomas L. Ludington. If the plea is accepted Judge Ludington will sentence Galea at a hearing tentatively scheduled for August 1, 2013 at 3 pm.. The maximum penalty for filing a false tax return is imprisonment for not more than three years and a $250,000.The investigation of this case was conducted by special agents of the Internal Revenue Service, and prosecuted by Assistant U.S. Attorney Robert Haviland.
New York Man Charged with Internet Extortion and Cyber StalkingRead the Press Release
A 21-year-old Great Neck, New York, man was charged in a criminal complaint in the Eastern District of Michigan with internet extortion and cyber stalking, announced United States Attorney Barbara L. McQuade.
Joining in the announcement were Special Agent in Charge Robert D. Foley III, Federal Bureau of Investigation and Chief John Seto, Ann Arbor Police Department.
According to the affidavit, from May 2012 through February 2013, Adam Paul Savader sent anonymous text messages using Google Voice numbers to 15 women stating that he had nude photographs of the women and threatening to distribute the nude photographs to the women’s friends and family members unless the women sent him more nude photographs of themselves. Savader sent some of the victims links to a photo-sharing website where nude pictures of the victims had been posted.The case was brought to the attention of the Federal Bureau of Investigation by Detectives from the Ann Arbor Police Department, who received a complaint from a victim stating that she had received threatening messages from a person who had illegally obtained nude photographs of her from her email account. Detectives with the Ann Arbor P.D. partnered with FBI agents to investigate the case and together identified 15 victims in Detroit, Washington, D.C. and Long Island, New York.
If convicted on these charges, Savader faces a maximum penalty of five years’ imprisonment.
Savader is currently in federal custody in New York awaiting removal to Michigan.
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.
U. S. Attorney's Office and Detroit One MembersObserve National Crime Victims's Rights WeekRead the Press Release
Detroit, Michigan - United States Attorney Barbara L. McQuade, Detroit Police Chief Chester Logan, along with several law enforcement agencies and community members of Detroit One as well as the mother of a crime victim will hold an observance in memory of crime victims. The observance will take place on Thursday, April 25, 2013 at 2:30 pm at Lafayette Green Park, located on the corner of W. Lafayette Blvd and Shelby in the downtown area of Detroit.
This event is being held in conjunction with the observance of National Crime Victims' Rights Week, April 21-27. This year's theme, "New Challenges. New Solutions," celebrates the spirit of Detroit One and also highlights the need for us to assist and serve each and every victim in need of hope and help.
A perennial cottage garden will be planted in remembrance of crime victims who have lost their lives to violence in the City of Detroit, with the event to serve as an announcement and invitation to come out and view this lovely memorial. The perennials will re-bloom each year symbolizing those who are not forgotten. The garden is tended regularly and is kept looking beautiful year round.
"The U.S. Attorney's Office is deeply committed to assisting victims of federal crimes, ensuring they are afforded their rights under the Crime Victims' Rights Act, protecting them from further harm, and helping them reshape their futures," said U.S. Attorney McQuade. "This week is a time to raise awareness about the rights and needs of crime victims, the challenges victims face in the recovery process, and the positive impact of those who provide services and support to victims."
The Crime Victims' Rights Act (CVRA), enacted in 2004, grants victims in federal criminal proceedings certain enforceable rights, including the right to be reasonably heard at public court proceedings and to receive full and timely restitution as provided by law. The Eastern District of Michigan, like other federal, state and local law enforcement agencies, has a dedicated Victim Witness Unit that serves federal crime victims across the District's many counties. Members of this unit notify victims of significant case events through the Department of Justice's Victim (DOJ) Notification System (VNS). Such notice enables victims to participate in court proceedings and make their voices heard. According to Department of Justice Statistics, in Fiscal Year (FY) 2011, the U.S. Attorneys' offices provided notice of over 10.4 million case events, including notices regarding criminal charges filed, plea hearings, bond hearings and sentencing hearings.
Notification of significant case events leads to increased victim participation in court proceedings. In FY 2011, Victim-Witness personnel in the United States Attorney's offices accompanied over 28,000 victims to court hearings and trials. Court accompaniment helps ensure that victim participation in court proceedings is meaningful as Victim-Witness personnel can answer questions and explain the federal judicial process.
In addition to notification and court accompaniment, the Eastern District of Michigan's Victim Witness Unit provides essential services to victims, such as making referrals for counseling, securing temporary housing, assisting with access to victim compensation funds, and accompanying victims to court to provide support and guidance during the proceedings. These services provide tools victims need to reshape their futures.
Further information about National Crime Victims' Rights Week is available at http://ovc.ncjrs.gov/ncvrw/.
Former Pontiac Schools Associate Superintendent and Chief Financial Officer Sentenced to 12 Months in Federal PrisonRead the Press Release
A former Associate Superintendent and Acting CFO of Pontiac Schools was sentenced today to 12 months in federal prison followed by one year home confinement, three years of supervised release and ordered to pay restitution to Pontiac Schools in the amount of $336,000 after having been convicted of one count of defrauding a program receiving federal funding, announced United States Attorney Barbara McQuade.
McQuade was joined in the announcement by Special Agent in Charge Robert D. Foley, III, Federal Bureau of Investigation.Jumanne Sledge, 41, was sentenced by U.S. District Judge Denise Page Hood in Detroit, Michigan.
In February, 2010, Sledge directed a subordinate at Pontiac Schools to issue a check payable to his “International Leadership Academy” in the amount of $236,000.00. Sledge cashed the check and deposited it into his bank account. When later asked for an invoice and purchase order, Sledge created a false invoice to make it appear a payment for a legitimate service. Sledge used the money to finance luxury vehicles, travel and other personal items.
"Among all of the corruption defendants we charge, school officials who steal money are particularly culpable because they are robbing children of their education," McQuade said.
This case was investigated by the FBI and the U.S. Department of Education, Office of Inspector General.
AUSA J. Michael Buckley investigated and prosecuted the case for the United States.
Mount Pleasant Man Sentenced for Domestic Assault on Indian ReservationRead the Press Release
A 49-year-old resident of Mount Pleasant, Michigan was sentenced today by United States District Judge Thomas L. Ludington to 28 months in custody followed by two years of supervised release, after having pled guilty on December 7, 2012 to domestic assault by a habitual offender announced U.S. Attorney Barbara L. McQuade.
On or about September 13, 2012, Paul Steven Hawk, got into an argument with his girlfriend and struck her in the lip. Hawk also illegally possessed a gun during this incident and attempted to improperly influence witnesses that he knew were going to testify at the grand jury. The assault occurred on the Isabella Reservation after Hawk had previously been convicted of Family Violence in 2000 and 2003.
The case was investigated by the Saginaw Chippewa Tribal Police. The case was prosecuted by Assistant United States Attorney Roy Kranz.
Macomb Township Man Sentenced Today for Manufacturing and Distributing Child PornographyRead the Press Release
A 33-year-old Macomb Township man was sentenced today to 30 years in federal prison followed by fifteen years of supervised release after having been found guilty by a federal jury in December, 2012 of producing and distributing child pornography, U.S. Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by Robert D. Foley, III, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation
Thomas William Wooten was sentenced before U.S. District Judge Marianne O. Battani in Detroit. The evidence at trial showed that Wooten produced and distributed on the internet pornographic images of a three-year-old girl, including a video of her engaging in a sexual act with Wooten. Wooten also downloaded and collected hundreds of child pornographic images and videos, some of which he obtained by trading the images he created.
“Regrettably, the internet provides child predators with a ready market for child pornography, but it also helps us to rescue children who are being sexually abused,” McQuade said.
FBI Special Agent in Charge Foley stated, “These despicable crimes victimize and exploit innocent children. The FBI is committed to the arrest and prosecution of criminals who engage in such deplorable, heinous behavior.”
The case was investigated by special agents of the Federal Bureau of Investigation. The case was prosecuted by Assistant U.S. Attorney Hala Jarbou.
Mortgage Fraud Ringleader Sentenced to 13 YearsRead the Press Release
A 45-year-old Fenton man was sentenced today to 13 years in prison in connection with a multi-million dollar mortgage fraud conspiracy, United States Attorney Barbara L. McQuade announced.
Joining McQuade in the announcement was Special Agent in Charge Robert D. Foley, III, head of the Detroit Division of the Federal Bureau of Investigation (FBI).
U.S. District Judge Julian Abele Cook, Jr., also sentenced Ronnie Edward Duke to pay a $1 million fine and $94 million in restitution. Duke led the scheme for close to four years, ending in July 2007 when the FBI executed seven search warrants in metropolitan Detroit and Florida.The scheme involved more than 450 fraudulent mortgage loans, more than 100 straw buyers, and approximately 180 different residential properties in metropolitan Detroit that were used as collateral for the loans. Most of these loans went into default and foreclosure. The loans ranged from roughly $350,000 to $600,000. Lenders were deceived by counterfeit purchase agreements, fake closing documents, and fictitious title companies that were actually controlled by Duke and his co-conspirators. The warranty deeds and mortgages associated with the majority of the loans went unrecorded, leaving the lenders completely unsecured. Such loans were commonly referred to as “ghost” loans by the defendants during the scheme.
“Mortgage fraud not only harms lenders, but it also affects all of us when foreclosures lead to vacant homes, which reduce property values and create havens for criminal activity,” McQuade said.
"Those who orchestrate and conduct mortgage fraud schemes that steal millions of dollars from innocent victims, will face severe consequences for their crimes,” Foley said. The FBI remains committed to pursuing and prosecuting anyone who engages in these illegal acts."
Fifteen of Duke’s co-conspirators were previously sentenced, including:∙ Ryan Andrew Zundel, 38, of Brewton, Alabama – 10 years
∙ Nicole Lynn Rothe (formerly Nicole Lynn Turcheck), 34, of Gibraltar – 10 years
∙ William Camsell Wells, III, 42, of Howell – 8½ years
∙ Wilinevah Richardson, 35, of Davison – 5 years
∙ Donna Marie Walbrook, 50, of Westland – 5 years
∙ Anthony Edward Peters, 75, of Monroe – 41 months
∙ Robert Brierley, 46 of Westland – 33 months.
Duke spent his fraud proceeds to operate a car racing business called Hardcore Racing, Inc. He purchased numerous sports cars, race cars, boats, motorcycles, and a helicopter. Duke’s co-defendants used their proceeds to finance unrelated businesses and to purchase luxury items, including cars, boats, motorcycles, race horses, residential properties, and travel to the Caribbean and other overseas vacation destinations.Duke’s criminal history includes embezzlement, credit card fraud, receiving and concealing stolen property, escape, aggravated stalking and disturbing the peace.
This case was prosecuted by Assistant United States Attorneys Erin Shaw and Stephen Hiyama, and investigated by the FBI, with the assistance of the U.S. Secret Service.
Former Brighton Resident and Son Convicted in Real Estate Investment FraudRead the Press Release
A Brighton businessman and his son were found guilty today by a federal jury of conspiracy and multiple counts of wire fraud, announced United States Attorney Barbara L. McQuade.
U.S. Attorney McQuade was joined in the announcement by Robert D. Foley, III, Special Agent in Charge of the Detroit office of the Federal Bureau of Investigation, and Merri Jo Gillette, Regional Director of the Chicago Office of the Securities and Exchange Commission.
The jury convicted John Bravata, 45, and Antonio Bravata, 25, after an eight- week trial before U.S. District Judge Paul D. Borman.
As part of the same prosecution, a guilty plea to wire fraud was entered by Richard J. Trabulsy, 32, of Canton, a former business partner of John Bravata.
