District of Minnesota
Press releases recorded for this federal judicial district.
Minneapolis Man Convicted of Trafficking Three Girls for Commercial Sex and Producing Child Pornography of Two GirlsRead the Press Release
United States Attorney for the District of Minnesota Andrew M. Luger today announced the trial conviction of DEUVONTAY SHELBY CHARLES, 21, who was originally indicted on March 7, 2016, in the District of Minnesota, for sex trafficking three minor girls and for producing and receiving child pornography of two minor girls. The jury returned a guilty verdict on December 14, 2016, after a six-day trial before U.S. District Judge Joan N. Ericksen. A sentencing date has not yet been set.
“Deuvontay Charles is a predator,” said Assistant United States Attorney Laura M. Provinzino. “He targeted vulnerable girls to traffic for commercial sex and to use to produce sexually-explicit images. Over the course of trial, the jury heard from four brave girls. Their stories are difficult to hear and were even more difficult for these victims to recount. The United States Attorney’s Office thanks the victims who courageously testified at trial and the jury who rendered this just verdict.”
“This conviction highlights the dedication and commitment of our excellent investigative partners,” said Special Agent in Charge Alex Khu of Homeland Security Investigations - St. Paul. “HSI is extremely proud of the cooperation between HSI and Anoka County Sheriff’s Office and other federal, state and local law enforcement agencies working to put people like Mr. Charles behind bars.”
“I am very proud of the collaborative work done on this case,” said James Stuart, Anoka County Sheriff. “Let this be another warning to those who seek to victimize others in the name of greed. If you choose this evil path, we will find you and prosecute you to the fullest extent of the law. We have made that commitment to the victims, and to the communities that we proudly serve, and will be relentless in delivering on that promise.”
As proven at trial, a concerned mother reached out to the Anoka County Sheriff’s Office in July 2015 to report that DEUVONTAY CHARLES was recruiting her 17-year-old daughter to engage in prostitution. In the defendant’s private messages, he described how her daughter could “make money” and promised travel to Las Vegas and that “life will be smooth sailing.” He told her that he would provide condoms and protect her from the “clients.” CHARLES also instructed her to save his phone number as “Daddy.”
That initial report led to law enforcement identifying additional juvenile victims. A 14-year-old girl identified that CHARLES had requested sexually-explicit images of her. Between July 2 and July 4, 2015, eight images displaying the child’s genitals were sent online to CHARLES. As proven at trial, CHARLES also sent two pornography images of an adult female and instructed the 14-year-old victim to send pictures of herself in those similar sexual poses.
Another 14-year-old victim was identified who was trafficked by CHARLES and who CHARLES used to produce sexually-explicit images in July 2015. CHARLES asked the victim to make a video of herself engaged in sexual acts. CHARLES also recruited that victim to engage in prostitution activity for him, asking if she wanted “to make money.” When 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.
As proven at trial, CHARLES also sent messages to another 17-year-old victim about making “quick money.” On August 21, 2015, CHARLES picked up the victim in Blaine, Minnesota, posted her as an “escort” on backpage.com, and trafficked her through August 26, 2015. CHARLES made her available for commercial sex acts at a hotel in Bloomington, Minnesota, that he paid for in cash and registered under a different name. As proven at trial, CHARLES received money from the victim as a result of the sex acts that she engaged in.
As proven at trial, when he committed these offenses, CHARLES was required to register as a predatory offender based on a 2014 conviction in Dakota County for soliciting a child to engage in sexual conduct.
This case is the result of an investigation conducted by Homeland Security Investigations, the Minnesota Bureau of Criminal Apprehension, Anoka County Sheriff’s Office, Dakota County Community Corrections, and the St. Paul Police Department.
This case is being prosecuted by Assistant U.S. Attorney Laura M. Provinzino.
Defendant Information:DEUVONTAY SHELBY CHARLES, 21
Minneapolis, Minn.Convicted:
• Sex trafficking of a minor, three counts
• Sex trafficking by use of force, fraud and coercion, two counts
• Production of child pornography, 12 counts
• Receipt of child pornography, two counts
• Commission of felony offense involving a minor when required to register as a sex offender, one countAttorneys Indicted for Multimillion Dollar Scheme to Fraudulently Obtain Settlements from Victims who Downloaded PornographyRead the Press Release
United States Attorney Andrew M. Luger today announced a federal indictment charging PAUL R. HANSMEIER, 35, and JOHN L. STEELE, 45, with conspiring to fraudulently obtain millions of dollars by deceiving federal and state courts. HANSMEIER was suspended from the practice of law in the State of Minnesota on September 12, 2016.
“The defendants in this case are charged with devising a scheme that casts doubt on the integrity of our profession,” said U.S. Attorney Luger. “The conduct of these defendants was outrageous – they used deceptive lawsuits and unsuspecting judges to extort millions from vulnerable defendants. Our courts are halls of justice where fairness and the rule of law triumph, and my office will use every available resource to stop corrupt lawyers from abusing our system of justice.”
“The charges announced today describe a fraud scheme perpetrated by lawyers and officers of the court who abused their positions of trust for personal enrichment,” said Special Agent in Charge of the FBI Minneapolis Division Richard T. Thornton. “The FBI remains committed to uncovering fraud such as this to protect the integrity of our civil justice system.”
“The role of IRS Criminal Investigation becomes even more important in complex financial investigations involving money laundering because of the time it takes to unravel,” stated Special Agent in Charge Shea Jones, St. Paul Field Office. “IRS Criminal Investigation is committed to working these types of difficult financial investigations and following the criminal’s money, wherever it leads.”
According to the indictment, between 2011 and 2014, the defendants orchestrated an elaborate scheme to steal millions of dollars by threatening copyright lawsuits against individuals who supposedly downloaded pornographic movies from file-sharing websites. The defendants created and used a series of sham entities to obtain copyrights to pornographic movies – some of which they filmed themselves – and then uploaded those movies to file-sharing websites like “The Pirate Bay” in order to lure people to download the movies.
According to the indictment, to learn the identities of their potential victims, the defendants filed bogus copyright infringement lawsuits, through which they got permission from courts to subpoena internet service providers for subscriber information associated with the IP addresses used to download their pornographic movies. After getting the subscriber information, the defendants used extortionate letters and phone calls to threaten the victims with enormous financial penalties and public embarrassment unless they agreed to pay a settlement of thousands of dollars.
According to the indictment, various courts began to restrict the defendants’ ability to sue multiple individuals in the same copyrights lawsuit. So the defendants changed their tactics, in order to keep extorting victims, and began to file lawsuits falsely alleging that computer systems belonging to their sham clients had been hacked. HANSMEIER and STEELE recruited ruse defendants to facilitate their phony “hacking” lawsuits. The ruse defendants were people who had been caught downloading pornography from a file-sharing website. The ruse defendants agreed to be sued in exchange for HANSMEIER and STEELE waiving a settlement fee. The ruse defendants were a necessary part of the scheme so that HANSMEIER and STEELE could seek discovery against the ruse defendants’ supposed “co-conspirators.”
Finally, when courts became suspicious of the defendants’ tactics and motives, the defendants began a long process of lies and deceit designed to conceal the truth and deflect responsibility from themselves. As courts began to uncover the defendant’s unscrupulous litigation tactics, judges began denying the defendants’ requests to subpoena ISPs, dismissing lawsuits, accusing the defendants of deceptive and fraudulent behavior, and imposing sanctions against the defendants and their associates. For example, on May 6, 2013, the District Court for the Central District of California issued an order imposing sanctions against the defendants. The order read, in part:
Plaintiffs [including HANSMEIER and STEELE] have demonstrated their willingness to deceive not just this Court, but other courts where they have appeared. Plaintiffs’ representations about their operations, relationships, and financial interests have varied from feigned ignorance to misstatements to outright lies. But this deception was calculated so that the Court would grant Plaintiff’s early-discovery requests, thereby allowing Plaintiffs to identify defendants and exact settlement proceeds from them. With these granted requests, Plaintiffs borrow the authority of the Court to pressure settlement.
In total, the defendants obtained approximately $6,000,000 made possible by the fraudulent copyright lawsuits they peddled to courts throughout the country.This case is the result of an investigation conducted by the FBI and the Criminal Investigation Division of the IRS.
This case is being prosecuted by Assistant U.S. Attorneys Benjamin Langner and David Maclaughlin, and Brian Levine, Senior Counsel with the Computer Crime and Intellectual Property Section of the U.S. Department of Justice.
Defendant Information:PAUL R. HANSMEIER, 35
Saint Paul, Minn.Charges:
• Conspiracy to commit mail fraud and wire fraud, 1 count
• Conspiracy to commit perjury and suborn perjury, 1 count
• Conspiracy to commit money laundering, 1 count
• Wire fraud, 10 counts
• Mail fraud, 5 countsJOHN L. STEELE, 45
Unknown, FloridaCharges:
• Conspiracy to commit mail fraud and wire fraud, 1 count
• Conspiracy to commit perjury and suborn perjury, 1 count
• Conspiracy to commit money laundering, 1 count
• Wire fraud, 10 counts
• Mail fraud, 5 countsMinnesota Chiropractor Convicted of Tax EvasionRead the Press Release
A federal jury sitting in the District of Minnesota convicted a Minnesota chiropractor today of five counts of tax evasion and one count of presenting a fake financial instrument to the U.S. Department of Treasury, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, and U.S. Attorney Andrew Luger for the District of Minnesota.
Donald Gibson was convicted following a five-day trial before U.S. District Court Judge Patrick J. Schiltz. According to the evidence presented at trial, Gibson failed to file his 2004 through 2014 individual income tax returns and attempted to evade his income tax liabilities for these years by diverting money to a warehouse bank called MYICIS, cashing over $800,000 in business checks at a check-cashing facility, and submitting fake money orders and bogus financial instruments to the Internal Revenue Service (IRS). Gibson also formed Sovereign Christian Mission (SCM), a purported religious organization, as a way to further hide his chiropractic income and pay for his personal expenses. Gibson used SCM to pay for his groceries, entertainment, dinners, and car repairs. Evidence presented at trial established that while the IRS was auditing his tax returns, and later during the criminal investigation, Gibson presented a fake financial instrument purporting to be worth $300 million to the IRS and claimed that it paid off his income tax liabilities.
“Donald Gibson blatantly disregarded his federal tax obligations, leaving honest taxpayers to bear the burden of his crimes,” said Principal Deputy Assistant Attorney General Ciraolo. “Individuals who ignore their obligations and willfully evade taxes will find that the Department, along with its law enforcement partners at the IRS, is committed to holding them fully accountable for their criminal conduct.”
“This defendant abused the tax system for his own financial benefit,” said U.S. Attorney Luger. “Federal law enforcement will continue to hold accountable those who do not meet their tax obligations, instead shifting their responsibilities onto the backs of honest taxpayers.”
“Today’s guilty verdict of Donald Gibson emphasizes that the IRS and the Department of Justice will continue their aggressive pursuit of those who intentionally evade their taxes,” said IRS Criminal Investigation Special Agent in Charge Shea Jones. “This conviction sends a message that the IRS is working to make sure that all taxpayers file and pay their fair share of taxes.”
Sentencing will be scheduled at a later date. Gibson faces a statutory maximum sentence of 25 years in prison for presenting a fake financial instrument to the Department of Treasury and five years in prison for each of the tax evasion convictions. Gibson also faces a period of supervised release, restitution and monetary penalties.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Luger commended special agents of IRS-Criminal Investigation, who conducted the investigation, and Trial Attorney Ryan Raybould of the Tax Division and Assistant U.S. Attorney Joseph Thompson, who prosecuted the case.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
Minnesota Man Pleads Guilty to Hate Crime for Mailing Threatening Letter to Islamic CenterRead the Press Release
Daniel George Fisher, 57, of Minneapolis, pleaded guilty today to a federal hate crime for writing and mailing a threatening letter to an Islamic Center. Fisher was charged with obstructing, by threat of force, the free exercise of religious beliefs.
The plea was announced by Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division; U.S. Attorney Andrew M. Luger of the District of Minnesota; and Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Division.
According to his guilty plea, in September 2015, Fisher wrote and mailed an anonymous letter to the Tawfiq Islamic Center (TIC), located in Minneapolis. In the letter, the defendant threatened to “blow up your building with all you immigrants in it.” The letter also included statements demonstrating strong anti-Muslim animus. Fisher subsequently admitted to the FBI that he wrote the letter to scare and intimidate the TIC’s Muslim members.
“America protects the free exercise of religion for all people in every community,” said Principal Deputy Assistant Attorney General Gupta. “Threats of violence that target religious communities violate federal law; corrode the ideals of our democracy; and threaten the foundation of an inclusive, free and open society. The Justice Department will continue to vigorously prosecute hate crimes that target people because of where they worship.”
“Threatening to blow up a mosque is simply un-American,” said U.S. Attorney Luger. “It is a bedrock principle of our country, enshrined in the First Amendment to the Constitution, that all people are free to practice their religion of choice. Tens of thousands of law-abiding Muslims do so in Minnesota. The U.S. Attorney's Office and FBI will not allow any resident of our state to have that most basic freedom jeopardized by the threat of violence.”
“Today’s guilty plea affirms that hate crimes directed at our communities based on their religion will not be tolerated,” said Special Agent in Charge Thornton. “We will continue to aggressively investigate and bring to justice those who threaten violence against our citizens who choose to exercise their religious freedom as protected by our Constitution.”
U.S. District Judge Wilhelmina M. Wright of the District of Minnesota accepted Fisher’s plea. Fisher faces up to 20 years in prison and a $250,000 fine.
The FBI’s Minneapolis Division investigated the matter. Assistant U.S. Attorney Angela Munoz-Kaphing of the District of Minnesota and Trial Attorney Olimpia Michel of the Civil Rights Division’s Criminal Section are prosecuting the case.
Fisher Plea AgreementMinneapolis Man Pleads Guilty to Hate Crime for Mailing Threatening Letter to Islamic CenterRead the Press Release
DANIEL GEORGE FISHER, 57, pleaded guilty today to a federal hate crime for writing and mailing a threatening letter to an Islamic Center. FISHER was charged with one count of obstructing the free exercise of religious beliefs.
The plea was announced by United States Attorney Andrew M. Luger; Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division; and Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Division.
"Threatening to blow up a mosque is simply un-American," said U.S. Attorney Luger. "It is a bedrock principle of our country, enshrined in the First Amendment to the Constitution, that all people are free to practice their religion of choice. Tens of thousands of law-abiding Muslims do so in Minnesota. The U.S. Attorney's Office and FBI will not allow any resident of our state to have that most basic freedom jeopardized by the threat of violence."
“America protects the free exercise of religion for all people in every community,” said Principal Deputy Assistant Attorney General Gupta. “Threats of violence that target religious communities violate federal law; corrode the ideals of our democracy; and threaten the foundation of an inclusive, free and open society. The Justice Department will continue to vigorously prosecute hate crimes that target people because of where they worship.”
“Today’s guilty plea affirms that hate crimes directed at our communities based on their religion will not be tolerated,” said Special Agent in Charge Thornton. “We will continue to aggressively investigate and bring to justice those who threaten violence against our citizens who choose to exercise their religious freedom as protected by our Constitution.”
According to the defendant’s guilty plea, on September 30, 2015, the Tawfiq Islamic Center received an anonymous handwritten letter, which threatened to “blow up your building with all you immigrants in it.” The letter also included profanities, racial and ethnic slurs, and other derogatory commentary about the religious and cultural practices of the members of the Tawfiq Islamic Center.
According to the defendant’s guilty plea, FBI Special Agents interviewed FISHER on June 14, 2016. FISHER reported that he was angry that the Tawfiq Islamic Center selected Minnehaha Avenue for its new location and he wanted the Center to build somewhere else. FISHER further reported that he had become “increasingly angry with Muslims since 9/11.” FISHER confessed to writing the letter and mailing it to Tawfiq Islamic Center with the intent to threaten and scare members of the Tawfiq Islamic Center.
This case is the result of an investigation conducted by the FBI.
This case is being prosecuted by Assistant U.S. Attorney Angela Munoz-Kaphing and Trial Attorney Olimpia Michel of the Civil Rights Division’s Criminal Section.
Defendant Information:
DANIEL GEORGE FISHER, 57
No known address
Convicted:
- Obstruction of Persons in the Free Exercise of Religious Beliefs, 1 count
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Largest Producer of Child Pornography Ever Prosecuted in Minnesota Sentenced to 38 Years in PrisonRead the Press Release
United States Attorney Andrew M. Luger today announced the sentencing of ANTON ALEXANDER MARTYNENKO, 33, to 38 years in prison after pleading guilty in January to federal child pornography charges. MARTYNENKO was sentenced before U.S. District Judge Richard H. Kyle in U.S. District Court in Saint Paul, Minn.
“This defendant exploited and extorted over 150 young people in a disturbingly manipulative scheme,” said U.S. Attorney Luger. “We hope the victims in this case take some solace in the sentence imposed today. I urge parents and teachers to help Minnesota youth protect themselves from online predators.”
Rosemount Police Chief Mitchell Scott said: “This case was the result of a collaboration between local, federal and state partners. While there are no winners here, the lengthy prison sentence for Anton Martynenko provides some measure of justice for the many people he victimized over the years.”
According to MARTYNENKO’s guilty plea and documents filed in court, between at least 2011 and 2015, he used social media to obtain homemade child pornography from unsuspecting boys, many of them teenagers. The defendant created and used various false aliases, including “Marie Anna,” “Courtney Jansgen,” and “Marie94mn,” on social media outlets for the purpose of obtaining nude and sexually explicit images and videos of minor males. MARTYNENKO created different cover stories, including that he (posing as a woman) had recently moved to Minnesota and was trying to make new friends, that he worked for a modeling agency, or that he was a college student at the University of Minnesota. MARTYNENKO would engage in sexual conversations with victims and eventually ask for nude images and/or video of the minor male victims.
According to the defendant’s guilty plea and documents filed in court, in approximately 2012, MARTYNENKO contacted a victim using a decoy social media account under the name “Marie Anna.” He claimed to be a woman who recently moved to Minnesota from Illinois who was looking to meet new people. MARTYNENKO told the victim that he was handsome and quickly moved to suggesting they exchange nude photographs. MARTYNENKO, using the moniker, “Marie Anna,” sent pictures to the victim of a nude female. The victim then sent nude pictures of himself to “Marie Anna” via social media. MARTYNENKO, still using the handle, “Marie Anna,” demanded more photos of the victim, but the victim stopped responding to the messages when he became suspicious. MARTYNENKO then threatened to distribute the victim’s nude photographs if the victim did not send more. About one year later, the victim learned that his pictures were being distributed via social media.
According to the defendant’s guilty plea and documents filed in court, MARYNENKO also used decoy accounts to advertise child pornography over the internet.
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.
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 was prosecuted by Assistant United States Carol M. Kayser.
This case is the result of an investigation conducted by the FBI, Minneapolis Police Department, Rosemount Police Department, Eagan Police Department, Chaska Police Department, and Dakota County Electronic Crimes Task Force.
Defendant Information:
ANTON MARTYNENKO, 33
Eagan, Minn.
Convicted:
- Production of child pornography, 1 count
- Distribution of child pornography, 1 count
- Advertising child pornography, 1 count
Sentenced:
- 38 years in prison
- Supervised release for a term of 15 years
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Minnesota Business Owner Indicted for Stealing More Than $755,000 from Employee Pension PlanRead the Press Release
United States Attorney Andrew M. Luger today announced an indictment charging WALLACE DAVID GREGERSON, 65, for operating an embezzlement scheme to defraud his employees and steal more than $755,000 from their pension plans. GREGERSON made an initial appearance today before Magistrate Judge Mayeron in U.S. District Court in Minneapolis, Minn.
According to the indictment and documents filed in court, GREGERSON was the president and sole owner of Lighting Affiliates, Inc. (“Lighting Affiliates”), a Minnesota corporation that sold lighting fixtures and related products. The Lighting Affiliates 401(k) Profit Sharing Plan (the “Plan”) was established as an employee benefit for eligible employees’ retirement savings. The Plan was funded by three types of contributions: voluntary salary reduction 401(k) contributions the Lighting Affiliates employees had deducted from their paychecks; 401(k) matching contributions made by Lighting Affiliates; and profit sharing contributions made by Lighting Affiliates.
According to the indictment and documents filed in court, GREGERSON, who was the sole trustee of the Plan, used his position to withdraw funds from the Plan and deposit those funds into Lighting Affiliates bank accounts. Between February 2011 and July 2013, GREGERSON drained the profit sharing portion of the Plan by withdrawing a total of approximately $675,233.55, and drained his former employees’ individual 401(k) accounts by withdrawing a total of approximately $80,667.23.
According to the indictment and documents filed in court, as part of the scheme, GREGERSON persuaded the financial institutions holding the Plan’s assets to provide him with funds belonging to the Plan and its participants by making false representations. GREGERSON provided written statements falsely affirming that the funds would be re-invested in another qualified plan or that the withdrawals were at the employee’s request.
