District of Minnesota
Press releases recorded for this federal judicial district.
Iranian Citizen Sentenced for Conspiring to Facilitate the Illegal Export of Technology to IranRead the Press Release
United States Attorney Gregory G. Brooker today announced the sentencing of ALIREZA JALALI, 39, to 15 months in prison for his participation in a conspiracy to defraud the United States. JALALI, who pleaded guilty on November 29, 2017, was sentenced today before United States District Judge Joan N. Ericksen in Minneapolis, Minn.
“Jalali and his co-conspirators illegally sent sensitive military-use technology to Iran, where it could fall into the hands of Iran’s Islamic Revolutionary Guard Corps, in clear violation of U.S. law,” said Assistant Attorney General Demers. “This is a threat to the national security of the United States and our allies, and we will aggressively prosecute those who brazenly violate our export control laws.”
Acting Special Agent in Charge Robert C. Bone II of the FBI Minneapolis Division stated, “This multi-year investigation highlights the importance of preventing U.S.-origin technology from being transferred to unauthorized end users. Fana Moj has designed components for the Iranian military's missile systems. We must prevent U.S. technology from falling into the wrong hands, where it could be used against our military members.”
Department of Commerce-Office of Export Enforcement (OEE) Special Agent in Charge Dan Clutch said: “A top priority of OEE is identifying and disrupting the illicit export of controlled technology to Iran. OEE will continue to collaborate with its law enforcement partners to combat these criminal schemes that threaten U.S. national security.”
“U.S. export controls are in place to keep sensitive technology from falling into the hands of our nation's enemies,” said Special Agent in Charge Tracy Cormier of HSI St. Paul. “One of HSI's highest priorities is to prevent illicit procurement networks, terrorist groups, and hostile nations from illegally obtaining military items and controlled dual-use technology.”
According to the defendant’s guilty plea, from 2009 through December 2015, JALALI was a part-time employee of Green Wave Telecommunication, Sdn Bhn, (“Green Wave”) a Malaysian company located in Kuala Lumpur, Malaysia. Since its incorporation in 2009, Green Wave operated as a front company for Fanavar Moj Khavar (“Fana Moj”), an Iran-based company that specializes in both broadcast communications and microwave communications.
As part of the conspiracy, Green Wave was used to acquire unlawfully sensitive export-controlled technology from the United States on behalf of Fana Moj. In order to accomplish these acquisitions, JALALI and his co-conspirators concealed the ultimate unlawful destination and end users of the exported technology through false statements, unlawful financial transactions, and other means.
As part of the conspiracy, the defendant’s co-conspirators would contact producers and distributors of the sought-after technology, solicit purchase agreements, and negotiate the purchase and delivery of the goods with the seller. When the goods were received by Green Wave in Malaysia, JALALI repackaged and unlawfully exported the items from Malaysia to Fana Moj in Tehran, Iran. In 2017, Fana Moj was designated by the United States Department of the Treasury as a Specially Designated National for providing financial, material, technological or other support for, or goods or services in support of, the IRGC.
This case is the result of an investigation conducted by the FBI, the U.S. Department of Commerce Office of Export Enforcement, and Homeland Security Investigations.
This case is being prosecuted by Assistant U.S. Attorney Charles J. Kovats and Trial Attorney David Recker of the National Security Division’s Counterintelligence and Export Control Section, with assistance provided by Assistant U.S. Attorney Douglas M. Pravda for the Eastern District of New York.
Defendant Information:
ALIREZA JALALI, 39
Citizen of Iran
Convicted:
- Conspiracy to defraud the United States, 1 count
Sentenced:- 15 months in prison
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600Three Illinois Men Charged in the Bombing of Bloomington, Minnesota Islamic CenterRead the Press Release
United States Attorney Gregory G. Brooker today announced a federal criminal complaint charging MICHAEL MCWHORTER, 29, JOE MORRIS, 22, and MICHAEL B. HARI, 47, for using an explosive device to maliciously destroy and damage the Dar al-Farooq Islamic Center (“DAF”) in Bloomington, Minnesota. MCWHORTER, MORRIS, and HARI are currently in custody in Urbana, Illinois. MORRIS and HARI made their initial appearance on federal charges related to an attempted bombing in Champaign, Illinois, today at 3:00 p.m. before Magistrate Judge Eric I. Long in U.S. District Court in Urbana, Illinois. MCWHORTER will make his initial appearance in connection with the attempted Illinois bombing at a later date.
The affidavit filed in support of the District of Minnesota criminal complaint alleges that on August 5, 2017, a pipe bomb was thrown through a window of the Dar al-Farooq Islamic Center (“DAF”), located in Bloomington, Minnesota. The pipe bomb, constructed of polyvinyl chloride, known as “PVC,” exploded, causing extensive damage. On January 27, 2018, law enforcement received information from a confidential source indicating that MCWHORTER, MORRIS, and HARI were responsible for the bombing carried out at DAF.
The Federal Bureau of Investigation is leading the investigation.
This case is being prosecuted by Assistant United States Attorneys Julie E. Allyn and John F. Docherty.
Defendant Information:
MICHAEL B. HARI, 47
Clarence, Ill.
Charges:
- Arson, 1 count
JOE MORRIS, 22
Clarence, Ill.
Charges:- Arson, 1 count
MICHAEL MCWHORTER, 29
Clarence, Ill.
Charges:- Arson, 1 count
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
The charges contained in the criminal complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Lakeville Man Indicted for Precious Metals Investment SchemeRead the Press Release
United States Attorney Gregory G. Brooker today announced the indictment of DAVID THOMAS ROUGIER, 45, on one count of mail fraud and one count of wire fraud. ROUGIER made his initial appearance yesterday before Magistrate Judge Franklin L. Noel in U.S. District Court in Minneapolis, Minn.
As alleged in the indictment, in or around late 2010, ROUGIER began soliciting clients to invest in precious metals by purchasing gold and silver through him. Between 2013 and 2014, ROUGIER began telling his victim-investors that he had found a company, which he identified as “TAUG Limited” (“TAUG”) that would guarantee to purchase their gold and silver for a set price on a designated future date, typically three years from the date they signed a contract with TAUG. ROUGIER presented some of his victim-investors with a purported contract between them and TAUG, under which they were charged various fees, including an annual “asset management fee,” typically between $1,000 and $2,000, in order to avail themselves of the guaranteed purchase price. In reality, the annual fees were always paid to ROUGIER and ROUGIER never purchased any gold or silver for his victim-investors.
As alleged in the indictment, in July 2017, ROUGIER represented that a different company, “Industrial and Commercial Bank of China (Asia) Limited” (“ICBC”), had taken over TAUG’s contracts. ROUGIER represented that ICBC would honor TAUG’s existing contracts and offered new clients essentially the same services.
As alleged in the indictment, between November 2010 and June 2017, more than a dozen individuals paid ROUGIER approximately $740,000 based upon his promises that he was using their money to buy gold and silver and, in some cases, that their investments were protected through the TAUG/ICBC contracts. Instead of purchasing gold and silver as promised ROUGIER spent hundreds of thousands of dollars of victims’ money on shopping trips, entertainment, travel, strip clubs and other personal expenses.
This case is the result of an investigation conducted by the FBI and the Minnesota Commerce Fraud Bureau.
Assistant United States Attorney Amber M. Brennan is prosecuting the case.
Defendant information:
DAVID THOMAS ROUGIER, 45
Lakeville, Minn.
Charges:
- Mail Fraud, 1 count
- Wire Fraud, 2 counts
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Fairfax Bookkeeper Indicted for $500,000 Embezzlement SchemeRead the Press Release
United States Attorney Gregory G. Brooker announced a federal indictment charging THERESA ERNESTINE LINSMEIER with three counts of wire fraud and five counts of filing false tax returns. LINSMEIER will make her initial appearance in United States District Court on March 15, 2018.
According to the indictment, from 1998 to 2016, LINSMEIER was employed as a bookkeeper at Farm Mercantile, Inc., a hardware store located in Fairfax, Minn. In her position, LINSMEIER had access to and was an authorized signatory on Farm Mercantile’s bank accounts and had authority to sign and issue checks on behalf of the company.
According to the indictment, from about 2011 through 2016, LINSMEIER devised a scheme to embezzle more than $500,000 from Farm Mercantile. As part of the scheme, LINSMEIER transferred money to her personal credit cards directly from the bank accounts to which she had access. LINSMEIER attempted to conceal her embezzlement by creating false entries in Farm Mercantile’s general ledger to make it look like the money she stole had actually been used to pay legitimate business expenses. In total, LINSMEIER stole approximately $535,000, which she used for online gambling.
This case is the result of an investigation conducted by the Internal Revenue Service-Criminal Investigation.
This case is being prosecuted by Assistant United States Attorney Joseph H Thompson.
Defendant Information:
THERESA ERNESTINE LINSMEIER, 58
Fairfax, Minn.
Charges:
- Wire fraud, 3 counts
- Filing false tax returns, 5 counts
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Twelve Individuals Charged in 46-Count Federal Indictment Alleging Duluth-Based Heroin Trafficking ConspiracyRead the Press Release
United States Attorney Gregory G. Brooker today announced the indictment of 12 individuals for their roles in a heroin distribution conspiracy. All 12 defendants named in the indictment were charged with conspiracy to distribute heroin. The defendants will make their initial appearances this week before Magistrate Judge Leo Brisbois in U.S. District Court in Duluth, Minn.
According to the indictment and documents filed in court, from at least March 13, 2017 through the present, CARLOS NASHUN COLEMAN, 33, BERNARD BRANDON MIMS, 38, CRYSTAL BROOKE STARSTEAD, 35, CAZEMBE OSIE FRANKLIN, 44, KENNETH SKY QUADE, 24, DANIEL ALBERT AMATUZIO, JR, 29, BENJAMIN MICHAEL WOODBURY, 27, DAMIEN DEANDRE BURNETT, 33, LAVINA NICOLE SHANNON, 40, JOSEPH DANTE WILLIAMS, 28, CHEVELLA DAWN KORKALO, 23, AND ERIN MARIE ALHACHEM, 27, conspired together to distribute heroin throughout the Twin Ports area. COLEMAN, who is identified as the main distributor, transported heroin from Chicago, Illinois to the Twin Cities and throughout the Twin Ports area where the heroin was further distributed through his network of co-conspirators.
This case is the result of a cooperative investigation conducted by the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Duluth Police Department, the Saint Louis County Sheriff’s Office, the Superior Police Department, the Carlton County Sheriff’s Office, the Hibbing Police Department, the Virginia Police Department, the Hermantown Police Department, and the Fond du Lac Reservation Police Department.
This case is being prosecuted by Assistant U.S. Attorney Thomas Calhoun-Lopez.
Defendant Information:
CARLOS NASHUN COLEMAN, a/k/a “Los,” 33
Apple Valley, MN
Charges:
- Conspiracy to distribute heroin, 1 count
- Distribution of heroin, 1 count
BERNARD BRANDON MIMS, a/k/a “Lil B,” 38
Superior, WI
Charges:- Conspiracy to distribute heroin, 1 count
- Distribution of heroin, 28 counts
- Possession with intent to distribute heroin, 5 counts
CRYSTAL BROOKE STARSTEAD, 35
Superior, WI
Charges:- Conspiracy to distribute heroin, 1 count
- Distribution of heroin, 5 counts
- Possession with intent to distribute heroin, 4 counts
CAZEMBE OSIE FRANKLIN, a/k/a “MC Snake,” 44
Aurora, MN
Charges:- Conspiracy to distribute heroin, 1 count
- Possession with intent to distribute heroin, 1 count
KENNETH SKY QUADE, a/k/a “Q,” 24
Unknown
Charges:- Conspiracy to distribute heroin, 1 count
- Possession with intent to distribute heroin, 1 count
DANIEL ALBERT AMATUZIO, JR, 29
Unknown
Charges:- Conspiracy to distribute heroin, 1 count
- Possession with intent to distribute heroin, 3 counts
BENJAMIN MICHAEL WOODBURY, a/k/a “Woody,” 27
Unknown
Charges:- Conspiracy to distribute heroin, 1 count
- Possession with intent to distribute heroin, 1 count
DAMIEN DEANDRE BURNETT, a/k/a “Luck,” 33
Unknown
Charges:- Conspiracy to distribute heroin, 1 count
- Possession with intent to distribute heroin, 1 count
LAVINA NICOLE SHANNON, a/k/a “Satin,” 40
Unknown
Charges:
- Conspiracy to distribute heroin, 1 count
- Possession with intent to distribute heroin, 1 count
JOSEPH DANTE WILLIAMS, 28
Unknown
Charges:
- Conspiracy to distribute heroin, 1 count
- Possession with intent to distribute heroin, 3 counts
CHEVELLA DAWN KORKALO, 23
Unknown
Charges:- Conspiracy to distribute heroin, 1 count
- Possession with intent to distribute heroin, 1 count
ERIN MARIE ALHACHEM,” 27
Unknown
Charges:
- Conspiracy to distribute heroin, 1 count
- Possession with intent to distribute heroin, 1 count
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
The charges contained in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Former Starkey President and Business Associate Found Guilty of Massive Fraud Perpetrated Against Starkey LaboratoriesRead the Press Release
JEROME RUZICKA and JEFFREY TAYLOR were convicted by a federal jury of charges related to stealing more than $15 million from the Eden Prairie-based Starkey Laboratories, Inc. (Starkey) and its principal owner William F. Austin, as well as one of Starkey’s suppliers, Sonion. RUZICKA is the former President of Starkey. U.S. District Court Chief Judge John Tunheim presided over the trial, which lasted nearly six weeks in Minneapolis. Former Starkey Chief Financial Officer (CFO) Scott Nelson and another former Starkey executive Jeff Longtain previously pleaded guilty in connection with this case.
United States Attorney Gregory G. Brooker, announcing the convictions, today, said, “It was pure greed that motivated these defendants. The FBI, IRS, and U.S. Postal Inspection Service meticulously uncovered the depth of the fraud, which lasted nearly a decade, and the trial team successfully presented the complex case to the jury. The jury was able to cut through the complexity and distractions and get to the truth. I want to also want to commend the victims in this case, Bill Austin, the employees of Starkey, and the Sonion Company, for their cooperation with this prosecution.”
“As proven at trial, defendants Jerry Ruzicka and W. Jeff Taylor misused their extensive corporate knowledge and positions of trust over a period of years to steal millions from Starkey Laboratories,” said Acting Special Agent in Charge Robert C. Bone II of the FBI Minneapolis Division. “Corporate fraud such as this not only negatively impacts individual companies and institutions but risks overall stability of the marketplace as fraud losses accumulate. The FBI will continue to work closely with our criminal justice partners to detect corporate fraud and hold those responsible to account for their crimes.”
“IRS Criminal Investigation is committed to investigating individuals who use corporations as personal piggy banks. Corporate fraud impacts many levels of society from investors to the honest, hardworking Americans who pay their tax obligations,” said Hubbard Burgess, IRS Criminal Investigation Special Agent in Charge.
“Today’s verdict reaffirms the critical role the U.S. Postal Inspection Service plays in partnering with our fellow law enforcement partners at the FBI and IRS-CID in protecting the American consumer from these types of fraudulent schemes,” said Craig Goldberg, Inspector in Charge of the Denver Division of the U.S. Postal Inspection Service, which includes Minnesota. “Postal Inspectors are committed to ensuring that the nation’s mail stream is not used by criminals to prey upon our citizens,” said Goldberg.
As proven at trial between 2006 and September 2015, RUZICKA, TAYLOR and others schemed to embezzle and misappropriate money and business opportunities belonging to Starkey and Sonion, a major supplier of hearing aid components to Starkey. The defendants deployed various tactics to steal from Starkey, including controlling a complicated web of sham companies and dummy entities, surreptitiously awarding themselves restricted stock in Starkey’s retail affiliate, and embezzling money from the company by causing payments to be made by Starkey for the benefit of the defendants and others.
RUZICKA and TAYLOR controlled a dummy entity, Archer Acoustics. TAYLOR falsely represented to Sonion this entity was a Starkey affiliate, thereby securing Starkey’s discounted pricing on hearing-aid components for Archer Acoustics. RUZICKA and TAYLOR used Archer Acoustics to purchase the discounted products that they later re-sold to other manufacturers to obtain illicit profits. At times, the illicit profits came in the form of fraudulent commissions and rebates. The defendants obtained at least $600,000 in profits, commissions and rebates by fraudulently leveraging Starkey’s purchasing power for their own benefit.
Another facet of this scheme was related to Starkey’s retail affiliate, Northland US, LLC, which Austin created in 2002. He was the sole owner. The purpose of Northland LLC was to acquire and operate retail hearing aid establishments. In 2006, without Austin’s knowledge, RUZICKA surreptitiously transferred Northland LLC’s assets to a new entity they controlled, Northland Hearing Centers, Inc. RUZICKA and former Starkey CFO Scott Nelson forged Austin’s signature to complete the transfer of assets, later awarded themselves restricted stock, and ultimately paid themselves and Jeff Longtain approximately $15 million in exchange for terminating the restricted stock grants.
As proven at trial, in 2014, RUZICKA embezzled $200,000 from Starkey under the guise of “officer’s insurance.” He used those funds to pay his state and federal personal income taxes. RUZICKA also stole a 2011 Jaguar automobile that Starkey purchased for his use at a cost of $119,188.77. Starkey paid the fees, insurance premiums, and other costs associated with the automobile. Nevertheless, in July 2015, RUZICKA transferred ownership of the car from Starkey to himself by signing the title as both representative of the seller and also as the buyer. He did not pay Starkey for the vehicle, nor was it reported as a taxable benefit.
In total, RUZICKA and TAYLOR are alleged to have conspired to steal more than $15 million from Starkey and Sonion.
When some details of the scheme were discovered in September 2015, RUZICKA was terminated by Starkey. TAYLOR was also terminated by Sonion when Sonion became aware of the fraud.
Lawrence Miller and Lawrence Hagan, also charged in this case, were acquitted by the jury. While we had hoped for a different outcome, we respect the jury’s verdict and thank them for their service during this long and complex trial.
This case is the result of an investigation conducted by the FBI, Criminal Investigation Division of the IRS, and the United States Postal Inspection Service.
Assistant U.S. Attorneys Benjamin Langner, Lola Velazquez-Aguilu, and Surya Saxena are prosecuting the case.
Defendant Information:
JEROME C. RUZICKA, 61
Plymouth, Minn.Convicted:
- Mail fraud, 4 counts
- Wire fraud, 3 counts
- Tax fraud, 1 count
W. JEFFREY TAYLOR, 57
Cologne, Minn.
Convicted:- Mail fraud, 1 counts
- Wire fraud, 2 counts
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600Registered Sex Offender Sentenced to 40 Years in Prison for Producing Child PornographyRead the Press Release
United States Attorney Gregory G. Brooker today announced the sentencing of DONALD THOMAS PERRIN, 58, a registered sex offender, to 40 years in prison for producing child pornography. PERRIN, who pleaded guilty on October 10, 2017, moments before his jury trial was set to begin, was sentenced yesterday before Judge Wilhelmina M. Wright in U.S. District Court in Saint Paul, Minn.