The evidence at trial showed that from 2006 to 2009, John Bravata conspired with his son Antonio Bravata to defraud more than 500 investors of more than $50 million dollars, money that largely represented the life savings of investors. In executing the scheme to defraud John and Antonio Bravata solicited money for their company “BBC Equities” by using false and fraudulent statements and promises. These false statements included promises of guaranteed safety of principal and high interest returns. Rather than investing the money in safe real estate transactions as promised, a large portion of the money was used by the defendants to support their lavish lifestyles.
Both John Bravata and Antonio Bravata furthered their scheme to defraud through free lunch seminars that targeted retirees. At these presentations they not only made false promises of a safe investment, they falsely claimed that they did not get paid unless the company was profitable, that no fees or commissions would be charged or taken on investments and that real estate was purchased with cash.
John Bravata was convicted of Conspiracy to Commit Mail and Wire Fraud and 15 counts of Wire Fraud. Antonio Bravata was convicted of Conspiracy to Commit Mail and Wire Fraud. Each count carries a maximum possible penalty of 20 years in prison and a $250,000 fine.
“White collar criminals may use sophisticated methods, but their crime is nothing more than stealing other people’s money,” McQuade said. “These defendants targeted and preyed upon victims and stole their life savings. Many of these victims are seniors who lack the resources or the time to recoup the loss.”
FBI Special Agent in Charge Foley stated: "These individuals engaged in an investment scheme that stole millions of dollars from hundreds of investors. The FBI is committed to stopping such predatory acts and holding criminals responsible."
Sentencing has been set for June 18, 2013. Bond was continued as to defendant Antonio Bravata. John Bravata’s detention was continued.
The case was prosecuted by Assistant United States Attorneys Frances Carlson and Karen Reynolds, as well as Special Assistant United States Attorney Jonathan Polish. SAUSA Polish was detailed to this case from the Chicago Region of the Securities and Exchange Commission. The case was investigated by the FBI and the SEC.
Former Pontiac City Council Member Pleads Guilty to Accepting BribesRead the Press Release
A former Pontiac City councilman pleaded guilty today in federal court in Detroit to accepting bribes, United States Attorney Barbara L. McQuade announced.
United States Attorney McQuade was joined in the announcement by Robert D. Foley, III, Special Agent in Charge of the Detroit Division of the Federal Bureau of Investigation.
Pleading guilty before U.S. District Court Judge Bernard A. Friedman was Everett Seay, 61, of Pontiac, Michigan.
According to court documents, beginning in May 2008, Everett Seay met repeatedly with a "J.B.," a person who purported to be a drug dealer from Chicago, who was seeking the assistance of members of the Pontiac City Council to obtain a "regulated use" ordinance to open a business to buy and sell gold for the purpose of laundering drug proceeds. Unknown to Seay, “J.B.” was actually an FBI agent acting in an undercover capacity. During several meetings, Seay solicited and accepted bribe payments from J.B. Between July and December, 2008, Seay received $10,800 in bribe payments from “J.B.”
United States Attorney Barbara L. McQuade said, “Public officials who accept bribes do not belong in office. We hope that our efforts to prosecute corrupt public officials will cause deter candidates from seeking office for personal gain.”
Special Agent in Charge Robert D. Foley stated, “Public officials who abuse their power to enrich themselves rather than serving the citizens will be brought to justice. The FBI is committed to stopping those who betray public trust and rob taxpayers of honest government."
The criminal charges against Everett Seay carry a statutory maximum penalty of ten years in prison and a fine of up to $250,000. Sentencing has been set for June 26, 2013.
This case was investigated by agents of the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Sheldon Light.
Dearborn Businessman, Disbarred Attorney Convicted in Bank Fraud and Bribery ConspiracyRead the Press Release
A Dearborn businessman and attorney were found guilty today by a federal jury of multiple counts of fraud and commercial bribery, announced United States Attorney Barbara L. McQuade.
U.S. Attorney McQuade was joined in the announcement by Robert D. Foley, III, Special Agent in Charge of the Detroit, Michigan office of the Federal Bureau of Investigation, Giovanni Tiano, Special Agent in Charge of the Dearborn, Michigan office of the Department of Homeland Security - Office of Inspector General, and Jeffrey Frost, Special Agent in Charge of the Detroit, Michigan office of U.S. Secret Service.
The jury convicted Hussein "Sam" Nazzal, 58, and Edward A. Schneider, 59, after a three-week trial before U.S. District Judge David M. Lawson.As part of the same prosecution, guilty pleas were entered by Eric Morton, 41 of Wixom, a former Assistant Vice President of Fifth Third Bank, Ross Carey, 49 of Farmington, a former Vice President of Minnesota Title Agency, Majed Tawbe, 43, of Dearborn, a former owner of several local gas stations and Mounif Zeaiter, 47, of Detroit.
The evidence at trial showed that from 2003 to 2007, Nazzal and Schneider conspired to defraud Fifth Third Bank by using straw buyers, false tax returns, inflated financial statements and phantom down payments in a series of commercial loan transactions involving Detroit area businesses and gas stations. Nazzal then submitted false and fraudulent payoff letters for mortgages and pre-existing liens when, in fact, none existed, so that he or one of his companies could obtain payouts at the respective closings. Schneider, the Treasurer of record for two of Nazzal's companies, separately obtained closing funds by submitting fraudulent invoices for attorneys' fees. Nazzal and Schneider were also convicted of paying bribes to Morton, a former vice president at the bank, in connection with the fraudulent loans. Nazzal was also convicted of obstruction of justice by falsifying records in a federal investigation; the evidence showed that at Nazzal's direction, Morton prepared a series of false documents exonerating Nazzal from any wrongdoing. These fraudulent documents were recovered by federal investigators in a safe at Nazzal's house during an April 2010 search warrant.
Nazzal and Schneider were also convicted of conspiring to defraud Standard Federal Bank (now Bank of America) by preparing false documents relating to $750,000 in fraudulent mortgages, then recording them ahead of the bank to effectively jump the bank's lien on the collateral. The evidence showed that Nazzal had arranged for Carey and another associate to provide false testimony in a suit to quiet title in Oakland County Circuit Court so that Nazzal would win the case and pocket $750,000.
Nazzal was also convicted of a similar lien jumping conspiracy involving Comerica Bank and a false $500,000 mortgage.
Schneider's law license was revoked by the State Bar of Michigan in August 2011 in connection with an unrelated matter.
“White collar criminals may use sophisticated methods, but their crime is nothing more than stealing other people’s money,” McQuade said. “While banks suffered the direct loss here, when banks are victimized, we all pay the price in the form of higher rates and damage to our banking system and economy.”
FBI Special Agent in Charge Foley stated, "Individuals in positions of trust who engage in acts of bribery and bank fraud will be pursued and prosecuted. The FBI is dedicated to ensuring these criminals face severe penalties for their illegal acts."
"Fraudulent loan schemes such as this have evolved significantly over the last several years in our area" said Jeff Frost, Special Agent in Charge of the U.S. Secret Service Detroit Field Office. "Cooperation between law enforcement has allowed us to focus our resources and respond quickly to uncover criminal activity such as this type of financial fraud."
Special Agent in Charge Giovanni Tiano stated "Let these convictions stand as an example that the Department of Homeland Security, Office of Inspector General will not tolerate individuals that attempt to corrupt our nation's financial institutions. These types of despicable acts adversely affect our economy and ultimately harm honest citizens."
Sentencing has been set for August 5, 2013. Bond was continued as to defendant Nazzal over the government's objection. Schneider's bond was also continued.
The case was prosecuted by Assistant United States Attorneys Bruce Judge and Erin Shaw. The case was investigated by the FBI, DHS-OIG, DHS-ICE and USSS.
Criminal Charges Filed Against Four Separate Student Aid Fraud RingsRead the Press Release
Criminal charges have been filed against eleven individuals for their roles in four Michigan-based federal student-loan fraud schemes totaling more than $1 million, announced Inspector General Kathleen Tighe of the U.S. Department of Education and Barbara McQuade, U.S. Attorney for the Eastern District of Michigan.
These criminal prosecutions are aimed at shutting down federal student aid fraud rings, loosely affiliated groups seeking to exploit distance education programs to fraudulently obtain Federal student aid.
Today’s announcement highlights four fraud rings operating independently of one another between 2006 and 2010. The eleven individuals charged orchestrated the fraud rings. One ringleader is alleged to have recruited more than 40 people to apply as students for enrollment and aid, even though most had neither a high school diploma nor a GED and were therefore ineligible to receive federal student aid. As a result, participants received more than $665,604.00 in federal student aid. Meanwhile, two of the same ringleader’s brothers orchestrated a similar scheme.
“I’m proud of the work of our agents in our Chicago and Ann Arbor offices and our colleagues in the U.S. Attorney’s Office in Detroit in pursuing those who would abuse the trust of America’s taxpayers by stealing federal student aid. Student aid is not a slush fund for criminals; it provides an opportunity for honest, hard-working students who wish to make their dream of a higher education a reality,” said Inspector General Tighe. “My office is committed to fighting student financial aid fraud and we will continue to aggressively pursue those who cheat these vital aid programs."
“Taxpayers fund federal financial assistance programs to permit needy students to obtain a higher education,” McQuade said. “Stealing these funds robs students of educational opportunities and cheats members of the public from their investment in an educated population.”
Since 2010, the Department of Education, Office of Inspector General has highlighted the vulnerability of distance education programs to fraud and abuse. All aspects of distance education-admission, student financial aid, and course instruction-take place through the internet, and students are not required to present themselves in person at any point. Institutions offering distance education, like all institutions that participate in the federal student aid programs, are not required to verify prospective and enrolled students' identities, so fraud ringleaders are able to use the identities of others, with or without their consent, to target distance education programs. Never needing to set foot on campus, fraud ring participants can exploit institutions well outside their immediate geographic area.
The rings target mainly lower-cost institutions because federal student aid awards easily cover tuition resulting in a higher award balance (known as a refund) paid to the student and intended for educational expenses such as books and room and board. It is these financial aid refund awards which the fraud ring participants seek. The student applicants have no intention of pursuing a degree, and often are not even eligible for federal student aid because they do not have a legitimate high school diploma or GED. The participants take a cut of the financial aid refund proceeds and the turn the remainder over to the ringleaders.
Those charged include: Nina Cooks, 50, Detroit; Sandra Roberts, 40, Detroit; Jacquelyn Robinson, 60, Detroit; Luther Hampton, 55, Eastpointe; Ulysses Hampton, 49, Westland; Ulysses Hampton, Jr., 23, Detroit; Brian Hickman, 45, Detroit; Jason Watkins, 28, Clinton Township; Candace Cureton 61, Detroit; Malayka Burks, 35, Detroit; and Shirley Jimerson, 47, Detroit.
These actions are a result of criminal investigations conducted by the U.S. Department of Education, Office of Inspector General in Chicago, IL and Ann Arbor, MI, the Social Security Administration, Office of Inspector General, the U.S. Postal Inspection Service and prosecutions by Assistant U.S. Attorneys in the U.S. Attorney’s Office for the Eastern District of Michigan.
Ypsilanti Resident Sentenced on Charges of Forced LaborRead the Press Release
An Ypsilanti man was sentenced today to 135 months after having been found guilty in October 2012 of four counts of forced labor, announced U.S. Attorney Barbara L. McQuade.
McQuade was joined in the announcement by Acting Special Agent in Charge William J. Hayes, Homeland Security Investigations, Immigration and Customs Enforcement.