According to the indictment and documents filed in court, GREGERSON used the majority of the funds to either pay for Lighting Affiliates’ expenses or for personal expenses such as country club membership dues, sports tickets, clothing purchases, and tuition payments on behalf of his daughter.
The case is being prosecuted by Assistant United States Attorney Kimberly A. Svendsen.
This case is the result of an investigation conducted by the U.S. Department of Labor Employee Benefits Security Administration and the U.S. Department of Labor Office of the Inspector General.
Defendant Information:
WALLACE DAVID GREGERSON, 65
Plymouth, Minn.
Charges:
- Mail fraud, 6 counts
- Money laundering, 2 counts
- Theft and Embezzlement from Employee Plan, 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 defendant is presumed innocent unless and until proven guilty.
Danny Heinrich Sentenced to 20 Years in PrisonRead the Press Release
DANNY JAMES HEINRICH, 53, was sentenced today to 20 years in prison after pleading guilty in September to federal child pornography charges. As part of his plea allocution, HEINRICH admitted in court that on October 22, 1989, he abducted, sexually assaulted and murdered 11-year-old Jacob Wetterling. HEINRICH also admitted that, in January 1989, he abducted and sexually assaulted 12-year-old J.S.
The announcement was made today by United States Attorney Andrew M. Luger, FBI Special Agent in Charge for the Minneapolis Division Richard T. Thornton, Stearns County Attorney Janelle P. Kendall, Stearns County Sheriff John Sanner and Minnesota Bureau of Criminal Apprehension (BCA) Superintendent Drew Evans.
“Today’s sentencing marks the close of a sad chapter in Minnesota history,” said U.S. Attorney Luger. “Danny Heinrich hurt countless lives, none more tragic than Jacob Wetterling. I encourage all Minnesotans to draw on the example of Patty and Jerry Wetterling, who transformed their grief into hope. Patty and Jerry have dedicated their lives to helping other parents bring their kids home. We can all help. The National Center for Missing and Exploited Children received more than 4 million online tips last year of suspected child sexual exploitation. No concern is too small, no observation too unimportant to call 1-800-THE-LOST or go online to www.missingkids.com. Every child matters. Every second counts.”
“The FBI, along with our law enforcement partners, never wavered in the effort to solve this heinous crime,” said Special Agent in Charge of the FBI Minneapolis Division Richard T. Thornton. “Although solving this crime took decades, justice has been delivered to both the Wetterling family and to the citizens of Minnesota. This sentencing should serve as a reminder to those who perpetrate crimes against children: Law enforcement will never give up in its hunt to find you and bring you to justice no matter how long it may take.”
“The victims today spoke eloquently of the real effect of these crimes, for not only themselves but also on behalf of other victims both present and represented in the videos and in the vast amount of child pornography Heinrich possessed,” said Stearns County Attorney Janelle Kendall. “Their accounts of the pain compounded by Heinrich's years of silence during their pleas for answers was heart rending. I must agree with the US Attorney that Heinrich's regret only caused him to act when he'd been cornered. That said, I was also struck by the resilience, strength, and insight of these victims brought together by evil, but now joined by Jacob's Hope. It has been an honor and privilege to know them through this experience. Thanks again to our federal and state partners for getting us all to today.”
According to HEINRICH’s guilty plea, on October 22, 1989, he abducted, sexually assaulted, and murdered Jacob Wetterling.
According to HEINRICH’s guilty plea, on January 13, 1989, he abducted and sexually assaulted J.S., a 12-year-old boy.
According to HEINRICH’s guilty plea, he possessed between 10 and 150 child pornography images, including images of prepubescent minors under the age of 12. The pornographic material portrays sadistic or masochistic conduct, and images of morphed child pornography.
This case is the result of an investigation conducted by the FBI, Minnesota Bureau of Criminal Apprehension and the Stearns County Sheriff’s Office.
This case was prosecuted by Assistant United States Attorneys Steven L. Schleicher and Julie Allyn of the U.S. Attorney’s Office’s Special Prosecutions Unit. Assistance was provided by the Stearns County Attorney’s Office and the Department of Justice Child Exploitation and Obscenity Section.
Defendant Information:
DANNY JAMES HEINRICH, 53
Annandale, Minn.
Convicted:
- Receipt of child pornography, 1 count
Sentenced:
- 20 years in prison
- Supervised release for a term of life
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Minnesota Couple Sentenced for Multi-Million-Dollar Income Tax Refund Fraud SchemeRead the Press Release
United States Attorney Andrew M. Luger announced the sentencing of MARK ARLIN HAMMERSCHMIDT, 49, and ORNELLA ANGELINA HAMMERSCHMIDT, 37, for orchestrating a multi-million-dollar tax fraud scheme. The defendants, who pleaded guilty on November 16, 2015, were sentenced today before U.S. District Judge David S. Doty in U.S. District Court in Minneapolis, Minn.
“The Hammerschmidts stole nearly $2 million from the U.S. Treasury and exploited hundreds of vulnerable victims for their own financial gain, causing those victims immeasurable harm,” said Assistant United States Attorney Michelle Jones. “The U.S. Attorney’s Office and the IRS will continue to vigorously investigate and prosecute those who seek to victimize others and enrich themselves through tax refund schemes.”
“Most tax return preparers provide excellent service to their clients, however a few unscrupulous tax preparers file false and fraudulent returns. Knowingly and intentionally falsifying documents filed with the IRS is a federal crime,” stated IRS Criminal Investigation Special Agent in Charge Shea Jones. Our Special Agents play a valuable role in protecting tax revenue by identifying, investigating and recommending prosecution of abusive return preparers such as Mark Hammerschmidt and Ornella Hammerschmidt.”
According to the defendants’ guilty pleas, from January 2011 through February 2013, MARK and ORNELLA HAMMERSCHMIDT operated an immigration and tax preparation business, called American Group, located in Shakopee, Minn. and Winter Garden, Fla., which they utilized to prepare and file more than 1,000 fraudulent federal income tax returns. The defendants attracted customers to American Group by misrepresenting their professional credentials and certifications. Most notably, ORNELLA HAMMERSCHMIDT falsely represented herself as a licensed immigration attorney.
As part of the scheme, MARK and ORNELLA HAMMERSCHMIDT filed hundreds of federal and state tax returns for Minnesota and Florida clients of American Group and Liberty Tax, another tax preparation business they owned, reporting incorrect filing statuses, false household help income, fictitious businesses and business losses, along with fraudulent child care credits and education credits, in order to obtain unwarranted income tax refunds. The defendants attempted to conceal their involvement as fraudulent return preparers by intentionally not signing the tax returns on the part of the form meant to be signed by paid preparers. The defendants also falsely reported their business addresses and bank accounts controlled by them as the addresses and bank accounts of their taxpayer clients. In connection with this part of the scheme, the defendants sought approximately $200,000 in fraudulent tax refund payments. Many of the defendants’ clients were non-or-limited English speakers, who relied on the defendants to properly and legally prepare their taxes. The false returns filed on behalf of the taxpayer clients caused substantial harm to them, both in terms of problems with the IRS and problems with immigration status.
According to his guilty plea, from 2010 until 2012, MARK HAMMERSCHMIDT obtained personal identification information (“PII”) of hundreds of Guatemalan citizens, including birth certificates and copies of passports. MARK HAMMERSCHMIDT then prepared and filed with the IRS applications for Individual Taxpayer Identification Numbers (“ITINs”) in the names of the Guatemalan citizens. Once he obtained the ITINs, MARK HAMMERSCHMIDT filed multiple years’ worth of false tax returns in the Guatemalan citizens’ names, seeking refunds based on false information including false household help income, false dependents, and false education credits. MARK HAMMERSCHMIDT also used the PII of the Guatemalan citizens to file false Minnesota state income tax returns. In connection with this part of the scheme, the defendant sought approximately $1.8 million in tax refunds based on the fraudulent tax returns he filed.
This case was prosecuted by Assistant U.S. Attorneys Michelle E. Jones and Timothy C. Rank.
This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS, Homeland Security Investigations, with substantial assistance from the Minnesota Department of Revenue.
Defendant Information:
MARK ARLIN HAMMERSCHMIDT, 49
Prior Lake, Minn.
Convicted:
- Conspiracy to Defraud the United States, 2 counts
Sentenced:
- 135 months in prison
- $1,832,986 in restitution
ORNELLA ANGELINA HAMMERSCHMIDT, 37
Prior Lake, Minn.
Convicted:
- False Claims for Refunds, 1 count
Sentenced:
- 48 months in prison
- $45,365 in restitution
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Nine Twin Cities Men Sentenced for Providing Material Support to ISILRead the Press Release
Nine men were sentenced this week in U.S. District Court in Minneapolis for conspiring to provide material support to ISIL. GULED OMAR, 22, was sentenced today to 35 years in prison. MOHAMED FARAH, was sentenced to 30 years in prison. ABDIRAHMAN DAUD, 22, was sentenced to 30 years in prison.
The announcement was made by United States Attorney for the District of Minnesota Andrew M. Luger, FBI Special Agent in Charge of the Minneapolis Division Richard T. Thornton, and Acting Assistant Attorney General for National Security Mary B. McCord.
“ISIL remains one of the most dangerous terror organizations in the world,” said United States Attorney Luger. “The defendants sentenced today remind us that this ideology ruins the lives of those who ascribe to it. Omar, Daud and Farah will spend the next several decades in prison because of their unbreakable desire to kill on behalf of ISIL. I commend the agents and officers of the FBI-led JTTF for continuing to keep Minnesotans safe.”
“The sentences handed down today reflect the true gravity of the defendants' crimes to betray their country, travel overseas, and ultimately join a terrorist organization dedicated to the murder of innocent people,” said FBI Special Agent in Charge for the Minneapolis Division Richard T. Thornton. “We hope these sentences will serve as a strong message that those who support terrorism will face justice. The FBI, through our Joint Terrorism Task Force, remains dedicated to working with our community partners to disrupt threats posed by ISIL and their supporters.”
“This case -- culminating in the sentencings of nine young men in the last three days -- demonstrates our commitment to disrupting those who would conspire to travel to Syria to fight with ISIL,” said Acting Assistant Attorney General McCord. “Counterterrorism is the National Security Division’s highest priority, and we will continue to work to stem the flow of foreign fighters abroad and to bring to justice those who seek to provide material support to designated foreign terrorist organizations.”
As proven at trial, between May 2014 and their arrests on April 19, 2015, these three defendants and their co-conspirators made multiple attempts to join ISIL in Syria. In May 2014, defendant OMAR and two other members of the conspiracy made an attempt to join ISIL by traveling across the United States – Mexico border near San Diego. This planned failed when members of defendant OMAR’s family prevented his travel.
Defendant OMAR again attempted to join ISIL in Syria on November 6, 2014, by first flying from Minneapolis/St. Paul International Airport to San Diego, California. Again, defendant OMAR planned to cross the United States – Mexico border near San Diego and travel onward to Syria to join ISIL. Before he could board the flight in Minnesota, OMAR was stopped at the airport and prevented from boarding the plane. In order to fund this second attempt to join ISIL in Syria, OMAR intended to use federal financial aid provided to him by the United States Department of Education to attend college.
Also in November 2014, defendant FARAH was one of four co-conspirators to take a Greyhound bus to New York City and attempt to board a flight to Europe. Defendant FARAH’s ultimate destination was Syria, where he planned to join and fight with ISIL. Federal agents in New York prevented defendant FARAH and his three co-conspirators from traveling.
In April 2015, defendants DAUD and FARAH drove from Minneapolis to San Diego, Calif., where they intended to purchase fake passports, cross the border into Mexico, travel to Syria to join ISIL. Unbeknownst to them, the individual from whom they purchased the fake passports was a law enforcement officer and both were arrested by federal agents immediately after obtaining the phony travel documents.
Eleven Minnesotans have been charged as part of this conspiracy to provide material support to ISIL. The men are all associates and friends of one another. Six defendants pleaded guilty before trial and two, ABDI NUR and MOHAMED ROBLE, joined ISIL in Syria.
This case is the result of an investigation conducted by members of the FBI-led Joint Terrorism Task Force (JTTF). The JTTF includes members from the following departments: the United States Marshals Service, Minnesota Bureau of Criminal Apprehension, Bloomington Police Department, St. Paul Police Department, Ramsey County Sheriff’s Office, Hennepin County Sheriff’s Office, Federal Air Marshals Service, Customs and Border Protection, Department of Defense, Immigration and Customs Enforcement, Minneapolis Police Department, Burnsville Police Department, Department of State, the Airport Police, Criminal Investigation Division of the IRS, and the FBI.
This case was prosecuted by Assistant U.S. Attorneys Andrew Winter, John Docherty and Julie Allyn, with assistance from the Department of Justice National Security Division’s Counterterrorism Section.
Defendant Information:
GULED ALI OMAR, 22
Minneapolis, Minn.
Convicted:
- Conspiracy to Murder Outside the United States, 1 count
- Conspiracy to Provide Material Support to a Designated Foreign Terrorist Organization (the Islamic State of Iraq and the Levant), 1 count
- Attempting to Provide Material Support to a Designated Foreign Terrorist Organization, 2 counts
- Attempted Financial Aid Fraud, 1 count
Sentenced:
- 35 years in prison
- Supervised release for a term of life
MOHAMED ABDIHAMID FARAH, 22
Minneapolis, Minn.
Convicted:
- Conspiracy to Murder Outside the United States, 1 count
- Conspiracy to Provide Material Support to a Designated Foreign Terrorist Organization (the Islamic State of Iraq and the Levant), 1 count
- Attempting to Provide Material Support to a Designated Foreign Terrorist Organization, 2 counts
- Perjury, 1 count
- False Statement, 1 count
Sentenced:
- 30 years in prison
- Supervised release for a term of life
ABDIRAHMAN YASIN DAUD, 22
Minneapolis, Minn.
Convicted:
- Conspiracy to Murder Outside the United States, 1 count
- Conspiracy to Provide Material Support to a Designated Foreign Terrorist Organization (the Islamic State of Iraq and the Levant), 1 count
- Attempting to Provide Material Support to a Designated Foreign Terrorist Organization, 1 count
Sentenced:
- 30 years in prison
- Supervised release for a term of life
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Three More Twin Cities Men Sentenced for Providing Material Support to ISILRead the Press Release
Six of nine defendants expected to be sentenced this week for conspiring to provide material support to ISIL have now been sentenced in U.S. District Court in Minneapolis. HAMZA AHMED, 21, was sentenced today to 15 years in prison. ADNAN FARAH, 20, was sentenced to 10 years in prison. HANAD MUSSE, 21, was sentenced to 10 years in prison.
The announcement was made by United States Attorney for the District of Minnesota Andrew M. Luger, FBI Special Agent in Charge of the Minneapolis Division Richard T. Thornton, and Acting Assistant Attorney General for the National Security Division Mary B. McCord.
“Today's sentences reflect the seriousness of these defendant's crimes,” said USA Luger. “Although all three defendants pleaded guilty before trial, none were willing to cooperate with the United States. ISIL continues to target Minnesota's Somali community. Only by working together will we succeed in ending this threat.”
“The sentences handed down today reflect the true gravity of the defendants' crimes to betray their country, travel overseas, and ultimately join a terrorist organization dedicated to the murder of innocent people,” said FBI Special Agent in Charge for the Minneapolis Division Richard T. Thornton. “We hope these sentences will serve as a strong message that those who support terrorism will face justice. The FBI, through our Joint Terrorism Task Force, remains dedicated to working with our community partners to disrupt threats posed by ISIL and their supporters.”
According to his guilty plea, in May 2014, AHMED applied for and later received federal financial aid, which he claimed would be used to attend Minnesota Community and Technical College. Instead, AHMED used that money to purchase a Greyhound bus ticket from Minneapolis to New York City, and airfare from New York that he thought would enable him to travel to Syria to join ISIL. He was stopped at JFK International Airport by federal agents. AHMED pleaded guilty on April 25, 2016.
According to his guilty plea, A. FARAH participated in the conspiracy throughout 2014 and early 2015 in various capacities, including attempting to obtain a real passport to travel to Syria to join ISIL. When that effort failed, A. FARAH provided money and a photograph in an attempt to obtain a false passport so that he could travel to Syria to join ISIL. A. FARAH also aided MUSSE in his effort to obtain a false passport. A. FARAH pleaded guilty on April 14, 2016.
According to his guilty plea, in November 2014, MUSSE traveled by Greyhound bus from Minneapolis to New York City where he joined three of his co-conspirators at JFK International Airport. While at JFK, MUSSE purchased round-trip airfare to Athens, Greece, with the intention of traveling onward to Syria to join ISIL. He was stopped at JFK International Airport by federal agents. MUSSE pleaded guilty on September 9, 2015.
This case is the result of an investigation conducted by members of the FBI-led Joint Terrorism Task Force (JTTF). The JTTF includes members from the following departments: the United States Marshals Service, Minnesota Bureau of Criminal Apprehension, Bloomington Police Department, St. Paul Police Department, Ramsey County Sheriff’s Office, Hennepin County Sheriff’s Office, Federal Air Marshals Service, Customs and Border Protection, Department of Defense, Immigration and Customs Enforcement, Minneapolis Police Department, Burnsville Police Department, Department of State, the Airport Police, Criminal Investigation Division of the IRS, and the FBI.
This case was prosecuted by Assistant U.S. Attorneys Andrew Winter, John Docherty and Julie Allyn, with assistance from the Department of Justice National Security Division’s Counterterrorism Section.
Defendant Information:
HAMZA NAJ AHMED, 21
Minneapolis, Minn.
Convicted:
- Conspiracy to Provide Material Support to a Designated Foreign Terrorist Organization, 1 count
- Financial aid fraud, 1 count
Sentenced:
- 15 years in prison
- 20 years of supervised release
ADNAN ABDIHAMID FARAH, 20
Minneapolis, Minn.
Convicted:
- Conspiracy to provide material support to a designated foreign terrorist organization, 1 count
Sentenced:
- 10 years in prison
- 20 years of supervised release
HANAD MUSTOFE MUSSE, 21
Minneapolis, Minn.
Convicted:
- Conspiracy to Provide Material Support to a Designated Foreign Terrorist Organization, 1 count
Sentenced:
- 10 years in prison
- 20 years of supervised release
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Three More Minnesota Men Sentenced for Providing Material Support to ISILRead the Press Release
Six of nine defendants expected to be sentenced this week for conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization, have now been sentenced in U.S. District Court in Minneapolis. Hamza Naj Ahmed, 21, of Minneapolis, Minnesota, was charged with an additional count of financial aid fraud, and was sentenced today to 15 years in prison and 20 years supervised release. Adnan Abdihamid Farah, 20, of Minneapolis, Minnesota, was sentenced to 10 years in prison and 20 years supervised release. Hanad Mustofe Musse, 21, of Minneapolis, Minnesota, was sentenced to 10 years in prison and 20 years supervised release.
The announcement was made by Acting Assistant Attorney General for the National Security Division Mary B. McCord, U.S. Attorney Andrew M. Luger for the District of Minnesota and Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Division.
"Today's sentences reflect the seriousness of these defendants’ crimes," said U.S Attorney Luger. "Although all three defendants pleaded guilty before trial, none were willing to cooperate with the United States. ISIL continues to target Minnesota's Somali community. Only by working together will we succeed in ending this threat."
“The sentences handed down today reflect the true gravity of the defendants’ crimes to betray their country, travel overseas, and ultimately join a terrorist organization dedicated to the murder of innocent people,” said Special Agent in Charge Thornton. “We hope these sentences will serve as a strong message that those who support terrorism will face justice. The FBI, through our Joint Terrorism Task Force, remains dedicated to working with our community partners to disrupt threats posed by ISIL and their supporters."
According to his guilty plea in May 2014, Ahmed applied for and later received federal financial aid, which he claimed would be used to attend Minnesota Community and Technical College. Instead, Ahmed used that money to purchase a Greyhound bus ticket from Minneapolis to New York City, New York, and airfare from New York that he thought would enable him to travel to Syria to join ISIL. He was stopped at JFK International Airport in New York by federal agents. Ahmed pleaded guilty on April 25.
According to his guilty plea, A. Farah participated in the conspiracy throughout 2014 and early 2015 in various capacities, including attempting to obtain a real passport to travel to Syria to join ISIL. When that effort failed, A. Farah provided money and a photograph in an attempt to obtain a false passport so that he could travel to Syria to join ISIL. A. Farah also aided Musse in his effort to obtain a false passport. A. Farah pleaded guilty on April 14.
According to his guilty plea, in November 2014, Musse traveled by Greyhound bus from Minneapolis to New York City where he joined three of his co-conspirators at JFK. While at JFK, Musse purchased round-trip airfare to Athens, Greece, with the intention of traveling onward to Syria to join ISIL. He was stopped at JFK by federal agents. Musse pleaded guilty on Sept. 9, 2015.