“Donald Perrin manipulated, exploited and humiliated a vulnerable young victim, and never once showed any remorse for his predatory actions,” said Assistant U.S. Attorney Kate Buzicky. “Unfortunately for the victims the damage can never be undone, but with today’s forty-year sentence this predator will no longer be able to harm vulnerable children.”
According to his guilty plea and documents filed in court, in the summer of 2014, PERRIN, a registered sex offender, began engaging in sexually explicit online chats with a fifteen-year-old minor. In the fall of 2014, PERRIN was arrested and jailed at Carver County Jail following a violation of his sex offender registration requirement. After he was released from Carver County Jail, PERRIN continued his online communications with the minor and made screen captures of their video chat sessions depicting sexually explicit activity. On February 12, 2016, PERRIN was again arrested and jailed as a result of his non-compliance with his sex offender registration requirements. Following his arrest, law enforcement executed search warrants at PERRIN’S home and recovered several digital devices containing thousands of child pornography files. PERRIN was scheduled to begin trial on October 10, 2017, before U.S. District Judge Wilhelmina M. Wright in St. Paul, Minn.
This case was brought as part of Project Safe Childhood, a nationwide initiative, launched in May 2006, to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov. In addition, if you know of any child who may have been a victim of exploitation, please contact the National Center for Missing or Exploited Children (NCMEC) at 1-800-THE-LOST (1-800-843-5678) or visit NCMEC’s web site at www.missingkids.com.
This case is the result of an investigation conducted by the FBI and the Carver County Sheriff’s Office.
Assistant United States Attorneys Katherine T. Buzicky and Angela Munoz-Kaphing are prosecuting this case.
Defendant Information:
DONALD THOMAS PERRIN, 58
Sherburne County Jail
Convicted:
- Production of child pornography, 1 count
- Commission of a felony while being required to register as a sex offender, 1 count
Sentenced:
- 480 months in prison
- 20 years of supervised release
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600Minneapolis Man Sentenced to Nine Years in Prison for Tax Fraud ConspiracyRead the Press Release
United States Attorney Gregory G. Brooker today announced the sentencing of HASSAN OSMAN, 52, to 108 months in prison for conspiracy, tax fraud and failing to appear on the day of trial. OSMAN was found guilty on September 21, 2017, following a four-day trial, on one count of conspiracy, 13 counts of aiding and assisting in the preparation of a false tax return, and one count of unlawful flight from prosecution. OSMAN was sentenced earlier today before Senior Judge David S. Doty in U.S. District Court in Minneapolis, Minn.
“Mr. Osman and his co-conspirators viewed the IRS not as a tax collection agency, but a way to generate illicit revenue. They filed 100 fraudulent tax returns claiming nearly $1 million in fraudulent tax refunds,” said Assistant U.S. Attorney Joe Thompson. “Today’s sentence underscores the seriousness of Mr. Osman’s crimes and his complete lack of remorse for his actions.”
“As we are in the midst of tax filing season, those who might consider preparing false tax returns should be aware of the extremely negative consequences as evidenced by the 108 month sentencing today of Hassan Osman,” said Hubbard Burgess, Acting Special Agent in Charge of the St. Paul Field Office. “Today's sentencing of Mr. Osman again emphasizes that IRS Criminal Investigation and the U.S. Attorney’s Office will continue their aggressive pursuit of those who would attempt to defraud America's tax system.”
As proven at trial, between January 2008 and April 2011, OSMAN and his co-conspirators devised and carried out a tax fraud scheme by filing false federal income tax returns claiming fraudulent refunds. OSMAN and his co-conspirators prepared fraudulent tax returns using fake W-2s created in the name of several front companies. Most of the returns were filed electronically, either from coffee shops or from a business in south Minneapolis owned by OSMAN. The resulting refunds were split among OSMAN and his co-conspirators. Often times, the fraudulent refunds were deposited onto prepaid debit cards and sent to addresses controlled by OSMAN or his co-conspirators. During the course of the conspiracy, OSMAN and his co-conspirators filed more than 90 income tax returns claiming approximately $1,012,877 in fraudulent tax refunds.
As proven at trial, OSMAN was arrested on April 17, 2015 and was later released on bond pending trial. On July 28, 2015, when OSMAN failed to appear for a court ordered pretrial conference, a warrant was issued for his arrest. On April 14, 2016, OSMAN was arrested in Toronto, Canada and later extradited back to the United States to face trial.
This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS.
This case was prosecuted by Assistant U.S. Attorneys Joseph H. Thompson and Michelle E. Jones.
Defendant Information:
HASSAN OSMAN, 52
Minneapolis, Minn.
Convicted:
- Conspiracy, 1 count
- Aiding and assisting in the preparation of a false tax return, 13 counts
- Failure to appear, 1 count
Sentenced:
- 108 months in prison
- Three years of supervised release
- $394,120.14 in restitution
# # #
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Hibbing Man Sentenced to 20 Years in Federal Prison for Producing Child PornographyRead the Press Release
United States Attorney Gregory G. Brooker today announced the sentencing of KEVIN JAMES PETROSKE, 36, to 20 years in prison for producing, attempting to produce and possessing images and videos containing child pornography. PETROSKE was found guilty on August 30, 2017, following a three-day trial, on three counts of production and attempted production of child pornography, five counts of attempted production of child pornography, and one count of possession of child pornography. PETROSKE was sentenced earlier today before Judge Patrick J. Schiltz in United States District Court in Minneapolis, Minn.
As proven at trial, on October 23, 2015, law enforcement received a report of a man peering into residential windows of a home in Hibbing, Minn. Shortly after, law enforcement apprehended and identified the suspect as PETROSKE. Law enforcement investigators determined that PETROSKE had prior convictions in Stearns County for felony stalking and an open investigation in Benton County for possession of child pornography. Upon execution of a search warrant at PETROSKE’S residence, investigators seized a laptop computer containing hundreds of videos and images containing child pornography.
As proven at trial, many of the videos found on PETROSKE’S laptop, which were recorded between October 2011 and September 2015, contained surreptitious recordings of minor females filmed by PETROSKE through the windows of their homes without their knowledge. PETROSKE captured the victims in their bedrooms and bathrooms in various private moments and, in many of the videos, PETROSKE is heard masturbating and making sexual comments.
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorney’s Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
This case is the result of an investigation conducted by the FBI, Minnesota Bureau of Criminal Apprehension, and the Hibbing Police Department.
Assistant U.S. Attorneys Manda M. Sertich and Melinda A. Williams prosecuted the case.
Defendant Information:
KEVIN JAMES PETROSKE, 36
Hibbing, Minn.
Convicted:
- Production and attempted production of child pornography, 3 counts
- Attempted production of child pornography, 5 counts
- Possession of child pornography, 1 count
Sentenced:
- 240 months in prison
- 10 years of supervised release
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Itasca County Felon Sentenced to 175 Months in Federal Prison for Possession of MethamphetamineRead the Press Release
United States Attorney Gregory G. Brooker today announced the sentencing JAYSEN LANE HEYER, 39, to 175 months in prison for possession with intent to distribute methamphetamine. HEYER pleaded guilty on September 8, 2017, and was sentenced today before Judge Susan Richard Nelson in U.S. District Court in Saint Paul, Minn.
According to the defendant’s guilty plea and documents filed in court, on December 28, 2016, HEYER was found to be in possession of approximately 199 grams of methamphetamine, an amount that carries a street value of between $8,000 and $12,000. Law enforcement officers also found HEYER to be in possession of stolen firearms, including a Smith and Wesson M&P 40 .40 caliber pistol and an Intratec Tech-DC9 9-millimeter pistol, as well as ammunition for both firearms. Because he is a felon, HEYER is prohibited under federal law from possessing firearms at any time.
This case is the result of an investigation conducted by the Itasca County Sheriff’s Office and the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF).
Assistant United States Attorney Deidre Y. Aanstad prosecuted this case.
Defendant Information:
JAYSEN LANE HEYER, 39
Squaw Lake, Minn.
Convicted:
- Possession with Intent to Distribute Methamphetamine, 1 count
Sentenced:
- 175 months in prison
- Four years of supervised release
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
South Saint Paul Man Sentenced to Federal Prison for Check Forgery SchemeRead the Press Release
United States Attorney Gregory G. Brooker today announced the sentencing of JAMES MARIO LEWIS, a/k/a/ “Lowdown,” 47, to 61 months in prison for operating a years-long check fraud scheme. The defendant, who pleaded guilty on July 6, 2017, to one count of bank fraud and one count of aggravated identity theft, was sentenced on February 20, 2018, before Senior Judge Michael J. Davis in U.S. District Court in Minneapolis, Minn.
“The recent sentencing of Mr. Lewis to over five years in prison for theft of mail should be a wake-up call to those individuals who are contemplating a similar crime”, said Acting Postal Inspector in Charge Dana Carter of the Denver Division. “The US Postal Inspection Service continues a long tradition of protecting the American public from those individuals who would steal or use the US Mail in furtherance of their criminal activities.”
According to his guilty plea and documents filed in court, from May 2009 through April 2014, LEWIS led a fraud scheme in which he and multiple co-conspirators would steal checks from victims’ mailboxes, change the name on the checks, deposit them at local banks, and then withdraw the cash proceeds. LEWIS would use chemicals to “wash” the stolen checks to remove the true payee and rewrite the checks using the names and bank account information of his co-conspirators. In total, LEWIS and his co-conspirators cashed or attempted to cash more than 60 counterfeit checks totaling more than $120,000.00.
This case was the result of an investigation conducted by the United States Postal Inspection Service, the Ramsey County Sheriff’s Office, and the Minnesota Financial Crimes Task Force.
Assistant United States Attorney Manda M. Sertich prosecuted this case.
Defendant Information:
JAMES MARIO LEWIS, a/k/a/ “Lowdown,” 47
South Saint Paul, Minn.
Convicted:
- Bank fraud, 1 count
- Aggravated identity theft, 1 count
Sentenced:- 61 months in prison
- Five years supervised release
- $57,963.41 in restitution
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600Saint Paul Psychiatrist Arrested and Charged with Receipt of Child PornographyRead the Press Release
United States Attorney Gregory G. Brooker today announced a criminal complaint charging AVIEL LI GOODMAN, 62, a licensed psychiatrist, with receipt of child pornography. GOODMAN made his initial appearance today before Magistrate Judge Menendez in United States District Court in Minneapolis, Minn.
According to the complaint and documents filed in court, on multiple occasions between March 1, 2015, and August 27, 2017, undercover agents downloaded numerous image and video files depicting child pornography from IP addresses connected to GOODMAN’S Saint Paul, Minn. residence. On January 17, 2018, upon execution of a search warrant on GOODMAN’S residence, law enforcement seized a computer containing hundreds of image files and multiple video files of suspected child pornography. The images and videos were submitted to the National Center for Missing and Exploited Children (NCMEC) for analysis and victim identification.
If you know of any child who may have been a victim of exploitation, please call the National Center for Missing or Exploited Children (NCMEC) at 1-800-THE-LOST (1-800-843-5678) or visit NCMEC’s web site at www.missingkids.com.
This case is the result of an investigation conducted by the Federal Bureau of Investigation.
This case is being prosecuted by Assistant U.S. Attorneys Katharine T. Buzicky and Carol M. Kayser.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Defendant Information:
AVIEL LI GOODMAN, 62
Saint Paul, Minn.
Charges:
- Receipt of child pornography, 1 count
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
The charges contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Rochester Tax Return Preparer Indicted for Tax Refund Fraud SchemeRead the Press Release
A federal grand jury returned an indictment today charging a Rochester-based tax return preparer with conspiring to file false claims for tax refunds, theft of public money, and aggravated identity theft, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Gregory G. Brooker for the District of Minnesota.
According to the indictment, MERCEDES MALDONADO RODRIGUEZ, from 2008 through April 2013, operated a tax return preparation business located in Rochester, Minnesota. RODRIGUEZ allegedly purchased authentic birth certificates of Mexican nationals, which she and her co-conspirators then used along with other falsified documents to fraudulently obtain Taxpayer Identification Numbers (ITINs) from the Internal Revenue Service. The indictment further alleges that RODRIGUEZ and her co-conspirators used the fraudulently obtained ITINs to file fraudulent tax returns, which claimed refunds based on, among other items, false dependents and child tax credits. An ITIN is a tax processing number issued by the IRS to individuals who do not have, and are not eligible to obtain, a social security number.
RODRIGUEZ is further alleged to have directed the fraudulent tax refund checks to be mailed to addresses belonging to her co-conspirators, employees, and family members and then cashed.
If convicted, RODRIGUEZ faces a statutory maximum sentence of 10 years in prison for the conspiracy, 10 years in prison for each count of theft of public money and a mandatory sentence of two years in prison for aggravated identity theft. She also faces substantial monetary penalties and restitution.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Brooker commended special agents of IRS Criminal Investigation, U.S. Postal Inspection Service, Homeland Security Investigations, the Federal Bureau of Investigation, the U.S. Secret Service and the Department of Treasury, Office of Inspector General, who investigated the case and Assistant U.S. Attorney Allen A. Slaughter and Trial Attorney Christopher S. Strauss of the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Defendant information:
MERCEDES MALDONADO RODRIGUEZ
Rochester, Minn.
Charges:
- Conspiracy to Defraud the United States with Respect to Claims, 1 count
- Theft of Public Money, 7 counts
- Aggravated Identity Theft, 33 counts
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
The charges contained in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
Minnesota Tax Return Preparer Indicted for Tax Refund Fraud SchemeRead the Press Release
A federal grand jury sitting in the District of Minnesota returned an indictment today charging a Rochester-based tax return preparer with conspiring to file false claims for tax refunds, theft of public money, and aggravated identity theft, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Gregory G. Brooker for the District of Minnesota.
According to the indictment, Mercedes Maldonado Rodriguez from 2008 through April 2013, operated a tax return preparation business located in Rochester, Minnesota. Rodriguez allegedly purchased authentic birth certificates of Mexican nationals, which she and her co-conspirators then used along with other falsified documents to fraudulently obtain Taxpayer Identification Numbers (ITINs) from the Internal Revenue Service. The indictment further alleges that Rodriguez and her co-conspirators used the fraudulently obtained ITINs to file fraudulent tax returns, which claimed refunds based on, among other items, false dependents and child tax credits. An ITIN is a tax processing number issued by the IRS to individuals who do not have, and are not eligible to obtain, a social security number.
Rodriguez is further alleged to have directed the fraudulent tax refund checks to be mailed to addresses belonging to her co-conspirators, employees, and family members and then cashed.
An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty.
If convicted, Rodriguez faces a statutory maximum sentence of 10 years in prison for the conspiracy, 10 years in prison for each count of theft of public money and a mandatory sentence of two years in prison for aggravated identity theft. She also faces substantial monetary penalties and restitution.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Brooker commended special agents of IRS Criminal Investigation, U.S. Postal Inspection Service, Homeland Security Investigations, the Federal Bureau of Investigation, the U.S. Secret Service and the Department of Treasury, Office of Inspector General, who investigated the case and Assistant U.S. Attorney Allen A. Slaughter and Trial Attorney Christopher S. Strauss of the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Big Island Capital Fraudster Sentenced to 110 Months in Prison for Million Dollar Ponzi SchemeRead the Press Release
United States Attorney Gregory G. Brooker today announced the sentencing of JEREMY RICHARD LUNDIN, 31, to 110 months in prison for operating a Ponzi scheme through which he stole more than $1 million from individual investors. LUNDIN, who pleaded guilty on September 22, 2017, was sentenced today before Judge Wilhelmina M. Wright in U.S. District Court in Saint Paul, Minn. In addressing LUNDIN’S conduct, Judge Wright stated, “You did not steal from your victims because you needed money … you stole money because you wanted to maintain a lavish lifestyle without earning it. Your victims earned their money, and you stole it. You used their money to buy vacations, clothes, vehicles, a boat, for yourself. Apparently you decided you deserved their money more than they did.”
Assistant U.S. Attorney Amber Brennan said, “Jeremy Lundin had a life that a lot of people dream of, a middle class life. But, he wanted things he could not afford, so he stole from people who had saved money for their retirement and to help their kids go to college. These are people who wanted to give their kids the same opportunities that Lundin himself had. And, he stole from them for no reason other than to live a lavish lifestyle.”
“When fraudsters like Jeremy Lundin take advantage of honest citizens who are simply looking to invest their hard-earned savings and retirement funds for a better life - it’s not only shameful, but devastating,” said Acting Special Agent in Charge Hubbard Burgess of IRS Criminal Investigation, St. Paul Field Office. “Today's sentencing demonstrates how federal law enforcement works together to help stop the criminal behavior of those who prey on innocent investors in order to enrich themselves.”
“Postal Inspectors take very seriously their mission to deter the illegal use of the mails for any criminal activity,” said Acting Postal Inspector in Charge, Dana Carter. “We are committed to working together with our law enforcement partners to identify, investigate and bring to justice those who would attempt to mask their criminal activity through the use of the mail. Today’s sentencing should send a clear message to those individuals who are contemplating using the mails for their schemes to defraud, don’t do it.”
“To appear legitimate, Lundin used a slick sales pitch and phony documents to steal people’s life savings. His sole objective was to indulge his own extravagant lifestyle,” said Minnesota Commerce Commissioner Jessica Looman. “The Commerce Fraud Bureau is committed to investigating and stopping fraud in Minnesota. We hope that the sentence received by Lundin will deter others from committing fraud in our state.”
According to the defendant’s guilty plea, from approximately December 2014 until May 2017, LUNDIN claimed that he conducted “options trading” through his company Big Island Capital. LUNDIN worked through a network of associates and friends to solicit investors to invest with Big Island Capital by promising those potential investors exponential growth through options trading. LUNDIN solicited more than $1 million from at least 51 investors, but instead of using the funds for options trading, LUNDIN spent investors’ money to fund his and his wife’s lavish lifestyle.
According to the defendant’s guilty plea, as part of the scheme, LUNDIN provided victim investors with written materials relating to his purported investment strategy. Through these materials, LUNDIN claimed that the goal of Big Island Capital was to “generate profits with options trading” and that while he could not “guarantee” an exact percent, he would “shoot for” returns of between 40 percent and 80 percent. LUNDIN also entered into contract agreements with victim investors. These agreements, titled, “Big Island Capital Investment Advisory Agreement,” purported that the assets of Big Island’s account would be held for safekeeping in a brokerage account. LUNDIN regularly represented that the value of the account was several hundred thousand dollars. For example, “Welcome Packet” materials LUNDIN sent to a new victim investor on November 24, 2015, claimed that the firm’s capital was then $730,000 when, in reality, LUNDIN did not even open the brokerage account until December 21, 2015.