Sentenced was Jean-Claude "Kodjo" Toviave, 44, a native of Togo, West Africa. In addition to his sentence, Toviave was ordered to pay his victims more than $130,000 in restitution which represents minimum wage for their hours of labor.
Evidence introduced during the trial established that Jean-Claude "Kodjo" Toviave, a native of Togo, West Africa, used force, and threats of force, to obtain the domestic labor of four minors from Togo from January 2006 to January 2011. Toviave brought the four minors into the United States by giving them passports with false names and dates of birth. Defendant represented on these immigration documents that the four individuals were his biological children. Toviave pleaded guilty on February 24, 2012, to visa fraud, mail fraud and harboring aliens in connection with bringing the four minors to Michigan from Togo.
The four victims testified at trial that Toviave regularly beat them with broomsticks, a toilet plunger, sticks, ice scrappers and phone chargers if they failed to obey Toviave's orders to complete household labor. Each of the victims' testimony during trial detailed the work that they were forced to do on a weekly and sometimes daily basis, spanning nearly five years. This domestic work included all of the cooking and cleaning in the house, hand-washing laundry, ironing Toviave's suits, shining his shoes, washing and vacuuming his car, baby-sitting the children of his friends and cleaning his friend's home. In addition to force and threats of force, Toviave used food and sleep deprivation as punishment for the minors.
"This sentence is a victory not only for the young victims in this particular case, but also for human dignity and the rule of law," said William J. Hayes, acting special agent in charge of HSI Detroit. "HSI is fully committed to working with our law enforcement partners, both local and international, to combat the crime of human trafficking. Sadly, this crime occurs every day in America. We encourage anyone who suspects that human trafficking or forced labor is occurring in their community to report it to authorities immediately."
"Many people are shocked to learn that slavery and human trafficking still exist in this country, but the victims are often hiding in plain sight," McQuade said. "We are working with victim advocates and law enforcement agencies to expose these crimes and raise public awareness. This conviction and the rescue of these victims occurred because of the diligence of school teachers, advocates, investigators and prosecutors."The case was investigated by special agents from the Department of Homeland Security, Immigration and Customs Enforcement. The case was prosecuted by Assistant United States Attorneys Jeanine Brunson and Mollie O’Rourke.
Michigan Computer Company OwnerSentenced for International Environmental,Counterfeiting CrimesRead the Press Release
A Michigan computer company and its owner were sentenced today to 30 months in prison and ordered to pay a $2 million dollar fine and restitution in the amount of $10,839.00 for trafficking in counterfeit goods and services and violating environmental laws, announced Barbara L. McQuade, United States Attorney for the Eastern District of Michigan.
McQuade was joined in the announcement by William Hayes, Acting Special Agent-in-Charge for U.S. Immigration and Customs Enforcement’s Homeland Security Investigations in Detroit and Randall Ashe, Special Agent-in-Charge of the Environmental Protection Agency's criminal enforcement program in Michigan.
U.S. District Judge David M. Lawson sentenced Mark Jeffrey Glover, 44, and his company, Discount Computers, Inc. (DCI) for trafficking in counterfeit goods and services. DCI was also sentenced for storing and disposing of hazardous waste without a permit. Glover pleaded guilty to the charges on behalf of his company and himself in October.
DCI, headquartered in Canton, Mich. with warehouses in Maryland Heights, MO., and Dayton, N.J., operated as a broker of used electronic components, such as computers and televisions. DCI resold working items and disassembled broken ones, selling them for scrap. A large part of DCI’s business involved exporting used cathode ray tube (CRT) monitors to Middle Eastern and Asian countries. Egypt prohibits the importation of computer equipment which is more than five years old. To evade this requirement, all three DCI locations replaced original factory labels on used CRT monitors with counterfeit labels which reflected a more recent manufacture date. Over a five-period, DCI sent at least 300 shipments to Egypt, with a total shipment value of at least $2.1 million, constituting more than 100,000 used CRTs monitors.
Federal law makes it illegal to knowingly use a counterfeit mark on or in connection with goods and services for the purpose of deceit or confusion. It is also illegal to store and dispose of hazardous waste, which includes certain electronic waste, or e-waste, without a permit. Glass from older CRT monitors is known to contain levels of lead, which is toxic hazardous waste. When deposited in a landfill the lead can leach out and contaminate drinking water supplies. As a result, these types of monitors are required to be disposed of as hazardous waste under the Resource Conservation and Recovery Act. By exporting older CRTs with fraudulent manufacture dates, Glover sent a large quantity of older e-waste overseas which was subject to improper recycling, increasing the potential for environmental and human exposure to hazardous materials.
“Mr. Glover and his company falsified labels to conceal the age of computer monitors and their potential for hazardous waste,” McQuade said. “We hope this case will encourage others to comply with laws designed to protect drinking water and prevent human exposure to toxic waste.”
"When potentially hazardous e-waste is not properly disposed of, human lives can seriously be impacted", said William Hayes, special agent in charge of HSI Detroit. "The investigation confirmed that the defendant repeatedly and illegally exported used cathode ray tubes overseas. Homeland Security Investigations stands with our law enforcement partners ready to prevent any company from ignoring U.S. controls to export hazardous e-waste."
“It is a serious and costly offense to abandon hazardous waste,” said Randall Ashe, Special Agent in Charge of EPA’s criminal enforcement program in Detroit and Chicago. “Furthermore it is a serious offence to engage in the illegal export of e-waste as this has potential for environmental and human exposure to hazardous materials. It is because of these types of environmental and human health threats that the EPA has designated illegal export of e-waste one of its top six international priorities. Those who engage in this type of behavior put the public and the environment at risk, and will be prosecuted.”E-waste is a global concern because used electronic equipment contains more than 1,000 different substances including toxic heavy metals and organics that, if disposed of improperly, can cause significant pollution problems. Improper e-waste disposal is common in third world and developing countries because they are ill equipped for proper recycling, refurbishing, and disposal. It is also common in these countries to find black market recycling groups that extract valuable metals from e-waste without regard for the safety of their impoverished employees who are exposed directly to toxic materials.
The case was prosecuted by the U.S. Attorney's Office in the Eastern District of Michigan by Assistant U.S. Attorney Jennifer Blackwell. The case was investigated by agents of the U.S. Environmental Protection Agency's Criminal Investigation Division and U.S. Department of Homeland Security–Homeland Security Investigations, Detroit.
Former Highland Park Police Officer Pleads Guilty to Extortion Conspiracy to Protect A Cocaine ShipmentRead the Press Release
A Highland Park Police officer pleaded guilty today to conspiring with three other police officers to commit extortion and protect a shipment of cocaine, U.S. Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by FBI Special Agent in Charge Robert D. Foley, III.
During a hearing before U.S. District Judge Avern Cohn, Craig Clayton, 55, of Highland Park, Michigan, admitted that in late 2012 and early 2013, he agreed with three other Highland Park police officers to take money in exchange for protecting a four-kilogram shipment of cocaine. Clayton admitted that on January 23, 2013, he drove a car containing what he believed to be two kilograms of cocaine. Clayton brought his police badge and gun to protect the shipment. Another Highland Park police officer drove a separate car containing what he believed were two additional kilograms of cocaine. Later, Clayton accepted $1,500 in cash from an FBI informant for his work in delivering and protecting the drug shipment.
United States Attorney McQuade said, "Police officers who take bribes have no place in law enforcement. They will be prosecuted for violating their duties to serve the public.”
FBI Special Agent in Charge Foley stated, “Police officers who swear an oath to serve and protect are held to the highest standards of ethics and integrity. The FBI is committed to ensuring those standards are maintained, and in cases of abuse, will pursue and prosecute those responsible."Based on his guilty plea and felony conviction for conspiring to commit extortion, Clayton is facing a maximum of twenty years in prison and a fine of up to $250,000.
The case was investigated by agents of the FBI. It is being prosecuted by Assistant United States Attorney David A. Gardey.Ronald Zajac, General Counsel of Detroit's Pension Funds, and Paul Stewart, Former Pension Fund Trustee, Indicted for Bribery ConspiracyRead the Press Release
Ronald Zajac, of Northville, Michigan, the General Counsel of Detroit's two pension funds, and Paul Stewart, of Detroit, Michigan, a former Trustee of Detroit's Police and Fire Retirement System were both charged today in a superseding indictment with participating in a bribery and kickback conspiracy involving over $200 million in investments before the two City of Detroit pension funds United States Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by FBI Special Agent in Charge Robert D. Foley, III.
Zajac and Stewart were added as defendants in a superseding indictment that had already charged former city Treasurer Jeffrey Beasley and investment sponsor Roy Dixon with the bribery and kickback conspiracy. The charges were set forth in a Fifth Superseding Indictment issued by a Detroit federal Grand Jury today.
United States Attorney McQuade said, "Public officials entrusted with billions of dollars in employees’ pension money cannot take bribes and kickbacks to influence their investment decisions.”
Robert Foley, Special Agent in Charge, Federal Bureau of Investigation said, "Those who are fortunate enough to serve in positions of public trust are expected to act with honesty and integrity at all times. The FBI is committed to holding these individuals accountable for abuses including acts of bribery, kickbacks and other serious crimes."
Zajac served as the General Counsel of Detroit's two pension funds, the General Retirement System and the Police and Fire Retirement System, from 1982 through 2012. In November 2012, the Board of Trustees of the Police and Fire Retirement System terminated Zajac as General Counsel. Zajac still serves as the General Counsel of the General Retirement System. Stewart was a City of Detroit police officer for more than 30 years and served as a Trustee of the Police and Fire Retirement System from 2004 to 2011. Stewart also served as the Vice President of the Detroit Police Officers Association, the union that represents most of Detroit's police force.
According to the 13-count superseding indictment, between January 2006 and April 2009, defendants Zajac and Stewart conspired with Beasley, Dixon, and other individuals to defraud current and retired employees of the City of Detroit of their right to the honest services of former Mayor Kwame Kilpatrick, Beasley, Stewart, and other Trustees free from bribery and corruption. During the the conspiracy, Stewart accepted thousands of dollars in cash, trips, entertainment, and other things of value from people seeking investments from the Police and Fire Retirement System. Stewart accepted a $5,000 casino chip, a Christmas basket that included an envelope with thousands of dollars in cash, a cash payment of $2,500 during a trip to New York City, a cash payment of $2,500 during a trip to Florida, an excursion to the Bahamas for Stewart and his mistress, and a trip to Naples, Florida for Stewart and his mistress. In addition, Stewart accepted a "birthday present" of $5,000 in cash at a party at the Atheneum Hotel. Zajac organized the party, and Zajac solicited and collected the cash from people having business before the Boards of Trustees of the pension funds. Zajac also collected and delivered an additional $5,000 in cash for a second pension fund trustee at the same party. At a party in January 2007, Zajac collected and delivered thousands of dollars in cash for former Treasurer and Trustee Beasley.
Also during the conspiracy, Zajac sought to curry favor with Beasley and former Mayor Kilpatrick by raising more than $70,000 for the Kilpatrick Civic Fund. Zajac directed and forced people having business before the pension funds to spend thousands of dollars to entertain trustees of both pension funds. Zajac forced one trustee to pay more than $10,000 for limousines for trustees during a trip to New York City.
Soon after giving Beasley, Stewart, and a third trustee thousands of dollars in cash at their "birthday parties," the trustees voted to give Zajac a substantial raise as General Counsel of the two pension funds. As a result of the raise, Zajac was receiving over $400,000 in compensation per year from the pension funds.