This case is the result of an investigation conducted by members of the FBI-led Joint Terrorism Task Force (JTTF). The JTTF includes members from the following departments: the U.S. Marshals Service, Minnesota Bureau of Criminal Apprehension, Bloomington Police Department in Minnesota, St. Paul Police Department in Minnesota, Ramsey County Sheriff’s Office in Minnesota, Hennepin County Sheriff’s Office in Minnesota, Federal Air Marshals Service, Customs and Border Protection, Department of Defense, Immigration and Customs Enforcement, Minneapolis Police Department, Burnsville Police Department in Minnesota, Department of State, the Airport Police, IRS Criminal Investigation Division and the FBI.
This case was prosecuted by Assistant U.S. Attorneys Andrew Winter, John Docherty and Julie Allyn of the District of Minnesota, with assistance from the National Security Division’s Counterterrorism Section.
United States Attorney Andrew M. Luger's Statement Regarding Sentencing of Abdullahi YusufRead the Press Release
United States Attorney Andrew M. Luger said: “The hard work of rehabilitating those who seek to engage in ideological violence must continue. Judge Davis recognized that fact today with a sentence for Abdullahi Yusuf that allows him to continue his rehabilitation. The United States thanks Mr. Yusuf for his cooperation.”
Three Twin Cities Men Sentenced for Providing Material Support to ISILRead the Press Release
The first three of nine defendants expected to be sentenced this week for conspiring to provide material support to ISIL were sentenced today in three separate hearings in U.S. District Court in Minneapolis. ABDULLAHI YUSUF, 20, was sentenced to time already served. ABDIRIZAK WARSAME, 21, was sentenced to 30 months in prison. ZACHARIA ABDURAHMAN, 21, was sentenced to 10 years in prison.
The announcement was made by United States Attorney for the District of Minnesota Andrew M. Luger, FBI Special Agent in Charge of the Minneapolis Division Richard T. Thornton, and Acting Assistant Attorney General for the National Security Division Mary B. McCord.
“The hard work of rehabilitating those who seek to engage in ideological violence must continue,” said United States Attorney Andrew M. Luger. “Judge Davis recognized that fact today in his considered sentences for those defendants who cooperated with the government and have begun to disengage from ISIL’s violent ideology.”
According to his guilty plea, in April 2014, YUSUF applied for an expedited U.S. Passport at the Minneapolis Passport Office. The following month, YUSUF attempted to travel from Minneapolis/St. Paul International Airport to Istanbul, Turkey, to join ISIL. He was stopped at the airport by federal agents. YUSUF pleaded guilty on February 26, 2015. YUSUF cooperated with the United States and testified at the trial of three of his co-conspirators.
According to his guilty plea, WARSAME participated in the conspiracy throughout 2014 and early 2015 in various capacities, including serving briefly as “emir” of the co-conspirators, and helping unindicted co-conspirator, Yusuf Jama, obtain contact information to aid his joining ISIL in Syria. WARSAME pleaded guilty on February 11, 2016. WARSAME cooperated with the United States and testified at the trial of three of his co-conspirators.
According to his guilty plea, in November 2014, ABDURAHMAN and three co-conspirators traveled by bus from Minneapolis to New York City’s JFK airport, where they attempted to fly overseas to join ISIL in Syria. They were stopped from flying and questioned by federal agents before returning to Minnesota. Despite being stopped from traveling in November 2014, ABDURAHMAN and the co-conspirators continued to discuss and plan another attempt to travel to Syria to join ISIL. ABDURAHMAN pleaded guilty on September 17, 2015.
This case is the result of an investigation conducted by members of the FBI-led Joint Terrorism Task Force (JTTF). The JTTF includes members from the following departments: the United States Marshals Service, Minnesota Bureau of Criminal Apprehension, Bloomington Police Department, St. Paul Police Department, Ramsey County Sheriff’s Office, Hennepin County Sheriff’s Office, Federal Air Marshals Service, Customs and Border Protection, Department of Defense, Immigration and Customs Enforcement, Minneapolis Police Department, Burnsville Police Department, Department of State, the Airport Police, Criminal Investigation Division of the IRS, and the FBI.
This case was prosecuted by Assistant U.S. Attorneys Andrew Winter, John Docherty and Julie Allyn.
Defendant Information:
ABDULLAHI YUSUF, 20
Inver Grove Heights, Minn.
Convicted:
- Conspiracy to Provide Material Support to a Designated Foreign Terrorist Organization, 1 count
Sentenced:
- Time already served
- 20 years of supervised release
ABDIRIZAK WARSAME, 21
Eagan, Minn.
Convicted:
- Conspiracy to provide material support to a designated foreign terrorist organization, 1 count
Sentenced:
- 30 months in prison
- 20 years of supervised release
ZACHARIA ABDURAHMAN, 21
Columbia Heights, Minn.
Convicted:
- Conspiracy to Provide Material Support to a Designated Foreign Terrorist Organization, 1 count
Sentenced:
- 10 years in prison
- 20 years of supervised release
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Three Minnesota Men Sentenced for Providing Material Support to ISILRead the Press Release
The first three of nine defendants expected to be sentenced this week for conspiring to provide material support to the Islamic State of the Levant (ISIL), a designated foreign terrorist organization, were sentenced today in three separate hearings in U.S. District Court in Minneapolis. Abdullahi Yusuf, 20, of Inver Grove Heights, Minnesota, received time served and a sentence of 20 years supervised release. Abdirizak Warsame, 21, of Eagan, Minnesota, was sentenced to 30 months in prison and 20 years supervised release. Zacharia Abdurahman, 21, of Columbia Heights, Minnesota, was sentenced to 120 months in prison and 20 years supervised release.
The announcement was made by Acting Assistant Attorney General for the National Security Division Mary B. McCord, U.S. Attorney Andrew M. Luger for the District of Minnesota and Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Division.
“The hard work of rehabilitating those who seek to engage in ideological violence must continue,” said U.S. Attorney Andrew M. Luger. “Judge Davis recognized that fact today in his considered sentences for those defendants who cooperated with the government and have begun to disengage from ISIL’s violent ideology.”
According to his guilty plea, in April 2014, Yusuf applied for an expedited U.S. Passport at the Minneapolis Passport Office. The following month, Yusuf attempted to travel from the Minneapolis–St. Paul International Airport in Minneapolis to Istanbul, Turkey, to join ISIL. He was stopped at the airport by federal agents. Yusuf pleaded guilty on Feb. 26, 2015. Yusuf cooperated with the U.S. and testified at the trial of three of his co-conspirators.
According to his guilty plea, Warsame participated in the conspiracy throughout 2014 and early 2015 in various capacities, including serving briefly as “emir” of the co-conspirators, and helping unindicted co-conspirator, Yusuf Jama, obtain contact information to aid his joining ISIL in Syria. Warsame pleaded guilty on Feb. 11. Warsame cooperated with the U.S. and testified at the trial of three of his co-conspirators.
According to his guilty plea, in November 2014, Abdurahman and three co-conspirators traveled by bus from Minneapolis to JFK airport in New York, where they attempted to fly overseas to join ISIL in Syria. They were stopped from flying and questioned by federal agents before returning to Minnesota. Despite being stopped from traveling in November 2014, Abdurahman and the co-conspirators continued to discuss and plan another attempt to travel to Syria to join ISIL. Abdurahman pleaded guilty on Sept. 17, 2015.
This case is the result of an investigation conducted by members of the FBI-led Joint Terrorism Task Force (JTTF). The JTTF includes members from the following departments: U.S. Marshals Service, Minnesota Bureau of Criminal Apprehension, Bloomington Police Department in Minnesota, St. Paul Police Department in Minnesota, Ramsey County Sheriff’s Office in Minnesota, Hennepin County Sheriff’s Office in Minnesota, Federal Air Marshals Service, U.S. Customs and Border Protection, Department of Defense, Immigration and Customs Enforcement, Minneapolis Police Department, Burnsville Police Department in Minnesota, Department of State, Airport Police, Criminal Investigation Division of the IRS and the FBI.
This case was prosecuted by Assistant U.S. Attorneys Andrew Winter, John Docherty and Julie Allyn of the District of Minnesota with assistance from the National Security Division’s Counterterrorism Section.
Saint Paul Gang Members Indicted for Gun ConspiracyRead the Press Release
United States Attorney Andrew M. Luger, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge Jim Modzelewski and Saint Paul Police Chief Todd Axtell today announced a federal indictment charging five members of a criminal street gang known as the Hit Squad for conspiring to illegally possess firearms.
“This indictment is part of an innovative strategy to combat gang violence in our state,” said U.S. Attorney Luger. “Working with our partners at the ATF and Saint Paul Police Department, prosecutors from this office are going after the gang members and their illegal guns. Together, we are making communities safer, neighborhood by neighborhood.”
“Our goal is to significantly reduce or eliminate gang violence in St. Paul and other communities in our area of responsibility,” said James Modzelewski, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives’ St. Paul Field Division. “We are committed to protecting communities from gun violence and will pursue violent criminals to the fullest extent of the law. The ATF is proud to work alongside the men and women of the St. Paul Police Department who have made reducing gang violence a priority in their city. Additionally, we wouldn’t have had such a successful investigation without the assistance of the Washington County Sheriff’s Office who helped us out early on in the case. With the strong partnership between these agencies, more can be done to make Saint Paul a safer place for everyone.”
“Gang and gun violence is an insidious problem that rips at the fabric of our community,” said Axtell. “This indictment is a testament to a region-wide commitment to holding accountable those who put children, community members and others in danger with their careless disregard for the law, civility and safety of others. We are thankful for the other agencies who helped secure the indictment and look forward to continued efforts to keep our streets safe.”
According to the indictment and documents filed in court, the Hit Squad originated in 2010 in Saint Paul’s Westside neighborhood. The main purpose of the Hit Squad gang is to prevent rival gang members from entering or being within Hit Squad “territory.” Hit Squad members obtain money through the commission of crimes such as armed robbery, illegal drug distribution, burglary, theft, and other violent crimes. Hit Squad members often use the proceeds of these illegal activities to purchase firearms. They also steal firearms, trade drugs for guns, and share guns with one another.
According to the indictment and documents filed in court, the five Hit Squad members indicted today, including TYVION WAYNE BENSON, a/k/a “Tavi,” MICHAEL TREVINO, a/k/a “Mike Mike,” JOHN WELSEY EPPS, a/k/a “King Savage,” DAMARIUS DANTE GILBERT, a/k/a “Boss Sleep,” and KENDALL DVONTAE PRUITT, a/k/a “Tinki,” conspired together and with others to illegally obtain and jointly possess firearms.
According to the indictment and documents filed in court, between at least July 2014 and November 7, 2016, members of the Hit Squad were in a gang war with rival gangs including the “Ho’s and Money” (HAM) Crazy gang. This gang war has resulted in the shooting of several gang members of both sides of the conflict.
According to the indictment and documents filed in court, the indicted co-conspirators were involved in drive-by shootings and other shootouts in Saint Paul. They illegally possessed firearms near the Arlington Hills Recreation Center in Saint Paul, in common areas outside of residential apartment complexes and while driving around various neighborhoods in Saint Paul.
According to the indictment and documents filed in court, the indicted co-conspirators conspired to illegally possess at least 14 handguns during the indicted period.
This case is the result of an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, Saint Paul Police Department, and the Washington County Sheriff’s Department.
Assistant U.S. Attorneys Jeffrey S. Paulsen and Benjamin Bejar are prosecuting the case.
Defendant Information:
DAMARIUS DANTE GILBERT, a/k/a “Boss Sleep,” 20
Charges:
- Conspiracy – Felon in possession of a firearm, 1 count
- Felon in possession of a firearm, 2 counts
TYVION WAYNE BENSON, a/k/a “Tavi,” 22
Charges:
- Conspiracy – Felon in possession of a firearm, 1 count
- Felon in possession of a firearm, 1 count
JOHN WELSEY EPPS, a/k/a “King Savage,” 21
Charges:
- Conspiracy – Felon in possession of a firearm, 1 count
- Felon in possession of a firearm, 1 count
KENDALL DVONTAE PRUITT, a/k/a “Tinki,” 19
Saint Paul, Minn.
Charges:
- Conspiracy – Felon in possession of a firearm, 1 count
- Felon in possession of a firearm, 1 count
MICHAEL TREVINO, a/k/a “Mike Mike,” 21
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 PureChoice Founder Guilty of $25 Million Dollar Investment Fraud SchemeRead the Press Release
The United States Attorney’s Office for the District of Minnesota today announced the conviction of BRYAN REICHEL, 61, founder and former principal shareholder of PureChoice, Inc. (PureChoice), for orchestrating a multi-million-dollar investment fraud scheme. On July 21, 2015, REICHEL was charged in a 12 count superseding indictment with Wire Fraud, Bankruptcy Fraud, Concealment of Bankruptcy Estate Property and making a False Statement Under Penalty of Perjury. On November 3, 2016, following a four-week trial, a federal jury found REICHEL guilty on 11 of 12 counts.
After the verdict, the prosecutors, Assistant U.S. Attorneys David J. MacLaughlin and Joseph H. Thompson, wrote: "This case is an excellent example of a jury’s ability to cut through complexity to the truth. The jury rejected the defendant's false and callous argument that the main victims in this case, who lost over $12 million to Reichel’s scheme, were corporate raiders who had themselves victimized Reichel. Reichel’s decade-long fraud scheme was not lost on this jury, and the United States thanks them for their service.”
“The guilty verdict of Bryan Reichel illustrates how federal law enforcement works together to help put an end to the criminal behavior of those who commit investment and bankruptcy fraud schemes,” stated Special Agent in Charge Shea Jones of the IRS Criminal Investigation St. Paul Field Office. “Today, Justice is served, and Bryan Reichel is being held accountable for his fraudulent and deceptive actions that continued for too many years. Let this conviction serve as a warning to those who are considering similar conduct.”
"As evidenced by this verdict, the FBI, along with its law enforcement partners, remains committed to combatting financial crime. The FBI will continue in its efforts to protect innocent people from becoming victims of financial crime by continuing to pursue those who commit these crimes," said FBI Special Agent in Charge for the Minneapolis Division Richard T. Thornton.
“Postal Inspectors take very seriously their mission to deter the illegal use of the mails for any criminal activity,” said Postal Inspector in Charge, Craig Goldberg. “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.”
As proven at trial, beginning in 2003 until 2011, REICHEL solicited investments in PureChoice by falsely representing to investors that the money would be used to fund the operations of PureChoice, a Burnsville-based company that sold air quality monitors. As part of the scheme, REICHEL stole millions of dollars from investors by lying about the success of the company and not disclosing the fact that PureChoice’s main product did not comply with federal regulations.
As proven at trial, in October 2004, REICHEL solicited a $500,000 loan to PureChoice from Victim PH to “bridge the gap” and continue funding company operations until the completion of a private stock offering in early 2005. Rather than using the money to fund PureChoice operations, REICHEL paid settlement agreements, a breach of contract lawsuit and an overdue loan that the company was responsible for.
As proven at trial, in September 2005, REICHEL solicited a short-term $500,000 “bridge loan” from Victim RB to PureChoice by falsely representing that the money would be used to fund operations until the company received additional financing and investments. Immediately after receiving the loan, REICHEL paid $70,000 to himself and made more than $200,000 in payments toward earlier unpaid loans. In March 2006, REICHEL again asked Victim RB to provide money to fund PureChoice operations, this time in the form of a $3 million line of credit which PureChoice could access through a series of $500,000 loans. Between 2006 and 2009, REICHEL several times requested Victim RB to increase the amount, ultimately obtaining more than $5 million in loans for PureChoice from Victim RB. REICHEL used a significant portion of the money to pay off earlier investors, make interest payments to Victim RB, and to make preferential payments to himself.
As proven at trial, between April 2007 and August 2007, REICHEL sold Victim GA $900,000 worth of PureChoice stock, falsely representing that the funds would be used to purchase manufacturing components and pay for operational expenses. Instead, REICHEL used the funds to purchase stock in other companies and pay personal credit card debt. In May 2008 and July 2008, REICHEL asked Victim GA to provide PureChoice with loans in the amount of $800,000 and $200,000, respectively, stating that the funds were needed to “bridge the gap” until the next round of funding was complete. Again, REICHEL used the majority of the funds for personal use, including the purchase of stock in other companies and paying off thousands of dollars in credit card debt.
As proven at trial, on November 14, 2008, REICHEL sent a sales and marketing update to PureChoice investors and prospective investors in which he made false statements about the company’s corporate agreement with 3M. In the update, REICHEL stated that PureChoice was “currently working to expand [its] existing relationship” with 3M, when, in reality, REICHEL had received notice from 3M of its intent to allow its agreements with PureChoice to expire.
As proven at trial, in September 2009, REICHEL asked Victim GA and Victim DA to provide a $1.5 million loan to PureChoice to purchase manufacturing materials so the company could meet projected sales goals and hire additional staff. In order to secure the loan, REICHEL again misrepresented the company’s relationship with 3M and expressly stated that the funds would be used to purchase products from suppliers. Over the course of four transactions, REICHEL obtained a $1.5 million loan from Victim GA, of which a significant portion was used to pay off earlier investors in PureChoice and to transfer more than $600,000 to himself.
As proven at trial, by June 2010, several of REICHEL’s victims had demanded immediate payment of millions of dollars. To avoid repayment and protect his assets, in April 2011, REICHEL filed for bankruptcy in the District of Minnesota, giving rise to an automatic stay and thereby preventing lawsuits and judgments from being entered by the victims. As part of the scheme, REICHEL made false statements in his bankruptcy case in order to conceal numerous items of personal property and thousands of dollars in personal accounts.
This case is being prosecuted by Assistant U.S. Attorneys and David J. MacLaughlin and Joseph H. Thompson.
This case is the result of an investigation conducted by the United States Postal Inspection Service, the Internal Revenue Service-Criminal Investigations, and the Federal Bureau of Investigation.
Defendant Information:
BRYAN REICHEL, 61
Prior Lake, MN
Convicted:
- Wire Fraud, 7 counts
- Bankruptcy Fraud, 3 counts
- False Statement Under Penalty of Perjury, 1 count
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Twin Cities Man Sentenced to 27 Years in Prison for Sex Trafficking of Teenage GirlsRead the Press Release
United States Attorney Andrew M. Luger today announced the sentencing of PHILLIP DWAYNE LOYD a/k/a “PC,” 45, for trafficking three teenage girls for the purpose of commercial sex and production of child pornography. LOYD pleaded guilty on January 25, 2016 and was sentenced yesterday before U.S. District Chief Judge John R. Tunheim.
“Phillip Loyd is a serial predator who bragged that sex trafficking is an essential part of who he is,” said Assistant U.S. Attorney Laura Provinzino. “While Loyd spends the next 27 years in prison, the girls he harmed can work to recover from the abuse suffered at his hands. This office will aggressively seek to hold accountable predators like Loyd and give hope to young victims.”
According to the defendant’s guilty plea and documents filed in court, between January 14, 2015, and January 27, 2015, LOYD, who is a registered sex offender, and his co-defendant RAQUEL MONE BELCHER, trafficked three girls in and around the Twin Cities for the purpose of commercial sex. LOYD and BELCHER advertised at least one of the girls for commercial sex on backpage.com.
All three victims were under the age of eighteen. During this time, LOYD also made pornographic videos of one of the minor victims engaging in sexually explicit conduct.
BELCHER pleaded guilty on June 21, 2016, to conspiring with LOYD to commit sex trafficking of minors. She was sentenced to 52 months in prison.
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.
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 Homeland Security Investigations, the Minneapolis Police Department, Saint Paul Police Department, Anoka County Sheriff’s Office, the Federal Bureau of Investigation, and the United States Marshals.
This case was prosecuted by Assistant U.S. Attorney Laura M. Provinzino.
Defendant Information:
PHILLIP DWAYNE LOYD a/k/a “PC,” 45
Coon Rapids, Minn.
Convicted:
- Sex trafficking of a minor, 1 count
- Production of child pornography, 1 count
Sentenced:
- 27 years in prison
- 20 years supervised release
RAQUEL MONE BELCHER, 30
Minneapolis, Minn.
Convicted:
- Conspiracy to commit sex trafficking of minors, 1 count
Sentenced:
- 52 months in prison
- 10 years supervised release
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Former United States Tax Court Judge Pleads Guilty to Conspiring to Defraud the IRS of $450,000 in TaxesRead the Press Release
United States Attorney Andrew M. Luger today announced the guilty plea of DIANE L. KROUPA, 61, to conspiring to defraud the United States. KROUPA, who was indicted on April 4, 2016, pleaded guilty today before United States District Judge Wilhelmina M. Wright in U.S. District Court in St. Paul, Minn.
“Abusing her position of public trust, Diane Kroupa conspired to defraud the government and break the very tax laws she was sworn to uphold,” said United States Attorney Andrew Luger. “My Office remains committed to prosecuting individuals who engage in fraud schemes such as this, regardless of their position or profession.”