According to the defendant’s guilty plea, in order to appear legitimate and promote his scheme, LUNDIN created phony account statements. He also provided victim investors with online access to fictitious quarterly statements and purportedly “up to date” information about the rate of growth and the market value of the accounts, which commonly and falsely showed double-digit gains. As part of the scheme, LUNDIN directed his victim investors to make their checks payable to “Big Island Capital,” he would then deposit those checks into a bank account he had established in the company’s name. Between May 2015 and May 2017, at least $992,000 was deposited into that account. During roughly the same time period, however, LUNDIN transferred $933,950 from the business account directly into his and his wife’s personal checking account. LUNDIN and his wife used the majority of those investor funds on personal expenses including travel, luxury automobiles, a boat, jewelry, retail purchases, and more than $366,000 in credit card payments.
This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS, Federal Bureau of Investigation, United States Postal Inspection Service, and Minnesota Department of Commerce Fraud Bureau.
Assistant United States Attorney Amber M. Brennan prosecuted the case.
Defendant Information:
JEREMY RICHARD LUNDIN, 31
Mound, Minn.
Convicted:
- Mail fraud, 1 count
- Money laundering – transaction involving fraud proceeds, 1 count
Sentenced:
- 110 months in prison
- Three years of supervised release
- $969,788.96 in restitution
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Two Men Arrested and Charged with Illegally Exporting UAV Parts and Technology to HizballahRead the Press Release
The indictment of Usama Darwich Hamade, 53, Samir Ahmed Berro, 64, and Issam Darwich Hamade, 55, was announced today for their conspiring to illegally export goods and technology from the United States to Lebanon and to Hizballah, a designated foreign terrorist organization, in violation of the International Emergency Economic Powers Act (IEEPA), the Export Administration Regulations, and the International Traffic in Arms Regulations. Defendants Usama Hamade and Issam Hamade are currently in custody in South Africa. Samir Ahmed Berro remains at large.
Acting Assistant Attorney General for National Security Edward C. O’Callaghan and U.S. Attorney Gregory G. Brooker of the District of Minnesota made the announcement.
According to the Indictment, from 2009 through December 2013, Usama Hamade, Berro and Issam Hamade willfully conspired to export and attempted to export from the United States to Lebanon, and specifically to Hizballah, goods and technology without obtaining the required export licenses from the U.S. Department of Commerce and the U.S. Department of State, in violation of IEEPA, the Export Administration Regulations, the Arms Export Control Act, and the International Traffic in Arms Regulations.
According to the Indictment, those goods included inertial measurement units (IMUs) suitable for use in unmanned aerial vehicles (UAVs), a jet engine, piston engines and recording binoculars.
The charges contained in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
This case is the result of an investigation conducted by the FBI, the U.S. Department of Commerce Office of Export Enforcement, and Homeland Security Investigations.
Assistant U.S. Attorneys John Docherty and David MacLaughlin are prosecuting the case, with assistance from Trial Attorney David Recker of the National Security Division’s Counterintelligence and Export Control Section.
Two Men Arrested and Charged with Illegally Exporting UAV Parts and Technology to HizballahRead the Press Release
United States Attorney Gregory G. Brooker today announced the indictment of USAMA DARWICH HAMADE, 53, SAMIR AHMED BERRO, 64, and ISSAM DARWICH HAMADE, 55, for conspiring to illegally export goods and technology from the United States to Lebanon and to Hizballah in violation of the International Emergency Economic Powers Act (“IEEPA”), the Export Administration Regulations, and the International Traffic in Arms Regulations. Defendants USAMA HAMADE and ISSAM HAMADE are currently in custody in South Africa. SAMIR AHMED BERRO remains at large.
According to the Indictment, from 2009 through December 2013, USAMA HAMADE, BERRO and ISSAM HAMADE willfully conspired to export and attempted to export from the United States to Lebanon, and specifically to Hizballah, goods and technology without obtaining the required export licenses from the U.S. Department of Commerce and the U.S. Department of State, in violation of IEEPA, the Export Administration Regulations, the Arms Export Control Act, and the International Traffic in Arms Regulations.
According to the Indictment, USAMA HAMADE, BERRO and ISSAM HAMADE caused the export of inertial measurement units (“IMUs”) suitable for use in unmanned aerial vehicles (“UAVs”), a jet engine, piston engines, and recording binoculars to Hizballah, designated by the U.S. Secretary of State as a “foreign terrorist organization.” As part of the conspiracy, in October 2009, USAMA HAMADE directed Individual A to order the jet engine and have it delivered to SAB Aerospace, a company owned by BERRO in the United Arab Emirates ("UAE"). BERRO then transshipped the jet engine to Hizballah co-conspirators in Lebanon. In September 2009 through November 2009, USAMA HAMADE directed Individual A to place orders for the digital compasses and the IMUs for delivery to South Africa, falsely telling Individual A that the parts would be used in UAVs in South Africa to fly over wildlife areas to prevent poaching. Instead, USAMA HAMADE transshipped the digital compasses and the IMUs to Hizballah co-conspirators in Lebanon.
As part of the conspiracy, in March and May of 2010, USAMA HAMADE directed Individual A to order additional IMUs to be sent to South Africa without telling Individual A that he intended to send the IMUs to Hizballah in Lebanon after receiving them in South Africa. As a consequence,
Individual A obtained an export license from the U.S. Department of State, which permitted the export of the IMUs to South Africa but prohibited their re-export without further authorization. In January 2010, ISSAM HAMADE and USAMA HAMADE directed Individual A to obtain an exhaust system for the jet engine, which was subsequently purchased online by Individual A.
As part of the conspiracy, between November 2009 ·and April 2010, BERRO caused 20 piston engines to be shipped from the U.S. to a temporary recipient in Frankfurt, Germany, and then on to SAB Aerospace in the UAE. From there, BERRO caused the piston engines to be shipped to Hizballah in Lebanon.
As part of the conspiracy, in December 2013, USAMA HAMADE directed Individual B to send the recording binoculars to Lebanon via a courier, who flew from Los Angeles to Beirut, Lebanon, where the binoculars were delivered to Hizballah.
As part of the conspiracy, between 2010 and 2011, ISSAM HAMADE made multiple wire transfers from a bank in Beirut, Lebanon to bank accounts controlled by USAMA HAMADE, totaling approximately $173,924.
This case is the result of an investigation conducted by the FBI, the U.S. Department of Commerce Office of Export Enforcement, and Homeland Security Investigations.
Assistant United States Attorneys John Docherty and David MacLaughlin are prosecuting the case.
Defendant Information:
USAMA DARWICH HAMADE, 53
Citizen of Lebanon and South Africa
Charges:
- Illegal export conspiracy, 1 count
- Smuggling, 1 count
SAMIR AHMED BERRO, 64
Citizen of Lebanon and the United Kingdom
Charges:- Illegal export conspiracy, 1 count
ISSAM DARWICH HAMADE, 55
Citizen of Lebanon and the United Kingdom
Charges:- Illegal export conspiracy, 1 count
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
The charges contained in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Former It Employee of Transcontinental Railroad Sentenced to Prison for Damaging Ex-Employer’s Computer NetworkRead the Press Release
WASHINGTON – A former IT employee for the Canadian Pacific Railway was sentenced today to one year and one day in prison for causing intentional damage to critical portions of Canadian Pacific’s computer network.
Acting Assistant Attorney General John P. Cronan of the Department of Justice’s Criminal Division, U.S. Attorney Gregory G. Brooker of the District of Minnesota and Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Field Office made the announcement.
CHRISTOPHER VICTOR GRUPE, 46, was sentenced by U.S. District Judge Patrick J. Schiltz of the District of Minnesota. GRUPE was convicted of one count of intentional damage to a protected computer on Oct. 6, 2017, following a five-day jury trial in Minneapolis, Minnesota.
“The defendant in this case, a former IT professional, has been convicted of a felony, is going to prison, has lost his IT job and will likely never work in the IT industry again, and had to resign from the Army after losing his security clearance,” said Special Agent in Charge Thornton. “These are real consequences. The FBI, along with our law enforcement partners, will continue to aggressively pursue cases such as this to ensure that those with technical skills and trusted access to computer systems like Christopher Grupe who then betray that trust and commit computer crimes will be caught and punished.”
“Christopher Grupe chose to seek revenge on his employer by abusing company assets and insider knowledge that was entrusted to him to make the railroad safer, not more dangerous,” said Assistant U.S. Attorney Tim Rank. “Today’s sentence is an appropriate consequence for the defendant’s deliberate and malicious actions.”
As proven through evidence presented at the trial, from September 2013 until December 2015, GRUPE was employed as an IT professional by Canadian Pacific Railway (CPR), a transcontinental railroad company headquartered in Alberta, Canada, with U.S. headquarters in Minneapolis. On Dec. 15, 2015, following a 12-day suspension, GRUPE was notified by CPR management that he was going to be fired due to insubordination. However, at his request, GRUPE was instead allowed to resign, effective that same day. In his resignation letter, GRUPE indicated that he would return all company property, including his laptop, remote access device, and access badges, to the CPR office.
The evidence presented at the trial proved that on Dec. 17, 2015, before returning his laptop and remote access device, GRUPE used both to gain access to the CPR computer network’s core “switches” – high-powered computers through which critical data in the CPR network flowed. Once inside, GRUPE strategically deleted files, removed administrative-level accounts, and changed passwords on the remaining administrative-level accounts, thereby locking CPR out of these network switches. GRUPE then attempted to conceal his activity by wiping the laptop’s hard drive before returning it to CPR.
The evidence presented further showed that on Jan. 6, 2016, while trying to address a networking problem, the CPR network staff discovered that they were unable to access the main network switches. After CPR IT staff was able to regain access to the switches through a risky, but successful, rebooting procedure, they discovered evidence in logging data stored in the memory of the switches connecting the damage to GRUPE. CPR hired an outside computer security company to identify the source and scope of the intrusion as well as conduct an incident analysis, which also connected the damage to GRUPE.
This case is the result of an investigation conducted by the FBI, with assistance from the Digital Forensic Laboratory of the Criminal Division’s Computer Crime and Intellectual Property Section.
Assistant U.S. Attorney Timothy C. Rank of the District of Minnesota and Trial Attorney Aaron R. Cooper of the Criminal Division’s Computer Crime and Intellectual Property Section are prosecuting the case.
Defendant Information:
CHRISTOPHER VICTOR GRUPE, 46
Minneapolis, Minn.
Convicted:
- Intentional damage to a protected computer, 1 count
Sentenced:
- One year and one day in prison
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Former IT Employee of Transcontinental Railroad Sentenced to Prison for Damaging Ex-Employer’s Computer NetworkRead the Press Release
A former IT employee for the Canadian Pacific Railway was sentenced today to one year and one day in prison for causing intentional damage to critical portions of Canadian Pacific’s computer network.
Acting Assistant Attorney General John P. Cronan of the Department of Justice’s Criminal Division, U.S. Attorney Gregory G. Brooker of the District of Minnesota and Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Field Office made the announcement.
Christopher Victor Grupe, 46, was sentenced by U.S. District Judge Patrick J. Schiltz of the District of Minnesota. Grupe was convicted of one count of intentional damage to a protected computer on Oct. 6, 2017, following a five-day jury trial in Minneapolis, Minnesota.
As proven through evidence presented at the trial, from September 2013 until December 2015, Grupe was employed as an IT professional by Canadian Pacific Railway (CPR), a transcontinental railroad company headquartered in Alberta, Canada, with U.S. headquarters in Minneapolis. On Dec. 15, 2015, following a 12-day suspension, Grupe was notified by CPR management that he was going to be fired due to insubordination. However, at his request, Grupe was instead allowed to resign, effective that same day. In his resignation letter, Grupe indicated that he would return all company property, including his laptop, remote access device, and access badges, to the CPR office.
The evidence presented at the trial proved that on Dec. 17, 2015, before returning his laptop and remote access device, Grupe used both to gain access to the CPR computer network’s core “switches” – high-powered computers through which critical data in the CPR network flowed. Once inside, Grupe strategically deleted files, removed administrative-level accounts, and changed passwords on the remaining administrative-level accounts, thereby locking CPR out of these network switches. Grupe then attempted to conceal his activity by wiping the laptop’s hard drive before returning it to CPR.
The evidence presented further showed that on Jan. 6, 2016, while trying to address a networking problem, the CPR network staff discovered that they were unable to access the main network switches. After CPR IT staff was able to regain access to the switches through a risky, but successful, rebooting procedure, they discovered evidence in logging data stored in the memory of the switches connecting the damage to Grupe. CPR hired an outside computer security company to identify the source and scope of the intrusion as well as conduct an incident analysis, which also connected the damage to Grupe.
This case is the result of an investigation conducted by the FBI, with assistance from the Digital Forensic Laboratory of the Criminal Division’s Computer Crime and Intellectual Property Section.
Trial Attorney Aaron R. Cooper of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Timothy C. Rank of the District of Minnesota are prosecuting the case.
United States Files Complaint Against Precision Lens, Paul Ehlen for Alleged Kickback SchemeRead the Press Release
United States Attorney Gregory G. Brooker today announced that the United States has filed a Complaint-in-Intervention against the Cameron-Ehlen Group, Inc. d/b/a Precision Lens (“Precision Lens”) and Precision Lens’ owner PAUL EHLEN, and that DR. JITENDRA SWARUP has agreed to pay more than $2.9 million to resolve kickback allegations under the False Claims Act (“FCA”).
The United States previously announced a $12 million settlement with Sightpath Medical, Inc. and TLC Vision Corporation (collectively “Sightpath”) and their former CEO, JAMES TIFFANY.
As part of the FCA Agreement and in exchange for a release of OIG’s permissive exclusion authority, DR. SWARUP has agreed to enter into a three-year integrity agreement with OIG.
“Federal health care beneficiaries should have confidence that the health care they receive is unaffected by kickbacks provided to their medical providers,” said United States Attorney Gregory Brooker. “Companies are not permitted to use expensive trips and other remuneration in order to persuade physicians to use products supplied by those companies, and physicians may not accept such remuneration in exchange for patient referrals.”
The United States’ Complaint against Precision Lens and EHLEN alleges that Precision Lens provided kickbacks to physicians in various forms, including travel and entertainment. The Complaint identifies multiple examples of trips, including luxury skiing vacations, and high-end fishing, golfing and hunting vacations. For many of the trips, Precision Lens and EHLEN transported physicians to exclusive luxury vacation destinations on private jets. Precision Lens and EHLEN also sold frequent flyer miles to their physician customers at a steep discount, enabling the physicians to take trips at well below fair market value.
The Complaint-in-Intervention alleges that Precision Lens maintained a slush fund, also referred to internally at Precision Lens as a secret fund. Precision Lens used money from the slush fund to finance trips with key physician customers and sales targets.
In the settlement agreement with DR. SWARUP, the United States contends that from January 1, 2006, through January 1, 2015, DR. SWARUP received unlawful remuneration from Sightpath, Precision Lens and EHLEN, which resulted in the submission of false claims to the United States for ophthalmological products and services. Specifically, DR. SWARUP received various trips, including hunting and international fishing trips, which were used to induce, and attempt to induce, DR. SWARUP to use products and services distributed by these companies. DR. SWARUP also received consulting agreements with Sightpath in excess of $100,000 per year, where the services were allegedly either not fully performed or not properly tracked, which resulted in remuneration in excess of fair market value.
The $2.9 million settlement with DR. SWARUP resolves allegations filed in a civil lawsuit originally brought by a Relator, or whistleblower, under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government for false claims and to share in any recovery. The government often relies on whistleblowers to bring fraud schemes to light that might otherwise go undetected. The whistleblower in this matter, Kipp Fesenmaier, will receive 19.5% of the amounts recovered in connection with the settlement agreement.
The claims resolved by these settlements are allegations only; there has been no determination of liability or wrongdoing.
The case was handled by the Civil Frauds Unit of the U.S. Attorney’s Office for the District of Minnesota with assistance from the Office of Inspector General of the U.S. Department of Health and Human Services and the Federal Bureau of Investigation.
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Two Men Charged with Armed Robbery of an Inver Grove Heights BusinessRead the Press Release
United States Attorney Gregory G. Brooker today announced a superseding indictment charging JAMAAL MARQUIE MAYS, 33, and JAQUON KESHAWN MOMAN, 25, with robbery and firearms charges.
According to the indictment, on August 17, 2017, MAYS and MOMAN attempted to rob a Verizon Wireless store in Inver Grove Heights, Minn. while brandishing a firearm in the presence of a store employee. On July 10, 2017, MOMAN and another individual stole cash from a Metro PCS store in Minneapolis, Minn.
Because he is a felon, MAYS is prohibited under federal law from possessing any type of firearm at any time.
The Hobbs Act, passed by Congress in 1946, allows federal prosecutors to prosecute individuals who commit armed robberies of businesses engaged in interstate commerce.
This case is the result of an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Inver Grove Heights Police Department.
Assistant U.S. Attorney David P. Steinkamp is prosecuting the case.
Defendant Information:
JAMAAL MARQUIE MAYS, 33
Unknown
Charges:
- Interference with commerce by robbery, 1 count
- Using, carrying, brandishing and discharging a firearm during and in relation to a crime of violence, 1 count
- Felon in possession of a firearm, 1 count
JAQUON KESHAWN MOMAN, 25
Unknown
Charges:- Interference with commerce by robbery, 2 counts
- Using, carrying, brandishing and discharging a firearm during and in relation to a crime of violence, 1 count
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
The charges contained in the superseding indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Health Care Business Owners Sentenced to Prison for Multi-Million Dollar Fraud and Tax ConspiracyRead the Press Release
United States Attorney Gregory G. Brooker today announced the sentencing of three defendants for their involvement in a years-long, multi-million dollar heath care fraud and tax conspiracy. THURLEE BELFREY, 52, ROYLEE BELFREY, 52, and LANORE BELFREY, 43, each entered guilty pleas on September 14, 2017, and were sentenced yesterday before Senior U.S. District Judge Ann D. Montgomery in Minneapolis, Minn.
“For more than a decade, these three defendants each played a role in a scheme that garnered millions in illicit profits by cheating government health care programs that were funded by honest taxpayers and intended for the needy,” said Assistant U.S. Attorney Robert Lewis. “The sentences handed down are appropriate and just consequences.”
“Employers have a responsibility to their employees to withhold the proper amount of taxes and pay those taxes over to the IRS,” said IRS Criminal Investigation Acting Special Agent in Charge Hubbard Burgess, Saint Paul Field Office. “Because of employers like Thurlee Belfrey and Roylee Belfrey not complying with the tax laws, failing to turn over their employee’s withheld taxes results in a loss of tax revenue to the United States government but more importantly, it affects the loss of future social security or Medicare benefits for their employees.”
According to the defendants’ guilty pleas and documents filed in court, brothers THURLEE and ROYLEE BELFREY ran multiple health care businesses that received funds from the Medicaid and Medicare programs funded by the federal government and the State of Minnesota. In 2003, following an investigation by the Minnesota Attorney General’s Office into Royal Health Care, a business they started together in the 1990s, THURLEE BELFREY was convicted of felony theft by false representation. Based on his conviction, in 2004 the Minnesota Department of Human Services (DHS) and the United States Department of Health and Human Services (DHHS) excluded THURLEE BELFREY indefinitely from participating in state and federal health care programs, with no right to seek reinstatement for up to 20 years.