Upon conviction, both Zajac and Stewart face a maximum of twenty years in prison and a fine of up to $250,000 on the charge of conspiracy to commit honest services mail and wire fraud. The superseding indictment seeks forfeiture of the proceeds of the conspiracy received by Zajac, Stewart, and their co-conspirators.
The case was investigated by agents of the FBI, the Department of Labor, and the Internal Revenue Service. It is being prosecuted by Assistant United States Attorneys Robert Cares and David A. Gardey.
Forty-four Individuals Indicted in Health Care Fraud and Drug Distribution SchemeRead the Press Release
Seven Doctors, Four Pharmacists, Three Home Health Agency Owners Among Those Indicted
Forty-Four individuals have been charged in a health care fraud and drug distribution scheme, U.S. Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by Special Agent in Charge Robert L. Corso of the Drug Enforcement Administration, Special Agent in Charge Robert D. Foley III, of the Federal Bureau of Investigation, Acting Special Agent in Charge Gilbert Salinas of the Bureau of Alcohol, Firearms, and Explosives, Lamont Pugh, Special Agent in Charge of the Inspector General of the Department of Health and Human Services, Acting Special Agent in Charge William Hayes of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, Special Agent in Charge Erick Martinez of the Internal Revenue Service, Criminal Investigation, Detroit Police Chief Chester Logan, and Portsmouth, Ohio, Police Chief Robert Ware, II.
The 13-count superseding indictment charges 44 new defendants with a drug conspiracy involving prescription drug controlled substances such as OxyContin, Opana, Vicodin and other drugs. Health care fraud charges were filed against 32 of the defendants, while three defendants were charged with money laundering and three defendants were charged with being felons in possession of firearms.
The superseding indictment alleges that Sardar Ashrafkhan, Deepak Kumar, John Check and David Vezzossi, owners of home health agencies, would provide kickbacks, bribes, and other illegal benefits to physicians to induce them to write prescriptions for patients with Medicare, Medicaid, and private insurance. Patients were recruited into the scheme by patient recruiters or “marketers,” who would pay kickbacks and bribes to patients in exchange for the patients’ permitting the pharmacies and physicians to bill their insurance for medications and services that were medically unnecessary and/or never provided. During this conspiracy, prescriptions were presented to the Sav-Max (pharmacist Ahab Elmadhoun), Sav-Mart (pharmacist Waleed Yaghmour), Atrium (pharmacist Krina Patel and manager Sanjay Patel), or Caremax (pharmacist Jayshriben Gandhi and manager Guarang Gandhi) Pharmacies for filling. The medical professionals and health care agency owners would then bill the relevant insurers for services supposedly provided to the patients, without regard to the medical necessity of those prescriptions and services. Some of the pharmacists would bill insurers, including Medicare, Medicaid, and private insurers, for dispensing the medications, despite the fact that the medications were medically unnecessary and, in many cases, never provided. Other times, the pharmacists accepted cash from the recruiters for filling and dispensing medications.
The indictment further alleges a conspiracy to distribute controlled substances by the health care owners, physicians, pharmacies, and recruiters to facilitate the submission of false claims to Medicare, Medicaid, and private insurers. The home health care owners paid physicians associated with the scheme kickbacks in exchange for prescriptions for controlled substances for their patients which were filled at the respective pharmacies. The controlled substances involved included the Schedule II drug oxycodone (Oxycontin), the Schedule III drug hydrocodone (Vicodin, Lortab) the Schedule IV drug alprazolam (Xanax), and the Schedule V drug cough syrup with codeine.
The indictment further alleges illegal money laundering by pharmacists Waleed Yaghmour and Ahab Elmadhoun, and also by home health agency owner Sardar Ashrafkhan, a.k.a. “Dr. Khan.” The indictment further alleges individual charges of felon in possession of a firearm against marketers Toney Taylor and Troy Ivory, and home health agency owner John Stephen Check.
The 44 new defendants named in the 13-count indictment were pharmacists Krina Patel, 35, of Shelby Twp.; and office manager Sanjay Patel, 39, of Shelby Twp., Jayshriben Gandhi, 43, of Canton; and office manager Guarang Gandhi, 39, of Canton, pharmacist Ahab Elmadhoun, 40, of Canton; pharmacist Waleed Yaghmour, 46, of Dearborn; physicians Adelfo Pamatmat, 67, of Farmington Hills, physician John Geralt, 84, of Beverly Hills, physician Malik Dababneh, 53, of Oxford, physician Paul Kelly, 76, of Bath, physician Ravi Iyer, 42, of Novi, physician Muhammad Ahmed, 65, of Ypsilanti, physician assistant Timothy Spencer, 64, of Inkster, Wayne State Medical School graduate Javar Myatt-Jones, a.k.a. “Dr. Jones,” 33, of Chicago, foreign medical student Faraj Ghabag, 33, of Oregon, OH, home health agency owners Sardar Ashrafkhan, a.k.a. “Dr. Khan,” 55, of Warren, home health agency owner Deepak Kumar, 45, of Washington Twp., and his assistant Mohammad Mian, 44, of Oak Park, home health agency owner John Stephen Check, 53, of Dearborn Heights, and business partner co-owner David Vezzossi, 52, of West Bloomfield, marketer Frederick Till Jackson Sr., a.k.a. “Big Fred,” 52, of Detroit, marketer Tiffany Walker, a.k.a. “Mary Reed,” 45, of Detroit, Sierra Walker, a.k.a. “Tosha,” 25, of Detroit, marketer Toney Taylor, 44, of Detroit, marketer Jimmy Foster, 35, of Detroit, marketer James Blake, 32, of Sterling Heights, marketer Troy Ivory, 47, of Warren, marketer Jackie Renee Ivory, 32, of Ecorse, marketer Eric Hester, 40, of Ionia, marketer Felicia Jackson, 27, of Eastpointe, marketer Ayesha McCray, 30, of Detroit, marketer Jamall Gibson, 30, of Eastpointe, couriers Alfornia Johnson, a.k.a. “Con,” a.k.a “Alex,” a.k.a. “ShiCon,” 34, of Detroit, Phillip Burnett, a.k.a. “Frank,” a.k.a “Frank Burns,” 33, of Detroit, Ronnie Moses, a.k.a. “Red,” 23, of Detroit, Corey Williams, a.k.a. “CoCo,” 44, of Detroit, William Ashley Smith, a.k.a. “Cash,” of Portsmouth, OH, Robert Scott Dials, 25, of Portsmouth, OH, Cherish Lewis, 26, of Wheelersburg, OH, distributors Willie David Jackson, a.k.a. “Lil’ Dave,” 24, of Eastpointe, Lance Hatten, 29, of Columbus, OH, Josh Barnes, 33, of Wheelersburg, OH, Nathan Reed, a.k.a. “Reed,” 31, of Portsmouth, OH, and electronic transfer nominee Garland Holman, 30, of Detroit.
“The merger of health care fraud and drug trafficking is a disturbing trend that is not only robbing taxpayers, but also fueling addictions to prescription drugs,” McQuade said. “Prescription drug abuse has become a national epidemic, with more Americans dying from overdoses than from gunshot wounds.”
Robert L. Corso, Special Agent in Charge of DEA's Detroit Field Division stated, "Confronting the illegal diversion and abuse of controlled pharmaceuticals is a top priority of DEA and our law enforcement partners. The indictment alleges that this drug distribution organization includes members of the medical profession who abused their positions of trust and endangered the lives of countless people for pure profit. This was done by illegally distributing opiate painkillers and other controlled prescription medications throughout southeast Michigan and stretching to the southern reaches of Ohio. This investigation makes it clear that the DEA and our partners in law enforcement will continue to investigate and bring to justice those individuals that are responsible for the illegal distribution of prescription medicines."
FBI Special Agent in Charge Foley stated, "These arrests are the result of countless hours of hard work by the FBI and its law enforcement partners. We remain dedicated to pursuing and prosecuting any individuals who illegally exploit the health care system for their own personal gains.”
Acting ATF Special Agent in Charge Gil Salinas stated. “The combined law enforcement intelligence and resources were crucial in addressing this criminal element and in making our communities safer. ATF continues to pursue the those who continually endanger our communities. I commend the outstanding collaboration of our Violent Crime Task Force and our local, state, and federal law enforcement partners in undertaking this sweeping investigation.”
Special Agent in Charge Erick Martinez, Internal Revenue Service Criminal Investigation added that these crimes committed by doctors and pharmacists were worse than many typical schemes. “These illegal activities are done primarily to make money and once the money is in the hands of the suspects, it’s hard for them to deny their involvement.”
"The public rightfully expects that doctors will uphold professional standards rather than exploit patients for personal gain" said Lamont Pugh III, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General's region including Michigan. "Working closely with our law enforcement partners, we will investigate and bring to justice those who harm the Medicare program and taxpayers by fraudulently submitting claims related to illegal diversion and/or distribution of addictive drugs."
Detroit Police Chief Logan stated, "The investigation of this case exemplifies the strong teamwork between the men and women of the Detroit Police Department and our state and federal law enforcement partners, along with members of the Portsmouth, Ohio Police Department. Having the United States Attorney’s Office prosecute this criminal case will be sending a strong message to those who choose to break the law. Together we will make a difference.”
Police Chief Robert Ware stated, “Portsmouth is along a corridor of U.S. Route 23 better known as the drug pipeline. The flow of drugs from Detroit to Portsmouth and to neighboring cities such as Huntington, West Virginia has changed lives and communities forever. Behind the scenes are some very dedicated, hardworking Officers, Deputies, State Troopers, Federal Agents and Prosecutors working together to bring justice to those poisoning our communities. What you have before you today is the culmination of some of those joint efforts to curb the flow of illegal drugs into our neighborhoods.”
Of the ten defendants charged in the earlier indictment, all have been convicted by pleas over the last year. Those defendants included Detroit and Ohio residents. Several have been sentenced already and others are due to be sentenced in the near future.
The investigation in this case was handled by the Drug Enforcement Administration, the Federal Bureau of Investigation, the Bureau of Alcohol Firearms and Explosives, Detroit Police Dept., Portsmouth, Ohio, Police Dept., Scioto County Sheriff’s Office, the Internal Revenue Service Criminal Investigation, the U.S. Immigration and Custom’s Enforcement’s Department of Homeland Security Investigations, the Department of Health and Human Services Office of Inspector General, and the Detroit Violent Crimes Task Force and Michigan State Police. The case is being prosecuted by Assistant U.S. Attorneys Terrence R. Haugabook, Michael Martin, and Wayne F. Pratt. They will be assisted by Assistant U.S. Attorneys Jonathan Grey and Gjon Juncaj of the Forfeiture Section.
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.
Thirteen Individuals Indicted in Health Care Fraud and Drug Distribution SchemeRead the Press Release
Five Doctors, Four Pharmacists, and Home Health Agency Owner among those indicted in follow-up to the Babubhai Patel case
Thirteen individuals have been charged in a large-scale health care fraud and drug distribution scheme, United States Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by Special Agent in Charge Robert L. Corso of the Drug Enforcement Administration, Special Agent in Charge Robert D. Foley III, of the Federal Bureau of Investigation, and Lamont Pugh, Special Agent in Charge of the Inspector General of the Department of Health and Human Services.
The superseding indictment, unsealed yesterday, adds 13 new defendants and new charges to a 2011 indictment, which charged Canton Pharmacist Babubhai ‘Bob” Patel with overseeing a massive health care fraud and drug distribution ring at more than 20 pharmacies that he owned and controlled in metro-Detroit.