“Those charged with upholding the laws are not above the law. While serving as a United States Tax Court Judge, Diane Kroupa conspired to break the law by evading the taxes she owed. Her actions were not only unlawful and dishonest, but they were a theft from the American public. No matter what your position, it is unacceptable to cheat the system that provides the government services and protections that we all enjoy. IRS Special Agents will continue to pursue tax cheats at all levels of society, regardless of position or status,” said Shea Jones, Special Agent in Charge of the St. Paul Field Office.
According to the plea agreement and KROUPA’s testimony at the plea hearing, KROUPA was a former judge who was appointed to the United States Tax Court on June 13, 2003 for a term of 15 years. During the same period, KROUPA was married to Robert E. Fackler, a self-employed lobbyist and political consultant who owned and operated a business known as Grassroots Consulting. From 2004 to 2013, KROUPA and Fackler owned a home in Plymouth, Minnesota. From 2007 to 2013, they also leased a second residence in Easton, Maryland, where KROUPA lived while fulfilling her duties as a Tax Court Judge in Washington DC.
According to the plea agreement and KROUPA’s testimony at the plea hearing, between 2002 and 2012, KROUPA and Fackler conspired to obstruct the Internal Revenue Service (IRS) from accurately determining their joint income taxes. As part of the conspiracy, KROUPA and Fackler worked together each year to compile numerous personal expenses for inclusion as supposed “business expenses” for Grassroots Consulting in their joint tax return. Those expenses included: rent and utilities for the Maryland home; utilities, upkeep and renovation expenses of the Minnesota home; pilates classes; spa and massage fees; jewelry and personal clothing; wine club fees; Chinese language tutoring; music lessons; personal computers; and expenses for vacations to Alaska, Australia, the Bahamas, China, England, Greece, Hawaii, Mexico and Thailand. In total, from 2004 through 2010, the defendants fraudulently deducted at least $500,000 of personal expenses as purported Schedule C business expenses. At times, KROUPA prepared and provided to Fackler summaries of personal expenses falsely described according to business expense categories. On other occasions, KROUPA herself compiled and provided to their tax preparer the fraudulent personal expenses.
According to the plea agreement and KROUPA’s testimony at the plea hearing, KROUPA made a series of other false claims on their tax returns, including failing to report approximately $44,520 that she received from a 2010 land sale in South Dakota. KROUPA also falsely claimed financial insolvency to avoid paying tax on $33,031 on cancellation of indebtedness income that she and her husband received.
According to the plea agreement and KROUPA’s testimony at the plea hearing, KROUPA and Fackler purposely concealed documents from their tax preparer and an IRS Tax Compliance Officer during an audit for their 2004 and 2005 tax returns.
According to the plea agreement and KROUPA’s testimony at the plea hearing, during a second audit in 2012, KROUPA and Fackler caused false and misleading documents to be delivered to an IRS employee in order to convince the IRS employee that certain personal expenses were actually business expenses of Grassroots Consulting. After the IRS requested documents pertaining to their tax returns, KROUPA and Fackler removed certain items from their personal tax files before giving them to their tax preparer because the documents could reveal they had illegally deducted numerous personal expenses. During the audit, KROUPA also falsely denied receiving money from the 2010 land sale. Later, when they learned the 2012 audit might progress into a criminal investigation, KROUPA instructed Fackler to lie to the IRS about her involvement in preparing the portion of their tax returns related to Grassroots Consulting.
According to the plea agreement and KROUPA’s testimony at the plea hearing, between 2004 and 2010, KROUPA and Fackler purposely understated their taxable income by approximately $1,000,000 and purposely understated the amount of tax they owed by at least $450,000.
This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS and the United States Postal Inspection Service.
Assistant U.S. Attorneys Benjamin Langner and Timothy Rank are prosecuting the case.
Defendant Information:
DIANE L. KROUPA, 61
Minnetonka, Minn.
Convicted:
- Conspiracy to Defraud the United States, 1 count
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Seventeen Individuals Indicted for Respective Roles in Human Trafficking Scheme that Exploited Hundreds of Thai Women for Commercial Sex in the United StatesRead the Press Release
Sex Trafficking Organization Engaged in Visa Fraud and Debt Scheme to Recruit Victims into the United States for Prostitution
An indictment unsealed late yesterday in St. Paul, Minnesota, charges 17 members of an international sex trafficking organization with transporting hundreds of women from Thailand and profiting from advertising them for commercial sex throughout the United States.
The charged defendants include 12 Thai nationals and five U.S. nationals. Eight of the 17 charged defendants were arrested yesterday at various locations in Minnesota, California, Illinois, Georgia and Hawaii. One charged defendant was previously arrested in Belgium and four defendants remains at large.
The announcement was made by Attorney General Loretta E. Lynch; U.S. Attorney Andrew M. Luger of the District of Minnesota; Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division; Special Agent in Charge Alex Khu of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) St. Paul Division and Special Agent in Charge Shea Jones of the Internal Revenue Service-Criminal Investigation (IRS-CI) St. Paul Field Office.
“Human trafficking is a degrading crime that undermines our nation’s most basic promises of liberty and security," said Attorney General Lynch. “This case demonstrates the Justice Department’s determination to hold traffickers accountable and to help the survivors of this appalling practice reclaim their freedom and dignity. As part of our nationally recognized Anti-Trafficking Coordination Team Initiative, the District of Minnesota is playing a crucial role in those vital efforts, and I want to commend all of the team members whose cooperation led to today’s action.”
“The 17 people charged in this indictment ran a highly sophisticated sex trafficking scheme,” said U.S. Attorney Luger. “They promised women in Thailand a chance at the American dream, but instead exploited them, coerced them and forced them to live a nightmare. In short, the victims lived like modern day sex slaves. Today’s indictment is our ninth sex trafficking case since 2014, but it is the first that targets an entire organization. We will continue to work closely with our federal and local law enforcement partners to target and dismantle these types of far-reaching organizations.”
“The Justice Department created the Anti-Trafficking Coordination Team (ACTeam) Initiative to bring together federal law enforcement agencies to enhance our impact in investigating and prosecuting human trafficking,” said Principal Deputy Assistant Attorney General Gupta. “This case is an outstanding example of these efforts. We will continue to work tirelessly with them to bring traffickers to justice and vindicate the rights of vulnerable victims.”
“This week’s arrests reflect HSI’s global reach and ongoing efforts to dismantle criminal organizations that engage in human trafficking activities,” said Special Agent in Charge Khu. “HSI also remains firmly committed to rescuing victims and getting them help they desperately need to begin recovering from the depredations forced on them by these criminals.”
“From coast to coast, IRS Criminal Investigation is determined to team with our law enforcement partners to track down the individuals who facilitate and launder the proceeds of sex trafficking crimes,” said Special Agent in Charge Jones. “Those who seek to enrich themselves by exploiting the desperate circumstances of their victims will not be tolerated in our cities.”
According to the indictment, which was returned under seal on Sept. 28, 2016, since at least 2009, the criminal organization has recruited and transported hundreds of women, which the organization refers to as “flowers,” from Thailand to various locations across the United States, including Minneapolis, Los Angeles, Chicago, Atlanta, Phoenix, Washington D.C., Las Vegas, Houston, Dallas and Austin, for purposes of exploiting them for prostitution. Once in the United States, victims were allegedly placed in houses of prostitution where they were forced to work long hours – often all day, every day. As alleged in the indictment, the women were not allowed to leave the prostitution houses unless accompanied by a member of the criminal organization.
According to allegations in the indictment, which identifies several of the women as victims of human trafficking, the organization often recruited women from impoverished backgrounds who spoke little English. Recruiters exploited these vulnerabilities during the recruitment process, promising the victims access to a better life in the United States in exchange for a debt of between $40,000 and $60,000, which the women were required to pay off through prostitution earnings. As alleged in the indictment, before transporting the women to the United States, the organization would typically arrange to have the women photographed for purposes of advertising them for sex on websites like backpage.com and eros.com. The organization also encouraged the women to have breast implants in Thailand to make them “more appealing” to potential sex buyers in the United States and added the cost to the victims’ debt.
The organization engaged in widespread visa fraud to facilitate the international transportation of the women into their commercial sex enterprise, the indictment alleges. Members of the criminal organization assisted in obtaining fraudulent visas and travel documents for the women, and members of the conspiracy used personal information on the women and their families, which they gathered in the course of obtaining the fraudulent documents, to threaten victims who became non-compliant or tried to flee.
The defendants include:
- Sumalee Intarathong, 55, who was a boss in the scheme is currently incarcerated in Liege, Belgium, is charged with conspiracy to commit sex trafficking; sex trafficking by use of force, fraud and coercion; conspiracy to commit forced labor; conspiracy to commit transportation to engage in prostitution; transportation to engage in prostitution; conspiracy to engage in money laundering; conspiracy to use a communication facility to promote prostitution and conspiracy to commit visa fraud.
- Chabaprai Boonluea, 42, of Winder, Georgia, was a house boss in the operation and is charged with conspiracy to commit sex trafficking; sex trafficking by use of force, fraud and coercion; conspiracy to commit forced labor; conspiracy to commit transportation to engage in prostitution; transportation to engage in prostitution; conspiracy to engage in money laundering and conspiracy to use a communication facility to promote prostitution.
- Watcharin Luamseejun, 46, was a house boss in the scheme and is charged with conspiracy to commit sex trafficking; conspiracy to commit forced labor; conspiracy to commit transportation to engage in prostitution; conspiracy to engage in money laundering and conspiracy to use a communication facility to promote prostitution.
- Pantilla Rodpholka, 31, of Mount Prospect, Illinois, was a house boss in the operation and is charged with conspiracy to commit sex trafficking; conspiracy to commit forced labor; conspiracy to commit transportation to engage in prostitution; conspiracy to engage in money laundering and conspiracy to use a communication facility to promote prostitution.
- Noppawan Lerslurchachai, 35, of Lomita, California, was a facilitator in the scheme and is charged with conspiracy to commit sex trafficking; sex trafficking by use of force, fraud and coercion; conspiracy to commit forced labor; conspiracy to commit transportation to engage in prostitution; transportation to engage in prostitution; conspiracy to engage in money laundering and conspiracy to use a communication facility to promote prostitution.
- Khanong Intharathong, 44, of Dunwoody, Georgia, was a facilitator in the operation and is charged with conspiracy to commit sex trafficking; conspiracy to commit transportation to engage in prostitution; transportation to engage in prostitution; conspiracy to engage in money laundering and conspiracy to use a communication facility to promote prostitution.
- Andrew Flanigan, 51, of Winder, was a facilitator in the operation and is charged with conspiracy to commit sex trafficking; conspiracy to commit transportation to engage in prostitution; conspiracy to engage in money laundering and conspiracy to use a communication facility to promote prostitution.
- Patcharaporn Saengkham, 41, of Los Angeles, was a facilitator in the scheme and is charged with conspiracy to commit visa fraud.
- Yadaporn Panngoen, 30, Los Angeles, was a facilitator in the scheme and is charged with conspiracy to commit visa fraud.
- Supapon Sonprasit, 31, of St. Paul, was a facilitator in the operation and is charged with conspiracy to commit visa fraud.
- Thi Vu, 48, of Atlanta, was a runner in the operation and is charged with conspiracy to commit sex trafficking; conspiracy to commit transportation to engage in prostitution; conspiracy to engage in money laundering and conspiracy to use a communication facility to promote prostitution.
- Todd Vassey, 54, of Lahanina, Hawaii, was a runner in the scheme and is charged with conspiracy to commit sex trafficking; conspiracy to commit transportation to engage in prostitution; transportation to engage in prostitution; conspiracy to engage in money laundering and conspiracy to use a communication facility to promote prostitution.
- John Zbracki, 59, of Lakeville, Minnesota, was a runner in the operation and is charged with conspiracy to commit sex trafficking; conspiracy to commit transportation to engage in prostitution; transportation to engage in prostitution; conspiracy to engage in money laundering and conspiracy to use a communication facility to promote prostitution.
According to the indictment, Intarathong served as a boss before her arrest in Belgium earlier this year. As alleged in the indictment, each woman identified as a victim of human trafficking was “owned” by Intarathong or another boss until the victim could repay the debt.
According to the indictment, other members of the criminal organization served as “house bosses,” who owned one or more of the houses of prostitution where the “flowers” were exploited for commercial sex. House bosses were responsible for day-to-day operations, including advertising the “flowers” for commercial sex, maintaining the houses of prostitution, scheduling appointments with sex buyers and ensuring that a significant portion of the prostitution proceeds were routed back to the trafficker/boss to pay down the debt. The house boss kept the remainder of the prostitution proceeds, while the women were not permitted to retain any of their earnings, except for the occasional tip offered by a sex buyer.
As set forth in the indictment, other members of the criminal organization served as “facilitators,” who were primarily responsible for laundering the criminal proceeds of the organization and for directing the movement of victims within the United States, while other co-conspirators served as “runners.” The runners were typically men who were paid, in part, by receiving access to sex acts with the women. Runners accompanied the women anytime they were permitted to leave a house of prostitution to obtain personal items, travel as directed by the criminal organization or deposit money into accounts set up by the organization for repayment of the women’s debts. Runners were also sometimes asked to rent hotel rooms, apartments or other facilities for the organization.
The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The District of Minnesota is one of six districts designated through a competitive, nationwide selection process as a Phase II ACTeam, through the interagency ACTeam Initiative of the Departments of Justice, Homeland Security and Labor. ACTeams focus on developing high-impact human trafficking investigations and prosecutions involving forced labor, international sex trafficking and sex trafficking by force, fraud or coercion through interagency collaboration among federal prosecutors and federal investigative agencies.
This case is the result of an investigation conducted by HSI; IRS-CI; Department of State’s Diplomatic Security Service; St. Paul Police Department; Anoka County, Minnesota, Sheriff’s Office; and Cook County, Minnesota, Sheriff’s Office, with the support of the International Organized Crime Intelligence and Operations Center.
Assistant U.S. Attorneys Melinda Williams and Laura Provinzino of the District of Minnesota are prosecuting the case with the assistance of the Civil Rights Division’s Human Trafficking Prosecution Unit.
Seventeen Indicted for Their Roles in Trafficking Hundreds of Thai Sex Slaves in the United StatesRead the Press Release
SAINT PAUL – An indictment unsealed late yesterday in Saint Paul, Minn., charges seventeen members of an international sex trafficking organization with transporting hundreds of female Thai sex slaves from Thailand and trafficking them throughout the United States.
The charged defendants include 12 Thai Nationals and five U.S. Nationals. Eleven of the seventeen charged defendants were arrested yesterday at various locations in Minnesota, California, Illinois, Georgia, and Hawaii. One charged defendant was previously arrested in Belgium. Four defendants remain at large.
The announcement was made by Attorney General Loretta E. Lynch; U.S. Attorney Andrew M. Luger of the District of Minnesota; Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division; Special Agent in Charge Alex Khu of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) St. Paul Division and Special Agent in Charge Shea Jones of the Internal Revenue Service (IRS) Criminal Investigation Division’s St. Paul Field Office.
“Human trafficking is a degrading crime that undermines our nation's most basic promises of liberty and security,” said Attorney General Lynch. “This case demonstrates the Justice Department’s determination to hold traffickers accountable and to help the survivors of this appalling practice reclaim their freedom and dignity. As part of our nationally recognized Anti-Trafficking Coordination Team Initiative, the District of Minnesota is playing a crucial role in those vital efforts, and I want to commend all of the team members whose cooperation led to today’s action.”
“The 17 people charged in this indictment ran a highly sophisticated sex trafficking scheme,” said U.S. Attorney Luger. “They promised women in Thailand a chance at the American dream, but instead exploited them, coerced them and forced them to live a nightmare. In short, the victims lived like modern day sex slaves. Today’s indictment is our ninth sex trafficking case since 2014, but it is the first that targets an entire organization. We will continue to work closely with our federal and local law enforcement partners to target and dismantle these types of far-reaching organizations.”
“The Justice Department created the Anti-Trafficking Coordination Team (ACTeam) Initiative to bring together federal law enforcement agencies to enhance our impact in investigating and prosecuting human trafficking,” said Principal Deputy Assistant Attorney General Gupta. “This case is an outstanding example of these efforts. We will continue to work tirelessly with them to bring traffickers to justice and vindicate the rights of vulnerable victims.”
“This week’s arrests reflect HSI’s global reach and on-going efforts to dismantle criminal organizations that engage in human trafficking activities,” said Special Agent in Charge Alex Khu, of HSI St. Paul. “HSI also remains firmly committed to rescuing victims and getting them help they desperately need to begin recovering from the depredations forced on them by these criminals.”
“As this operation clearly shows, human trafficking—in this case the trafficking of vulnerable Thai women for sex—knows no boundaries,” said Sgt. Sean Johnson, an investigator with the Saint Paul Police Department Human Trafficking Unit. “We’re proud to be part of a community in which agencies work together to send a clear message to anyone who would traffic or purchase women for sex: Your actions will not be tolerated here, and we will hold you accountable for your actions.”
“From coast to coast, IRS Criminal Investigation is determined to team with our law enforcement partners to track down the individuals who facilitate and launder the proceeds of sex trafficking crimes,” said Shea Jones, Special Agent in Charge of the St. Paul Field Office. “Those who seek to enrich themselves by exploiting the desperate circumstances of their victims will not be tolerated in our cities.”
According to the indictment, which was returned under seal on September 28, 2016, since at least 2009, the criminal organization has trafficked at least hundreds of women, which the organization refers to as “flowers,” from Bangkok, Thailand, to various cities across the United States, including Minneapolis, Los Angeles, Chicago, Atlanta, Phoenix, Washington, D.C., Las Vegas, Houston, Dallas, and Austin, among others. Once in the United States, victims are placed in houses of prostitution where they are forced to work long hours – often all day, every day – having sex with strangers. The victims are not allowed to leave the prostitution houses unless accompanied by a member of the criminal organization.
According to the indictment, victims are often from impoverished backgrounds and speak little English. Recruiters exploit these vulnerabilities during the recruitment process. Victims are promised access to a better life in the United States, in exchange for an exorbitant “bondage debt” of between $40,000 and $60,000. Before being transported to the United States, the organization would typically arrange to have professional-quality escort-style photographs taken of the victims, which would ultimately be sent to traffickers in the United States and used to advertise the victims for sex on websites like backpage.com and eros.com. The organization also encouraged victims to have breast implants in Thailand to make the victims “more appealing” to potential sex buyers in the United States. The cost of the cosmetic surgery was added to the victims’ bondage debt.
According to the indictment, the organization engaged in widespread visa fraud to facilitate the international transportation of the victims. Members of the criminal organization assisted the victims in obtaining fraudulent visas and travel documents. As a part of obtaining visa documents, members of the criminal conspiracy gathered personal information from the victims, including the location of the victims’ families in Thailand. This information was later used to threaten victims who became non-compliant or tried to flee the organization in the United States.
According to the indictment, SUMALEE INTARATHONG, a/k/a
“Joy,” served as a boss/trafficker before her arrest in Belgium on August 5, 2016. Each trafficked victim was “owned” by INTARATHONG or another boss/trafficker, until the victim could repay the bondage debt. The trafficker arranged for victims to travel from Thailand to the United States and placed the victims in a house of prostitution somewhere in the United States.According to the indictment, other members of the criminal organization served as “house bosses,” who owned one or more of the houses of prostitution to which the flowers were trafficked. House bosses were responsible for day-to-day operations of the houses of prostitution they controlled, which included advertising the “flowers” for commercial sex, maintaining the houses of prostitution, scheduling sex buyers, and ensuring that a significant portion of the money earned by the victims was routed back to the trafficker/boss to pay down the bondage debt. The house boss kept the remainder of the money earned by the victim. The victim was not allowed to keep any money, except for the occasional tip offered by a sex buyer.
According to the indictment, other members of the criminal organization serve as “facilitators.” These individuals were primarily responsible for laundering the criminal proceeds of the organization and for directing the movement of victims within the United States.
According to the indictment, others among the co-conspirators served as “runners.” The runners were typically men who were paid, in part, in sex with the victims. Runners accompanied the victims anytime they were permitted to leave a house of prostitution. Victims were allowed to obtain personal items, to travel at the direction of the criminal organization, or to deposit money into bank accounts set-up by the organization for the victims to repay their bondage debt. Runners were also sometimes asked to rent hotel rooms, apartments or other facilities for the organization.
This case is the result of an investigation conducted by Homeland Security Investigations, Criminal Investigation Division of the IRS, Diplomatic Security Service, St. Paul Police Department, Anoka County Sheriff’s Office and Cook County Sheriff’s Office, with the support of the International Organized Crime Intelligence and Operations Center (IOC-2).