Despite this, and as he admitted in his guilty plea, THURLEE BELFREY conspired with his wife LANORE BELFREY to incorporate a new health care company, Model Health Care (Model), to continue the business operations and conceal THURLEE BELFREY’S involvement therein. To do this, and part of the scheme, LANORE BELFREY was named the owner of Model and intentionally failed to disclose THURLEE BELFREY’S involvement in managing the business. Despite being excluded, THURLEE BELFREY continued to manage Model. Government payment records show Model received more than $18,000,000 from Medicaid that would not have been paid but for the fraudulent misrepresentations made about THURLEE BELFREY’S lack of involvement in the businesses. According to the investigation, THURLEE and LANORE BELFREY received millions of dollars from Model during the scheme.
While THURLEE BELFREY ran Model, ROYLEE BELFREY operated several health care businesses as well. According to the defendants’ guilty pleas, between 2007 and 2013, THURLEE and ROYLEE BELFREY deducted and collected money from their employees’ wages, ostensibly for the payment of federal payroll taxes and Federal Insurance Contribution Act (FICA) taxes. However, they intentionally failed to pay the withheld taxes over to the IRS over the course of many years and, instead, used the money for other purposes, including attempts to develop a reality show based on their lives, high-end housing, a Caribbean cruise, luxury retail purchases, and thousands of dollars in cash withdrawals. In total, THURLEE and ROYLEE BELFREY admitted deducting and unlawfully using for their own benefit more than $3,960,000 in withheld taxes between 2007 and 2014.
This case is the result of an investigation conducted by the Minnesota Attorney General’s Office, the Internal Revenue Service – Criminal Investigation Division, Federal Bureau of Investigation, and the Office of the Inspector General, United States Department of Health and Human Services.
Assistant U.S. Attorneys Robert Lewis and David Maria prosecuted the case.
Defendant Information:
THURLEE BELFREY, 52
Saint Paul, Minn.
Convicted:
- Conspiracy to defraud the United States, 1 count
- Failure truthfully to account for and pay over withheld taxes, 1 count
Sentenced:
- 96 months in prison
- Three years of supervised release
- $8,944,036.82 in restitution
ROYLEE BELFREY, 52
Saint Paul, Minn.
Convicted:
- Failure truthfully to account for and pay over withheld taxes, 2 counts
Sentenced:
- 60 months in prison
- Three years of supervised release
- $4,592,593.74 in restitution
LANORE BELFREY, 43
Minnetonka, Minn.
Convicted:
- Conspiracy to defraud the United States, 1 count
Sentenced:
- 15 months in prison
- Two years of supervised release
- $402,158.00 in restitution
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Minneapolis Woman Charged with Terrorism Offenses, Arson, and Making False StatementsRead the Press Release
United States Attorney Gregory G. Brooker today announced a three-count indictment charging TNUZA JAMAL HASSAN, 19, with attempting to provide material support to a designated foreign terrorist organization, arson, and making a false statement. HASSAN will make her initial appearance before a United States Magistrate Judge at a later date.
According to the indictment, on September 19, 2017, HASSAN, a former student at St. Catherine University (SCU) in St. Paul, Minnesota, attempted to provide material support to a designated foreign terrorist organization, namely, al-Qa’ida. On September 22, 2017, in an interview with FBI Agents, HASSAN was asked whether she authored and delivered a letter to two fellow students at SCU in March 2017. The letter sought to encourage fellow students to “join the jihad in fighting” and to “[j]oin Al Qaeda, Taliban, or Al Shabaab.” HASSAN knowingly made a false statement to FBI Agents when she stated (1) she did not write the letter, (2) she did not know who wrote the letter, and (3) did not know how the letter came to be delivered to her fellow students.
According to the indictment, on January 17, 2018, HASSAN started several fires on the campus of SCU, including in St. Mary Hall, which she maliciously damaged. The fires set by HASSAN caused the St. Paul Fire Department to respond to SCU.
HASSAN was charged in Ramsey County District Court with one count of first-degree arson and is currently in custody at the Ramsey County Jail.
Assistant U.S. Attorney Andrew R. Winter is prosecuting the case.
This case is the result of an investigation conducted by the FBI-led Joint Terrorism Task Force, St. Paul Police Department, and arson investigators from the St. Paul Fire Department.
Defendant Information:
TNUZA JAMAL HASSAN, 19
Minneapolis, Minn.
Charges:
- Attempting to Provide Material Support to a Designated Foreign Terrorist Organization (al-Qa’ida), 1 count
- False Statement, 1 count
- Arson, 1 count
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Latvian National Pleads Guilty to “Scareware” Hacking Scheme That Targeted Minneapolis Star Tribune WebsiteRead the Press Release
A Latvian man pleaded guilty yesterday for participating in a lucrative “scareware” hacking scheme that targeted visitors to the Minneapolis Star Tribune’s website. Acting Assistant Attorney General John P. Cronan of the Department of Justice’s Criminal Division; United States Attorney Gregory G. Brooker of the District of Minnesota; and Special Agent in Charge Richard T. Thornton of the Federal Bureau of Investigation-Minneapolis Field Office made the announcement.
“With this guilty plea, Mr. Sahurovs has taken responsibility for perpetrating a malicious cyber-fraud scheme on visitors of the Minneapolis Star Tribune website,” said U.S. Attorney Greg Brooker. “This Office along with our partners at the FBI are committed to pursuing and prosecuting cyber criminals who use sophisticated schemes such as this to victimize internet users.”
Richard Thornton, Special Agent in Charge at the FBI's Minneapolis Division, added that, “this particular scheme was dangerous on several levels, especially the use of a website belonging to a media institution. In this case, there were thousands of victims who lost millions of dollars, but the use of the media internet site is concerning because it has the potential to undermine the public's access to information, a pillar of American democracy. The FBI is committed to identifying these and other cyber criminals, and, with the help of our domestic and foreign partners, will work tirelessly to catch them no matter where they hide.”
PETERIS SAHUROVS aka “Piotrek” aka “Sagade,” pleaded guilty to one count of conspiracy to commit wire fraud before District Judge Ann D. Montgomery of the District of Minnesota. SAHUROVS was arrested on a District of Minnesota indictment in Latvia in June of 2011, but was released by a Latvian court and later fled. In November of 2016, SAHUROVS was located in Poland and apprehended by Polish law enforcement and extradited to the United States in June of 2017. SAHUROVS was at one time the FBI’s fifth most wanted cybercriminal and a reward of up to $50,000 had been offered for information leading to his arrest and conviction. He will be sentenced on June 6.
According to admissions made in connection with his plea, from at least May 2009 to June 2011, SAHUROVS operated a “bullet-proof” web hosting service in Latvia, through which he leased server space to customers seeking to carry out criminal schemes without being identified or taken offline. The defendant knew that his customers were using his servers to perpetrate criminal schemes, including the transmission of malware, fake anti-virus software, spam, and botnets to unwitting victims, and he received notices from internet governance entities (such as Spamhaus) that his servers were hosting malicious activity. Nonetheless, he was familiar with these criminal schemes, took steps to protect them from being discovered or disrupted, and hosted them on his servers for financial gain.
SAHUROVS admitted that from in or about February 2010 to in or about September 2010, he registered domain names, provided bullet-proof hosting services, and gave technical support to a “scareware” scheme targeting visitors to the Minneapolis Star Tribune’s website. On February 19, 2010, the Minneapolis Star Tribune began hosting an online advertisement, purporting to be for Best Western hotels, on its website, startribune.com. Two days later, however, the advertisement began causing the computers of visitors to the website to be infected with malware. This malware, also known as “scareware,” caused visitors to experience slow system performance, unwanted pop-ups and total system failure. Website visitors also received a fake “Windows Security Alert” pop-up informing them that their computer had been infected with a virus and another pop-up that falsely represented that they needed to purchase the “Antivirus Soft” computer program to fix their security issues, at a price of $49.95.
Website visitors who clicked the “Antivirus Soft” window were presented with an online order form to purchase a purported security program called “Antivirus Soft.” Users who purchased “Antivirus Soft” would receive a file download that “unfroze” their computers and stopped the pop-ups and security notifications. However, the defendant admitted, the file was not a real anti-virus product and did not perform legitimate computer security functions, and merely caused malware that members of the conspiracy had previously installed to cease operating. Meanwhile, the defendant admitted, victim users who did not choose to purchase “Antivirus Soft” became immediately inundated with so many pop-ups containing fraudulent “security alerts,” that all information, data, and files on their computers were rendered inaccessible. Members of the conspiracy defrauded victims out of substantial amounts of money as a result of the scheme. The defendant admitted that as a result of his participation, he made between 150,000 and 250,000 U.S. dollars.
This case was investigated by the FBI’s Minneapolis Field Office.
The Criminal Division’s Office of International Affairs, as well as the Polish National Police, the National Prosecutor’s Office, and the Ministry of Justice provided substantial assistance. Assistant U.S. Attorney Timothy C. Rank of the District of Minnesota and Trial Attorney Aaron R. Cooper of the Criminal Division’s Computer Crime and Intellectual Property Section are prosecuting the case. The Department’s Office of International Affairs also provided substantial assistance in this matter.
Defendant Information:
PETERIS SAHUROVS, 28
Rezekne, Latvia
Convicted:
- Conspiracy to commit wire fraud, 1 count
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Former Bemidji Assistant Principal Sentenced to 300 Months in Federal Prison for Sexually Exploiting Dozens of ChildrenRead the Press Release
United States Attorney Gregory G. Brooker announced the sentencing of BRANDON MARK BJERKNES, 35, to 300 months in prison for sexually exploiting dozens of children. BJERKNES, who pleaded guilty on September 28, 2017, to one count of coercion and enticement of a minor and one count of production of child pornography, was sentenced on February 6, 2018, before Judge Wilhelmina M. Wright in U.S. District Court in St. Paul, Minn.
“During his tenure as Assistant Principal of Bemidji Middle School, Brandon Bjerknes repeatedly victimized at least 55 vulnerable young girls and boys over the course of almost three years,” said Assistant U.S. Attorney Angela Munoz-Kaphing. “Today’s sentence ensures that this defendant is held accountable for his reprehensible crimes and our community, including the brave victims who shared their stories, will be safe from his predatory actions.”
“Preying on children is detestable. It is especially egregious when the predator is someone in a position of authority and trust,” said BCA Superintendent Drew Evans. “Partnering with our law enforcement partners and prosecutors, we will find these people and bring them to justice.”
The Beltrami County Sheriff’s Office is extremely satisfied to see this case against Brandon Bjerknes concluded in the federal courts,” said Sheriff Phil Hodapp. “Mr. Bjerknes violated his high position of trust and authority over the children in our schools and our community, so it was exceptionally important for us to see this case brought to justice.”
According to the defendant’s guilty plea and documents filed in court, since 2006, BJERKNES was employed by the Bemidji Area Schools and, beginning in 2014, served as the Assistant Principal of Bemidji Middle School until his resignation in April 2017. While holding the position of Assistant Principal, BJERKNES posed as a 13-15-year-old male named “Brett Larson,” and used various social media profiles on Facebook and Snapchat with “decoy photographs” to contact minor females and males in middle and high school. Using the alias profiles, BJERKNES directed the minor victims to send him sexually explicit photographs. BJERKNES also used the alias profiles to engage in sexually explicit conversations with the minor victims. Some of the minor victims BJERKNES contacted on social media were students at Bemidji Middle School.
According to the defendant’s guilty plea and documents filed in court, on March 20, 2017, law enforcement executed a search warrant at BJERKNES’ Bemidji residence. Officers seized a number of electronic devices including BJERKNES’ personal iPhone and work iPhone, multiple iPads, computers and external hard drives. The social media accounts and the electronic devices contained multiple sexually explicit photos and videos of multiple known minor victims. Law enforcement identified evidence that BJERKNES used the alias social media accounts to contact more than 50 minor victims.
This case is the result of an investigation conducted by the Minnesota Bureau of Criminal Apprehension and the Beltrami County Sheriff's Office.
Assistant United States Attorney Angela Munoz-Kaphing prosecuted the case.
Defendant Information:
BRANDON MARK BJERKNES, 35
Bemidji, Minn.
Convicted:
- Coercion and enticement of a minor, 1 count
- Production of child pornography, 1 count
Sentenced:
- 300 months in prison
- Lifetime of supervised release
- $8,789.93 in restitution thus far
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Latvian National Pleads Guilty to “Scareware” Hacking Scheme That Targeted Minneapolis Star Tribune WebsiteRead the Press Release
A Latvian man pleaded guilty today in Minneapolis for participating in a lucrative “scareware” hacking scheme that targeted visitors to the Minneapolis Star Tribune’s website. Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Gregory G. Brooker of the District of Minnesota and Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Field Office made the announcement.
Peteris Sahurovs aka Piotrek and Sagade, 28, pleaded guilty to one count of conspiracy to commit wire fraud before District Judge Ann D. Montgomery of the District of Minnesota. Sahurovs was arrested on a District of Minnesota indictment in Latvia in June of 2011, but was released by a Latvian court and later fled. In November of 2016, Sahurovs was located in Poland and apprehended by Polish law enforcement and extradited to the United States in June 2017. Sahurovs was at one time the FBI’s fifth most wanted cybercriminal and a reward of up to $50,000 had been offered for information leading to his arrest and conviction. He will be sentenced on June 6.
According to admissions made in connection with his plea, from at least May 2009 to June 2011, Sahurovs operated a “bullet-proof” web hosting service in Latvia, through which he leased server space to customers seeking to carry out criminal schemes without being identified or taken offline. The defendant admitted that he knew his customers were using his servers to perpetrate criminal schemes, including the transmission of malware, fake anti-virus software, spam, and botnets to unwitting victims, and he received notices from Internet governance entities (such as Spamhaus) that his servers were hosting malicious activity. Nonetheless, Sahurovs admitted he took steps to protect the criminal schemes from being discovered or disrupted, and hosted them on his servers for financial gain.
Sahurovs admitted that from in or about February 2010 to in or about September 2010, he registered domain names, provided bullet-proof hosting services, and gave technical support to a “scareware” scheme targeting visitors to the Minneapolis Star Tribune’s website. On Feb. 19, 2010, the Minneapolis Star Tribune began hosting an online advertisement, purporting to be for Best Western hotels, on its website, startribune.com. Two days later, however, the advertisement began causing the computers of visitors to the website to be infected with malware. This malware, also known as “scareware,” caused visitors to experience slow system performance, unwanted pop-ups and total system failure. Website visitors also received a fake “Windows Security Alert” pop-up informing them that their computer had been infected with a virus and another pop-up that falsely represented that they needed to purchase the “Antivirus Soft” computer program to fix their security issues, at a price of $49.95.
Website visitors who clicked the “Antivirus Soft” window were presented with an online order form to purchase a purported security program called “Antivirus Soft.” Users who purchased “Antivirus Soft” would receive a file download that “unfroze” their computers and stopped the pop-ups and security notifications. However, the defendant admitted, the file was not a real anti-virus product and did not perform legitimate computer security functions, and merely caused malware that members of the conspiracy had previously installed to cease operating. Meanwhile, the defendant admitted, victim users who did not choose to purchase “Antivirus Soft” became immediately inundated with so many pop-ups containing fraudulent “security alerts” that all information, data, and files on their computers were rendered inaccessible. Members of the conspiracy defrauded victims out of substantial amounts of money as a result of the scheme. The defendant admitted that as a result of his participation, he made between $150,000 and $250,000 U.S. dollars.
This case was investigated by the FBI’s Minneapolis Field Office. The Criminal Division’s Office of International Affairs, as well as the Polish National Police, the National Prosecutor’s Office, and the Ministry of Justice provided substantial assistance. Assistant U.S. Attorney Timothy C. Rank of the District of Minnesota and Trial Attorney Aaron R. Cooper of the Criminal Division’s Computer Crime and Intellectual Property Section are prosecuting the case. The Department’s Office of International Affairs also provided substantial assistance in this matter.
Red Lake Man Sentenced to 360 Months in Federal Prison for the Murder of Two IndividualsRead the Press Release
United States Attorney Gregory G. Brooker today announced the sentencing of JARED DANIEL JONES, 23, to 360 months in prison for the murder of two individuals, including one minor victim. JONES, who pleaded guilty to two counts of murder in the second degree, was sentenced on February 2, 2018, before Senior Judge Donovan W. Frank in U.S. District Court in St. Paul, Minn.
According to the defendant’s guilty plea and documents filed in court, on October 15, 2014, within the exterior boundaries of the Red Lake Indian Reservation, JONES stabbed to death an unarmed juvenile victim with whom he had an ongoing gang dispute. JONES and his fellow gang members ambushed and stabbed the victim and left him on a trail to die.
According to the defendant’s guilty plea and documents filed in court, on January 20, 2016, JONES and another individual drove the victim, identified as R.B., to a remote area of the Red Lake Indian Reservation. JONES and his accomplice assaulted R.B., stole his vehicle, and left him in the cold, without proper clothing or transportation, which resulted in R.B.’s death from exposure to hypothermic conditions.
The case was investigated by Red Lake Department of Public Safety, the Federal Bureau of Investigation, the FBI Headwaters Safe Trails Task Force, and the Minnesota Bureau of Criminal Apprehension Forensic Science Laboratory.
Assistant U.S. Attorney Clifford B. Wardlaw prosecuted the case.
Defendant Information:
JARED DANIEL JONES, 23
Red Lake, Minn.
Convicted:
- Murder in the second degree, 2 counts
Sentenced:- 360 months, count 1
- 262 months, served concurrently, count 2
- Five years supervised release
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
U.S. Attorney for the District of Minnesota Greg Brooker Delivers Remarks at the Department of Justice’s Human Trafficking SummitRead the Press Release
Remarks as prepared for delivery.
Good Morning. Thank you to Acting Deputy Assistant Attorney General Richard Downing for the introduction and thank you to Attorney General Sessions and Associate Attorney General Brand for hosting this Summit. As noted, I am Greg Brooker, the United States Attorney for the District of Minnesota. I am pleased to be here today to talk about an issue that my office is deeply committed to, and that the Department has placed such a high priority on: Prosecuting Human Trafficking Cases.
It is timely that this Summit comes at the end of Human Trafficking Awareness Month and with the Super Bowl taking place just two days from now in my home town of Minneapolis. I would like to take this opportunity to highlight trends and cases in my federal district, as well as talk about some of the proactive work we have done to prepare for a potential uptick in human trafficking during one of the world’s largest sporting events.
Sex trafficking is a market-driven enterprise, and empirical data show that a major sporting event like the Super Bowl can bring about an increase in online sex ads on Craigslist, Backpage, and other places. We also know from recent research studies that those who purchase commercial sex are not confined to one demographic group -- they come from all walks of life. According to a recent survey of 750 men in Minnesota, most sex buyers are men between the ages of 30 & 60. More than 70 percent of them are white, and half are married. Nearly 70 percent have kids and almost half make $50,000 or more a year.