The 13 new defendants named in the superseding indictment include five doctors, four pharmacists, and a home health agency owner: pharmacist Mehul Patel, 34, of Canton; pharmacist Pradeep Pandya, 49, of Grand Blanc; pharmacist Vikas Sharma, 34, of Windsor; pharmacist Mukesh Khunt, 33, of Toronto; physicians Richard Utarnachitt, 71; of Clinton Township, physician Ruben Benito, 72; of Madison Heights, physician Javaid Bashir, 59, of Jackson, physician Carl Fowler, 60; of West Bloomfield, physician Rajat Daniel, 47; of West Bloomfield, home health agency owner Vinod Patel, 40; of Canton, business associate Atul Patel, 31, of Canton; marketer Anthony Macklin, a.k.a. “Jimbo,” of Detroit; and marketer
Michael Thoran, a.k.a. “Ace,” also of Detroit.The 21-count superseding indictment charges that Babubhai Patel was the owner and controller of approximately 26 Michigan pharmacies. The indictment alleges that Babubhai Patel would offer and provide kickbacks, bribes, and other illegal benefits to physicians to induce those physicians to write prescriptions for patients with Medicare, Medicaid, and private insurance. Patel would also direct that those prescriptions be presented to one of the Patel Pharmacies for billing. In exchange for their kickbacks and inducements, the physicians would write prescriptions for the patients, and bill the relevant insurers for services supposedly provided to the patients, without regard to the medical necessity of those prescriptions and services. The physicians would direct the patients to fill their prescriptions at one of the Patel Pharmacies, where Babubhai Patel and his pharmacists would bill insurers, including Medicare, Medicaid, and private insurers, for dispensing the medications, despite the fact that the medications were medically unnecessary and, in many cases, never provided. Patients were recruited into the scheme by patient recruiters or “marketers,” who would pay kickbacks and bribes to patients in exchange for the patients’ permitting the Patel Pharmacies and the physicians associated with Patel to bill their insurance for medications and services that were medically unnecessary and/or never provided.
The indictment further alleges a conspiracy to distribute controlled substances at the Patel pharmacies to facilitate the submission of false and fraudulent claims to Medicare, Medicaid, and private insurers. According to the indictment, Babubhai Patel and his associates paid physicians kickbacks for prescriptions for controlled substances for their patients, and directed those patients to fill the prescriptions at a Patel Pharmacy. The controlled substances included the Schedule II drug oxycodone (Oxycontin), the Schedule III drug hydrocodone (Vicodin, Lortab) the Schedule IV drug alprazolam (Xanax), and the Schedule V drug cough syrup with codeine. According to the indictment, prescriptions for these drugs were written outside the course of legitimate medical practice. Babubhai Patel and his pharmacists would then dispense the controlled drugs to patients without medical necessity. The distribution of controlled substances in this manner was intended, in part, as a kickback to the patients for agreeing to enable their insurance cards to be billed for medications purportedly dispensed at the Patel Pharmacies. The indictment also alleges that Babubhai Patel and his pharmacists dispensed controlled substances outside the scope of legitimate medical practice to patient recruiters or “marketers,” as a kickback for their efforts in to recruit patients into the scheme.
In addition to his pharmacies, the indictment alleges that Babubhai Patel had an ownership interest in a home health agency managed by his brother, Vinod Patel. The indictment alleges that Vinod Patel, Babubhai Patel, and others bribed physicians and other referral sources for referrals to that home health agency, and then billed the Medicare program for home health services that were medically unnecessary and never provided.
Of the 26 defendants originally charged in the indictment, six, including Babubhai Patel and four pharmacists, were convicted at a trial last summer. Fifteen additional defendants, including six pharmacists and two doctors, have pleaded guilty in the case. The five remaining defendants whose charges were renewed in the superseding indictment are set for trial on June 10, 2013. On February 1, 2013, Babubhai Patel was sentenced to 17 years imprisonment by U.S. District Judge Arthur J. Tarnow.
“Taxpayers fund Medicare and Medicaid to provide health care for needy citizens,” McQuade said. “We hope that doctors and pharmacists will take note that if they exploit these programs for personal profit, they will face serious consequences.”
Robert L. Corso, Special Agent in Charge of DEA's Detroit Field Division stated, "Confronting the illegal diversion and abuse of controlled pharmaceuticals is a top priority of DEA and our law enforcement partners. Today's indictments, particularly of the medical professionals are significant. It is alleged that these individuals abused their positions of trust and endangered the lives of countless people by illegally distributing opiate painkillers and depressants throughout southeast Michigan. This investigation makes it clear that the DEA and our partners in law enforcement will continue to investigate and bring to justice those individuals that are responsible for the illegal distribution of prescription medicines."
FBI Special Agent Foley stated, "Dishonest health care providers and pharmacists who exploit Medicare and Medicaid through fraudulent billing and other schemes will be held accountable for their crimes. The FBI remains committed to investigating this type of fraud and bringing those who abuse the system to justice."
“Schemes involving the illegal diversion and/or distribution of controlled substances go hand and hand with the fraudulent billing of Medicare and other health care programs” said Lamont Pugh III, Special Agent in Charge of the U.S. Department of Health & Human Services, Office of Inspector General – Chicago Regional Office. “The OIG and our law enforcement partners are acutely aware of the potential for those who commit health care fraud to utilize this blended approach when seeking to line their pockets with tax payer dollars. The indictments and arrests announced today illustrate our combined commitment and effort to protect the safety and well-being of the public and as well as the health care programs they rely upon.”
The investigation in this case was handled by the Drug Enforcement Administration, the Federal Bureau of Investigation, and the Department of Health and Human Services Office of Inspector General. The case is being prosecuted by Assistant U.S. Attorneys John K. Neal and Wayne F. Pratt.
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.
Former Detroit Mayor Kwame Kilpatrick, His Father Bernard Kilpatrick and City Contractor Bobby Ferguson Were Convicted on Racketeering, Extortion, Bribery, Fraud and Tax ChargesRead the Press Release
Today a federal jury returned guilty verdicts against Kwame M. Kilpatrick, 42, of Southlake, Texas and Bobby W. Ferguson, 44, of Detroit, on charges that they used Kwame Kilpatrick’s positions as Mayor of Detroit and Michigan State House Representative to execute a wide ranging racketeering conspiracy involving extortion, bribery and fraud, United States Attorney Barbara L. McQuade announced. Bernard Kilpatrick, 70, of Detroit was convicted of a felony tax offense.
McQuade was joined in the announcement by Robert D. Foley, III, Special Agent In Charge of the Detroit Field Office of the Federal Bureau of Investigation, Randall Ashe, Special Agent in Charge of the U.S. Environmental Protection Agency, Special Agent in Charge Erick Martinez, IRS Criminal Investigation and Barry McLaughlin, Special Agent in Charge, U.S. Department of Housing and Urban Development - Office of Inspector General.
Kwame Kilpatrick was convicted of 24 counts extortion, mail fraud, tax violations and racketeering, Bobby Ferguson was convicted of 9 counts of extortion and racketeering and Bernard Kilpatrick was convicted of one count of filing a false tax return.
Co-defendants Victor Mercado, former Director of the City of Detroit Water and Sewerage Department and Derrick Miller, former Chief Administrative Officer of the City of Detroit were also indicted as being part of the conspiracy and both pleaded guilty to their roles and are waiting sentencing.
The jury deliberated for about 14 days before returning the verdicts, concluding a five-month long trial before United States District Judge Nancy G. Edmunds.
United States Attorney Barbara L. McQuade stated, "Although this investigation spanned many years, this case is not about the past. It is about the future. This verdict has sent a powerful message that corruption will not be tolerated in this community. The people of Detroit deserve better and expect better. Candidates should seek public office to make a difference, not to make money for themselves."
FBI Special Agent in Charge Foley stated, "The FBI Led Detroit Area Public Corruption Task Force worked tirelessly to pursue and prosecute individuals associated with a criminal enterprise run for years out of the Detroit Mayor's Office. Due to the scope and complexity of the investigation, it was imperative to make sure no corners were cut and no stone was left unturned. With this conviction, the public can be reassured that no corrupt activity will be left unchecked. No violation of the public's trust will go unpunished. The citizens of the state of Michigan and in this case the City of Detroit, deserve and expect the highest quality of government, and we remain dedicated to ensuring they receive it."
"Corruption at any level diminishes the hard work and dedication of the thousands of elected officials and government employees who are dedicated to providing honest services to the American public”, said Richard Weber, Chief of IRS Criminal Investigation. "IRS-CI stands committed to weed out individuals who ignore the public's well being, and choose to take the path to financial success by using greed and corruption. Mr. Kilpatrick attempted to conceal his public corruption by failing to report to the Internal Revenue Service his illicit receipt of hundreds of thousands of dollars. When elected officials disregard their sworn oath because greed has clouded their judgment, let this case serve as a reminder that no one is above the law and everyone is accountable for their misdeeds."
"The U.S. EPA mandated the improvement of the Detroit Water & Sewerage Department to address long term non compliance with the city's discharge permit," said Randall K. Ashe, Special Agent in Charge of EPA's criminal enforcement program in Michigan. "Sadly, former Mayor Kwame Kilpatrick used the awarding of these contracts as an opportunity to enrich himself and Bobby Ferguson. EPA CID is very grateful to the jury for rendering this verdict and hope that this sends a clear message to all municipal officials that this conduct will not be tolerated."
HUD Special Agent in Charge Barry McLaughlin stated, “The citizens of Detroit should not have to tolerate those who use deceit and fraud to fill their pockets with money reserved to improve this community. This case will serve notice that the United States Attorney Office and HUD - Office of Inspector General will make every effort to ensure that these funds are used for this community, and will vigorously investigate those that work scams at the expense of Detroiters”.
The evidence presented at trial established that Kwame Kilpatrick and Bobby Ferguson participated in a racketeering conspiracy to financially enrich themselves, their associates and their families by using the power and authority of Kwame Kilpatrick’s position as Mayor of Detroit, as well as his position as a member of the Michigan House of Representatives, to commit extortion, bribery and fraud, as well as by defrauding donors to nonprofit entities under the control of Kwame Kilpatrick and his associates, including the Kilpatrick Civic Fund, Kilpatrick for Mayor, and the Kilpatrick Inaugural Committee.Extortion of Municipal Contractors. At the heart of the conspiracy was a scheme to use the power and authority of Kwame Kilpatrick’s office as Mayor of Detroit to extort municipal contractors by coercing them to include Ferguson in public contracts, and to rig the award of public contracts to ensure Ferguson obtained a portion of the revenue from those contracts. Ferguson obtained at least eighty-three million dollars in revenues from municipal contracts through this scheme, a portion of which he shared with his co-conspirators. At trial, the government presented evidence regarding multiple instances of attempted or actual extortion and contract rigging, including the following:
• Kwame Kilpatrick held up a $50 million sewer lining contract until Inland Waters, the winning bidder, agreed to pay Ferguson, who ultimately received $24.7 million in contract revenue when the contract was increased to $138 million.
• Kwame Kilpatrick held up a $12 million amendment to a sewer lining contract until Inland Waters agreed to pay Ferguson $350,000 for work Ferguson wanted at a large sewer collapse at 15 Mile Road in Sterling Heights, although Ferguson did no work in exchange for the payments.• Ferguson extorted Lakeshore Engineering Services to give Ferguson $1.7 million from a $28 million sewer outfalls contract although Ferguson did no work for the payments.