The District of Minnesota is one of six districts designated through a competitive, nationwide selection process as a Phase II Anti-Trafficking Coordination Team (ACTeam), through the interagency ACTeam Initiative of the Departments of Justice, Homeland Security and Labor. ACTeams focus on developing high-impact human trafficking investigations and prosecutions involving forced labor, international sex trafficking and sex trafficking by force, fraud or coercion through interagency collaboration among federal prosecutors and federal investigative agencies.
Assistant U.S. Attorneys Melinda Williams and Laura Provinzino are prosecuting the case with the assistance of the DOJ Civil Rights Division’s Human Trafficking Prosecution Unit.
Defendant Information:
Boss/Trafficker
SUMALEE INTARATHONG, a/k/a “Joy,” 55
Liege, Belgium (Incarcerated)
Charges:
- Conspiracy to commit sex trafficking, 1 count
- Sex trafficking by use of force, fraud, and coercion, 1 count
- Conspiracy to commit forced labor, 1 count
- Conspiracy to commit transportation to engage in prostitution, 1 count
- Transportation to engage in prostitution, 1 count
- Conspiracy to engage in money laundering, 1 count
- Conspiracy to use a communication facility to promote prostitution, 1 count
- Conspiracy to commit visa fraud, 1 count
House Bosses
CHABAPRAI BOONLUEA, 42
Winder, Ga.
Charges:
- Conspiracy to commit sex trafficking, 1 count
- Sex trafficking by use of force, fraud, and coercion, 1 count
- Conspiracy to commit forced labor, 1 count
- Conspiracy to commit transportation to engage in prostitution, 1 count
- Transportation to engage in prostitution, 1 count
- Conspiracy to engage in money laundering, 1 count
- Conspiracy to use a communication facility to promote prostitution, 1 count
WATCHARIN LUAMSEEJUN, 46
Unknown
Charges:
- Conspiracy to commit sex trafficking, 1 count
- Conspiracy to commit forced labor, 1 count
- Conspiracy to commit transportation to engage in prostitution, 1 count
- Conspiracy to engage in money laundering, 1 count
- Conspiracy to use a communication facility to promote prostitution, 1 count
PANTILLA RODPHOLKA, 31
Mount Prospect, Ill.
Charges:
- Conspiracy to commit sex trafficking, 1 count
- Conspiracy to commit forced labor, 1 count
- Conspiracy to commit transportation to engage in prostitution, 1 count
- Conspiracy to engage in money laundering, 1 count
- Conspiracy to use a communication facility to promote prostitution, 1 count
Facilitators
NOPPAWAN LERSLURCHACHAI, 35
Lomita, Calif.
Charges:
- Conspiracy to commit sex trafficking, 1 count
- Sex trafficking by use of force, fraud, and coercion, 1 count
- Conspiracy to commit forced labor, 1 count
- Conspiracy to commit transportation to engage in prostitution, 1 count
- Transportation to engage in prostitution, 1 count
- Conspiracy to engage in money laundering, 1 count
- Conspiracy to use a communication facility to promote prostitution, 1 count
KHANONG INTHARATHONG, 44
Dunwoody, Ga.
Charges:
- Conspiracy to commit sex trafficking, 1 count
- Conspiracy to commit transportation to engage in prostitution, 1 count
- Transportation to engage in prostitution, 1 count
- Conspiracy to engage in money laundering, 1 count
- Conspiracy to use a communication facility to promote prostitution, 1 count
ANDREW FLANIGAN, 51
Winder, Ga.
Charges:
- Conspiracy to commit sex trafficking, 1 count
- Conspiracy to commit transportation to engage in prostitution, 1 count
- Conspiracy to engage in money laundering, 1 count
- Conspiracy to use a communication facility to promote prostitution, 1 count
PATCHARAPORN SAENGKHAM, 41
Los Angeles, Calif.
Charges:
- Conspiracy to commit visa fraud, 1 count
SUPAPON SONPRASIT, 31
St. Paul, Minn.
Charges:
- Conspiracy to commit visa fraud, 1 count
Runners
THI VU, 48
Atlanta, Ga.
Charges:
- Conspiracy to commit sex trafficking, 1 count
- Conspiracy to commit transportation to engage in prostitution, 1 count
- Conspiracy to engage in money laundering, 1 count
- Conspiracy to use a communication facility to promote prostitution, 1 count
TODD VASSEY, 54
Lahanina, Hawaii
Charges:
- Conspiracy to commit sex trafficking, 1 count
- Conspiracy to commit transportation to engage in prostitution, 1 count
- Transportation to engage in prostitution, 1 count
- Conspiracy to engage in money laundering, 1 count
- Conspiracy to use a communication facility to promote prostitution, 1 count
JOHN ZBRACKI, 59
Lakeville, Minn.
Charges:
- Conspiracy to commit sex trafficking, 1 count
- Conspiracy to commit transportation to engage in prostitution, 1 count
- Transportation to engage in prostitution, 1 count
- Conspiracy to engage in money laundering, 1 count
- Conspiracy to use a communication facility to promote prostitution, 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.
Husband of Former United States Tax Court Judge Pleads Guilty to Obstructing an IRS AuditRead the Press Release
United States Attorney Andrew M. Luger today announced the guilty plea of ROBERT E. FACKLER, 63, with obstructing an IRS audit. FACKLER, who was indicted on April 4, 2016, pleaded guilty today before United States District Judge Wilhelmina M. Wright in U.S. District Court in St. Paul, Minn.
According to the plea agreement and FACKLER’s testimony at the plea hearing, FACKLER was married to Diane Kroupa, a former judge who was appointed to the United States Tax Court on June 13, 2003 for a term of 15 years. During the same period, FACKLER was a self-employed lobbyist and political consultant who owned and operated a business known as Grassroots Consulting. From 2004 to 2013, FACKLER and Kroupa owned a home in Minnesota. From 2007 to 2013, they also leased a second residence in Maryland, where Kroupa lived while fulfilling her duties as a Tax Court Judge in Washington DC.
According to the plea agreement and FACKLER’s testimony at the plea hearing, between 2002 and 2012, FACKLER and Kroupa conspired to obstruct the Internal Revenue Service (IRS) from accurately determining their joint income taxes. As part of the conspiracy, FACKLER and Kroupa worked together each year to compile numerous personal expenses for inclusion as supposed “business expenses” for Grassroots Consulting in their joint tax return. Those expenses included: rent and utilities for the Maryland home; utilities, upkeep and renovation expenses of the Minnesota home; pilates classes; spa and massage fees; jewelry and personal clothing; wine club fees; Chinese language tutoring; music lessons; personal computers; and expenses for vacations to Alaska, Australia, the Bahamas, China, England, Greece, Hawaii, Mexico and Thailand. In total, from 2004 through 2010, the defendants fraudulently deducted at least $500,000 of personal expenses as purported Schedule C business expenses. At times, Kroupa prepared and provided to FACKLER handwritten summaries of personal expenses falsely described according to business expense categories. On other occasions, Kroupa herself compiled and provided to their tax preparer the fraudulent personal expense.
According to the plea agreement and FACKLER’s testimony at the plea hearing, as part of the conspiracy, FACKLER also caused Grassroots Consulting business receipts to be understated by approximately $450,000 by fraudulently deducting purported business expenses which had previously been reimbursed. As a result, the defendants caused the amount of adjusted gross income, taxable income, and total tax shown on their income tax returns to be falsely understated.
According to the plea agreement and FACKLER’s testimony at the plea hearing, FACKLER and Kroupa made a series of other false claims on their tax returns, including failing to report approximately $44,520 that Kroupa received from a 2010 land sale in South Dakota. The defendants falsely claimed financial insolvency to avoid paying tax on $33,031 on cancellation of indebtedness income.
According to the plea agreement and FACKLER’s testimony at the plea hearing, FACKLER and Kroupa purposely concealed documents from their tax preparer and an IRS Tax Compliance Officer during an audit for their 2004 and 2005 tax returns.
According to the plea agreement and FACKLER’s testimony at the plea hearing, during a second audit in 2012, FACKLER and Kroupa caused false and misleading documents to be delivered to an IRS employee in order to convince the IRS employee that certain personal expenses were actually business expenses of Grassroots Consulting. After the IRS requested documents pertaining to their tax returns, Kroupa removed certain items from their personal tax files before FACKLER gave them to their tax preparer because the documents could reveal they had illegally deducted numerous personal expenses. FACKLER and Kroupa together concocted “false explanations” justifying payments questioned by the IRS. Later, when they learned the 2012 audit might progress into a criminal investigation, Kroupa instructed FACKLER to lie to the IRS about her involvement in preparing the portion of their tax returns related to Grassroots Consulting.
According to the plea agreement and FACKLER’s testimony at the plea hearing, between 2004 and 2010, FACKLER and Kroupa purposely understated their taxable income by approximately $1,000,000 and purposely understated the amount of tax they owed by at least $450,000.
This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS and the United States Postal Inspection Service.
Assistant U.S. Attorneys Benjamin Langner and Timothy Rank are prosecuting the case.
Defendant Information:
ROBERT E. FACKLER, 63
Minnetonka, Minn.
Convicted:
- Obstruction of an IRS audit, 1 count
###
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Five Indicted for Massive Fraud Perpetrated Against Starkey LaboratoriesRead the Press Release
United States Attorney Andrew M. Luger today announced a federal indictment charging JEROME RUZICKA, SCOTT NELSON, LAWRENCE MILLER, JEFFREY TAYLOR, and LAWRENCE HAGEN with conspiring to steal more than $20 million from Eden Prairie-based Starkey Laboratories, Inc. (Starkey) and its principal owner William F. Austin. The defendants are expected to make initial appearances in U.S. District Court in Minneapolis later this week.
“This indictment describes a massive and long running fraud scheme against a corporation by those in positions of trust,” said U.S. Attorney Luger. “The defendants carried out a complex scheme to accomplish a simple goal: to embezzle funds for their own benefit. Our federal law enforcement partners at the FBI, IRS, and U.S. Postal Inspection Service conducted a thorough investigation that exposed the defendants’ greed and abuse of trust.”
“The charges today demonstrate an unrelenting effort by the FBI and our law enforcement partners to bring to justice those who are involved in corporate fraud schemes,” said FBI Special Agent in Charge for the Minneapolis Division Richard T. Thornton. “The FBI will continue to aggressively investigate business executives and others who misuse their positions for personal enrichment.”
“The indictment of these executives alleges the misuse of their positions of trust within their corporations,” said SAC Shea Jones IRS Criminal Investigation of the St. Paul Field Office. “High-ranking corporate officials hold positions of trust not only in their companies but also in the eyes of the public. That trust is broken when such officials abuse their power and commit crimes.”
“Postal Inspectors take very seriously their mission to deter the illegal use of the mail for any criminal activity,” said Postal Inspector in Charge, Craig Goldberg. “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.”
According to the indictment, between 2006 and September 2015, the defendants conspired to embezzle and misappropriate money and business opportunities belonging to Starkey and Sonion, a major supplier of hearing aid components to Starkey. The co-conspirators 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 co-conspirators and others.
According to the indictment, in 2006, RUZICKA and TAYLOR created a sham company called, Archer Consulting. RUZICKA caused Starkey to pay Archer Consulting “commission” payments for purported sales of hearing aid components from Sonion, where TAYLOR served as president. In 2010, RUZICKA and TAYLOR changed the description of the fraudulent payments from “commissions” to “consulting fees.” Thereafter, RUZICKA caused Starkey to begin paying consulting fees to Archer Consulting of $75,000 per month. Between 2006 and 2015, RUZICKA and TAYLOR stole approximately $7,650,000 through their sham company.
According to the indictment, RUZICKA, TAYLOR and HAGEN controlled two dummy entities, Claris Investments and Archer Acoustics. TAYLOR falsely represented to Sonion that these entities were Starkey affiliates, thereby securing Starkey’s discounted pricing on hearing-aid components for Claris and Archer Acoustics. RUZICKA, TAYLOR, and HAGEN, used their entities 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 and NELSON surreptitiously transferred Northland LLC’s assets to a new entity they controlled, Northland Hearing Centers, Inc. They forged Austin’s signature to complete the transfer of assets, later awarded themselves restricted stock, and ultimately paid themselves and another individual approximately $15 million in exchange for terminating the restricted stock grants.
According to the indictment, RUZICKA, NELSON and MILLER also abused their positions of authority as Starkey executives to embezzle money and fraudulently obtain benefits from Starkey. RUZICKA awarded himself and other co-conspirators hidden bonuses that were concealed from Austin by falsifying compensation reports.
For example, according to the indictment, 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.
According to the indictment, NELSON used more than $200,000 in Starkey funds to purchase a condominium so that he could carry on a clandestine personal relationship with a Starkey employee. He further stole $225,000 to replenish his personal investment account after he bought a home in Prior Lake, Minn. To conceal this theft, NELSON prepared a phony “promissory note” to disguise this illicit payment as a loan from Starkey. He never reported the “loan” on Starkey’s loan register and has made no payments on the “loan.”
In total, RUZICKA, NELSON, MILLER, TAYLOR and HAGEN are alleged to have conspired to steal more than $20 million from Starkey and Sonion.
When some details of the scheme were discovered in September 2015, RUZICKA, NELSON and MILLER were terminated by Starkey. TAYLOR was also terminated by Sonion when Sonion became aware of the fraud.
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 and Lola Velazquez-Aguilu are prosecuting the case.
Defendant Information:
JEROME C. RUZICKA, 59
Plymouth, Minn.
Charges:
- Conspiracy to commit mail fraud and wire fraud, 1 count
- Mail fraud, 6 counts
- Wire fraud, 16 counts
- Conspiracy to commit money laundering, 2 counts
- Financial transactions involving fraud proceeds, 4 counts
SCOTT A. NELSON, 58
Prior Lake, Minn.
Charges:
- Conspiracy to commit mail fraud and wire fraud, 1 count
- Mail fraud, 2 counts
- Wire fraud, 2 counts
- Financial transactions involving fraud proceeds, 1 count
W. JEFFREY TAYLOR, 55
Cologne, Minn.
Charges:
- Conspiracy to commit mail fraud and wire fraud, 1 count
- Mail fraud, 4 counts
- Wire fraud, 10 counts
- Conspiracy to commit money laundering, 2 counts
- Financial transactions involving fraud proceeds, 4 counts
LAWRENCE W. MILLER, 63
Chanhassen, Minn.
Charges:
- Conspiracy to commit mail fraud and wire fraud, 1 count
- Wire fraud, 4 counts
LAWRENCE T. HAGEN, 63
Minnetonka, Minn.
Charges:
- Conspiracy to commit mail fraud and wire fraud, 1 count
- Wire fraud, 3 counts
- Conspiracy to commit money laundering, 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.
Bloomington Man Sentenced to 33 Years in Prison for Trafficking 12-Year Old and 16-Year-Old Girls for Commercial SexRead the Press Release
United States Attorney for the District of Minnesota Andrew M. Luger today announced the sentencing of LEE ANDREW PAUL, a/k/a “Black,” 36, to 33 years in prison for sex trafficking three victims, two minor girls and one young woman. On March 18, 2015, a superseding indictment charged PAUL with trafficking all three victims. On December 11, 2015, following a five-day trial before U.S. District Judge Ann D. Montgomery, a federal jury convicted PAUL of all charged counts.
“I remain amazed at the courage and fortitude shown by the young victims who stood up to Paul and who took back from him the power he tried to exert over them. Everything about Paul’s conduct belies any notion that he can be trusted to walk the streets ever again. My office is committed to prosecuting human traffickers like Paul and bringing to justice anyone who would exploit and abuse the most vulnerable in our community,” said U.S. Attorney Andrew M. Luger.
“The defendant is a remorseless predator. He is a rapist, an exploiter of women and children, and an unquestionable danger to our society. Every day the defendant is behind bars is a day that our community is safer” said Assistant United States Attorney Melinda A. Williams.
“The buying and selling of children for commercial sex acts is among the most despicable of crimes and Mr. Paul's conviction represents a great victory in taking such criminals off our streets and out of our communities,” said Special Agent in Charge Alex Khu of HSI St. Paul. “HSI has had the honor of working with some of the best law enforcement partners available to see that this criminal spends a long time behind bars.”
As proven at trial, PAUL is a self-proclaimed “pimp.” During Memorial Day weekend of 2013, PAUL sought out a 12-year-old sixth grader to join his sex trafficking “family.” He lured the 12-year-old and a 16-year-old girl to a party at a motel in Rochester, Minn., where he gave them marijuana and alcohol. PAUL announced that he was a pimp and told the young victims they would be working for him. PAUL took the girls to the Twin Cities where they knew no one. PAUL sexually assaulted the 16-year-old victim and brutally raped the 12-year-old.
As proven at trial, while at a motel in Maple Grove, Minn., that same weekend, the 16-year-old victim escaped PAUL and found a police officer and reported what had happened to her. However, PAUL had been tipped off that the 16-year-old victim was trying to find the police and PAUL fled the scene. He then directed another victim, this one 19-years-old, to take the 12-year-old victim to Alexandria, Minn., to “show her the ropes.” The 12-year-old was sold two times that night for sex with men. Law enforcement arrested PAUL on the morning of May 27, 2013, and was in jail pending state charges in Olmsted and Anoka Counties until he made bail on August 26, 2013. PAUL fled in July 2014 on the eve of his Olmsted County trial.
As proven at trial, while on the run, PAUL got rid of his cell phone and shut down his Facebook page to avoid being tracked by law enforcement. He fled first to Chicago, Ill., and then Atlanta, Ga., where he lived under two different assumed identities and used “burner” phones to avoid being tracked by law enforcement. He was arrested on January 14, 2015 by the U.S. Marshals Service and brought back to Minnesota to face federal charges.
This case is the result of an investigation conducted by Homeland Security Investigations, the United States Marshal’s Service, Rochester Police Department, Alexandria Police Department, Douglas County Sheriff’s Office, Anoka County Sheriff’s Office, Pope County Sheriff’s Office, and the Maple Grove Police Department.
This case was prosecuted by U.S. Attorney Andrew M. Luger, Assistant U.S. Attorney Melinda A. Williams, and Special Assistant U.S. Attorney Erin Gustafson. The United States Attorney’s Office thanks the Olmsted County Attorney’s Office for its substantial assistance in the prosecution of this case.
Defendant Information:
LEE ANDREW PAUL, a/k/a “Black,” 36
Bloomington, Minn.
Convicted:
- Sex Trafficking of a Minor by Force, Fraud, and Coercion, 2 counts
- Sex Trafficking by Force, Fraud, and Coercion, 1 count
Sentenced:
- 33 years in prison
###
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Wabasha Antiques Dealer Sentenced to Pay $100,000 Fine for Smuggling Elephant IvoryRead the Press Release
United States Attorney Andrew M. Luger today announced the sentencing of JAY ANTHONY ANDERSON, 66, for smuggling elephant ivory from the United States in violation of the Lacey Act. ANDERSON, who pleaded guilty on June 6, 2016 to one count of smuggling and one count of violating the Lacey Act, was sentenced on September 20, 2016 before U.S. District Judge Susan R. Nelson in U.S. District Court in St. Paul, Minn.
ANDERSON was the owner and operator of an antique business, located in Wabasha, Minn., as well as a website used to sell items through various online auctions. According to the defendant’s guilty plea and documents filed in court, from January 2011 through May 2013, ANDERSON sold more than $200,000 worth of elephant ivory, domestically and abroad. The defendant used online advertising to target buyers located in Asia and used third-party shippers so that he would not have to personally ship the ivory internationally.
According to the defendant’s guilty plea and documents filed in court, on June 10, 2011, ANDERSON, knowingly attempted to export a carving made from elephant ivory to a buyer located in Foshan City, China for approximately $1,356.00. ANDERSON attempted to export the elephant ivory through the United States Postal Service declaring the object as “RESIN CARVINGS” valued at $30.00, when in fact the defendant knew the object was made from elephant ivory and held a much higher monetary value. On June 23, 2011, U.S. Fish and Wildlife Service officials inspected and intercepted the package at an International Mail Facility in Chicago, Ill.
According to the defendant’s guilty plea and documents filed in court, from January 29, 2012 through December 31, 2012, ANDERSON knowingly violated the laws and regulations of the United States by buying and selling an object made from elephant ivory with a market value of more than $350.00. Specifically, on January 29, 2012, ANDERSON purchased an object made from elephant ivory from an auction house in Montreal, Canada for approximately $300.00. ANDERSON subsequently sold the elephant ivory object for approximately $700.00, describing it as an “18th/19th CENTURY IVORY & EBONY EUROPEAN CRUCIFIX.” At the time the elephant ivory object was purchased and imported, ANDERSON failed to submit a declaration to USFWS, as required by law.
"Dealers in the United States often begin illegally buying and selling rare wildlife after being lured by the prospects of huge profits. They choose to disregard how their greed fuels the black market and how the market affects living populations," said U.S. Fish and Wildlife Service Resident Agent in Charge Pat Lund, supervisor for Minnesota, Iowa, and Wisconsin. "We also find that many people think they won’t get caught or if they do, the consequences will be minimal. This sentence should serve as a reminder that this is not always the case," continued Lund.