A recent assessment by the Human Smuggling and Trafficking Center (HSTC) concludes that high profile events with large crowds, like the Super Bowl, can be attractive targets for sex traffickers, and we know that there is a short-term uptick in advertisements during this period.
In preparation for the Super Bowl in Minneapolis, an Anti-Sex Trafficking Team with over 40 organizations was created to map out strategies to crack down on sex trafficking - from all angles - across the entire state. The Team is led by Hennepin County, which is Minneapolis, and Ramsey County, which is St. Paul. And the Team includes the US Attorney’s Office, Carlson Family Foundation and the Women’s Foundation of Minnesota, which have both been leaders on this issue. The Team also includes representatives from nonprofits, hospitals, private businesses, and law enforcement entities and has been supported by the National Football League.
So what has this Team been up to? We have developed a plan that includes additional emergency shelter beds, increased street outreach and a hotline to report trafficking related tips. We have created a 24-hour, fully staffed hotline to ensure victims can immediately find safe shelter. Service providers have worked with city governments to relax zoning requirements if needed during the timeframe of the Super Bowl to ensure that no one will be denied space in a shelter in the cold winter months in Minnesota. What is especially unique is that this Team not only brought together private and public sector stakeholders, but it includes the key voices of sex trafficking survivors.
The Team designed multiple public awareness campaigns, specifically for the Super Bowl, including the “Don’t Buy it” campaign, designed to educate men and boys about sex trafficking. This campaign aims to focus on the demand side.
Here’s a short clip of the “Don’t Buy It” Public Service Announcement running in Minnesota and Online:
“Don’t Buy it” https://www.youtube.com/watch?v=AVE4Z2RXsCc
The Team also created a campaign aimed at preventing at-risk youth from being trafficked. The “I Am Priceless” campaign is geared toward youth between the ages of 8 and 12 who are at risk for being trafficked. The Team sought the input of youth who are trafficking survivors to develop the campaign, which is focused on reaffirming self-esteem and self-worth. These campaign ads are on posters at malls, on bus shelters, murals, billboards, and include a 30-second radio spot. They are being featured on social media apps like Instagram, Facebook, Snapchat and YouTube. Here’s a short clip of the “I am Priceless” video:
“I Am Priceless” https://vimeo.com/240218675
In the months leading up to the Super Bowl, bus drivers, hotel workers and all 10,000 Super Bowl volunteers received training on how to identify sex trafficking when they see it and where to report it. In addition, U.S. Bank has taken the lead to train internal investigators and analysts to identify trends and red flags that may be human trafficking indicators – this new Team is reporting directly to law enforcement.
A collaborative team of dozens of local police departments and federal agencies, led primarily by Homeland Security Investigations, FBI, and the Minneapolis Police Department, has made great efforts to plan and execute proactive strategies such as coordinating targeted sex trafficking stings during the week of the Super Bowl. And multiple arrests have been made.
Human trafficking, of course, is not limited to large-scale events like the Super Bowl. Sadly, these crimes against human rights occur 365 days a year. It is a prevalent and persistent problem that shows its face in many disturbing ways, yet often remains hidden in plain sight.
Many people wouldn’t think of Minnesota as one of the prime locations for human trafficking; however, the FBI has identified the Twin Cities as the nation’s 13th largest location for child sex trafficking in the country. Minnesota is unique in its geography, its diverse populations and its major industries. The Twin Cities represent a large metropolitan area that is home to more than a dozen Fortune 500 companies, a major international airport, the largest shopping mall in the United States, as well as multiple major league sports teams and event venues. We also share our northern border with Canada, we have an international shipping port in Duluth, and through our interstate corridors we are directly connected to other large Midwestern cities such as Chicago, St. Louis, and Milwaukee. The State has 11 federally recognized Indian Tribes and is home to many immigrant groups, including sizable Hmong, Somali, Ethiopian, and Liberian communities. Minnesota pretty much has everything. However, the things that make our state unique are also the things that present human trafficking vulnerabilities. Minnesota is also nationally recognized as a leader on human trafficking awareness – its Safe Harbor Law served as a template for federal legislation. This is why the fight against human trafficking is a crucial mission that none of us can afford to ignore or to only emphasize during a Super Bowl.
In 2016, the district was one of only six districts designated as an Anti-Trafficking Coordination Team (ACTeam) location. This is a collaborative initiative among my office, the FBI, the Department of Homeland Security and the Department of Labor. Through this initiative, we focus on developing high impact human trafficking investigations and prosecutions, as well as developing strong partnerships with victim service providers and state and local law enforcement partners.
I am proud of the depth and breadth of the work of my office, in conjunction with our partners in federal, tribal, state, and local law enforcement. Together we have investigated and prosecuted trafficking cases ranging from large-scale, transnational organized criminal enterprises, to individual traffickers who target minor victims, to labor traffickers who prey on vulnerable, often foreign-born populations.
We know that as people go about their busy lives they usually aren’t paying attention to indicators of human trafficking, so these crimes often occur in plain sight. That’s why through our federal and state law enforcement task forces in Minnesota, we have trained those on the front lines to identify signs of human trafficking and to report it to law enforcement. Throughout the year, we are focusing our training efforts on employees who work in hotels, airports, casinos and other hospitality and entertainment occupations. We are also reaching out to schoolteachers and administrators, bankers, transportation industry workers, hospital workers and faith communities. These trainings throughout Minnesota have resulted in actionable tips that have contributed directly to the successful investigation and prosecution of human traffickers. We have also collaborated with an organization called “COAST” – Club Operators Against Sex Trafficking – to provide education and training to owners and employees of adult entertainment clubs who may be most likely to encounter the signs of a sex trafficking victim – currently my office is investigating such tips now.
Let me highlight a handful of the cases we’ve handled that are result of some of these tips.
Last year, in a wealthy suburb of St. Paul, local police officers encountered a woman wandering the streets at night, bloody, beat up and frail. She was heading in the direction of the airport. They stopped and spoke to the woman and because of their recent training; the officers were able to quickly recognize that the woman was a victim of human trafficking and were able to access the appropriate help and resources for her, including involving Homeland Security Investigations from the outset. The subsequent investigation revealed that the woman endured horrific abuse at the hands of the defendant, Lili Huang. In addition to being held against her will and forced to work up to 18 hours a day, the victim was kicked, punched, grabbed by her hair and threatened with knives. The victim told law enforcement that she hid clumps of her hair, which had been grabbed and torn out by the defendant, under her mattress so that she wouldn’t be forced to eat it. My Office worked hand in hand with our state and local law enforcement partners to achieve a successful prosecution of the defendant, who was ultimately sentenced to more than a year in custody after which she will be deported to China, ordered to pay over $100,000 in restitution to the victim and to third-party victim services, and required to forfeit her house.
In another all too common scenario, last year four teenage girls testified at a federal trial against a trafficker who had sold them for sex in the Twin Cities. The investigation began when a concerned mother reached out to her local Sheriff’s Office to report that a man named Deuvontay Charles was recruiting her 17-year-old daughter to engage in prostitution. In the defendant’s Facebook messages, he described how the girl could “make money” and promised a trip to Las Vegas and that “life will be smooth sailing.” He told her that he would provide condoms and protect her from the “clients.” The defendant also instructed the young girl to save his phone number as “Daddy.”
That initial report led to law enforcement identifying additional juvenile victims. A 14-year-old girl told law enforcement that this same defendant had requested sexually-explicit images of her. The defendant also sent two pornographic images of an adult female and instructed the 14-year-old victim to send pictures of herself in similar sexual poses.
The defendant trafficked a second victim, who was also only 14-years-old, and used her to produce sexually-explicit images. Charles asked the victim to make a video of herself engaged in sexual acts. While recruiting the victim, the defendant asked if she wanted “to make money.” When she asked what he meant, Charles replied “sex.” Knowing she was only 14-years-old, Charles responded that while she is “kinda young,” there would be a lot of money to make.
Charles preyed on yet another victim. He sent messages to a 17-year-old about making “quick money.” After picking the victim up in a Minneapolis suburb, he posted her as an “escort” on backpage.com. He then made a hotel reservation using an alias and paid for the room in cash. For the next several days, the defendant sold the victim for commercial sex and kept all the money the victim received as a result of the sex acts that she was forced to engaged in.
At the time he committed these offenses, Charles was a registered sex offender based on a prior conviction for soliciting a child to engage in sexual conduct.
Clearly, this man is a predator who targeted vulnerable young girls. Justice was served when the victims’ important testimony led to Charles’ conviction and a thirty-six year sentence in federal prison.
Our office is also actively prosecuting one of the largest transnational sex trafficking cases in the nation. This particular case is truly remarkable because of the collaborative efforts of multiple law enforcement agencies, victim service providers, and industry partners across multiple jurisdictions who took on this case and attacked the international criminal enterprise from every angle.
The investigation started through good old fashion police work. A federal agent with Homeland Security Investigations received a report from her HSI colleagues in Arizona that multiple Thai women were being trafficked in Arizona and the operation was moving some of the women to Minneapolis. Our office commenced an investigation with our federal and local law enforcement partners and, eventually, other federal, state and local jurisdictions from around the country.
We worked with multiple U.S. Attorneys’ offices, HSI, state and local law enforcement across the country, the Department of State, as well as components within the Department of Justice including the Human Trafficking Prosecution Unit and the Money Laundering and Asset Recovery Section. Through surveillance, review of records and receipts, and other techniques, law enforcement learned that these victims were being trafficked in nearly every major city throughout the U.S. under the watchful eye of a massive criminal organization.
I would like to take a moment to describe the vast criminal enterprise that was responsible for trafficking hundreds of impoverished women from Bangkok, Thailand, to cities through the United States, including Minneapolis, Los Angeles, Chicago, Atlanta, Phoenix, Las Vegas, Houston, Dallas, Austin, Seattle and right here in the nation’s capital. Putting the pieces together required close coordination with international, national, state and local partners. It is the result of more than four years’ worth of work, and begins the current prosecution process of dismantling a highly profitable operation that generated millions of dollars through a highly sophisticated sex trafficking scheme.
These victims typically came from impoverished backgrounds and spoke little English- vulnerabilities that the traffickers exploited during the recruitment process. The women were promised a better life in the United States in exchange for a large “bondage debt,” of anywhere between $40,000 and $60,000. The women were told that, after they worked off their debt, they could become U.S. citizens. The recruiters who met with them in Thailand were friendly, helpful and made the future in the United States sound bright. They brought them to photography studios to take professional-quality, escort-style photographs, which ultimately were sent to traffickers here in the United States and used to advertise the victims for sex on websites. The traffickers also encouraged the women to get breast implants in an effort to make the women “more appealing” to men in the U.S. The cost of the cosmetic surgery was added to the victims’ bondage debt.
When the women arrived in the U.S., everything changed. They were essentially held prisoner in prostitution houses and only allowed to leave if accompanied by an employee of the organization. The women were forced to have sex with strangers for many hours every day, even if the men were abusive. They were threatened by the organization. The traffickers ensured that the women remained isolated in the United States. They had little money, no freedom of movement, and no interaction with the outside world.
The structure of this sex trafficking organization was hierarchical. It consisted of Traffickers, House Bosses, Money Launderers, Facilitators and Runners. Each of these players had their own clearly defined role to play in keeping this criminal organization profitable.
At the top of the organization were the Traffickers. Traffickers in the United States and in Thailand were responsible for recruiting the victims and controlling the bondage debt. They learned everything they could about the women, including detailed information about their families.
The information obtained about the victims’ families was an important part of the scheme. Armed with this information, the traffickers threatened anyone who wanted to or tried to escape the organization, including threats that their families would be harmed if the women did not do everything they were told.
The traffickers also determined where in the United States the women would be sent. But first, they had to get the women into the U.S. The traffickers did this by engaging in widespread visa fraud, including arranging sham marriages and lying on visa applications, in order to facilitate the travel of the women from Thailand into the United States. Once in the U.S., the women were sent to one of many houses of prostitution.
The House Bosses, who reported to the traffickers, were responsible for the day-to-day operations of these houses. They advertised the women, usually on websites like backpage.com, scheduled sex buyers, and ensured that the cash earned by the victim was routed back to the trafficker, with the house boss taking her cut. Little money was left for the victim herself to pay off the bondage debt.
The Facilitators assisted in the money laundering and other activities of the organization. They helped lease apartments and other locations used as houses of prostitution, book travel, advertise the women, and schedule commercial sex acts. They were also responsible for laundering and routing millions of dollars generated through this commercial sex trade.
And, finally, there were the Runners. The trafficking organization feared the women would try to escape, so the runners accompanied them when they left the house, apartment, or hotel room. The runners were also responsible for bringing them to and from the airport. The organization regularly moved the woman to different cities so that the women did not develop connections, to generate new clientele and to supply new markets. Runners also took them to the bank where the victims would deposit the payments on their bondage debt. The runners were typically men, and were often paid, at least in part, in sex with the victims.
This prosecution has been a massive undertaking. As noted, to date, it is one of the largest federal sex trafficking prosecutions in the United States. In total, we have publicly indicted 38 members of the organization.
Seventeen have thus far pleaded guilty. A trial date has been set for early May for the remaining defendants. Hundreds of victims have been recovered around the country. Millions of dollars have been seized, which will go toward much-deserved restitution to the victims. Weapons have also been confiscated.
One thing I would like to emphasize in particular is our work in helping the victims find hope and a sense of justice. As noted, this organization made millions of dollars annually and the prosecution team is working to secure that money for victim restitution. The DOJ Money Laundering and Asset Recovery Section (MLARS) is playing an integral role in this aspect of the case. MLARS has documented more than $25 million in proceeds from the commercial sex acts having been laundered back to the traffickers. When dealing with this level of organized crime, we know that we can only shut down a sophisticated sex trafficking organization when we take away their money.
My office has also collaborated with an organization in Los Angeles called the Thai Community Development Center, a DOJ grantee. They specialize in working with the Thai population to help provide victims with access to culturally sensitive and language specific resources and services. Today, some of the victims have learned English, some are taking vocational courses, and some are living independently and finding a future.
We take seriously the Department of Justice’s directive to take a victim-centered approach to our trafficking cases and, thankfully, Minnesota has unique resources that provide exceptional services to stabilize and support victims throughout a case’s full investigation and prosecution.
In conclusion, while the increased awareness and attention that the Super Bowl brings to this issue is important, I want to again emphasize that human trafficking is not a problem unique to the Super Bowl or any other major event. If we want to get the problem of human trafficking under control, awareness and enforcement efforts must continue long after the big game is over.
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Federal Jury Finds Blaine Man Guilty of Production and Possession of Child PornographyRead the Press Release
United States Attorney Gregory G. Brooker today announced the conviction of SCOTT FRANCIS FORTIER, 38, for producing and possessing video files containing child pornography. FORTIER, who was charged in a superseding indictment on August 23, 2017, with one count of production of child pornography and one count of possession of child pornography, was found guilty on both counts by a federal jury in Minneapolis, Minn.
“This disturbing case involved a defendant who preyed on two minor victims whom he met at a horseback riding summer camp,” said Special Assistant U.S. Attorney Lindsey Middlecamp. “After hearing the evidence presented at trial, the jury swiftly returned a guilty verdict. I am thankful to the victims who courageously testified at trial and to the jury for rendering this just verdict.”
As proven at trial, FORTIER was associated for many years with Circle R Ranch (“the Camp”), a co-ed horseback riding summer camp located in Todd County, Minn. Through his involvement with the Camp, FORTIER met a 17-year-old minor (“Minor Victim #1). On September 9, 2016, FORTIER invited Minor Victim #1 and her 15-year-old friend (Minor Victim #2) to his house in Blaine, Minn., where he gave them both alcohol and subsequently used each minor to engage in sexually explicit conduct. FORTIER used his cell phone to produce multiple videos of himself engaging in the sexually explicit conduct with Minor Victim #1 and Minor Victim #2. Following an execution of a search warrant, law enforcement discovered that FORTIER also possessed videos of children under the age of 12 engaging is sexually explicit conduct, along with thousands of other images of child pornography.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorney’s Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
This case is the result of an investigation conducted by the Anoka County Sheriff’s Office, the Todd County Sheriff’s Office, and the FBI.
Based on the evidence obtained in this case, authorities believe there may be additional victims who have not yet been identified. Anyone with information about this matter is encouraged to call the FBI at 763-569-8395. Callers may remain anonymous.
Assistant U.S. Attorney Carol M. Kayser and Special Assistant U.S. Attorney Lindsey E. Middlecamp are prosecuting this case.
Defendant Information:
SCOTT FRANCIS FORTIER, 38
Blaine, Minn.
Convicted:
- Production of child pornography, 1 count
- Possession of child pornography, 1 count
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
California Medical Device Company to Pay $7.62 Million to Resolve Allegations that Its Subsidiary Billed TRICARE for Excessive, Unnecessary SuppliesRead the Press Release
The Department of Justice announced today that DJO Global Inc. (DJO), a medical device company headquartered in Vista, California, has agreed to pay $7.62 million to resolve allegations that its subsidiary, Empi Inc. (Empi), a now-defunct medical device company based in Shoreview, Minnesota, submitted false claims to TRICARE for excessive, unnecessary transcutaneous electrical nerve stimulation (TENS) electrodes that TRICARE beneficiaries did not need or use. TENS is a therapy that uses low-voltage electrical current for pain relief.
The settlement resolves allegations that Empi used inappropriate techniques such as “assumptive selling” to persuade some TRICARE beneficiaries to seek and accept unjustifiably large quantities of TENS electrodes from 2010 through 2015, with a particularly steep increase in the number of beneficiaries receiving unnecessary quantities in 2014-2015. Assumptive selling consisted of Empi sales representatives contacting some TRICARE beneficiaries and inducing them to order excessive TENS electrodes by acting as though the beneficiaries had indicated a need for them, when that may not have been the case.
DJO announced its decision to shut down Empi in November 2015, and Empi ceased operations the following month.
“We commend the Defense Health Agency and the Department of Defense Office of Inspector General for analyzing this conduct and working with the Department to guard the integrity of TRICARE, a vital federal health care program that provides medical care and services to those in the military and their families,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.
“Service members, veterans, and their families deserve the best available medical care,” said United States Attorney Gregory G. Brooker. “This $7.6 million settlement underscores our commitment to protecting the integrity of federal health care programs and it sends a strong message of accountability to those who would seek to take advantage of those programs.”
“This settlement demonstrates the commitment of the Defense Criminal Investigative Service (DCIS), along with our law enforcement partners, to aggressively pursue the waste, fraud, and abuse of Department of Defense and TRICARE resources,” said Special Agent in Charge Michael Mentavlos of the DCIS Southwest Field Office.
The settlement is the most recent in the federal government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act, under which this matter was resolved. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
This matter was handled by the Civil Frauds Unit of the U.S. Attorney’s Office for the District of Minnesota, the Justice Department’s Commercial Litigation Branch, and the Department of Defense Office of the Inspector General.
The claims settled by this agreement are allegations only; there has been no determination of liability.