• Ferguson extorted Walbridge Aldinger Company for $5 million in work for Ferguson on a contract to construct the Baby Creek combined sewer overflow facility and the Patton Park recreational facility.
Defrauding the State and Non-Profit Donors. Evidence showed that during Kwame Kilpatrick’s tenure as a Representative of the Michigan House and as the Mayor of Detroit, Kwame Kilpatrick, Bobby Ferguson, and Bernard Kilpatrick obtained over half a million dollars from the State of Michigan and donors to nonprofit entities they controlled, including the Kilpatrick Civic Fund, Kilpatrick for Mayor, and the Kilpatrick Inaugural Committee, under the false pretense that the money would be used to better the community or for campaign expenses when, in reality, the money was used for personal or other impermissible expenses. This included the following:
• Kwame Kilpatrick, while a member of the State House of Representatives and with the assistance of Ferguson, defrauded the State of Michigan by directing over $280,000 in grant money from the State to nonprofit entities controlled by Ferguson and Kwame Kilpatrick’s wife. The State grant money, which was supposed to help children and seniors in the Detroit area, was spent in large part by Kilpatrick on personal expenses and by Ferguson to refurbish the offices of his company.• Kwame Kilpatrick defrauded donors to Kilpatrick for Mayor, the Kilpatrick Inaugural Committee and the Kilpatrick Civic Fund by taking cash kickbacks of over $250,000 from his fundraising director.
• Kwame Kilpatrick, defrauded donors to the Kilpatrick Civic Fund by using at least $200,000 in Civic Fund money for personal expenses, $200,000 for friends and family, and $150,000 in improper campaign expenses.
Bribery/Extortion Involving Other Public Contracts and Investments. Further evidence showed that during Kwame Kilpatrick’s tenure as Mayor, he and Bernard Kilpatrick solicited and accepted payments and property valued at over one million dollars from persons seeking business with the City or its General Retirement System or Police and Fire pension funds. Included in this bribery/extortion scheme were the following:
• Karl Kado paid Kwame Kilpatrick and Bernard Kilpatrick approximately a quarter-million dollars in cash for favorable treatment with respect to his contracts for cleaning and electrical services at Cobo Hall;
• Jon Rutherford provided money and campaign-related payments totaling over $300,000 on behalf of Kwame and Bernard Kilpatrick in return for Kwame Kilpatrick’s support of Rutherford’s waterfront casino development plan;
• Tony Soave provided free private jet service and other benefits to Kwame and Bernard Kilpatrick worth over $300,000, so that he would not be harmed with respect to his business interests with the City; and• Marc Andre Cunningham paid Bernard Kilpatrick a portion of his commission on a pension fund consulting deal from a venture capital firm (totaling at least $15,000) for Kwame Kilpatrick’s support of Cunningham’s firm getting the pension fund monies.
Proceeds from the Extortion/Bribery Conspiracy. Evidence was presented that in return for the proceeds from the public contracts Ferguson received, Ferguson kicked back significant sums of cash, items of value or other benefits to Kwame Kilpatrick. Further evidence was presented that during his tenure as Mayor, Kwame Kilpatrick used over $840,000 cash, derived from the extortion/bribery/fraud conspiracy, to make deposits into his bank accounts, pay his credit card bills, purchase cashier’s checks, and clothing, and to repay loans. During his son’s tenure as Mayor, Bernard Kilpatrick deposited over $840,000 in cash into his personal bank accounts.
As a result of the lengthy and wide-ranging investigation into corruption in the City of Detroit, the government has obtained convictions from thirty-two other individuals. Attached is a list detailing these convictions.
The investigation of this case was conducted by agents of the FBI, EPA-CID and IRS-CID. The case is being prosecuted by Assistant U.S. Attorneys Mark Chutkow, R. Michael Bullotta, Jennifer Blackwell and Eric Doeh.
Maryland Resident Sentenced to 14 Years in Prison for $8 Million “Ponzi” SchemeRead the Press Release
Michael Winans, Jr., 30, of Jessup, Maryland, was sentenced today to 14 years in federal prison for defrauding investors out of approximately $8 million dollars, United States Attorney Barbara McQuade announced.
Joining in the announcement was Wayne County Prosecutor Kym Worthy and Special Agent in Charge Robert D. Foley, III, Federal Bureau of Investigation (FBI).
In addition to the prison sentence, United States District Judge Sean Cox also ordered Winans to pay restitution in the amount of $4.7 million dollars to the hundreds of victims he defrauded as well as a $175,000 fine, which is the maximum allowed by law.
Winans pleaded guilty in October, 2012 to operating the Winans Foundation Trust (the Trust) and representing that the Trust was a company investing in crude oil bonds in Saudi Arabia. Winans initially recruited eleven other individuals, whom he called "shareholders" in the Trust, to invest in the crude oil bonds. Winans required the so-called "shareholders" to solicit additional investors and then send the investors' funds to the Trust. Over 1,000 victim investors from several states sent over $8,000,000 to the Trust. All of these victims were led to believe they were investing in Saudi Arabian crude oil bonds that Winans well knew did not exist. In reality, Winans converted some of the victim investors' money to his own personal use. He also redistributed some of his later victims’ money to the earlier victims while falsely representing to them that it was the return on their "investments" he had promised.
"Investor fraud schemes like this one are just a fancy way to steal other people's money," McQuade said. "Anyone who robs citizens of their hard-earned savings will be brought to justice."
"We are pleased that the many victims of Michael Winans can rest easier tonight knowing that he has been convicted and will be spending his time in federal prison," said Prosecutor Kym L. Worthy.
FBI Special Agent in Charge Foley, "Those individuals who engage in illegal investment schemes will face severe penalties for their criminal activity. The FBI is committed to vigorously pursuing anyone who commits these crimes."This case was a joint investigation with the FBI, the Wayne County Prosecutor’s Office and the Michigan Department of Licensing and Regulatory Affairs, Office of Financial and Insurance Regulation (OFIR).
The case is being prosecuted by Assistant United States Attorney Abed Hammoud.
A telephone line and e-mail address have been set up by the FBI/United States Attorney’s Office to collect information about potential victims. Individuals who believe they may have been a victim of the Winans Foundation Trust should provide their name, address, phone number and e-mail address to one of the following: e-mail: [email protected] or toll free 1-888-702-0553.Justice Department Files Lawsuit Against Golden Corral Restaurant for Violation of the Americans with Disabilities ActRead the Press Release
The United States Attorney's Office for the Eastern District of Michigan announced today that it has filed suit against the Golden Corral restaurant in Westland, Michigan for violating the American's with Disabilities Act (ADA) by denying service to a mother and her minor children based on the appearance of the children's skin due to a genetic skin disorder.
The Justice Department's complaint, filed in the U.S. District Court for the Eastern District of Michigan in Detroit, alleges that the manager of the Golden Corral restaurant demanded that Danielle Duford and her four daughters leave the restaurant based on the appearance of the children's skin caused by a genetic skin disorder, epidermolysis bullosa, which causes blisters to form on the skin in response to minor injuries and temperature changes. Despite Ms. Duford informing the restaurant manager of her children's disability and repeatedly emphasizing that they did not have a contagious disease, the manager required the family to immediately leave the restaurant, claiming that he had received complaints from other customers. Title III of the ADA prohibits public accommodations, such as restaurants, from discriminating against people on the basis of disability, or their association with an individual with a disability, in the full and equal enjoyment of the goods or services offered. The lawsuit seeks an injunction against further discrimination, money damages for the victims of the unlawful discrimination, and civil penalties to be paid to the United States. The lawsuit is only an allegation of unlawful conduct by the defendants. The United States will bear the burden of proving the allegations at trial.
"The promise of the Americans with Disabilities Act is that disabled citizens should have full access to public life. We hope that this lawsuit will assist in expanding people's understanding of the range of disabilities and the obligations to treat all disabled citizens fairly under the law," said Barbara L. McQuade, the United States Attorney for the Eastern District of Michigan.
The case is being handled by Assistant U.S. Attorney Susan K. DeClercq in the U.S. Attorney's Office for the Eastern District of Michigan, in collaboration with the Disability Rights Section of the Civil Rights Division of the Justice Department.
More information about the ADA is available at the Justice Department's toll-free ADA Information line at (800) 514-0301 or (800) 514-0383 (TTY) and via the ADA website at http://www.ada.gov or through contacting the U.S. Attorney's civil rights hotline at 313-226-9151.Former Wayne County Official Found Guilty of Falsifying Documents to Conceal Bribery SchemeRead the Press Release
Zayd Allebban, former Wayne County Director of Enterprise Applications, the office that does software application development for Wayne County, was found guilty today by a federal jury in Detroit on charges of falsifying documents with the intent to obstruct justice, U.S. Attorney Barbara L. McQuade announced. The purpose of the falsified documents was to conceal a bribery/extortion scheme by Allebban’s friend and supervisor, Tahir Kazmi, former Wayne County Chief Information Officer.
McQuade was joined in the announcement by Special Agent in Charge Robert D. Foley, III of the Federal Bureau of Investigation (“FBI”).
The eight day trial was conducted before United States District Judge Stephen J. Murphy. The jury deliberated for approximately a day and a half before reaching their verdict.
The evidence presented at trial established that Allebban and Kazmi sought to obstruct justice by seeking to persuade a private contractor to provide false information to the FBI and to a federal grand jury investigating corruption in the Wayne County government. Allebban and Kazmi sought to conceal the fact that the contractor had given Kazmi tens of thousands of dollars in cash and trips to Hawaii, Turkey, and Florida. Allebban was found guilty of falsifying documents that indicated that all payments from the contractor had been repaid by Kazmi, prior to the initiation of the grand jury investigation, with the intent to obstruct the grand jury and FBI investigation. Allebban, as part of the scheme, also delivered $24,000 in cash to the private contractor in an effort to induce the contractor to tell the FBI that the contractor had never given anything to Kazmi.
Allebban faces up to twenty years in prison and a fine of up to $250,000 on each of the two counts of falsifying documents.
A sentencing date will be set by Judge Murphy’s chambers.
Allebban was found not guilty on separate charges of conspiracy to obstruct justice and obstruction of justice by means of false documents.
Tahir Kazmi pleaded guilty on July 26, 2012 to accepting a bribe and is scheduled to be sentenced on February 22, 2013. He faces a maximum sentence of ten years in prison and/or a $250,000 fine.
U.S. Attorney McQuade said, “Public officials who illegally enrich themselves will be detected and brought to justice. Efforts to conceal their crimes will bring additional charges and higher penalties.”
FBI Special Agent in Charge Foley said, "The citizens of Wayne County deserve honest government and leaders committed to serving the needs of taxpayers. This verdict should serve as a reminder that the FBI-led Detroit Area Public Corruption Task Force will remain vigilant and dedicated to stopping these illegal acts."The case was investigated by Special Agents of the FBI and Detroit Area Public Corruption Task Force. It is being prosecuted by Assistant United States Attorney Sheldon Light.
Federal Agencies Announce Cracking Down on Identity TheftRead the Press Release
United States Attorney Barbara McQuade and Erick Martinez, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation, along with E. C. Woodson, Inspector in Charge, United States Postal Inspection Service, and Jeffrey Frost, Special Agent in Charge, United States Secret Service announced a crackdown on tax identity theft and other related charges.
Identity Theft is a serious crime which can result in great personal hardships to the victims of such crimes. The U. S. Attorney’s Office, IRS Criminal Investigations and our law enforcement partners are committed to stemming refund fraud related to identity theft by focusing on preventing, detecting and resolving identity theft cases as soon as possible.