Under the Lacey Act, it is unlawful to import, export, transport, sell or purchase wildlife, fish or plants that were taken, possessed, transported or sold in violation of a state, federal or foreign law. When it was passed in 1900, the Lacey Act became the first federal law protecting wildlife.
This case is the result of an investigation by the U.S. Fish and Wildlife Service.
This case was prosecuted by Assistant U.S. Attorney Andrew S. Dunne.
Defendant Information:
JAY ANTHONY ANDERSON, 66
Wabasha, Minn.
Convicted:
- Smuggling, 1 count
- Violation of the Lacey Act, 1 count
Sentenced:
- $100,000 fine payable to the Lacey Act Reward Fund
- Two years’ probation
- Forfeiture of elephant ivory totaling $85,000
- 200 hours community service
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Former CFO of Granite Falls Industrial Contractor Sentenced to More Than Six Years in Prison for Embezzling Nearly $6 MillionRead the Press Release
United States Attorney Andrew M. Luger today announced the sentencing of KIRSTEN ANN TJOSAAS, 38, for embezzling $5,773,410 from Fagen, Inc. (Fagen), an industrial contracting company for which she served as Chief Financial Officer. TJOSAAS pleaded guilty on May 6, 2016, to wire fraud and money laundering.
According to her guilty plea, between 2006 and November 2015, TJOSAAS abused her authority as Corporate Controller and Chief Financial Officer of Fagen to issue at least 19 checks and make wire transfers totaling approximately $4.5 million from Fagen to Fairmont Investments, LLC (Fairmont), a Nebraska-based corporation controlled by the defendant.
According to her guilty plea, after registering Fairmont, TJOSAAS opened a bank account at Granite Falls Bank in the name of Fairmont for the purpose of embezzling money from Fagen. TJOSAAS signed these checks using the signature stamp of another Fagen executive without the authority or knowledge of that executive. The defendant also entered false entries into Fagen’s general ledger to disguise the illegitimate checks as payments to Fagen partners or payments to legitimate Fagen vendors. After depositing checks into the Fairmont account, TJOSAAS transferred the funds she had stolen into her own personal bank accounts.
According to her guilty plea, TJOSAAS also fraudulently issued Fagen checks payable to another company. TJOSAAS had access to and control over the bank account of this company. Between June 2006 and November 2015, TJOSAAS issued approximately 25 fraudulent checks into this account, totaling more than $1.2 million.
TJOSAAS used the illicit proceeds to buy homes in Florida, Minnesota, Kentucky, and Arizona. She purchased time-shares in Arizona and the U.S. Virgin Islands, as well as at least three automobiles, two all-terrain vehicles, a motorcycle, a jet-ski, and a sailboat.
TJOSAAS spent more than $500,000 of the stolen money on travel, including $346,000 on airplane tickets, $213,000 on hotel stays and more than $90,000 in restaurants.
This case is the result of an investigation conducted by the FBI.
Assistant U.S. Attorney Joseph H. Thompson prosecuted the case.
Defendant Information:
KIRSTEN ANN TJOSAAS, 38
Granite Falls, Minn.
Convicted:
- Wire fraud, 1 count
- Money laundering, 1 count
Sentenced:
- 78 months in prison
- 3 years supervised release
- $5,773,420 in restitution
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Serial Fraudster Pleads Guilty to Investment Advisor Fraud and Money LaunderingRead the Press Release
United States Attorney Andrew M. Luger today announced the guilty plea of RANDY MILAND, 62, for operating a Ponzi scheme through which he stole or attempted to steal more than $500,000 from purported investors. MILAND pleaded guilty today before United States District Judge Wilhelmina M. Wright in U.S. District Court in St. Paul, Minn.
“Randy Miland is a serial scam artist who has had a long career of defrauding his victims with false claims that he would use their money for legitimate investments,” said Minnesota Commerce Commissioner Mike Rothman. “He may once have worked as a chiropractor, but his real profession has been operating Ponzi schemes to steal people’s money. The Commerce Fraud Bureau worked with federal authorities to stop Miland’s criminal activities and prevent even more Minnesotans from being ripped off by him.”
“Today's guilty plea of Randy Miland demonstrates how law enforcement cooperatively works together to help put an end to the criminal behavior of those who prey on investors for their personal financial gain,” said Special Agent in Charge Shea Jones of St. Paul Field Office IRS Criminal Investigation. “IRS Special Agents will continue to use their financial expertise to identify and trace laundered funds in these types of investor fraud schemes.”
“Despite two prior convictions, Randy Miland continued to steal from friends and acquaintances through lies and misrepresentations,” said Assistant United States Attorney Joseph H. Thompson. “The Minnesota Department of Commerce and Criminal Investigation Division of the IRS worked together to investigate this case and put an end to Miland’s fraudulent conduct.”
According to the defendant’s guilty plea, between 2010 and 2014, MILAND fraudulently solicited approximately $575,000 from investors, telling them that he would use their money to invest in futures and other legitimate investments. Instead, he used their money to pay personal expenses, including court-ordered restitution to victims of his prior scams, and to make Ponzi-type payments to other purported investors.
MILAND concealed from the new victims that he had been twice convicted of fraudulent conduct, that he was forbidden by the Minnesota Department of Commerce from offering or selling securities, and that he still owed more than $1.5 million in restitution to victims of prior schemes.
MILAND was convicted in 1999 in state court of theft by swindle and ordered to pay more than $1.5 million in restitution to the victims of his scheme. As of May 2016, MILAND still owed to the victims nearly the entire amount.
MILAND was convicted in 2006 in federal court of fraud and ordered to pay more than $250,000 in restitution to the victims. As of May 2016, MILAND owed approximately $124,000 in restitution.
The case is being prosecuted by Assistant United States Attorney Joseph H. Thompson.
This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS and the Minnesota Department of Commerce Fraud Bureau.
Defendant Information:RANDY MILAND, 62
White Bear Lake, Minn.Convicted:
• Mail fraud, 1 count
• Money laundering, 1 countMinnesota Man Admits to the Murder of Jacob WetterlingRead the Press Release
Danny James Heinrich, 53, of Annandale, Minnesota, pleaded guilty today to federal child pornography charges. As part of his allocution, Heinrich admitted in court that on Oct. 22, 1989, he abducted, sexually assaulted and murdered 11-year-old Jacob Wetterling. Heinrich also admitted that, in January 1989, he abducted and sexually assaulted a 12-year-old.
Investigators recovered Wetterling’s remains on Sept. 2; nearly 27 years after his disappearance from St. Joseph Township, Minnesota.
The announcement was made today by U.S. Attorney Andrew M. Luger for the District of Minnesota, Special Agent in Charge Richard T. Thornton for the FBI’s Minneapolis Division, Stearns County Sheriff John Sanner, Sterns County Attorney Janelle P. Kendall and Superintendent Drew Evans for the Minnesota Bureau of Criminal Apprehension (BCA).
“Danny Heinrich is no longer a person of interest,” said U.S. Attorney Luger. “He is the confessed murderer of Jacob Wetterling and nearly 27 years after he committed this heinous crime, he has been brought to justice. And Jacob is finally home.”
“This outcome is proof of what we can accomplish when law enforcement and prosecutors work together at the federal, state and local level,” said Special Agent in Charge Thornton. “When the FBI proposed a cold case review with the assistance of an expert from the FBI’s Child Abduction Rapid Deployment team two years ago, our partners agreed to this and embraced the opportunity to have a new set of eyes help take a fresh look at the voluminous and complex case file. I am extraordinarily proud of the FBI and of all the law enforcement personnel, past and present who poured their hearts and souls into this investigation, seeking justice for Jacob and answers for everyone.”
“Jacob Wetterling’s abduction in 1989 ended an age of innocence for Central Minnesota and beyond and had a dramatic impact on how parents raised their children,” said Sterns County Sheriff Sanner. “As the investigation wore on and years turned to decades the hope of resolving the case and bringing Jacob home never once faltered. A combination of steadfast determination, science and a unique collaborative effort involving local, state and federal agencies highlighted the value and importance of these relationships. Even though the ending is not what we had hoped and prayed for, Jacob is finally home.”
“From the night he went missing, the BCA never gave up on finding Jacob,” said Superintendent Evans. “For 27 years, BCA agents and our many partner agencies from all over the country doggedly followed every lead and pursued every tip. The BCA team of agents, scientists, and crime scene examiners have been collecting and analyzing evidence throughout the investigation. Last fall, our scientists connected Heinrich through DNA to another assault, which led to his arrest on the charges he faces today and eventually, led our agents and crime scene team to Jacob. While this is not the result we hoped for, Jacob can now finally come home.”
“This event in the history of Minnesota, especially the history of Stearns County, could not have been accomplished without every member of this local, state and national team,” said Stearns County Attorney Kendall. “Despite the complication of this path, this case demonstrates that no case is too hard to solve, no tip too insignificant to consider and no legal obstacle insurmountable in finding answers and accountability for Jacob Wetterling and for everyone near and far who knows his name. We never stopped looking for Jacob; none of us will ever forget the moment we found him. Our condolences and deepest sympathies remain with the Wetterling family.”
According to Heinrich’s guilty plea, on Oct. 22, 1989, he abducted, sexually assaulted and murdered Wetterling.
According to Heinrich’s guilty plea, on Jan. 13, 1989, he abducted and sexually assaulted a 12-year-old boy.
According to Heinrich’s guilty plea, he possessed between 10 and 150 child pornography images, including images of prepubescent minors under the age of 12. The pornographic material portrays sadistic or masochistic conduct and images of morphed child pornography.
The parties have jointly recommended a federal prison sentence of 20 years.
This case is the result of an investigation conducted by the FBI, Minnesota Bureau of Criminal Apprehension and the Stearns County Sheriff’s Office.
This case is being prosecuted by Assistant U.S. Attorneys Steven L. Schleicher and Julie Allyn of the U.S. Attorney’s Office’s Special Prosecutions Unit. Substantial assistance was provided by the Stearns County Attorney’s Office. The Department of Justice Child Exploitation and Obscenity Section also provided assistance.
Danny Heinrich Admits to Murder of Jacob WetterlingRead the Press Release
DANNY JAMES HEINRICH, 53, pleaded guilty today to federal child pornography charges. As part of his allocution, HEINRICH admitted in court that on October 22,1989, he abducted, sexually assaulted and murdered 11-year-old Jacob Wetterling. HEINRICH also admitted that, in January 1989, he abducted and sexually assaulted 12-year-old J.S.
Investigators recovered Jacob Wetterling’s remains on Friday, September 2, 2016; 26 years, 10 months, and 11 days after his disappearance from St. Joseph Township, Minn.
The announcement was made today by United States Attorney Andrew M. Luger, FBI Special Agent in Charge for the Minneapolis Division Richard T. Thornton, Stearns County Sheriff John Sanner, Stearns County Attorney Janelle P. Kendall and Minnesota Bureau of Criminal Apprehension (BCA) Superintendent Drew Evans.
“Danny Heinrich is no longer a person of interest,” said U.S. Attorney Andrew Luger. “He is the confessed murderer of Jacob Wetterling, and nearly 27 years after he committed this heinous crime, he has been brought to justice. And Jacob is finally home.”
“This outcome is proof of what we can accomplish when law enforcement and prosecutors work together at the federal, state and local level,” said FBI Special Agent in Charge for the Minneapolis Division Richard T. Thornton. “When the FBI proposed a cold case review with the assistance of an expert from the FBI’s Child Abduction Rapid Deployment team two years ago, our partners agreed to this and embraced the opportunity to have a new set of eyes help take a fresh look at the voluminous and complex case file. I am extraordinarily proud of the FBI and of all the law enforcement personnel, past and present who poured their hearts and souls into this investigation, seeking justice for Jacob and answers for everyone.”
“Jacob Wetterling's abduction in 1989 ended an age of innocence for Central Minnesota and beyond and had a dramatic impact on how parents raised their children,” said Stearns County Sheriff John Sanner. “As the investigation wore on and years turned to decades the hope of resolving the case and bringing Jacob home never once faltered. A combination of steadfast determination, science and a unique collaborative effort involving local, state and federal agencies highlighted the value and importance of these relationships. Even though the ending is not what we had hoped and prayed for, Jacob is finally home.”
“From the night he went missing, the BCA never gave up on finding Jacob,” said BCA Superintendent Drew Evans. “For 27 years, BCA agents and our many partner agencies from all over the country doggedly followed every lead and pursued every tip. The BCA team of agents, scientists, and crime scene examiners have been collecting and analyzing evidence throughout the investigation. Last fall, our scientists connected Heinrich through DNA to another assault, which led to his arrest on the charges he faces today, and eventually, led our agents and crime scene team to Jacob. While this is not the result we hoped for, Jacob can now finally come home.”
“This event in the history of Minnesota, especially the history of Stearns County, could not have been accomplished without every member of this local, state and national team,” said Stearns County Attorney Janelle Kendall. “Despite the complication of this path, this case demonstrates that no case is too hard to solve, no tip too insignificant to consider, and no legal obstacle insurmountable in finding answers and accountability for Jacob Wetterling and for everyone near and far who knows his name. We never stopped looking for Jacob; none of us will ever forget the moment we found him. Our condolences and deepest sympathies remain with the Wetterling family.”
According to HEINRICH’s guilty plea, on October 22, 1989, he abducted, sexually assaulted, and murdered Jacob Wetterling.
According to HEINRICH’s guilty plea, on January 13, 1989, he abducted and sexually assaulted J.S., a 12-year-old boy.
According to HEINRICH’s guilty plea, he possessed between 10 and 150 child pornography images, including images of prepubescent minors under the age of 12. The pornographic material portrays sadistic or masochistic conduct, and images of morphed child pornography.
The parties have jointly recommended a federal prison sentence of 20 years.
This case is the result of an investigation conducted by the FBI, Minnesota Bureau of Criminal Apprehension and the Stearns County Sheriff’s Office.
This case is being prosecuted by Assistant United States Attorneys Steven L. Schleicher and Julie Allyn of the U.S. Attorney’s Office’s Special Prosecutions Unit. Substantial assistance was provided by the Stearns County Attorney’s Office. The Department of Justice Child Exploitation and Obscenity Section also provided assistance.
Defendant Information:
DANNY JAMES HEINRICH, 53
Annandale, Minn.
Convicted:
-
Receipt of child pornography, 1 count
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
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Saint Paul Man Sentenced to 18 Months in Prison for Dealing Firearms Without a LicenseRead the Press Release
United States Attorney Andrew M. Luger today announced the sentencing of EITAN BENJAMIN FELDMAN, 30, to 18 months in prison for illegally dealing in firearms without a license. The defendant pleaded guilty on April 29, 2016, and was sentenced today by U.S. District Judge Patrick J. Schiltz in United States District Court in Minneapolis, Minn.
“Feldman’s actions in this case put firearms in the hands of criminals in the Twin Cities, and jeopardized public safety,” said ATF Special Agent in Charge of the St. Paul Field Division James C. Modzelewski. “Today’s sentence should send a message to our community that ATF is committed to working with local police and prosecutors to identify illegal sources of firearms, and hold them accountable. If we’re going to impact gun violence in our communities, we all need to work together to prevent criminals from getting guns.”
“Stemming the flow of illicit firearm sales is an important priority for law enforcement,” said Assistant United States Attorney Benjamin Bejar. “Engaging in the business of unlicensed firearms sales is a serious crime that circumvents the critical background check routinely performed by legitimate licensed firearms dealers to prevent those persons who cannot legally possess firearms from acquiring them.”
According to the defendant’s guilty plea, between January 2014 and January 2016, FELDMAN regularly dealt firearms without a license by repeatedly purchasing firearms and offering them for resale within days of getting them. FELDMAN routinely purchased firearms offered by out-of-state Federal Firearms Licensees (FFLs) through websites such as gunbroker.com, an online firearms auction site. He arranged to have the firearms transferred to L.E. Gun Sales, a FFL in Minnesota, where he got the guns after completing and signing the appropriate documentation.
According to the defendant’s guilty plea, during the same time period, FELDMAN regularly listed and offered the same firearms for sale – often at a higher price than what he paid – on armslist.com. On average, FELDMAN made a potential $90 profit on each firearm he resold. Of the 41 guns FELDMAN purchased and re-sold during this time, the average time he actually possessed a gun before offering it for resale was only nine days.
In July 2015, an ATF Special Agent told FELDMAN that some of the firearms he had received at L.E. Gun Sales, and subsequently sold, had been linked to crime scenes within days of FELDMAN taking possession of and selling the guns.
Despite being informed by ATF Agents that some of the firearms he had purchased and resold had been linked to crime scenes within days of his illicit transactions, the defendant continued to willfully engaging in the business of dealing in firearms without a license. Most egregiously, even after ATF Agents served the defendant with a written warning notice and explained that his actions were almost certainly in violation of federal law, the defendant continued his unlicensed and illegal dealing in firearms.
This case is the result of an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, Minneapolis Police Department, the Saint Paul Police Department and the Bloomington Police Department.
Assistant U.S. Attorney Benjamin Bejar prosecuted the case.
Defendant Information:
EITAN BENJAMIN FELDMAN, 30
Saint Paul, Minn.
Convicted:
-
Willfully engaging in the business of dealing in firearms without a license, 1 count
Sentenced:
-
18 months in prison
-
2 years’ supervised release
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
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President of Two Nonprofits Sentenced to One Year in Prison for Stealing Nearly $500,000 from State of MinnesotaRead the Press Release
United States Attorney Andrew M. Luger today announced the sentencing of ROBERTA BARNES, 59, to 12 months in prison. BARNES pleaded guilty in December 2014 to using two nonprofit entities to defraud the State of Minnesota for more than $480,000. BARNES was sentenced today before Chief U.S. District Judge John R. Tunheim in U.S. District Court in Minneapolis, Minn.
According to her guilty plea and documents filed in court, BARNES was the president of two St. Paul-based nonprofit organizations, Agape House for Mothers (“Agape”) and Sierra Young Family Institute (“Sierra”). Through Agape and Sierra, BARNES won approximately $1.7 million in grant funds from by the Minnesota Department of Health (“MDH”) and the Minnesota Housing Finance Agency (“MHFA”).
From 2002 until May 2012, BARNES applied for and received grant money from MDH and MHFA to combat teen pregnancy and provide housing assistance to needy families. Instead, BARNES spent more than $480,000 of the grant funds on personal expenses for herself and her family; she attempted to conceal her fraud scheme by creating fraudulent invoices that reflected false expenses incurred by Agape and Sierra.
This case is the result of an investigation conducted by the Federal Bureau of Investigation and the U.S. Department of Health and Human Services.
Assistant U.S. Attorney Benjamin Langner prosecuted this case.
Defendant Information:ROBERTA BARNES, 59
St. Paul, Minn.Convicted:
• Mail Fraud, 1 countSentenced:
• 12 months + 1 day in prison
• 2 years supervised release
• Restitution to be determinedEleventh Twin Cities Man Charged with Conspiracy to Provide Material Support to ISILRead the Press Release
Numerous Alleged Co-Conspirators Previously Convicted at Trial and Pleaded Guilty in Minnesota
Mohamed Amiin Ali Roble, 20, formerly of Minneapolis, was charged today by criminal complaint with providing and conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL).
The charges were announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Andrew M. Luger of the District of Minnesota and Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Division.
According to the complaint and documents filed in court, on Oct. 4, 2014, Roble flew to China with a family member. In November 2014, four of Roble’s associates in Minnesota attempted to travel from Minnesota to Syria to join ISIL, via JFK International Airport in New York. The four defendants were stopped by federal law enforcement agents at JFK and were prevented from flying from New York to various destinations in Europe. Also in November 2014, Roble bought airplane tickets and flew to Istanbul, but returned to China shortly thereafter.
On Dec. 27, 2014, Roble again traveled to Istanbul and, according to the complaint, subsequently made his way into Syria and joined ISIL.
A criminal complaint is merely an allegation, and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
This case is the result of an investigation conducted by members of the FBI-led Joint Terrorism Task Force (JTTF). The Minnesota JTTF includes members from the U.S. Marshals Service; Bloomington, Minnesota, Police Department; Ramsey County, Minnesota, Sheriff’s Office; Hennepin County, Minnesota, Sheriff’s Office, Federal Air Marshals Service; Customs and Border Patrol; Department of Homeland Security; Minneapolis Police Department; the Airport Police; Internal Revenue Service-Criminal Investigation; and the FBI. The National Security Division’s Counterterrorism Section and the U.S. Attorney’s Office of the District of Minnesota are prosecuting the case.
Eleventh Twin Cities Man Charged with Conspiracy to Provide Material Support to ISILRead the Press Release
United States Attorney for the District of Minnesota Andrew M. Luger and Special Agent in Charge for the Minneapolis Division of the FBI Richard T. Thornton today announced a criminal complaint charging MOHAMED AMIIN ALI ROBLE, 20, with conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL) and providing material support to ISIL.According to the complaint and documents filed in court, on October 4, 2014, ROBLE and his mother flew from Minneapolis to Beijing, China. From Beijing, ROBLE flew to Wuhan, in Hubei Province, China.