California Medical Device Company to Pay $7.62 Million to Resolve Allegations That Its Subsidiary Billed Tricare for Excessive, Unnecessary SuppliesRead the Press Release
WASHINGTON – The Department of Justice announced today that DJO Global Inc. (DJO), a medical device company headquartered in Vista, California, has agreed to pay $7.62 million to resolve allegations that its subsidiary, Empi Inc. (Empi), a now-defunct medical device company based in Shoreview, Minnesota, submitted false claims to TRICARE for excessive, unnecessary transcutaneous electrical nerve stimulation (TENS) electrodes that TRICARE beneficiaries did not need or use. TENS is a therapy that uses low-voltage electrical current for pain relief.
The settlement resolves allegations that Empi used inappropriate techniques such as “assumptive selling” to persuade some TRICARE beneficiaries to seek and accept unjustifiably large quantities of TENS electrodes from 2010 through 2015, with a particularly steep increase in the number of beneficiaries receiving unnecessary quantities in 2014-2015. Assumptive selling consisted of Empi sales representatives contacting some TRICARE beneficiaries and inducing them to order excessive TENS electrodes by acting as though the beneficiaries had indicated a need for them, when that may not have been the case.
DJO announced its decision to shut down Empi in November 2015, and Empi ceased operations the following month.
“We commend the Defense Health Agency and the Department of Defense Office of Inspector General for analyzing this conduct and working with the Department to guard the integrity of TRICARE, a vital federal health care program that provides medical care and services to those in the military and their families,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.
“Service members, veterans, and their families deserve the best available medical care,” said United States Attorney Gregory G. Brooker. “This $7.6 million settlement underscores our commitment to protecting the integrity of federal health care programs and it sends a strong message of accountability to those who would seek to take advantage of those programs.”
“This settlement demonstrates the commitment of the Defense Criminal Investigative Service (DCIS), along with our law enforcement partners, to aggressively pursue the waste, fraud, and abuse of Department of Defense and TRICARE resources,” said Special Agent in Charge Michael Mentavlos of the DCIS Southwest Field Office.
The settlement is the most recent in the federal government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act, under which this matter was resolved. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
This matter was handled by the Civil Frauds Unit of the U.S. Attorney’s Office for the District of Minnesota, the Justice Department’s Commercial Litigation Branch, and the Department of Defense Office of the Inspector General.
The claims settled by this agreement are allegations only; there has been no determination of liability.
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Arkansas Man Charged in the Kidnapping of Edina WomanRead the Press Release
United States Attorney Gregory G. Brooker today announced a federal criminal complaint charging JOSEPH SEAN ANTHONY PORTER, 25, with the kidnapping of an Edina woman. PORTER is currently in custody in Little Rock, Arkansas and will make an initial appearance before a United States Magistrate Judge at a later date.
Alleged in the criminal complaint and law enforcement affidavit is a detailed timeline of PORTER’S actions related to the kidnapping offense. The criminal complaint (including the affidavit) is attached as a pdf document.
The Edina Police Department and the Federal Bureau of Investigation are leading the investigation with assistance from various other state and local law enforcement agencies.
This case is being prosecuted by Assistant United States Attorney Karen B. Schommer.
Defendant Information:
JOSEPH SEAN ANTHONY PORTER, 25
Jacksonville, Ark.
Charges:
- Kidnapping, 1 count
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
The charges contained in the criminal complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
Red Lake Man Sentenced to 60 Months in Prison for Sexual Assault of A MinorRead the Press Release
United States Attorney Gregory G. Brooker today announced the sentencing of BRANDON SCOTT CLOUD, 36, to 60 months in prison for sexually assaulting a minor victim. CLOUD, who was charged via criminal information on July 21, 2017, pleaded guilty on September 21, 2017, and was sentenced yesterday before Senior Judge Michael J. Davis in United States District Court in Minneapolis, Minn.
According to the defendant’s guilty plea and documents filed in court, on August 11, 2016, within the exterior boundaries of the Red Lake Indian Reservation, CLOUD sexually assaulted a 13-year-old minor victim. The victim, who was visiting a family member at CLOUD’S residence, was assaulted by CLOUD while she was sleeping. Following the assault, the victim contacted her mother who notified the Red Lake Police Department.
This case is the result of an investigation conducted by the Red Lake Police Department and the FBI Headwaters Safe Trails Task Force.
Assistant U.S. Attorney Clifford B. Wardlaw prosecuted the case.
Defendant Information:
BRANDON SCOTT CLOUD, 36
Red Lake, Minn.
Convicted:
- Sexual abuse of a minor, 1 count
Sentenced:- 60 months in prison
- Three years supervised release
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United States Attorney’s Office, District of Minnesota: (612) 664-5600New Mexico Man Pleads Guilty to Directing Computer Attacks Against Websites of Dozens of Victims, as Well as Felon-In-Possession ChargesRead the Press Release
A New Mexico man pleaded guilty today in St. Paul, Minnesota, to engaging in and directing distributed denial of service (DDoS) attacks against the websites of his prior employers, business competitors and public services, as well as felon-in-possession charges. Acting Assistant Attorney General John P. Cronan of the Department of Justice’s Criminal Division, U.S. Attorney Gregory G. Brooker of the District of Minnesota and Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Field Office made the announcement.
John Kelsey Gammell pleaded guilty to one count of conspiracy to commit intentional damage to a protected computer and two counts of being a felon-in-possession of a firearm before District Judge Wilhelmina M. Wright of the District of Minnesota. He will be sentenced at a later date.
According to admissions made in connection with his plea, from at least in or about July 2015 through in or about March 2017, Gammell engaged in a campaign of DDoS attacks on websites throughout the United States. A DDoS attack is a malicious attempt to disable or interrupt service to a computer or website, usually by causing large amounts of internet traffic to be directed to the computer or website. Gammell directed DDoS attacks at a number of victims’ websites, including websites operated by companies he used to work for, companies that declined to hire him, competitors of his business, and websites for law enforcement agencies and courts, among others.
Gammell admitted that he caused DDoS attacks by using computer programs on his own computers, as well as by directing “DDoS-for-hire” companies from which he purchased services to launch the DDoS attacks. Gammell purchased subscriptions to multiple DDoS-for-hire companies, including VDoS, CStress, Inboot, Booter.xyz and IPStresser. He initiated attacks using these DDoS-for-hire companies against dozens of victims, including but not limited to Washburn Computer Group, the Minnesota State Courts, Dakota County Technical College, Minneapolis Community and Technical College, the Hennepin County Sheriff’s Office and others. Gammell took a variety of steps to avoid detection and circumvent his victims’ DDoS attack mitigation efforts, such as using IP address anonymization services to mask his identity and location, using cryptocurrency in payment for DDoS-for-hire services, using multiple DDoS-for-hire services at once to amplify his attacks, using spoofed emails to conceal his conduct, and using encryption and drive-cleaning tools to conceal digital evidence of his conduct on his computers.
Gammell, who is prohibited from possessing firearms or ammunition based on prior felony convictions, also admitted that he possessed parts for use in the building of AR-15 assault rifles, upper and lower receivers, a pistol grip, a trigger guard, 15 high-capacity magazines, a buttstock, a buffer tube and 420 rounds of 5.56 x 45mm full metal jacket rifle ammunition in Colorado, where he worked. He further admitted that he possessed a Heckler & Koch P2000 handgun, and a Springfield Armory model 1911-A1, .45 caliber handgun, as well as hundreds of rounds of ammunition in New Mexico, where he resided.
This case was investigated by the FBI’s Minneapolis Field Office. Assistant U.S. Attorney Timothy C. Rank of the District of Minnesota and Trial Attorney Aaron R. Cooper of the Criminal Division’s Computer Crime and Intellectual Property Section are prosecuting the case. The U.S. Attorney’s Offices for the District of Colorado and the District of New Mexico also provided substantial assistance in this matter.
New Mexico Man Pleads Guilty to Directing Computer Attacks Against Websites of Dozens of Victims, as Well as Felon-In-Possession ChargesRead the Press Release
A New Mexico man pleaded guilty today in St. Paul, Minnesota, for directing computer attacks against the websites of his prior employers, business competitors and public services, as well as felon-in-possession charges. Acting Assistant Attorney General John P. Cronan of the Department of Justice’s Criminal Division; United States Attorney Gregory G. Brooker of the District of Minnesota; and Special Agent in Charge Richard T. Thornton of the Federal Bureau of Investigation-Minneapolis Field Office made the announcement.
U.S. Attorney Greg Brooker stated, "Cyber-attacks, such as the ones perpetrated by the defendant, are serious crimes that cause real harm to real victims. As this prosecution shows, these crimes also carry serious consequences. This Office will continue to prioritize the prosecution of cybercriminals that pose a substantial threat to private businesses, public entities, and critical infrastructure."
FBI Minneapolis Division Special Agent in Charge Richard Thornton added, "Unfortunately, crime on the internet has become an everyday reality across the United States. Cybercriminals looking to turn a buck or with an axe to grind mistakenly see the internet as fertile ground for anonymous criminal activity." "Cybercrime," Thornton explained, "has real world consequences. While many cases involve the loss of money or personal information, it’s no less impactful when victims are denied internet services that have become vital in our personal and commercial lives. We’re grateful to our corporate and law enforcement partnerships that helped achieve justice for the victims in this case."
JOHN KELSEY GAMMELL, 55, pleaded guilty to one count of conspiracy to cause intentional damage to a protected computer and two counts of being a felon-in-possession before District Judge Wilhelmina M. Wright of the District of Minnesota. He will be sentenced at a later date.
According to admissions made in connection with his plea, from at least in or about July 2015 through in or about March 2017, GAMMELL engaged in a campaign of distributed denial of
service ("DDoS") attacks on websites throughout the United States. A DDoS attack is a malicious attempt to disable or interrupt service to a computer or website, usually by causing large amounts of internet traffic to be directed to the computer or website. GAMMELL directed DDoS attacks at a number of victims’ websites, including websites operated by companies he used to work for, companies that declined to hire him, competitors of his business, and websites for law enforcement agencies and courts, among others.
GAMMELL admitted that he caused DDoS attacks by using computer programs on his own computers, as well as by directing "DDoS-for-hire" companies from which he purchased services to launch the DDoS attacks. GAMMELL purchased subscriptions to multiple DDoS-for-hire companies, including VDoS, CStress, Inboot, Booter.xyz, and IPStresser. He initiated attacks using these DDoS-for-hire companies against dozens of victims, including but not limited to Washburn Computer Group, the Minnesota State Courts, Dakota County Technical College, Minneapolis Community and Technical College, the Hennepin County Sheriff’s Office, and others. GAMMELL took a variety of steps to avoid detection and circumvent his victims’ DDoS attack mitigation efforts, such as using IP address anonymization services to mask his identity and location, using cryptocurrency in payment for DDoS-for-hire services, using multiple DDoS-for-hire services at once to amplify his attacks, using spoofed emails to conceal his conduct, and using encryption and drive-cleaning tools to conceal digital evidence of his conduct on his computers. GAMMELL, who is a convicted felon, also admitted that he possessed parts for use in the building of AR-15 assault rifles, upper and lower receivers, a pistol grip, a trigger guard, 15 high-capacity magazines, a buttstock, a buffer tube, and 420 rounds of 5.56 x 45mm full metal jacket rifle ammunition in Colorado, where he worked. He further admitted that he possessed a Heckler & Koch P2000 handgun, and a Springfield Armory model 1911-A1, .45 caliber handgun, as well as hundreds of rounds of ammunition in New Mexico, where he resided.
This case was investigated by the FBI’s Minneapolis Field Office.
Assistant U.S. Attorney Timothy C. Rank of the District of Minnesota and Trial Attorney Aaron R. Cooper of the Criminal Division’s Computer Crime and Intellectual Property Section are prosecuting the case. The U.S. Attorney’s Offices for the District of Colorado and the District of New Mexico also provided substantial assistance in this matter.
Defendant Information:
JOHN KELSEY GAMMELL, 55
Las Cruces, N.M.
Convicted:
- Conspiracy to commit intentional damage to a protected computer, 1 count
- Felon in possession of a firearm, 2 counts
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Attorney General Jeff Sessions Appoints Gregory G. Brooker as Interim United States AttorneyRead the Press Release
MINNEAPOLIS – Attorney General Jeff Sessions today announced the appointment of Gregory G. Brooker as Interim United States Attorney pursuant to 28 U.S.C. § 546, which provides that “the Attorney General may appoint a United States Attorney for the district in which the office of United States Attorney is vacant.” This appointment will take effect on January 5, 2018.
“For the past 18 years, Gregory Brooker has ably represented the people of Minnesota as a leader in the U.S. Attorney’s Office,” said Attorney General Sessions. “He has invaluable experience both in private practice and as a federal prosecutor. He has put fraudsters and other criminals behind bars. I am confident that he will make an excellent Interim U.S. Attorney for Minnesota, and I am pleased to appoint him today.”
Mr. Brooker joined the United States Attorney’s Office in 1999 as an Assistant U.S. Attorney. From 2007-2014, he served as Chief of the Civil Division and in February 2014, he was appointed to the position of First Assistant U.S. Attorney. Mr. Brooker has served as Acting U.S. Attorney since March 11, 2017. Prior to joining the Office, Mr. Brooker spent five years with the Minneapolis law firm of Popham, Haik, Schnobrich, Kaufman and Doty, handing a wide variety of commercial litigation cases.
Mr. Brooker is a Minnesota native who attended Rush City High School in Rush City, Minn., and received his law degree in 1985 from the University of Minnesota Law School. More information about Mr. Brooker’s biography is available at www.justice.gov/usao-mn/
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Wife of Big Island Capital Fraudster Charged for Her Role in Million Dollar Ponzi SchemeRead the Press Release
Acting United States Attorney Gregory G. Brooker today announced the filing of a felony information charging ALEX REAVES LUNDIN, 25, with conspiracy for her role in a $1 million Ponzi scheme orchestrated by her husband, Jeremy Lundin. LUNDIN will make her initial appearance in U.S. District Court at a later date. Jeremy Lundin, who has already pled guilty to charges of mail fraud and money laundering for his role in orchestrating the scheme, is scheduled to be sentenced on February 1, 2018.
According to the information, from approximately December 2014 through May 2017, Jeremy Lundin claimed that he conducted “options trading” through his business Big Island Capital. He worked through a network of associates and friends to solicit investors by promising to generate exponential growth through options trading, and obtained more than $1 million from 51 investors over a roughly two-year period. However, instead of using the funds for options trading, Jeremy Lundin and LUNDIN spent investors’ money to fund their lavish lifestyle.
According to the information, as part of the scheme, Jeremy Lundin provided investors with a “Welcome Packet,” consisting of an “Investment Advisory Agreement” and other materials describing his business. Through these materials, Jeremy Lundin claimed that Big Island Capital investments earned a 67 percent rate of return in 2013 and a 97.8 percent rate of return in 2014. In order to appear legitimate and promote his scheme, Jeremy Lundin also created phony account statements which commonly and falsely showed double-digit gains on a weekly or quarterly basis. Between May 2015 and May 2017, at least $992,000 in investor funds was deposited into Jeremy Lundin’s “Big Island Capital” bank account. During roughly the same time period, however, Jeremy Lundin transferred $933,950 from the business account directly into his and LUNDIN’s personal checking account. The couple then used the majority of those investor funds on their personal expenses including travel, luxury automobiles, a boat, jewelry, retail purchases, and more than $366,000 in credit card payments.
According to the information, after LUNDIN became aware that her husband was not conducting options trading as he promised investors, she continued to assist him in carrying out the scheme by, among other actions, soliciting new investors and drafting correspondence intended to lull current victim-investors into believing their money was safe, despite knowing that she and Jeremy Lundin had spent all of the investor funds on personal expenses.
This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS, Federal Bureau of Investigation, United States Postal Inspection Service, and Minnesota Department of Commerce Fraud Bureau.
Assistant United States Attorney Amber M. Brennan is prosecuting the case.
Defendant Information:
ALEX REAVES LUNDIN, 25
Mound, Minn.
Charges:
- Conspiracy to commit mail fraud, 1 count
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
The charges contained in the information are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
Six Members of Saint Paul Street Gang “HAM Crazy” Indicted on Federal Firearms ChargesRead the Press Release
Acting United States Attorney Gregory G. Brooker, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Acting Special Agent in Charge Kirk Howard and Saint Paul Police Chief Todd Axtell today announced a federal indictment charging six members of a Saint Paul criminal street gang known as the HAM Crazy for conspiring to illegally possess firearms.
“This indictment represents the aggressive action this Office and our law enforcement partners are taking against gun violence in Saint Paul,” said Acting U.S. Attorney Gregory Brooker. “Working hand-in-hand with our partners at the ATF and Saint Paul Police Department, we are dedicating all necessary resources to investigate and prosecute the most violent offenders. This alarming uptick in gang activity and gun violence will not be tolerated in our cities and communities.”
“There are plenty of ways to settle disagreements between groups, but gun violence is not a method we will allow. The communities of Saint Paul deserve better,” said Acting Special Agent in Charge Kirk Howard of the Saint Paul Field Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives. “ATF, Saint Paul Police Department and the Department of Corrections have put forth maximum effort to reduce gun violence in Saint Paul. We’re happy to partner with the two agencies in this investigation and hope this indictment provides a word of warning to others who are inclined to be involved in this dangerous behavior.”
Saint Paul Police Chief Todd Axtell said, “Too many families are impacted by gun violence in Saint Paul. We welcome these indictments as they hold gun violence suspects responsible. We will continue to partner with our local and federal law enforcement agencies and rigorously pursue gun offenders whose crimes tear at the fabric of our community.”
According to the superseding indictment, since at least January 2014, defendants MARVELL VOSHON JEFFERSON, a/k/a “Vo,” a/k/a “Lil Vo,” CARMELO MANUEL MARRERO, a/k/a “Melo,” a/k/a “Mello,” CASEY JEMAR DAVIS, a/k/a “Casey Jermar Davis,” a/k/a “K Chop,” SHELBY DELANE ASHFORD, JR., a/k/a “Two Times,” PHILLIP DWAYNE JACKSON, a/k/a “Go,” a/k/a “Kid Go,” and NAKIA MARQUIRE MARTIN, a/k/a “Nakia Marquette Martin,” a/k/a “Freaky,” a/k/a “Freaky Nick,” have maintained active membership in the street gang known as the HAM Crazy. The main purpose of the HAM Crazy gang is to preserve and protect their territory, power, status, and reputation through the use of violence and intimidation against rival Saint Paul gangs, such as the Hit Squad.
According to the superseding indictment, since at least January 2014, the HAM Crazy gang has been in an ongoing gang war with several rival gangs, including the Hit Squad, that has resulted in gang members on both sides of the rivalry being shot and/or killed. HAM Crazy members and their rival gang members often use social media platforms, such as Facebook, YouTube, and Snapchat, as a way to disrespect, intimidate, and threaten rivals by brandishing firearms, displaying money, making gang signs, and publishing rap videos.