U.S. Attorney McQuade stated, "Identity theft is a serious crime with many layers of harm to innocent victims, including financial loss, damaged credit, and violation of privacy. We hope that these enforcement actions will deter identity thieves from committing these kinds of crimes."
"ID Theft is our top priority and we will not rest until the identity thieves are caught and sent to jail", said Erick Martinez, Special Agent in Charge of IRS-Criminal Investigation.Below are brief summaries of some of the criminal actions investigated by IRS Criminal Investigation, United States Postal Service, and United States Secret Service, that took place in the metropolitan Detroit area during the past several weeks.
∙ U.S. v. Drake Dodson - As alleged in the criminal complaint, Dodson was part of a conspiracy to file federal income tax returns using the names and Social Security numbers of individuals whose identities had been stolen. The returns requested refunds based on false information about tax withholdings and tax credits. The complaint further alleges that the conspirators obtained approximately $1.1 million in refunds.
∙ U.S. v. Brittany Goodson - As alleged in the criminal complaint Goodson was found to be in possession of numerous means of identification, i.e., names, social security numbers, dates of birth and other identifiers, bank routing and account numbers, and numerous prepaid debit cards, along with handwritten notes indicating that individual tax returns had been filed in some of the names. The matter was referred to the IRS/CI which determined that various false and fraudulent income tax returns had been filed using some of the means of identification found in her possession, which directed that fraudulent refunds be wire transferred to many of the prepaid debit card accounts also found in the defendant's possession. The affidavit specifically describes false refunds of $1,464, $3,933 and $4,094 linked to the information possessed by Goodson. She was charged with possession of means of identification with the intent to use them illegally and making false claims to the IRS.
∙ U.S. v. David Sneed - According to the criminal complaint, Sneed was found to be in possession of 29 United States Treasury income tax refund checks with a face value of $141,951.00, all made out to different payees, none of whom was Sneed, and all listing addresses of the payees in the state of Florida. The matter was referred to the U.S. Secret Service and the IRS/CI, and subsequent investigation determined that the checks were individual income tax refund checks issued as a result of the filing of fraudulent tax returns. The defendant admitted that he agreed to receive the checks for a Florida tax preparer and bring them to Michigan to cash them for a percentage of their face value. He was to be paid $100 per check for the service. He was charged with the unlawful possession of means of identification (names and addresses on the checks) to aid and abet or in connection with a federal felony, that is, making false claims to the IRS.∙ U.S. v. George Harris - According to the affidavit underlying the complaint, Harris was found to be in possession of over 50 credit cards and over 100 pages containing various means of identification of others, including names, dates of birth, social security numbers, and addresses. Analysis of the seized items and subsequent investigation revealed that the defendant had no permission to possess the means of identification, and that at least 20 different false individual tax returns had been filed in the names found in the defendant's possession resulting in false refunds of almost $28,000 being issued without the knowledge or consent of the persons named as the taxpayers on the returns. The defendant was charged with possessing means of identification with the intent to commit or in connection with a federal felony, specifically, making false claims to the IRS.
∙ U.S. v. Valerie Butler and Gary Young - A federal indictment was returned charging Butler and Young, age 48 and 25 respectively, of Detroit, Michigan. The defendants were named in an indictment charging them with one count of conspiracy to defraud the government, one count of Identity Theft and multiple counts of Theft of Public Money. The twelve count indictment charges that from 2009-2011, Butler and Young conspired by working together to prepare false tax returns. Butler and Young claimed tax refunds in amounts greater than the taxpayer was entitled to receive. Butler and Young attempted to hide their involvement in the filing of the tax returns by failing to sign the return as the preparer. Butler and Young had all of the refund money deposited to bank accounts that they controlled. They split the refund money with some of the taxpayers, but most of the taxpayers never received any of the refund. Butler and Young filed at least 299 false returns with total false claims of approximately $1,760,000, and refunds issued of approximately $1,079,201.
IRS Criminal Investigation, United States Postal Inspection Service, and United States Secret Service need your help in preventing, detecting and resolving identity theft cases. Let us know as soon as possible if you suspect that you may have you're your identity compromised or know someone who is involved in ID Theft. Remember - Be careful with your personal information, especially with your social security number. It you have questions about ID Theft, go to the following websites: www.IRS.gov, www.postalinspectors.uspis.gov and www.secretservice.gov. It is important to keep in mind the IRS does not initiate contact with taxpayers by email to request personal or financial information over the internet. This also includes any type of electronic communication, such as text messages and social media channels.
Serial Bank Robbery Sentenced to 45 Years in Federal PrisonRead the Press Release
A serial bank robber was sentenced today to 45 years in federal prison after having been convicted of four counts of bank robbery and one count of conspiracy to commit bank robbery, announced United States Attorney Barbara McQuade.
McQuade was joined in the announcement by Special Agent in Charge Robert D. Foley, III, Federal Bureau of Investigation.Arthur Payton, 45, was sentenced by U.S. District Judge Lawrence P. Zatkoff in Port Huron, Michigan.
In November 2012, a federal jury convicted Payton for recruiting heroin-addicted prostitutes to rob banks in Oakland and Wayne counties. After the FBI determined that Payton was responsible for the bank robberies, his co-defendant wore a hidden microphone and recorded Payton planning his next set of bank robberies in downtown Detroit. Payton stole approximately $8,000 from the four banks.
This conviction was Payton's third federal conviction. He was convicted in San Diego in the mid-1990s and in Detroit in 2005 for engaging in identical schemes to use drug-addicted prostitutes to rob banks. In 1994, Payton appeared on the Oprah Winfrey Show as a "bank robbing pimp."
“This defendant has returned to the same criminal scheme each time he has been released from prison, preying on vulnerable women at the fringes of society to rob banks,” McQuade said. “This lengthy sentence was necessary because prison is the only thing that prevents him from robbing banks.”
FBI Special Agent in Charge Foley stated, "This case is an example of the FBI's commitment to combat violent crime in the state of Michigan. We will continue to work with our law enforcement partners to stop these illegal acts and ensure dangerous criminals are arrested and prosecuted."
This case was investigated by the FBI, the Livonia Police Department, the Farmington Hills Police Department, the Farmington Police Department, and the Novi Police Department.
AUSAs Doug Salzenstein and Matthew Roth prosecuted the case for the United States.
Investment Advisor to the Detroit Pension Funds Pleads Guilty to Conspiring with Former City Treasurer Jeffrey Beasley to Pay Him BribesRead the Press Release
Chauncey Mayfield, a former investment advisor to the two City of Detroit pension funds, pleaded guilty today to conspiring with former Detroit Treasurer Jeffrey Beasley to pay him bribes in exchange for new business from the pension funds, United States Attorney Barbara L. McQuade announced today. McQuade was joined in the announcement by Special Agent in Charge Robert Foley of the Federal Bureau of Investigation (“FBI”).
During a hearing this afternoon before United States District Judge Nancy Edmunds, Mayfield, 56, of Ft. Lauderdale, Florida, admitted that between 2006 and 2008 he had an agreement with the then City Treasurer Beasley to pay bribes to Beasley and others to influence Beasley’s decisions as a Trustee of Detroit’s Police and Fire Retirement System and General Retirement System.
Mayfield was the principal owner and Chief Executive Officer of MayfieldGentry Realty Advisors, L.L.C. (“MayfieldGentry”). MayfieldGentry was an investment advisor and fiduciary to the two Detroit pension funds overseeing a real estate investment portfolio worth more than $200 million of pension fund assets. According to Mayfield, Beasley agreed to maintain business for Mayfield’s company and to give Mayfield new pension fund business in exchange for cash others things of value. In particular, Mayfield gave $50,000 to the Kilpatrick Civic Fund. In addition, Mayfield paid for Beasley and others to take a trip to Las Vegas costing $60,000; paid for another private plane trip to Tallahassee, Florida costing $24,000; paid for a private jet flight to Bermuda; and hired Beasley’s paramour to work at MayfieldGentry at Beasley’s request. Because of the pension fund business directed to MayfieldGentry by Beasley, Mayfield earned significant investment advisory fees from Detroit’s two pension funds.
United States Attorney McQuade said, “Detroit’s pension fund officials are entrusted to care for the retirement savings of the City’s employees, including police officer and firefighters. Officials who abuse their positions of trust for personal gain will be brought to justice.”
Robert Foley, Special Agent in Charge, Federal Bureau of Investigation said,"Those individuals who engage in pay to play schemes rob citizens of their right to honest government. The FBI Led Detroit Area Public Corruption Task Force is committed to stopping these illegal acts."Based on his guilty plea and felony conviction for conspiring to pay bribes, Mayfield is facing a maximum of five years in prison and a fine of up to $250,000.
A criminal indictment is pending against Beasley and against Roy Dixon, a former investment advisor to the two pension funds who paid bribes to Beasley and other officials and who embezzled millions from the funds.
In addition, a number of other defendants have been convicted in relation to the pension fund investigation, including (1) Monica Conyers, a former Trustee of the General Retirement System and former member of the Detroit city council, for conspiracy to take bribes, including bribes relating to a proposed multi-million dollar pension fund investment in Wireless Resources and a $10,000 extortion payment relating to the Police and Fire Retirement System’s investment in the Romulus Deep Injection Waste Well; (2) Samuel L. Riddle, Conyers’ Chief of Staff, for conspiracy to commit bribery and extortion relating to the Wireless Resources and Romulus Deep Injection Well investments; (3) DeDan Milton, a former Trustee of Detroit’s two pension funds; (4) Andrew Park, an owner of Asian Village, who paid a bribe to obtain a $2.75 million loan from Detroit’s General Retirement System; and (5) Derrick Miller, former Chief Information Officer of Detroit, who accepted the bribe from Park and who took a kickback of more than $500,000 on a $44 million investment by Detroit’s two pension funds.
The case was investigated by agents of the Federal Bureau of Investigation, the Internal Revenue Service, and the Department of Labor. It is being prosecuted by Assistant United States Attorneys Robert Cares and David A. Gardey.
Pharmacist/pharmacy Owner Sentenced to 17 Years for Health Care Fraud, Drug OffensesRead the Press Release
A 50-year-old Canton pharmacist who owned and operated 26 pharmacies in the metro-Detroit area was sentenced today to 17 years in prison, U.S. Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by Robert D. Foley, III, Special Agent in Charge, Federal Bureau of Investigation, Robert Corso, Special Agent in Charge, Drug Enforcement Administration and Lamont Pugh, Special Agent in Charge of the Inspector General of the Department of Health and Human Services.
U.S. District Judge Arthur J. Tarnow sentenced BABUBHAI "Bob" PATEL on 26 convictions for a health care fraud conspiracy, a drug conspiracy, and related fraud and drug violations.
Evidence presented at a six-week jury trial concluding in August 2012 showed between 2006 and 2011, the pharmacies billed Medicare and Medicaid more than $57 million. At least 25% of those billings were for drugs that were either medically unnecessary never dispensed. Additional amounts were fraudulently billed to private insurers such as Blue Cross Blue Shield of Michigan. The pharmacies operated on a business model that paid kickbacks to physicians in exchange for writing prescriptions for expensive medications. The affiliated doctors would also write prescriptions for controlled substances, without regard to medical necessity, which would be filled at the pharmacies and distributed to paid "patients" and patient recruiters. The expensive non-controlled medications would be billed but not dispensed.