Approximately one-month later, four of ROBLE’s co-defendants attempted to travel from Minnesota to Syria to join ISIL, via New York’s JFK International Airport. The four co-defendants were stopped by federal law enforcement agents at JFK from flying from New York to various destinations in Europe.
According to the complaint and documents filed in court, during the same time period that his co-defendants made their attempt to travel through New York to Turkey, ROBLE made six cash withdrawals of approximately $1,000 each from an ATM in Wuhan, China. The withdrawals were made from an account containing funds ROBLE obtained from a monetary settlement he was awarded after suffering personal injuries in the I-35W bridge collapse of August 1, 2007.
According to the complaint and documents filed in court, in November 2014 ROBLE bought airfare and flew to Istanbul, Turkey. From Turkey, ROBLE called his mother and told her that he was in Turkey “shopping,” and that he needed an airline ticket back to China, which she purchased for him. ROBLE returned to China shortly thereafter.
On December 27, 2014, ROBLE again traveled to Istanbul. ROBLE did not return to China from this second trip to Turkey.
This case is the result of an investigation conducted by members of the FBI-led Joint Terrorism Task Force (JTTF). The JTTF includes members from the following departments: the United States Marshals Service, Bloomington Police Department, Ramsey County Sheriff’s Office, Hennepin County Sheriff’s Office, Federal Air Marshals Service, Customs and Border Patrol, Department of Homeland Security, Minneapolis Police Department, the Airport Police, IRS-CI, and the FBI.
Defendant Information:MOHAMED AMIIN ALI ROBLE, 20
Minneapolis, Minn.Charges:
• Conspiracy to provide material support to a designated foreign terrorist organization, 1 count
• Providing material support to a designated foreign terrorist organization, 1 countSeventh Defendant Sentenced to 140 Months in Prison for Role in Minneapolis Street GangRead the Press Release
United States Attorney Andrew M. Luger announced the sentencing of PERCY MINIFER LACEY, JR., a/k/a “P3,” 23, to 140 months in prison. LACEY, who pleaded guilty on February 23, 2016, to conspiracy to possess firearms in furtherance of a drug trafficking crime, was sentenced today before U.S. District Judge Patrick Schiltz in U.S. District Court in Minneapolis, Minn.
LACEY is the final defendant to be sentenced as part of an August 2015 indictment charging members of the 10z and 20z street gangs with crimes related to a multi-year gang war, which included a broad daylight shooting in August 2014 outside the Hennepin County Medical Center.
“Gangs like the 10z and 20z that engage in violent warfare endanger innocent lives and pose a significant threat to communities throughout Minneapolis,” said Assistant United States Attorney Thomas Calhoun-Lopez. “The ATF and the Minneapolis Police Department have worked hard to stem the tide of gang violence in Minneapolis, and today’s sentence is an important step forward.”
According to the defendant’s guilty plea and documents filed in court, LACEY and his co-conspirators engaged in a series of public shootings as part of gang warfare on behalf of the 10z and 20z, gangs which make money through the sale of illegal drugs. 10z and 20z members repeatedly engaged in street warfare against rival gangs, primarily the Bloods and the Bogus Boys, to protect and seize new drug dealing territory and to attack and rob drug distributors associated with rival gangs. All together, the defendants were involved in at least five shootings between August 19 and September 23, 2014.
According to the defendant’s guilty plea and documents filed in court, two days after being caught on tape shooting at Bloods gang members with a semi-automatic weapon, LACEY sprayed 30 rounds of bullets outside Hennepin County Medical Center, ignoring nearby staff, families and children, in his pursuit of Bloods who were visiting a member of their gang who had been shot earlier in the day. One round narrowly missed a child in her car seat.
According to the defendant’s guilty plea and documents filed in court, LACEY was a proud gang member. He has multiple photos of himself posted to social media showing off stacks of money, and videos in which he boasts about his capacity for violence. Even after he was indicted, LACEY posted a photo of himself with fellow gang members flashing gang signs while incarcerated.
This case was prosecuted by Assistant U.S. Attorney Thomas Calhoun-Lopez.
This case is the result of an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Minneapolis Police Department.
Defendant Information:PERCY MINIFER LACEY, JR., a/k/a “P3,” 23
Richfield, Minn.Convicted:
• Conspiracy to possess firearms in furtherance of a drug trafficking crime, 1 countSentenced:
• 140 months in prison
• 3 years supervised releaseDANIEL ALFRED ADAMS, a/k/a “Funk,” 30
Minneapolis, Minn.Convicted:
Conspiracy to possess firearms in furtherance of a drug trafficking crime, 1 countSentenced:
• 120 months in prison
• 3 years supervised releaseCLARENCE JAMES DICKENS, JR., a/k/a “Claro,” a/k/a, “Sneaky,” 26
Roseville, Minn.Convicted:
• Conspiracy to possess firearms in furtherance of a drug trafficking crime, 1 countSentenced:
• 129 months in prison
• 3 years supervised releaseANTHONY PIERRE DOSS, a/k/a “Two Tone,” a/k/a “Tony,” 25
Brooklyn Park, Minn.Convicted:
• Conspiracy to possess firearms in furtherance of a drug trafficking crime, 1 countSentenced:
• 105 months in prison
• 3 years supervised releaseTHOMAS DUPREE BENNETT, a/k/a “Deandre Clay,” a/k/a “Trigga,” 28
Minneapolis, Minn.Convicted:
• Felon in possession of ammunition, 1 count
Sentenced:
• 60 months in prison
• 3 years supervised release
ANDREW INDELICATO PETERSON, a/k/a “Boo Boo,” 26
St. Louis Park, Minn.Convicted:
• Felon in possession of ammunition, 1 countSentenced:
• 120 months in prison
• 3 years supervised releasePAUL ANTONIO EARLY, a/k/a “Stamps,” a/k/a, “Man Man,” 24
Minneapolis, Minn.Convicted:
• Distribution of cocaine base, 1 countSentenced:
• 100 months in prison
• 3 years supervised releaseAgQuest Accountant Sentenced to 42 Months in Prison for Embezzling more than $1.7 MillionRead the Press Release
United States Attorney Andrew M. Luger announced the sentencing of DIANE MARIE EILER, 48, to 42 months in prison for stealing $1.7 million from her employer. EILER, who pleaded guilty to one count of wire fraud on April 15, 2016, was sentenced today before Senior U.S. District Judge Patrick J. Schiltz in U.S. District Court in Minneapolis, Minn.
“Eiler systematically abused the trust of her employer to steal more than $1.7 million,” said Assistant United States Attorney Joseph H. Thompson. “The sentence imposed today by the court demonstrates that financial crimes are taken seriously and that white collar criminals are subject to significant consequences for their illegal acts.”
According to the defendant’s guilty plea and documents filed in court, EILER was the Director of Accounting at AgQuest Financial Services, Inc., a financial services company based in Morgan, Minn., which offers loans and insurance to farmers and other agricultural producers. From 2007 through November 2015, EILER used her position to funnel money from AgQuest to her own personal bank accounts.
According to the defendant’s guilty plea, EILER stole company checks and wrote them out to herself, using the signature stamps of the company’s executives. She hid the theft by creating false entries in AgQuest’s ledger to disguise the payments as payments to AgQuest customers. In total, EILER wrote more than 250 checks to herself, which totaled more than $1.7 million. EILER gambled away almost all of the stolen money.
This case was prosecuted by Assistant U.S. Attorney Joseph H. Thompson.
This case is the result of an investigation conducted by the FBI.
Defendant Information:DIANE MARIE EILER, 48
Bird Island, Minn.Convicted:
• Wire fraud, 1 count
Sentenced:
• 42 months in prison
• 3 years supervised release
• $1,738,459 in restitutionSt. Paul Woman Pleads Guilty to Using Stolen Identities to File Fraudulent Income Tax ReturnsRead the Press Release
United States Attorney Andrew M. Luger today announced the guilty plea of EBONY SHANTE YARBROUGH, 28, to aggravated identity theft. YARBROUGH pleaded guilty today before U.S. District Judge Patrick J. Schiltz in U.S. District Court in Minneapolis, Minn.
“Today's plea by Ebony Yarbrough to an aggravated identity theft charge exemplifies IRS Special Agents' intense focus on the rigorous pursuit of identity theft and refund fraud," said Shea Jones, Special Agent in Charge of IRS Criminal Investigation St. Paul Field Office. IRS Criminal Investigation remains committed to the pursuit of identity theft crimes and, together with our partners at the U.S. Attorney’s Office, we will hold those who engage in similar conduct accountable.”
According to the defendant’s guilty plea, between 2013 and 2015, YARBROUGH convinced friends and family members to allow her to file their state and federal income tax returns by claiming she knew how to prepare the returns and would charge less than a tax preparation service.
According to her guilty plea, YARBROUGH prepared taxpayers’ returns by claiming false Schedule C income characterized as “hair stylist,” “cleaner” or “exotic dancer.” Additionally, YARBROUGH included dependents on taxpayers’ returns by using stolen personal identifying information belonging to minors, enabling them to qualify for other tax credits. YARBROUGH’S scheme accounted for more than $500,000 in false state and federal claims.
This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS. The Minnesota Department of Revenue assisted in the investigation.
Assistant U.S. Attorney Kimberly A. Svendsen is prosecuting the case.
Defendant Information:
EBONY SHANTE YARBROUGH, 28
St. Paul, Minn.
Convicted:
- Aggravated Identity Theft, 1 count
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Red Lake Man Pleads Guilty to Assaulting a Police OfficerRead the Press Release
United States Attorney Andrew M. Luger yesterday announced the guilty plea of NODIN MAKWA, 21, for charging at a police officer with his car after a high-speed chase. On January 5, 2016, MAKWA was indicted on one count of assaulting, resisting or impeding certain officers or employees. MAKWA pleaded guilty yesterday before Senior U.S. District Court Judge Michael J. Davis.
According to the defendant’s guilty plea, on August 8, 2015 Red Lake Police responded to a call from a woman who said MAKWA threatened her child with a sword. When police located his vehicle and tried to pull him over, MAKWA sped away at 120 miles per hour. After several police cars boxed in MAKWA’s car, a Beltrami County deputy sheriff attempted to approach MAKWA, who then reversed his vehicle into the officer. The officer was knocked unconscious, and sustained a broken hip and a concussion.
To learn more about the Justice Department’s Tribal Safety program, visit http://www.justice.gov/tribal/.
This case is the result of an investigation conducted by the Minnesota Highway Patrol and the Beltrami County Sheriff.
This case is being prosecuted by Assistant U.S. Attorney Clifford B. Wardlaw.
Defendant Information:
NODIN MAKWA, 21
Red Lake, Minn.
Convicted:
- Assaulting, resisting or impeding certain officers or employees, 1 count
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Ponemah Man Sentenced to 20 Years in Prison for Aggravated Sexual AssaultRead the Press Release
United States Attorney Andrew M. Luger today announced the sentencing of DANA LEE COBENAIS, 24, an enrolled member of the Red Lake Band of Chippewa, for aggravated sexual abuse. Following a three-day trial before Senior U.S. District Judge Richard Kyle, a jury on November 19, 2015 found COBENAIS guilty. COBENAIS was sentenced today before Judge Kyle in Duluth, Minn. to 20 years in prison.
As proven at trial, on March 14, 2015, COBENAIS brutally assaulted a woman on the Red Lake Indian Reservation, after forcing her to give him a ride in her car. COBENAIS grew angry during the ride and punched the victim several times in the face before sexually assaulting her. When the Red Lake Police responded to a call for help they found substantial amounts of blood in the car and on the victim. COBENAIS’ sexual violence was so severe that the victim needed surgery to repair the lacerations.
Because the Red Lake Indian Reservation is a federal-jurisdiction reservation, some of the crimes that occur there are investigated by the FBI in conjunction with the Red Lake Tribal Police Department. Those cases are prosecuted by the U.S. Attorney’s Office.
Violence against American Indian women occurs at epidemic rates. In 2005, Congress found that one in three American Indian women is raped during her lifetime, and American Indian women are nearly three times more likely to be battered during their lives than Caucasian women.
The U.S. Justice Department is taking steps to increase engagement, coordination, and action relative to public safety in tribal communities, including the creation of the Violence Against Women Federal and Tribal Prosecution Task Force. This task force will explore current issues raised by professionals in the field and recommend “best practices” in prosecution strategies involving domestic violence, sexual assault and stalking.
To learn more about the Justice Department’s Tribal Safety program, visit http://www.justice.gov/tribal/.
This case is the result of an investigation conducted by the FBI and Red Lake Police Department.
This case was prosecuted by Assistant U.S. Attorney Clifford B. Wardlaw.
Defendant Information:
DANA LEE COBENAIS, 24
Ponemah, Minn.
Convicted:
- Aggravated sexual abuse, 1 count
Sentenced:
- 20 years in prison
- Lifetime supervised release
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Minneapolis-Based Gang Leader Sentenced to 15 Years in Prison for Distribution of Crack Cocaine and Possession of a Firearm During a Drug Trafficking CrimeRead the Press Release
United States Attorney Andrew M. Luger yesterday announced the sentencing of LOUIS LEE FRASIER BANKS, 26, a leader of a known Minneapolis gang, the Taliban/Young N’ Thuggin (YNT) gang. On March 4, 2015, BANKS was charged in a seven-defendant indictment with conspiracy to distribute cocaine base (crack) and distribution of crack. On October 13, 2015 BANKS pleaded guilty to a two count information charging him with conspiracy to distribute crack cocaine and possessing a firearm during a drug trafficking crime. The defendants include other members of the gang. BANKS appeared yesterday before U.S. District Judge Patrick J. Schultz.
According to the defendant’s guilty plea and documents filed in court, between January and December 2014, the defendants named in the indictment were organizers and members of two closely associated street gangs, the Taliban and the YNT. BANKS had more influence in the gangs, based on seniority and criminal activity. The Taliban/YNT gangs claim an area of north Minneapolis as their territory, and other north Minneapolis gangs, including the 1-9 Dipset and Stick Up Boys, as enemies. The members carry guns to protect themselves and their money against their rivals, in order to further their ability to sell illegal drugs.
According to the defendant’s guilty plea and documents filed in court, the Taliban/YNT are organized for the purpose of making money by trafficking illegal drugs, among other criminal activity. Members of the Taliban/YNT frequently travel to St. Cloud and Duluth, Minnesota, and to Fargo, North Dakota, to sell crack. Crack that the Taliban/ YNT could sell in Minneapolis for $20 could be sold for $50 in Greater Minnesota and in North Dakota. Similarly, an amount of crack cocaine sold for $150 in the Metro area would sell for between $220 and $250 in Greater Minnesota.The other defendants in this case were sentenced as follows: CARNEL LAVEL HARRISON, a/k/a “Boo Man,” 26, was sentenced to 120 months in prison and 5 years of supervised release. DEJUAN PIERRE DARKYSE WASHINGTON, a/k/a “DJ,” 25, was sentenced to 120 months in prison and 3 years of supervised release. LAQUEDRICK LEMEL AS-SIDIQ, a/k/a “Quady,” a/k/a “C,” 26, was sentenced to 120 months in prison and 3 years of supervised release. DONTE TRAMAYNE SMITH, a/k/a “Five,” 26, was sentenced to 18 months in prison and 3 years of supervised release. CORTEZ DAVON BLAKEMORE, a/k/a “Tez,” 26, was sentenced to 21 months in prison and 3 years of supervised release. Defendant TERRELL VONSHAY ROBERSON, a/k/a “Get Right,” a/k/a “Slim,” is awaiting sentencing.
This case is the result of an investigation conducted by the Safe Streets Task Force, which is comprised of federal and local law enforcement agencies, including, but not limited to, the FBI, Minneapolis Police Department, Minnesota Bureau of Criminal Apprehension and St. Paul Police Department. The St. Cloud Violent Crimes Task Force and the St. Cloud Police Department were a critical part of this investigation.
This case was prosecuted by Assistant U.S. Attorney David Steinkamp.
Defendant Information:
LOUIS LEE FRASIER BANKS, a/k/a “G.I.,” 26
Anoka County Jail
Convicted:
- Conspiracy to distribute Cocaine Base, 1 count
- Felon in Possession of a Firearm in furtherance of a drug trafficking crime, 1 count
Sentenced:
- 15 years in prison
- 5 years of supervised release
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Ohio Woman Convicted of Conspiring to Exploit Foreign Workers at Minnesota FarmRead the Press Release
United States Attorney Andrew M. Luger today announced the trial conviction of SANDRA LEE BART, 68, for requiring foreign workers on temporary H-2A work visas to pay illegal fees and kickbacks. BART was found guilty by a jury of conspiring with others to commit fraud.
Co-defendant WILIAN SOCRATE CABRERA pleaded guilty on July 14, 2016, to conspiracy to commit fraud in foreign labor contracting, and co-defendant JOHN JAMES SVIHEL pleaded guilty on June 16, 2016, to conspiracy to commit fraud in foreign labor contracting.
“Today’s verdict should serve as a warning to those who seek to exploit foreign workers through the U.S. guest worker visa programs,” said Assistant United States Attorney Manda Sertich. “We commend the investigating agencies for their collaboration and thank the jury for its service.”
As proven at trial, from 2008 to May of 2015 BART and CABRERA operated an unregistered business called “Labor Listo,” which they used to recruit employers like SVIHEL, who ran Svihel Vegetable Farm in Foley, Minn., to hire seasonal workers from the Dominican Republic on temporary work visas. The visa programs require employers to pay for workers’ housing and travel expenses to and from their home country, and forbid employers from collecting recruitment fees or wage kickbacks. BART and CABRERA violated all of these rules.
As proven at trial, CABRERA charged the workers a one-time recruitment fee of between $420 and $2,385, as well as an annual fee of $374, which he split with BART. The workers were told that if they didn’t pay the fees they would not be allowed to return for the following growing season. BART and CABRERA also collected full reimbursement from the workers for their flights. SVIHEL kept a percentage of the workers’ wages. BART and CABRERA were clearly using the program to profit from the workers. “Costs – pass on to applicant,” was written on a business plan from a 2008 Labor Listo meeting between BART and CABRERA.
As proven at trial, BART and CABRERA recruited SVIHEL in 2010 to hire four Dominican workers using the H-2A visa program, which provides temporary visas to agriculture workers, falsely telling him that a church in the Dominican Republic would pay for workers’ airfares. When the wage Svihel was required to pay the workers was increase from $9.75 per hour to $10.62 per hour in 2011, SVIHEL expressed hesitation in continuing to use the program. BART told SVIHEL that the workers would be willing to pay wage and airfare kickbacks to make up the difference. SVIHEL kept a total of $90,000 in kickbacks and spent it on travel and leisure expenses.
As proven at trial, when BART learned there was an investigation into the working conditions at Svihel Farm, she tried to have CABRERA talk the workers into signing a document retracting any statements they made to the Department of Labor about illegal fees. SVIHEL and BART exchanged a list of workers, labeling the workers “G” for good or “B” for bad, based on which workers they thought had spoken to the Department of Labor. The workers labeled “bad” were sent back to the Dominican Republic first in the 2014 season and were not invited back in 2015.
This case is the result of an investigation conducted by the U.S. Department of State Diplomatic Security Service, U.S. Department of Labor Office of the Inspector General, and the Homeland Security Investigations Document and Benefit Fraud Task Force.
This case is being prosecuted by Assistant United States Attorneys and Manda Sertich and David Maria.
Defendant Information:SANDRA LEE BART, 68
Seven Hills, OhioConvicted:
• Conspiracy to commit false swearing in an immigration matter, 1 count
• Conspiracy to commit fraud in foreign labor contracting, 1 count
• Conspiracy to commit wire and mail fraud, 1 count
WILIAN SOCRATE CABRERA, 43
Dominican RepublicConvicted:
• Conspiracy to commit fraud in foreign labor contracting, 1 count
JOHN JAMES SVIHEL, 54
Foley, Minn.Convicted:
• Conspiracy to commit fraud in foreign labor contracting, 1 countFrazee Man Sentenced to 33 Months in Prison for Stealing Point-Of-Sale Credit Card ReadersRead the Press Release
United States Attorney Andrew M. Luger today announced the sentencing of DANIEL MARTEZ WALKER, a/k/a “Ghost,” 24, for stealing and using credit card processing machines to steal approximately $215,000. WALKER, who pleaded guilty to conspiracy to commit access device fraud on April 13, 2016, was sentenced today before U.S. District Judge Susan R. Nelson in U.S. District Court in St. Paul, Minn.
“Identity theft crimes wreak havoc on business owners and consumers,” said Assistant U.S. Attorney Kate Buzicky. “Mr. Walker’s sentence shows the seriousness of these offenses, and the need to punish them appropriately.”