According to the superseding indictment, due to the ongoing gang war and the need for firearms to conduct gang-related activity, the defendants conspired to illegally obtain and jointly possess firearms. The defendants and other HAM Crazy members also attempted to buy, sell, trade, and obtain firearms using social media. All six defendants have prior convictions that prohibit them from legally possessing firearms.
According to the superseding indictment, the defendants and other HAM Crazy members conspired to illegally possess at least nine firearms during the timeframe of the superseding indictment.
Five of the defendants, JEFFERSON, DAVIS, ASHFORD, JACKSON, and MARTIN, have made their initial appearances in federal court and have been arraigned on the charges in the superseding indictment. One defendant, MARRERO, remains at large.
This case is the result of an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Saint Paul Police Department, and the Minnesota Department of Corrections.
Assistant U.S. Attorneys Benjamin Bejar and Thomas Calhoun-Lopez are prosecuting the case.
Defendant Information:
MARVELL VOSHON JEFFERSON, a/k/a “Vo,” a/k/a “Lil Vo,” 23
Saint Paul, Minn.
Charges:
- Conspiracy – Felon in possession of a firearm, 1 count
- Felon in possession of a firearm, 1 count
CARMELO MANUEL MARRERO, a/k/a “Melo,” a/k/a “Mello,” 23
Maplewood, Minn.
Charges:- Conspiracy – Felon in possession of a firearm, 1 count
- Felon in possession of a firearm, 1 count
- Aiding and abetting felon in possession of firearms, 1 count
CASEY JEMAR DAVIS, a/k/a “Casey Jermar Davis,” a/k/a “K Chop,” 23
Saint Paul, Minn.
Charges:- Conspiracy – Felon in possession of a firearm, 1 count
- Aiding and abetting felon in possession of firearms, 1 count
SHELBY DELANE ASHFORD, JR., a/k/a “Two Times,” 23
Columbia Heights, Minn.
Charges:- Conspiracy – Felon in possession of a firearm, 1 count
- Aiding and abetting felon in possession of firearms, 1 count
PHILLIP DWAYNE JACKSON, a/k/a “Go,” a/k/a “Kid Go,” 23
Lino Lakes, Minn.
Charges:- Conspiracy – Felon in Possession of a Firearm, 1 count
- Prohibited person in possession of firearm, 1 count
NAKIA MARQUIRE MARTIN, a/k/a “Nakia Marquette Martin,” a/k/a “Freaky,” a/k/a “Freaky Nick,” 24
Moose Lake, Minn.
Charges:- Conspiracy – Felon in possession of a firearm, 1 count
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Federal Jury Finds Edina Chiropractor and His Patient Recruiters Guilty of Insurance Fraud ConspiracyRead the Press Release
Acting United States Attorney Gregory G. Brooker today announced the conviction of ADAM JOHN BURKE, 33, ABDIRAHIN KHALIF IBRAHIM, 26, and DANA ENOCH KIDD, 36, for their roles in a multi-million dollar insurance fraud conspiracy. BURKE, IBRAHIM, and KIDD were initially indicted on December 20, 2016, and following a two-week trial before Senior Judge Michael J. Davis in U.S. District Court in Minneapolis, Minn., the jury convicted BURKE, IBRAHIM, and KIDD on charges of conspiracy and mail fraud.
Assistant U.S. Attorney David Maria said, “Adam Burke, a licensed Doctor of Chiropractic, used his professional position and private medical practice to perpetrate an egregious fraud scheme that cost automobile insurers and, ultimately, policyholders in Minnesota, millions of dollars. We are thankful for the hard work and dedication put into this case by our partners at the Commerce Fraud Bureau and the FBI.”
“Insurance fraud costs all Minnesotans in the form of higher premiums,” said Commerce Commissioner Jessica Looman. “The Commerce Fraud Bureau investigates sophisticated fraud schemes and works closely with our other law enforcement partners to bring criminals perpetrating fraud to justice. Today’s verdict makes it clear that Minnesota does not tolerate insurance fraud.”
“The defendants in this case defrauded automobile insurance companies by submitting false no-fault insurance claims and subsequently received reimbursements for chiropractic services that were either not medically necessary or were never rendered. Their greed had real consequences for the people of Minnesota in terms of higher insurance costs and tax dollars spent investigating their illegal conduct,” said Special Agent in Charge of the FBI Minneapolis Division Richard T. Thornton. “The FBI and its partners will continue to aggressively pursue insurance fraud schemes to protect the public from dishonest fraudsters damaging our insurance companies, regardless of their position in the medical community.”
As proven at trial, beginning in at least 2012, BURKE, a licensed Doctor of Chiropractic, participated in a scheme to defraud automobile insurance companies by hiring patient recruiters, known as “runners,” to solicit automobile accident victims to attend treatments at BURKE’S clinic, Burke Chiropractic Center, P.A. (“Burke Chiropractic”). BURKE typically paid the runners, including IBRAHIM and KIDD, between $1,000 and $2,000 for each patient they brought to Burke Chiropractic so that BURKE could bill services to the insurance companies. To disguise the payments, BURKE would write checks to the runners with false descriptions in the memo lines such as “marketing,” “consulting fee,” or “pt transportation.” BURKE also required the runners to form corporate entities, such as limited liability companies, with names that sounded like legitimate businesses that performed marketing or transportation services, again, to hide the true nature of the payments. BURKE wrote more than 280 checks, totaling more than $590,000.
As proven at trial, BURKE structured the scheme in a way that would maximize Burke Chiropractic’s billings to the insurance companies. BURKE typically withheld kickback payments to the runners until after the patients had attended a certain number of treatment sessions. Frequently, the runners paid a portion of the kickback payments they had received from BURKE to the patients they referred in order to make sure that the patients attended the minimum number of treatment sessions. Thus, the kickback payments were intended to ensure that patients came for treatments at Burke Chiropractic because of the payments, as opposed to the necessity and reasonableness of the treatments. As an additional incentive to continue attending treatments, BURKE often referred patients to personal injury attorneys, and BURKE instructed the runners to advise patients that following through on all treatment sessions would result in a bigger settlement from the insurance company. As a result of this fraud scheme, BURKE and Burke Chiropractic billed millions of dollars to the automobile insurance companies.
This case is the result of an investigation conducted by the Minnesota Commerce Fraud Bureau and the Federal Bureau of Investigation. Additional assistance was provided by the Minneapolis Police Department, Saint Paul Police Department, Minnesota State Patrol, and Homeland Security Investigations.
This case is being prosecuted by Assistant U.S. Attorneys David M. Maria and John E. Kokkinen.
Defendant Information:
ADAM JOHN BURKE, 33
Minneapolis, Minn.
Convicted:
- Conspiracy to commit mail fraud, 1 count
- Mail fraud, 12 counts
ABDIRAHIN KHALIF IBRAHIM, 26
Saint Paul, Minn.
Convicted:
- Conspiracy to commit mail fraud, 1 count
- Mail fraud, 3 counts
DANA ENOCH KIDD, 36
Elk River, Minn.
Convicted:
- Conspiracy to commit mail fraud, 1 count
- Mail fraud, 1 count
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Federal Jury Convicts Three Twin Cities Drug TraffickersRead the Press Release
Acting United States Attorney Gregory G. Brooker today announced the conviction of ALEJANDRO LLAMAS-DELGADO, 24, GREGORIO RAMIREZ-MALDONADO, 28, and ERICK PARRA-SALAZAR, 24, for drug trafficking-related offenses. Following a three-day trial before U.S. District Judge Joan N. Ericksen in Minneapolis, Minn., the jury found all three defendants guilty of conspiracy to distribute controlled substances, and possession with intent to distribute cocaine. In July 2017, co-defendant COLIN BLAIR MCAFEE, 46, pleaded guilty to one count of possession with intent to distribute cocaine. All four defendants will remain in federal custody pending their sentencing hearings.
Assistant U.S. Attorney Thomas Hollenhorst said: “This case involved the prosecution of one of the biggest methamphetamine and cocaine traffickers in the State of Minnesota. Mr. Llamas-Delgado’s drug trafficking organization spanned many states and involved numerous drug couriers and distributors. The community is safer with him behind bars.”
As proven at trial, since at least 2014, LLAMAS-DELGADO operated a drug trafficking organization responsible for transporting and distributing methamphetamine and cocaine from Texas and California into Minnesota. RAMIREZ-MALDONADO and PARRA SALAZAR assisted LLAMAS-DELGADO by transporting approximately two kilograms of cocaine from Texas to the Twin Cities.
As proven at trial, law enforcement agents in California seized approximately 17 pounds of suspected cocaine and 25 pounds of suspected methamphetamines concealed in hidden compartments under the front seats of a 2005 Mini-Cooper that had been loaded onto a vehicle transport carrier destined for LLAMAS-DELGADO in the Twin Cities area. During the spring of 2017, law enforcement agents in the Twin Cities area conducted surveillance of LLAMAS-DELGADO and his co-conspirators that revealed multiple residences linked to the conspiracy’s drug trafficking activities. On May 15, 2017, law enforcement agents conducted simultaneous searches of several residences, resulting in the seizure of more than $40,000 in cash, 28 pounds of marijuana, over 750 grams of cocaine, a firearm, and other drug trafficking paraphernalia.
This case is the result of an investigation by the U.S. Drug Enforcement Administration, Orono Police Department, Riverside County Sheriff’s Office (California), Albertville Police Department, Brooklyn Center Police Department, Wright County Sheriff’s Office, Hennepin County Sheriff’s Office, the Minnesota State Patrol, and the California Highway Patrol.
Assistant U.S. Attorneys Thomas M. Hollenhorst and Sarah E. Hudleston prosecuted this case.
Defendant Information:
ALEJANDRO LLAMAS-DELGADO, 24
Brooklyn Center, Minn.
Convicted:
- Conspiracy to distribute methamphetamine and cocaine, 1 count
- Possession with intent to distribute cocaine, 1 count
GREGORIO RAMIREZ-MALDONADO, 28
Houston, Texas
Convicted:
- Conspiracy to distribute cocaine, 1 count
- Possession with intent to distribute cocaine, 1 count
ERICK PARRA-SALAZAR, 24
Houston, Texas
Convicted:
- Conspiracy to distribute cocaine, 1 count
- Possession with intent to distribute cocaine, 1 count
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Federal Judge Approves Final Distribution of Payments to Victims of Frank Vennes Fraud SchemeRead the Press Release
Yesterday in federal court, United States District Judge Ann D. Montgomery issued an order approving a final distribution of payments to victims of FRANK E. VENNES, JR., and dissolving the Liquidating Trusteeship established to administer the Asset Distribution Plan.
“Although nothing can erase entirely the years of financial hardship and emotional stress caused by this massive fraud scheme, we hope that through the Liquidating Trustee’s administration of the Asset Distribution Plan victims have experienced some measure of relief and closure,” said Acting U.S. Attorney Gregory Brooker.
Gary Hansen, the Liquidating Trustee, noted the many complexities in liquidating the VENNES assets, which included multiple business entities; office buildings, apartment buildings, and other real estate; an extensive art and rare coin collection; and many other assets spread across the country. “This has been a long and challenging process. We appreciate Judge Montgomery’s practical and flexible approach, which permitted us to resolve issues creatively and without substantial litigation or undue administrative expense. Many of those who placed their trust in Frank Vennes lost much or all of their life savings. We have not been able to make them whole, but have worked hard to provide the maximum possible recovery from the available assets,” said Hansen.
On October 18, 2013, VENNES was sentenced to 15 years in prison for fraudulently raising money from individuals and through hedge funds for investment in Petters Company, Inc. (“PCI”). VENNES was a long-time associate of Thomas J. Petters, the Minnesota businessman who was convicted in 2009 of orchestrating a $3.65 billion Ponzi scheme. In January 2011, the Court issued an order approving an Asset Distribution Plan that provided for the distribution of cash or assets to the victims and creditors of the Vennes Defendants1, in connection to the Petters Ponzi scheme. After the final distribution, the total value of assets and cash distributed to victims and creditors through the Liquidating Trustee will total approximately $20 million.
This case was handled by the Civil Division of the U.S. Attorney’s Office for the District of Minnesota.
The case is captioned United States of America v. Frank E. Vennes, Jr., et al. Case No. 8-cv-5348 (ADM/TNL).
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1The Vennes Defendants are: Frank E. Vennes, Jr.; Metro Gem Finance; Metro Gem, Inc.; Grace Offerings of Florida, LLC; Metro Property Financing, LLC; 38 E. Robinson, LLC; 55 E. Pine, LLC; Orlando Rental Pool, LLC; 100 Pine Street Property, LLC; Orange Street Tower, LLC; Cornerstone Rental Pool, LLC; 2 South Orange Avenue, LLC; Mandan Properties, LLC; Century Apartments, LLC; Youngstown Holdings, LLC; Metro Development Properties, LLC; Grace Offerings of St. Paul, LLC; Project Riverwatch, LLC; Friends of Hope Academy, LLC; Plando, LLC; Art Group, LLC; and Metro Gold, LLC.
Methamphetamine Trafficker Sentenced to More Than 33 Years in Federal PrisonRead the Press Release
Acting United States Attorney Gregory G. Brooker today announced the sentencing of ELFRED WILLIAM PETRUK, 39, to 31 years in prison for methamphetamine-related trafficking offenses. PETRUK was found guilty on June 12, 2017, following a four-day trial, of one count of conspiracy to distribute methamphetamine and one count of possession with intent to distribute methamphetamine. PETRUK was sentenced to 31 years for each count and will serve those terms concurrently. PETRUK was indicted on these counts while on supervised release for a previous federal conviction. As a result, he will serve an additional two-and-one-half years consecutively for violating his supervised release terms and conditions. He was sentenced on December 13, 2017, before U.S. District Judge Ann D. Montgomery.
“Methamphetamines are destroying lives across Minnesota. Today’s sentence highlights our commitment to prosecuting individuals, such as Mr. Petruk, who are intent on bringing these dangerous drugs into our communities,” said Acting United States Attorney Gregory G. Brooker. “This case reflects the collaborative work of federal, state, and local task forces and their dedication to combating drug trafficking.”
“Mr. Petruk has had a history of criminal behavior dating back two decades. Getting him off the streets is a big win for these communities,” said Acting Special Agent in Charge Kirk Howard of the Saint Paul Field Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives. “In fact, our local ATF office has built a number of cases on Mr. Petruk resulting in three separate federal indictments. We are extremely happy with the sentencing. We owe a big thanks to the Lake Superior Drug and Violent Crime Task Force with whom we worked closely during this investigation. This is a big win for them, too.”
As proven at trial, in July 2016, law enforcement agents received information that PETRUK, who then had only recently been released from prison and placed on federal supervised release, was trafficking large quantities of methamphetamine from the Twin Cities area to the Twin Ports area. In September 2016, on at least three separate occasions, law enforcement agents observed PETRUK traveling from the Twin Ports area to the Twin Cities, making short-duration stops at remote locations and at homes of known methamphetamine users and dealers. On September 20, 2016, agents stopped and detained PETRUK and, upon execution of a search warrant, recovered more than 800 grams of highly pure methamphetamine hidden in a compartment under the hood of PETRUK’S vehicle.
As proven at trial, following PETRUK’S arrest, law enforcement agents executed search warrants at several of the locations in Duluth, Minn. and Superior, Wisc. believed to be related to PETRUK’S drug-trafficking activities. During the course of the searches, law enforcement agents seized a loaded 9mm handgun, methamphetamine, cash, digital scales, drug-packaging materials, and other drug-trafficking paraphernalia.
The defendant has multiple prior criminal convictions in state and federal courts. In September 2006, PETRUK pleaded guilty in federal district court to one count of possession with intent to distribute methamphetamine and was sentenced to 120 months in prison. In July 2015, PETRUK was found guilty by a federal jury of one count of corruptly attempting to obstruct an official proceeding and was sentenced to 46 months in prison.
This case is the result of an investigation by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives; the Duluth Police Department; the Superior, Wisconsin Police Department; and the Lake Superior Drug and Violent Crime Task Force.
Assistant U.S. Attorneys Allen A. Slaughter and Benjamin Bejar prosecuted the case.
Defendant Information:
ELFRED WILLIAM PETRUK, 39
Duluth, Minn.
Convicted:
- Conspiracy to distribute methamphetamine, 1 count
- Possession with intent to distribute methamphetamine, 1 count
Sentenced:
- 402 months in prison (372 months each count to be served concurrently, plus 30 months for violation of supervised release conditions to be served consecutively)
- 10-year term of supervised release (10 years each count, served concurrently)
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Former Controller of Minnesota Metal Stamping Company Sentenced to 33 Months in Prison for Million Dollar Embezzlement SchemeRead the Press Release
Acting United States Attorney Gregory G. Brooker today announced the sentencing of JOHN BURWOOD ROBINSON, 50, to 33 months in federal prison for stealing more than $1.1 million from his employer. ROBINSON, who was charged on July 26, 2017 with one count of mail fraud and one count of filing a false tax return, pleaded guilty on August 17, 2017, to both counts. He was sentenced on November 30, 2017, before Senior Judge Paul A. Magnuson in U.S. District Court in Saint Paul, Minn.
“This is an appropriate sentence for a defendant who abused his long-held position of trust by stealing more than a million dollars from his employer to fund his preoccupation with classic automobiles,” said Assistant U.S. Attorney Surya Saxena. “I am grateful for the combined efforts of the investigative agencies whose work brought this case to a successful conclusion.”
“IRS Criminal Investigation remains committed to uncovering financial fraud schemes,” stated Acting Special Agent in Charge Hubbard Burgess of the St. Paul Field Office IRS Criminal Investigation. “The recent 33-month sentencing of John Robinson shows that filing a filing false tax return will result in severe consequences.”
“Robinson was entrusted with managing the finances of the business that employed him, but instead he violated that trust by defrauding and stealing from the business,” said Minnesota Commerce Commissioner Jessica Looman. “This successful criminal investigation was the result of a coordinated effort by the Commerce Fraud Bureau with the Blaine Police and the IRS.”
According to the defendant’s guilty plea and documents filed in court, from 1991 through 2016, ROBINSON was employed by North Central Stamping & Manufacturing, Inc. (“NCSMI”), and in 2003, he became NCSMI’s controller. As the controller, ROBINSON managed NCSMI’s bank accounts, bookkeeping records, and financial reports.
According to the defendant’s guilty plea and documents filed in court, ROBINSON devised a fraud scheme to steal money that was paid to NCSMI by its clients. ROBINSON opened a bank account in the name of NCSMI without the company’s knowledge or authorization. ROBINSON then deposited payments made by NCSMI’s customers into the fraudulent bank account he had set up. ROBINSON used the money to pay for his own personal expenses, to fund his hobby of buying and restoring automobiles and automobile parts, and to pay for a storage facility to store the automobiles and parts. In total, ROBINSON stole approximately $1,200,000 from NCSMI.
According to the defendant’s guilty plea and documents filed in court, in addition to his theft, ROBINSON admitted to filing false tax returns by understating his total income for the calendar years 2009 through 2015, in order to lower his tax liability and to avoid detection of his fraud scheme. In total, ROBINSON caused a total tax loss of $291,757.31.