In sentencing the defendant, the court told the defendant that "what you have done is reprehensible." The criminal conduct engaged in by other health care fraud violators sentenced by the court was "small scale compared to this."“Taxpayers fund Medicare and Medicaid to provide health care to needy Americans,” McQuade said. “It is gratifying to see courts impose strong sentences on defendants who exploit these programs for personal gain.”
FBI Special Agent in Charge Foley stated, "Those individuals who engaged in this health care fraud scheme stole millions of dollars over several years, from a system designed to provide health care to those in need. The FBI is committed to stopping these illegal acts and prosecuting these criminals."
"The conduct that occurred in this case was deplorable, inexcusable and dangerous" said Lamont Pugh III, Special Agent in Charge of the Chicago Region of the U.S. Department of Health & Human Services, Office of Inspector General. "The OIG will continue to work with our law enforcement partners to combat prescription drug fraud in the Medicare and Medicaid programs and seek to ensure the safety of program beneficiaries and taxpayer dollars."
Of the 26 defendants charged in the original indictment in this case, 20 defendants have either pleaded guilty or been convicted at trial. Six defendants are scheduled for trial in June. Out of 12 pharmacists charged, 11 have been convicted at trial or pleaded guilty, with one waiting to be tried. Out of four doctors charged, two have pleaded guilty, with two waiting to be tried.
Earlier this week, Judge Tarnow sentenced several of the other pharmacists who were convicted at trial. BRIJESH RAWAL, 36, of Canton; ASHWINI SHARMA, 34, of Novi; and LOKESH TAYAL, 36, of Northville, were each sentenced to terms of imprisonment of 68 months for their participation as pharmacists in these criminal offenses. These three pharmacists were non-U.S. citizens who entered the United States under a visa program for certain skilled workers, and each will be deported to the country of their citizenship upon the completion of their sentences. Defendant RAWAL is a citizen of Canada, while defendants SHARMA and TAYAL are citizens of India.
In addition to the prison sentence, defendant BABUBHAI PATEL was ordered to pay restitution to the Medicaid and Medicare programs in the amount of $17.3 million, and restitution to Blue Cross Blue Shield in the amount of $1.5 million. Defendant PATEL, who has been held without bond since his arrest on August 2, 2011, will receive credit toward his sentence for the time he has served.
U.S. Attorney McQuade thanked the Drug Enforcement Administration, the FBI, the Department of Human Services, Office of Inspector General, and Blue Cross and Blue Shield of Michigan for their tireless work in the investigation and prosecution of the case. The case is being prosecuted by Assistant United States Attorneys John K. Neal and Wayne F. Pratt.Former Detroit Public Library Contractor Indictedfor Bribery of A Public OfficialRead the Press Release
James Henley, a former contractor with the Detroit Public Library (“DPL”), was charged in an Indictment for Bribery of a Public Official, United States Attorney Barbara L. McQuade announced today.
Joining McQuade in the announcement were Robert D. Foley, III, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation and Special Agent in Charge Erick Martinez, Internal Revenue Service Criminal Investigation
According to the six count Indictment, James Henley bribed a public official of the DPL from about January 2007 until about July 28, 2008. Henley owned a company called Core Consulting & Professional Services. The DPL official approved a proposal submitted by Core Consulting to provide information technology work, and approved various extensions and change orders to the contract. Ultimately, DPL paid Core Consulting $1.5 million under the contract, and Henley secretly paid kickbacks to the DPL official totaling at least $600,000.
Henley is also charged with failing to file individual and corporate tax returns for years 2007 and 2008.
If convicted, Henley faces a maximum of ten years in prison and a fine of up to $250,000. The Indictment also seeks forfeiture of proceeds and payments associated with the bribery scheme.United States Attorney McQuade said, “The citizens lose when public contracts are awarded on the basis of bribery instead of on the merits of the bids. We will do all we can to root out corruption in public contracting in hopes of deterring officials from using public funds for self-enrichment.”
FBI Special Agent in Charge Robert D. Foley III said, "Those individuals who engage in bribery and kickbacks rob citizens of the honest government they deserve. The FBI Led Detroit Area Public Corruption Task Force is committed to stopping these illegal acts."
"Kickbacks will not be tolerated as a way to do business in Detroit," said Special Agent in Charge Erick Martinez, IRS Criminal Investigation.
The case was investigated by agents of the FBI. This case is being prosecuted by Assistant United States Attorneys Elizabeth A. Stafford and Julie Beck.
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.
Former Michigan Supreme Court Justice Diane Marie Hathaway Pleads Guilty to Bank FraudRead the Press Release
Press Conference - Former Michigan Supreme Court Justice Diane M. Hathaway
Diane M. Hathaway, a former Michigan Supreme Court Justice, pleaded guilty today to committing bank fraud in connection with a property owned at 15834 Lakeview Court, Grosse Pointe Park, Michigan, United States Attorney Barbara L. McQuade announced today. McQuade was joined in the announcement by Special Agent in Charge Robert D. Foley, III of the Federal Bureau of Investigation ("FBI"), and Michigan Attorney General, Bill Schuette.
During a hearing this morning before United States District Judge John Corbett O’Meara, Hathaway, 58, of Grosse Pointe, Michigan, admitted that between 2010 and 2011 she knowingly engaged in a scheme to defraud ING Direct bank by concealing assets from the bank to qualify for a “short sale.” A short sale is a forgiveness of debt by the bank to a borrower who claims financial hardship.
Based on her guilty plea and felony conviction for committing bank fraud Hathaway is facing a maximum of thirty years in prison, a fine of up to $1,000,000 and up to five years of supervised release.United States Attorney McQuade said, "We have made mortgage fraud a priority in this district because of the harm this crime causes to our housing markets in the aggregate. Homeowners who play by the rules should know that those who don't will be held accountable, no matter who they are."
Robert Foley, Special Agent in Charge of the FBI said, "Regardless of a person's stature or position in life, we must all follow the same set of rules. In this case, an individual in a prominent position of public trust made extremely poor choices that have resulted in criminal activity. The FBI is committed to stopping these illegal acts."
Michigan Attorney General Bill Schuette said, “"Public corruption scandals have damaged the public's trust in government and tarnished our state's reputation. But today, we begin to move forward, beyond the cloud of controversy that hung over our state's Supreme Court. I appreciate the hard work of U.S. Attorney Barbara McQuade and FBI Special Agent In Charge Bob Foley, who brought this case to a swift and just end."
This case was investigated by the FBI with assistance from Michigan Attorney General’s Office.Four Highland Park Police Officers Arrested and Charged with Taking Bribes and Conspiring to Protect and Deliver Six Kilograms of CocaineRead the Press Release
Press Conference - Highland Park Police Department
A federal criminal complaint was unsealed today charging four Highland Park police officers with accepting bribes, conspiring to distribute six kilograms of cocaine, and carrying firearms in furtherance of a drug trafficking crime, United States Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by Special Agent in Charge Robert D. Foley, III, of the Federal Bureau of Investigation, Chief of Police Kevin Coney, Highland Park Police Department and Michigan Attorney General Bill Schuette.
The four Highland Park police officers charged are: Anthony Bynum, 29, of Highland Park, Michigan; Price Montgomery, 38, of Highland Park, Michigan; Shawn Williams, 33, of Detroit, Michigan; and Craig Clayton, 55, of Highland Park, Michigan. Bynum and Montgomery are both police officers with the Highland Park Police Department. Bynum is also a police officer for Detroit Public Schools. Williams and Clayton are both Auxiliary (Reserve) Officers for Highland Park. Chief Coney was instrumental in assisting the FBI in its investigation of the four officers from his department.
The Criminal Complaint charges the four police officers with accepting cash bribes and with conspiring to deliver six kilograms of cocaine. According to the Criminal Complaint, Bynum and Montgomery arrested a man in August 2012 in Highland Park on a firearms offense. The officers beat the man after arresting him. While in the hospital, the man offered to pay the officers if they would dismiss the charges against him. The officers were willing to accept money in exchange for failing to appear for trial. Subsequently, the man who had been arrested by Montgomery and Bynum began working undercover for the FBI as an unpaid confidential source. During the course of the investigation, Montgomery and Bynum were captured on videotape accepting $10,000 in cash from the confidential source, in return for failing to appear at the man's trial in the Wayne County Circuit Court. On the date set for the man's trial in Circuit Court, Officers Montgomery and Bynum failed to appear as witnesses as required by subpoena, and the case was dismissed.
Later, Officers Mongtomery and Bynum agreed to transport and deliver two kilograms of cocaine for the FBI confidential source, whom the officers believed to be a drug trafficker. On November 15, 2012, Officers Montgomery and Bynum protected and delivered a shipment of what they believed to be two kilograms of cocaine from the Oakland Mall in Troy, Michigan, to a location in Taylor, Michigan. Each officer was paid $1,500 for his role in the delivery of sham cocaine. Subsequently, Officers Montgomery and Bynum recruited two additional Highland Park officers, Williams and Clayton, to help with the delivery of a second, larger shipment of cocaine. On January 23, 2013, the four Highland Park police officers delivered four kilograms of what they believed to be cocaine, again from the Oakland Mall. Each officer was paid either $1,000 or $1,500 by the confidential source for his work in protecting and transporting the sham cocaine. The four police officers each carried a firearm, and some carried their police badges, while protecting the loads of sham cocaine.
Upon conviction, each of the four defendants faces a maximum of up to forty years in prison for conspiring to distribute cocaine. In addition, the officers face a maximum of ten years in prison on the bribery charges, and an additional five year consecutive sentence for carrying a firearm during a drug trafficking offense.
United States Attorney McQuade said, "We applaud Highland Park Police Chief Coney for initiating a federal investigation into misconduct by his officers. We want to emphasize that the misconduct is limited to these four officers. Our community deserves to be served and protected by police officers who perform their jobs with integrity. Police officers who take bribes and participate in criminal activities will be discovered and prosecuted."
Special Agent in Charge Foley of the FBI said, "Police officers swear an oath to protect and serve and are held to the highest standards of ethics and conduct. The FBI led Detroit Area Public Corruption Task Force is committed to ensuring illegal acts on the part of law enforcement officers are thoroughly investigated and those officers face harsh penalties for their crimes."Highland Park Police Chief Coney stated, “"The illegal actions of these officers do not represent or reflect the ethical standards and values consistent with the Highland Park Police Department. We remain committed to providing our citizens with first class public safety and ensuring our officers display integrity at all times."
"Public corruption scandals damage the public's trust in government and harm our state's reputation," said Attorney General Schuette. "We will continue to work with U.S. Attorney Barbara McQuade, the FBI, state, and local law enforcement agencies to eliminate corruption wherever it is found."
DPS Emergency Financial Manager Roy S. Roberts stated, “"There are a corps of extremely dedicated law enforcement officers who selflessly work day and night to protect our students, teachers, staff and DPS property, and the arrest and prosecution of this one individual will ensure that their professionalism and dedication will be preserved and maintained in the public eye. While relieved that none of this activity occurred on Detroit Public Schools grounds or involved any of our students, I applaud the leadership of our police department for cooperating fully and am highly appreciative of the efforts of the agencies in the FBI-led Public Corruption Task Force who brought this matter to justice."
The case was investigated by the FBI led Public Corruption Task Force which includes Internal Revenue Service, Criminal Investigation, Environmental Protection Agency - Office of Inspector General, Housing and Urban Development - Office of Inspector General, Department of Transportation - Office of Inspector General, Michigan State Police, the Michigan Attorney General's Office and the Detroit Police Department. It is being prosecuted by Assistant United States Attorney David A. Gardey.