According to the defendant’s guilty plea and documents filed in court, from July to September 2014, WALKER conspired with others to steal point-of-sale (POS) machines from Twin Cities businesses, including bowling alleys and liquor stores. The conspirators used the stolen machines to process fraudulent “refunds” from the victim businesses. In total, WALKER and the co-conspirators used the stolen machines to cause 275 unauthorized refunds totaling more than $215,000 in losses to the victim businesses.
This case was the result of an investigation conducted by the United States Secret Service and Brooklyn Park Police Department.
This case was prosecuted by Assistant U.S. Attorneys Sarah Hudleston and Kate Buzicky.
Defendant Information:
DANIEL MARTEZ WALKER, 24
Frazee, Minn.
Convicted:
- Conspiracy to commit access device fraud, 1 count
Sentenced:
- 33 months in prison
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Convicted Minneapolis Gang Member Sentenced to Additional 70 Months in Prison for Ordering Retaliatory Violence Against WitnessesRead the Press Release
United States Attorney Andrew M. Luger today announced the sentencing of TYWIN BENDER, a/k/a “Finn Winn,” 26, to a total of 130 months in prison for attempting to retaliate violently against federal witnesses. On April 7, 2016, following a three-day trial before Senior U.S. District Court Judge Richard H. Kyle, a jury found BENDER guilty of conspiracy to retaliate against two federal witnesses. Bender previously had pleaded guilty to federal firearms charges in a related case. Today he was sentenced to 60 months on the firearms charge and 70 months consecutive for the witness retaliation charge.
“Our system of justice depends on the willingness of witnesses to take the stand and testify truthfully,” said Assistant United States Attorney Jeffrey Paulsen. “When Tywin Bender ordered two federal witnesses to be beaten in retaliation for their testimony against a violent gang leader, he committed an assault on the judicial system itself. This prosecution shows that such assaults will not go unpunished.”
BENDER, a known member of the Stick Up Boys street gang based in North Minneapolis, was charged in November 2014 in an 11-defendant indictment for conspiracy to commit the crime of being a felon in possession of firearms, a crime to which BENDER pleaded guilty. One of his co-defendants, Veltrez Black, a/k/a “Chief,” was also charged in that indictment and exercised his right to go to trial. Two other gang members, Antonio Lewis and Kibbie Walker, testified against Black at trial. On October 22, 2015, a jury found Black guilty of all charges against him.
As proven at BENDER’s witness retaliation trial, the day after Black’s conviction, BENDER used a prison phone to call an accomplice who was not incarcerated and dictated an email for her to send to two fellow gang members, D.W. and D.G., who were confined at Minnesota Correctional Facility – Rush City, which is the same facility where witnesses Lewis and Walker were then held. The email stated, “the nigga bogus [Lewis’s nickname] is a rat. he took the stand on chief. smash him as soon as you see him. green light. the nigga Kibbie took the stand too on chief. let everybody know. no talking no explanations.” The plot was foiled when an alert Department of Corrections employee noticed the threatening language in the email and steps were taken to protect the intended victims.
This case is the result of an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives.
This case was prosecuted by Assistant U.S. Attorney Jeffrey Paulsen.
Defendant Information:
TYWIN BENDER, a/k/a/ “Finn Winn,” 26
Stillwater, Minn.
Convicted:
- Conspiracy to possess firearms as a convicted felon, 1 count
- Conspiracy to retaliate against a federal witness, 1 count
Sentenced:
- Firearms charge – 60 months
- Witness retaliation charge – 70 months consecutive
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Former Club Rage Bouncer Sentenced to 70 Months in Prison for Tax FraudRead the Press Release
United States Attorney Andrew M. Luger today announced the sentence of JOHN HUNTER, SR., 47, to 70 months in federal prison for filing false tax returns. Following a four-day trial before Senior U.S. District Court Judge David S. Doty, a jury on December 3, 2015, found HUNTER guilty of all the charges against him, including conspiracy to defraud the United States, false claims, and aggravated identity theft. HUNTER was sentenced today before Judge Doty in U.S. District Court in Minneapolis, Minn.
"Today's 70 month sentencing of Mr. John Hunter exemplifies the driven focus of IRS Special Agents as they relentlessly pursue identity theft and refund fraud crimes," said Shea Jones, Special Agent in Charge of the St. Paul Field Office IRS Criminal Investigation. “IRS Criminal Investigation, together with the U.S. Attorney’s Office, will continue to investigate the criminals who are stealing from the American taxpayer.”
As proven at trial, in 2010, HUNTER fraudulently claimed more than $200,000 in tax refunds to which he was not entitled. HUNTER misrepresented both his income and the incomes of 48 others, using their personal identifying information to file false tax returns. In 2009, HUNTER claimed a $8,222 tax refund based on earnings of $13,000 from his job at the Maplewood nightclub, Club Rage, in 2009. His actual earnings were closer to $4,000 and no taxes had been withheld from his paychecks.
As proven at trial, HUNTER also recruited dozens of friends and acquaintances, including minors, for whom he would file fraudulent returns by exaggerating or falsifying their incomes. HUNTER claimed that several of these acquaintances had worked at Club Rage or Holiday Stores, though they never had.
As proven at trial, HUNTER unsuccessfully tried to continue his scheme in 2012, claiming that he had earned over $19,000 at Jimmy John’s sandwich shop. He also filed false taxes for two others without their knowledge, claiming almost $20,000 in fraudulent refunds. The IRS rejected his claims.
This case was the result of an investigation conducted by IRS Criminal Investigations Division with substantial assistance from the Minnesota Department of Revenue.
This case was prosecuted by Assistant U.S. Attorneys Joseph Thompson and Amber Brennan.
Defendant Information:
JOHN HUNTER, SR., 47
Eagan, Minn.
Convicted:
- Conspiracy to defraud the United States, 1 count
- False claims, 8 counts
- Aggravated identity theft, 2 counts
Sentenced:
- 70 months in prison
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Labor Union Officers Charged with Embezzlement and Theft of Union FundsRead the Press Release
United States Attorney Andrew M. Luger announced a federal indictment charging SCOT MCNAMARA, 56, for embezzlement and theft of labor union assets.[1] MCNAMARA is expected to appear before Magistrate Judge Steven E. Rau in United States District Court in St. Paul, Minn.
According to the indictment and documents filed in court, MCNAMARA is a member of the International Association of Heat and Frost Insulators and Allied Workers, Local 34 (“Local 34”), a labor union representing 458 Minnesota members. Beginning in December 2007, MCNAMARA served as financial secretary of the union, until December 2012 when he lost his bid for re-election.
According to the indictment, as financial secretary, MCNAMARA had a Visa rewards credit card for use on behalf of Local 34. Use of the card resulted in earned credit card reward points, which Local 34 owned. However, before leaving office as financial secretary, MCNAMARA cashed in the reward points in exchange for other items, including $1,900 in gas cards, which were sent to MCNAMARA’s home.
According to the indictment and documents filed in court, MCNAMARA also used the Visa rewards card to pay personal expenses, including more than $2,800 in airline tickets for a family vacation to the Grand Cayman Islands.
According to the indictment and documents filed in court, from October 30, 2011, through November 2, 2011, MCNAMARA attended a training in New Orleans, La., regarding his role as trustee for Local 34’s health and welfare and pension funds. Local 34 paid a total of $3,054.84 for costs associated with MCNAMARA’s attendance at the training yet MCNAMARA personally requested and received a $3,087.84 reimbursement. Nearly all of the expenses MCNAMARA claimed in his reimbursement request had already been paid by Local 34. Instead of turning over the reimbursement funds to Local 34, MCNAMARA used the money to cover personal expenses, including payments associated with a December 2012 trip for his family to the Grand Cayman Islands.
A related felony information has also been filed charging KEITH CHRISTOPHERSON, 53, for embezzlement and theft of labor union assets.[2]
This case is the result of an investigation conducted by the U.S. Department of Labor.
Assistant U.S. Attorney Lola Velazquez-Aguilu is prosecuting the case.
Defendant Information:SCOT MCNAMARA, 56
Cottage Grove, Minn.Charges:
• Embezzlement and theft of labor union assets, 4 countsKEITH CHRISTOPHERSON, 53
Coon Rapids, Minn.Charges:
• Embezzlement and theft of labor union assets, 1 count[1] The charges contained in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
[2] The charges contained in the information are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Serial Child Rapist Sentenced to Life in PrisonRead the Press Release
United States Attorney Andrew M. Luger today announced the sentencing of REX LEE FURMAN, 53, to life in prison for preying on children both online and in-person. Following a three-day trial before Senior U.S. District Judge David S. Doty, a jury on October 22, 2015, found FURMAN guilty of all the charges against him, including 13 counts of production of child pornography and related charges.
“This defendant is a determined and dangerous predator who has spent decades abusing and raping little girls,” said Assistant United States Attorney Melinda A. Williams. “As a result of today’s sentence, his days of harming the most vulnerable in our society have finally come to an end.”
As proven at trial, while residing in Federal Dam, Minn., FURMAN photographed and sexually abused two young girls who were then in his care. He also collected images and videos of child pornography, including videos of girls as young as three-years-old being sexually violated.
During a search of the Federal Dam residence, FURMAN informed law enforcement that they would probably find thousands of images of child pornography, including images that he had produced. An investigation revealed more than five hundred such videos and images, including of the two girls who had been in his care. FURMAN had equipped his room with tools to enable the abuse of children, including a mounted computer monitor over his bed, a mirror underneath the monitor and a security camera outside of his bedroom door to see anyone approaching.
FURMAN has two prior convictions for sexually abusing prepubescent girls. In 1981 FURMAN was convicted of criminal sexual conduct in the fourth degree in Wright County for sexual misconduct with a five-year-old girl. In 1999, FURMAN was convicted of criminal sexual conduct in the first degree in Hennepin County for sexually violating a developmentally disabled young girl in his care.
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 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.
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.The Minnesota BCA, which leads the Minnesota Internet Crimes Against Children Task Force, and the Minneapolis Police Department, which is a member of the FBI Child Exploitation Task Force, investigated the case.
This case was prosecuted by Assistant U.S. Attorney Melinda A. Williams and Deputy Chief Alexandra R. Gelber of the Department of Justice Criminal Division’s Child Exploitation and Obscenity Section.
Defendant Information:REX LEE FURMAN, 53
Federal Dam, Minn.Convicted:
• Production of child pornography, 13 counts
• Distribution of child pornography, 2 counts
• Possession of child pornography, 1 count
• Receipt of child pornography, 1 count
• Committing a sex offense while being required to register as a sex offender, 1 countSentenced:
• Life in prisonRecidivist Child Sex Offender Sentenced to Life in Prison for Child Pornography-Related OffensesRead the Press Release
A Minnesota man with two prior convictions for sexually abusing children was sentenced today to serve life plus 10 years in prison for production, distribution, receipt and possession of child pornography, as well as committing a child sex offense while being required to register as a sex offender, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Andrew M. Luger of the District of Minnesota.
Rex Lee Furman, 52, of Federal Dam, Minnesota, was sentenced by U.S. District Judge David S. Doty of the District of Minnesota, who also ordered Furman to pay restitution in the amount of $3,000 to two victims. Furman was convicted on Oct. 21, 2015, following a three-day jury trial.
According to the evidence presented at trial, in 2013, during separate investigations by the Minnesota Bureau of Criminal Apprehension (BCA) and the Minneapolis Police Department, law enforcement officers obtained child pornography videos from an internet protocol (IP) address linked to Furman’s home. The evidence showed that during a search of his residence that was executed with the assistance of the Cass County Sheriff’s Office on Feb.13, 2014, Furman admitted that he had downloaded child pornography. According to the trial evidence, he also informed a special agent that he had produced images depicting child exploitation involving two girls who had been in his care, both of whom were younger than six years old at the time of the abuse. The trial evidence showed that subsequent forensic analysis of Furman’s computers and digital media confirmed that he produced pornographic photographs and a video of those children in 2012. According to the trial evidence, investigators also found in Furman’s possession hundreds of images and videos that depicted other children engaged in sex acts with adults.
Furman has two prior Minnesota state court convictions for engaging in sex acts with minors. In December 1981, Furman pleaded guilty to sexually abusing a five-year-old girl who was in his care. In January 1999, Furman was convicted after a bench trial of sexually abusing a 10-year-old girl in his care. As a result, he was required to register as a sex offender until 2021.
The Minnesota BCA, which leads the Minnesota Internet Crimes Against Children Task Force, and the Minneapolis Police Department, which is a member of the FBI Child Exploitation Task Force, investigated the case. Assistant U.S. Attorney Melinda A. Williams of the District of Minnesota and Deputy Chief Alexandra R. Gelber of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) prosecuted the case.
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 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.
Corcoran Man Indicted for Multimillion Dollar Fraud in the Bakken Oil FieldsRead the Press Release
United States Attorney Andrew M. Luger today announced an indictment charging RONALD DAVID JOHNSON, 50, for stealing more than $2.1 million from victims hoping to invest successfully in the North Dakota oil boom. JOHNSON is charged with five counts of wire fraud, one count of money laundering. JOHNSON is expected to appear tomorrow before Magistrate Judge Becky R. Thorson in U.S. District Court in Saint Paul, Minn.
According to the indictment and documents filed in court, 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, would allow oil workers to eschew more common barracks-style housing in favor of comfortable indoor RV parks, which would have been large warehouses where oil workers could park their RVs and have access to shared amenities like laundry and vending machines.
According to the indictment, JOHNSON fraudulently solicited $2.1 million from four investors in Indoor RV Parks, LLC, telling the investors that their money would be used to build and manage indoor RV parks for oil workers. Instead of using the invested money for RV parks, JOHNSON used more than $1.8 million to fund his personal cattle farm, take vacations, buy vintage Chevrolets, and purchase real estate, including an entire 17-acre island on Mink Lake in Maple Lake, Minn.
This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS and the FBI.
This case is being prosecuted by Assistant U.S. Attorney Joseph H. Thompson.
Defendant Information:RONALD DAVID JOHNSON, 50
Corcoran, Minn.Charges:
• Wire fraud, 5 counts
• Money laundering, 1 countFormer Investment Advisor Charged with Securities Fraud for Stealing more than $5 MillionRead the Press Release
United States Attorney Andrew M. Luger announced an information charging BRADLEY SMEGAL, 63, for stealing more than $5.1 million from at least 14 of his investment advisory clients. SMEGAL is charged with two counts of securities fraud.[1]
According to the information and documents filed in court, SMEGAL was a registered broker and investment advisor from 1980 until May 2012 when the Financial Industry Regulatory Authority (FINRA) barred him from the securities industry.
According to the information and documents filed in court, between August 2007 and January 2013, SMEGAL convinced at least 14 investment advisory clients to invest in entities in which SMEGAL had an undisclosed ownership interest or otherwise controlled the investment vehicle. SMEGAL often described the investments as conservative and guaranteed specific rates of return to the clients. SMEGAL did not disclose his personal stake in these investments to his clients.
According to the information and documents filed in court, SMEGAL fraudulently convinced his clients to invest approximately $5.14 million into these entities. He diverted $825,900 of those funds to his personal bank account. As part of an effort to hide this theft, SMEGAL often routed the money through multiple bank accounts before depositing it into his personal account. In order to keep the scheme going, SMEGAL sometimes made Ponzi-type payments to investors.
According to the information and documents filed in court, just prior to being barred by FINRA, in November 2011, Wells Fargo, where SMEGAL had been working, terminated his employment. SMEGAL had not disclosed to his employer that he had a financial interest in all of the entities to which he steered his investment advisory clients. After he was terminated, SMEGAL led certain clients to believe that he was still employed by Wells Fargo.
This case is the result of an investigation conducted by the FBI and the United States Postal Inspection Service.
This case is being prosecuted by Assistant U.S. Attorney David M. Maria.
Defendant Information:
BRADLEY SMEGAL, 63
Bainbridge Island, Wash.
Charges:
-
Securities fraud, 2 counts
[1] The charges contained in the information are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
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Repeat Sex Offender Sentenced to 15 Years in Prison for Receiving Child PornographyRead the Press Release
United States Attorney Andrew M. Luger today announced the sentencing of TERRANCE MICHAEL PICK, 68, for receiving child pornography. PICK, who pleaded guilty on March 23, 2016, was sentenced today before Senior U.S. District Judge Ann D. Montgomery in U.S. District Court in Minneapolis, Minn.
“We are grateful to our partners at the Internet Crimes Against Children Task Force for helping us investigate this case,” said Assistant United States Attorney Laura M. Provinzino. “Child pornography is a crime that has profound repercussions for the victims throughout their lifetimes. This is a just sentence for a man with a troubling history of harming children.”
“This disturbing case is an example of why investigators must continue to uncover and bring to justice those who would prey on children,” said Minnesota Bureau of Criminal Apprehension Superintendent Drew Evans. “The Internet Crimes Against Children Task Force will continue to identify and investigate predators who would conduct such criminal acts with such vulnerable victims.”
According to the defendant’s guilty plea and documents filed in court, PICK had several thousand electronic images and almost 200 videos of child pornography. The search history on PICK’s web browser also included nefarious phrases such as “training them young.”
According to the defendant’s guilty plea and documents filed in court, PICK was convicted of second-degree manslaughter in 1974 in Stearns County when he killed a two-year-old child. The child bled to death from internal injuries caused by PICK. On January 20, 1988 PICK was convicted of first-degree criminal sexual conduct in Wright County for sexually assaulting his 7-year-old niece and her 8-year-old friend.
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 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.
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 led by the Minnesota Bureau of Criminal Apprehension, with assistance from the Meeker County Sheriff’s Office, the Eden Valley Police Department and the Federal Bureau of Investigation.
This case was prosecuted by Assistant U.S. Attorney Laura M. Provinzino.
Defendant Information:
TERRANCE MICHAEL PICK, 68
Eden Valley, Minn.Convicted:
• Receipt of child pornography, 1 countSentenced:
• 15 years in prison
• 15 years of supervised releaseInvestment Advisor Pleads Guilty to Defrauding Investors of More Than $1.2 MillionRead the Press Release
The United States Attorney’s Office for the District of Minnesota announced the guilty plea of DAVID BLAINE WELLIVER, 56, for defrauding investors in the Dblaine Fund, a mutual fund for which WELLIVER acted as investment adviser, of at least $1.2 million. WELLIVER pleaded guilty to one count of securities fraud today before Senior U.S. District Judge Paul A. Magnuson.in U.S. District Court in St. Paul, Minn.
“Today's guilty plea demonstrates how federal law enforcement works together to help put an end to the criminal behavior of those who prey on investors for their personal financial gain,” said Special Agent in Charge Shea Jones of IRS Criminal Investigation. “IRS Criminal investigators will continue to use their financial expertise to identify these types of investor fraud schemes.”
According to the defendant’s guilty plea, WELLIVER was the CEO and CIO of Dblaine Capital, LLC, an investment advisory company he founded in Buffalo, Minn. In September 2010, WELLIVER negotiated an agreement with Lazy Deuce Capital Company, LLC (Lazy Deuce), to purportedly finance the merger between Dblaine Capital and other mutual funds.
According to the defendant’s guilty plea, WELLIVER, in 27 separate transactions between October 2010 and May 2011, borrowed a total of $4 million from Lazy Deuce. Aside from a $95,000 payment to acquire the assets of a mutual fund, WELLIVER did not use any of the other proceeds of the Lazy Deuce loans to acquire mutual funds as he had represented to Lazy Deuce. Instead, WELLIVER diverted over $500,000 in proceeds from the Lazy Deuce loans to his own personal use, including for landscaping and interior decorating at his personal residence, to purchase land adjacent to his personal residence, to buy a personal vehicle, and to pay for his son’s college tuition.
According to the defendant’s guilty plea, between December 16, 2010, and April 15, 2011, WELLIVER caused $1.725 million in Dblaine Fund investors’ money to be invested in a shell company formed by several Lazy Deuce principals, called Semita Partners LLC (Semita). At the time WELLIVER made the investments in Semita, he knew that Semita was a shell company formed by principals of Lazy Deuce – the same company from which Dblaine Capital had borrowed money – and that Semita had no operations. On December 31, 2010, in order to meet a series of redemptions in the Dblaine Fund, WELLIVER liquidated nearly all of the stocks held by the Dblaine Fund. Following this liquidation, the Dblaine Fund’s only holdings consisted of worthless Semita shares and cash held in a money market account.
As a result of WELLIVER’s fraud scheme, Dblaine Fund investors lost more than $1.2 million.
This case is the result of an investigation conducted by the United States Postal Inspection Service, the Federal Bureau of Investigation, and the Internal Revenue Service – Criminal Investigation.
This case is being prosecuted by Assistant United States Attorneys Kimberly A. Svendsen and Benjamin F. Langner.
Defendant Information:DAVID BLAINE WELLIVER, 56
Buffalo, Minn.Convicted:
• Securities fraud, 1 count