This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS, the Minnesota Department of Commerce Fraud Bureau, and the Blaine Police Department.
Assistant U.S. Attorney Surya Saxena prosecuted the case.
Defendant Information:
JOHN BURWOOD ROBINSON, 50
Crystal, Minn.
Convicted:
- Mail fraud, 1 count
- Filing a false tax return, 1 count
Sentenced:
- 33 months in prison
- 3 years supervised release
- $624,132.99 in restitution
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Local Dermatologist Pays $850,000 to Settle False Claims Act AllegationsRead the Press Release
Acting United States Attorney Gregory G. Brooker today announced that Skin Care Doctors, P.A. and its founder and CEO, Michael J. Ebertz, M.D. have agreed to pay $850,000 to the United States to resolve allegations of false claims submitted for certain dermatology procedures in violation of the False Claims Act (“FCA”).
Assistant U.S. Attorney Ann Bildtsen said, “Medicare is a public trust. This resolution against both the company and its CEO safeguards that trust and restores needed funds to Medicare. This Office is committed to taking necessary actions to rectify inflated billing to federal programs.”
The United States contended that between January 2008 and December 2015, Skin Care Doctors, P.A. ("SCD") and Michael J. Ebertz, M.D. (“Ebertz”) submitted false claims for payment to the Medicare Program. The billing in question spanned four different areas, including billing Medicare for free samples of a phototherapy drug and upcoding office visits, lesion removal procedures, and phototherapy services. As outlined in the settlement agreement, Ebertz and SCD will pay to the United States a settlement amount of $850,000.
The settlement resolves a civil lawsuit brought by a whistleblower, a doctor who formerly worked with Ebertz, under the qui tam provisions of the False Claims Act. The False Claims Act allows private parties to bring suit on behalf of the government for false claims and to share in any recovery. Such whistleblowers bring fraud schemes to light that might otherwise go undetected.
The case was handled by the Civil Frauds Unit of the U.S. Attorney’s Office for the District of Minnesota, with assistance from the Office of Inspector General of the U.S. Department of Health and Human Services and the Federal Bureau of Investigation.
The case is United States of America and the State of Minnesota ex rel. Jeff Samuelson, M.D. v. Skin Care Doctors, P.A., and Michael J. Ebertz, M.D., 15-cv-3132 (SRN/BRT). The settlement resolved false claims allegations prior to any determination of liability.
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Federal Indictment Charges Three North Minneapolis Gang Members in Violent Drug Trafficking ConspiracyRead the Press Release
Acting United States Attorney Gregory G. Brooker today announced a federal indictment charging three members of the North Minneapolis-based 1-9 Block Dipset Gang with crimes related to violent gang activity, including conspiracy, possession and distribution of heroin, and illegal possession of firearms and ammunition. DOMONICK DESHAY WRIGHT, a/k/a “Freaky,” 29, BRIAN FUNTANOUS MACK, a/k/a “B-Mack,” 32, and HAKEEM MALIK DONTAE FLAX, a/k/a “Keem,” 31, are currently in custody and are awaiting court appearances before a United States Magistrate Judge.
According to the indictment, from at least August 2016 through the present, the defendants maintained active membership in the 1-9 Block Dipset Gang, with the purpose of making money for the gang through criminal acts, including distribution of heroin. As part of their heroin distribution scheme, WRIGHT, MACK, FLAX and other members of the gang possessed, used and carried firearms in order to protect themselves from rival gang members and maintain drug distribution territory. WRIGHT, MACK and FLAX have prior felony offenses that make them ineligible to possess firearms.
According to the indictment, members of the 1-9 Block Dipset Gang were involved in a violent gang war with rival North Minneapolis gangs, including the Tre Tre Crips and the Young-N-Thuggin gangs, which resulted in the shooting deaths of gang members on both sides of the conflict. Disputes over gang territories and retaliation for prior acts of violence also contributed to the gun violence. As an example, on August 5, 2017, FLAX shot and killed a member of the rival Tre Tre Crips gang in a parking lot outside of a North Minneapolis restaurant.
This indictment is the result of an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Minneapolis Police Department.
This case is being prosecuted by Assistant U.S. Attorney Thomas Calhoun-Lopez.
Defendant Information:
DOMONICK DESHAY WRIGHT, a/k/a “Freaky,” 29
Brooklyn Center, Minn.
Charges:
- Conspiracy to possess a firearm in furtherance of a drug trafficking crime, 1 count
- Conspiracy to distribute heroin, 1 count
- Possession with intent to distribute heroin, 1 count
- Felon in possession of a firearm, 2 counts
- Possession of a firearm in furtherance of a drug trafficking crime, 1 count
BRIAN FUNTANOUS MACK, a/k/a “B-Mack,” 32
Minneapolis, Minn.
Charges:- Conspiracy to possess a firearm in furtherance of a drug trafficking crime, 1 count
- Conspiracy to distribute heroin, 1 count
- Possession with intent to distribute heroin, 1 count
- Felon in possession of a firearm, 3 counts
- Possession of a firearm in furtherance of a drug trafficking crime, 1 count
HAKEEM MALIK DONTAE FLAX, a/k/a “Keem,” 31
Vadnais Heights, Minn.
Charges:- Conspiracy to possess a firearm in furtherance of a drug trafficking crime, 1 count
- Conspiracy to distribute heroin, 1 count
- Felon in possession of ammunition, 1 count
- Discharge of a firearm in furtherance of a drug trafficking crime, 1 count
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Credit Repair Business Owner Pleads Guilty to Tax Fraud ChargesRead the Press Release
Acting United States Attorney Gregory G. Brooker today announced the guilty plea of JOSEPH ARNOLD MCGLYNN, JR., 33, former owner, CEO and President of United Credit Consulting (“UCC”), for failing to account for and pay over employment taxes. MCGLYNN, JR., who was indicted on August 8, 2017, pleaded guilty yesterday before Judge Ann D. Montgomery in U.S. District Court in Minneapolis, Minn.
According to the plea agreement and documents filed in court, while MCGLYNN, JR. was the owner, CEO and President of UCC, a credit repair service company located in Burnsville, Minn., MCGLYNN, JR. was responsible for ensuring that UCC’s Employer’s Quarterly Federal Tax Returns were filed and that employment taxes were paid. However, although MCGLYNN, JR. caused employment taxes to be withheld from the wages of UCC employees, he failed to pay over such taxes to the Internal Revenue Service (“IRS”). Instead, MCGLYNN, JR. used the money to fund a lavish lifestyle, including luxury vacations, rentals of luxury vehicles, visits to strip clubs and purchases of luxury items such as jewelry and handbags. In total, MCGLYNN, JR. failed to pay to the IRS at least $159,157 in employment taxes.
The defendant’s wife and former employee of United Credit Consulting, TARA MARIE MCGLYNN, 32, pleaded guilty on January 17, 2017, to filing a false tax return.
Both cases are the result of an investigation conducted by the Criminal Investigation Division of the IRS and the United States Postal Inspection Service.
Assistant U.S. Attorney Michelle E. Jones is prosecuting the cases.
Defendant Information:
JOSEPH ARNOLD MCGLYNN, JR., 33
Burnsville, Minn.
Convicted:
- Willful failure to account for and pay over employment taxes, 2 counts
TARA MARIE MCGLYNN, 32
Eden Prairie, Minn.
Convicted:
- Filing a false tax return, 1 count
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Two Florida Residents Federally Indicted for Orchestrating $150 Million Brazilian Factoring SchemeRead the Press Release
Acting United States Attorney Gregory G. Brooker today announced a federal indictment charging ANTONIO CARLOS DE GODOY BUZANELI, 56, and JOSE MANUEL ORDOÑEZ, JR., 46, in a $150 million investment fraud scheme involving purported Brazilian factoring. JULIO ENRIQUE RIVERA, 61, a third defendant involved in the conspiracy, was charged by felony information and pleaded guilty on November 9, 2017. BUZANELI and ORDOÑEZ were taken into custody on November 17, 2017, and made their initial appearance in U.S. District Court in Miami, Fla., that afternoon. A detention hearing for BUZANELI and ORDOÑEZ is scheduled for November 21, 2017, before Magistrate Judge John O’Sullivan at the C. Clyde Atkins U.S. Courthouse in Miami, Fla.
According to the indictment and documents filed in court, BUZANELI, ORDOÑEZ and RIVERA were the principals of Providence Holdings International, Inc., a company based in Key Biscayne, Fla. In 2009 and 2010, BUZANELI, ORDOÑEZ and RIVERA formed Providence Financial Investments, Inc. and Providence Fixed Income Fund LLC (collectively, along with Providence Holdings International, Inc., “Providence”) in order to raise money from investors.
According to the indictment and documents filed in court, from about 2010 until June 2016, Providence raised approximately $150 million from investors worldwide by representing that Providence would invest the money in Brazilian factoring. “Factoring” is a financial transaction in which accounts receivable are purchased at a discount. Providence’s marketing materials explained that in Brazil consumers write ten separate post-dated checks for $100 – one per month – to pay for $1,000 in retail items such as consumer electronics or groceries. The retailer then sells the post-dated checks to Providence for approximately $820, and Providence earns $180 over ten months as the checks mature. As a result, Providence claimed to make a 48 percent annual return on money invested in Brazil.
According to the indictment and documents filed in court, Providence raised more than $64 million from U.S. investors by employing a network of unlicensed brokers who sold promissory notes bearing annual interest rates between 12 percent and 24 percent. Investors were told their money would be used to factor accounts receivable in Brazil. BUZANELI, ORDOÑEZ and RIVERA provided the brokers with marketing materials to show investors that their money would be used to factor accounts receivable in Brazil. The materials falsely stated that funds would be used “for the sole purpose” of making loans to a Brazilian subsidiary of Providence “which will use the proceeds of the loan to acquire receivables or financial instruments such a post-dated checks and/or Duplicatas in the Brazilian Factoring Market.”
The indictment alleges that BUZANELI and ORDOÑEZ instead used a significant amount of the investors’ funds to pay purported profits to other investors and to make commission payments to brokers. BUZANELI and ORDOÑEZ also diverted investor funds to other companies they controlled, including an import/export company, a travel company, a credit restoration service, a catering company and a food truck operated by BUZANELI’S wife.
According to the indictment and documents filed in court, one of Providence’s brokers, an individual identified in the indictment as J.C., owned and operated a financial advisory firm in Saint Louis Park, Minn. Between July 2013 and January 2016, J.C. raised approximately $2.4 million for Providence from Minnesota investors by representing that Providence would invest their money in factoring in Brazil.
According to the indictment and documents filed in court, BUZANELI and ORDOÑEZ also opened Providence offices and affiliates around the world, including in London, Hong Kong, Taipei, Shanghai, Singapore, Vancouver, and Panama. In about 2011, for example, BUZANELI and ORDOÑEZ opened Providence-affiliated entities in the Bailiwick of Guernsey and in Hong Kong, through which they raised approximately $85 million from offshore investors by falsely representing they would use the investors’ money to invest in Brazilian factoring. In reality, Providence did not use the international investors’ money to purchase receivables in the Brazilian factoring market. Instead, much of the investors’ money was transferred to other Providence-controlled entities around the world as well as to bank accounts controlled by BUZANELI and ORDOÑEZ, where the money was used for payments unrelated to Brazilian factoring, including to pay commissions to U.S. brokers and to make interest payments to American investors in Providence’s U.S.-based entities.
According to the indictment and documents filed in court, on July 28, 2016, Providence Financial Investments, Inc. and Providence Fixed Income Fund LLC declared bankruptcy, claiming to have estimated assets between $0 an $50,000. As a result of the fraud scheme, Providence investors worldwide lost a total of more than $100 million.
This case is the result of an investigation conducted by the FBI, United States Postal Inspection Service, and the Minnesota Commerce Fraud Bureau.
Assistant U.S. Attorneys Kimberly A. Svendsen and Joseph H. Thompson are prosecuting the case.
Defendant Information:
ANTONIO CARLOS DE GODOY BUZANELI, 56
Coral Gables, Fla.
Charges:
- Conspiracy to commit mail fraud, 1 count
- Mail fraud, 12 counts
JOSE MANUEL ORDOÑEZ, JR., 46
Davie, Fla.
Charges:
- Conspiracy to commit mail fraud, 1 count
- Mail fraud, 12 counts
JULIO ENRIQUE RIVERA, 61
Pembroke Pines, Fla.
Convicted:
- Conspiracy to commit mail fraud, 1 count
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Corcoran Man Sentenced to More Than 10 Years in Prison for Multi-Million Dollar Fraud in the Bakken Oil FieldsRead the Press Release
Acting United States Attorney Gregory G. Brooker today announced the sentencing of RONALD DAVID JOHNSON, 51, to 126 months in prison for stealing more than $2.1 million from victims who were hoping to invest successfully in the North Dakota oil boom. On June 19, 2017, following a five-day trial, a jury convicted JOHNSON on nine counts of wire fraud and one count of money laundering. JOHNSON was sentenced this morning by Judge Wilhelmina M. Wright in U.S. District Court in St. Paul, Minn.
“Ronald Johnson abused the trust of his victims only to enrich himself at their expense. He promised investors he would use their money to purchase land in North Dakota and to build indoor RV parks, but it was all a lie. Johnson simply stole their money,” said Assistant U.S. Attorney Joseph Thompson. “With today’s sentence, which includes prison time, restitution and a forfeiture order, Johnson is now being held accountable for his crimes.”
“IRS Criminal Investigation remains committed to uncovering investment fraud schemes and bringing to justice those who prey on investors for their personal financial gain,” said Acting Special Agent in Charge Jeremy Shivers of the St. Paul Field Office IRS Criminal Investigation. “Those who line their pockets with profits from investment fraud schemes should know they will not go undetected and there will be detrimental consequences for this type of criminal behavior as in the case of the 126- month sentencing handed down to Ronald Johnson today.”
“The FBI together with our law enforcement partners will tirelessly pursue those responsible for investment fraud schemes,” said FBI Special Agent in Charge Richard T. Thornton, Minneapolis Division. “The sentence handed down today to include time in prison reflects the seriousness of the defendant's crimes.”
As proven at trial, JOHNSON came up with an investment idea to address the need to house oil workers in the Bakken in North Dakota and Montana. The idea, registered as Indoor RV Parks, LLC (“IRVPK”), would allow oil workers to eschew more common barracks-style housing in favor of comfortable indoor RV parks, specifically large climate-controlled warehouses where oil workers could park their RVs and have access to shared amenities like on-site storage, laundry and vending machines. Johnson promised his investors that as “members” of IRVPK, they would, based on the amount of the investment, receive a percentage of the rental income and other revenue generated by the indoor RV park. As part of his scheme, JOHNSON sent emails and letters to investors designed to lull them into a false sense of security and to postpone complaints regarding delays in the project.
As proven at trial, JOHNSON fraudulently solicited $2.1 million from four investors in IRVPK, telling the investors that their money would be used to build and manage indoor RV parks for oil workers. Instead of using the investor money to purchase land and start construction on the RV parks, JOHNSON used the funds to repay prior investors, fund his personal 51-acre cattle farm, take vacations, buy vintage Chevrolets, and purchase real estate, including a 17-acre island on Mink Lake in Maple Lake, Minn. As of today, IRVPK has not built any indoor RV Parks, has not acquired any property in North Dakota or Montana, and has a bank account that is empty.
This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS and the FBI.
This case was prosecuted by Assistant U.S. Attorneys Benjamin Langner and Joseph H. Thompson.
Defendant Information:
RONALD DAVID JOHNSON, 51
Corcoran, Minn.
Convicted:
- Wire fraud, 9 counts
- Money laundering, 1 count
Sentenced:
- 126 months in prison
- Three years of supervised release
- $2,303,629 in restitution
- Forfeiture of all property derived from criminal proceeds
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Saint Louis Park Man Pleads Guilty to Impersonating an FBI OfficerRead the Press Release
Acting United States Attorney Gregory G. Brooker today announced the guilty plea of ARON AVRAM SHAMILOV, 24, for impersonating a federal officer. SHAMILOV, who was indicted on September 19, pleaded guilty on November 13, 2017, before United States District Judge Susan Richard Nelson in Saint Paul, Minn. A sentencing hearing is scheduled for March 16, 2018.
According to his guilty plea and documents filed in court, on March 29, 2017, SHAMILOV submitted to an apartment leasing office a letter purportedly authored by a Special Agent of the FBI in support of the defendant’s attempt to lease an apartment. The letter, which was intended to explain SHAMILOV’S low credit score, falsely stated that SHAMILOV was the victim of identity theft. The fabricated letter included the FBI seal and was purportedly authored by a Special Agent of the Minneapolis Division of the FBI, and falsely stated that the Special Agent had been assigned to investigate SHAMILOV’S identity theft case. On May 2, 2017, the property manager of the apartment complex contacted the FBI Minneapolis Division to verify the validity of the letter. After reviewing the letter, the FBI informed the property manager that the letter was not genuine.
This case is the result of an investigation conducted by the FBI.
Assistant United States Attorneys Charles J. Kovats and Timothy C. Rank are prosecuting the case.
Defendant Information:
ARON AVRAM SHAMILOV, 24
St. Louis Park, Minn.
Convicted:
- Impersonation of an Officer or Employee of the United States, 1 count
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
- Impersonation of an Officer or Employee of the United States, 1 count
Registered Nurse Charged with Stealing Pain Medications Intended for Patients from Minneapolis HospitalRead the Press Release
Acting United States Attorney Gregory G. Brooker today announced the indictment of MATTHEW ALLEN AMUNDSON, 30, a registered nurse, for fraudulently obtaining hydromorphone, a prescription opioid pain medication. AMUNDSON, who is charged with one count of obtaining a controlled substance by fraud, made his initial appearance in U.S. District Court in Minneapolis, Minn. earlier today.
According to the indictment, from January 2015 through April 2015, AMUNDSON, while employed as a registered nurse at Abbott Northwestern Hospital in Minneapolis, Minn., fraudulently obtained possession of controlled substances, namely, hydromorphone, which was intended for hospital patients. While working in his capacity as a nurse, AMUNDSON accessed the hospital’s secured automated medication dispensing systems and used syringes to extract hydromorphone from vials intended for patient use. AMUNDSON subsequently injected the vials with saline solution to replace the missing hydromorphone before returning the vials to the medication dispensing systems.
This case is the result of an investigation conducted by the U.S. Food and Drug Administration, Office of Criminal Investigations and the Drug Enforcement Administration (DEA) Tactical Diversion Squad, which is comprised of agents, officers and deputies from the DEA, Federal Bureau of Investigation, Minneapolis Police Department, Plymouth Police Department, Washington County Sheriff’s Office, and the Minnesota Army National Guard.
Assistant U.S. Attorney Richard A. Newberry is prosecuting the case.
Defendant Information:
MATTHEW ALLEN AMUNDSON, 30
Northfield, Minn.
Charges:
- Obtaining a controlled substance by fraud, 1 count
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.