District of Minnesota

Acting United States Attorney Gregory G. Brooker today announced a federal indictment charging SCOTT FRANCIS FORTIER, 38, with production and possession of child pornography. FORTIER was indicted on April 12, 2017, and will make his initial appearance in United States District Court later this week.

 

According to the indictment and documents filed in court, FORTIER was associated for many years with Circle R Ranch (“the Camp”), a co-ed horseback riding camp located in Todd County, Minn. Through his involvement with the Camp, FORTIER met a 17-year-old minor (“Minor Victim #1). On September 9, 2016, FORTIER invited Minor Victim #1 and her 15-year-old friend (Minor Victim #2) to his house in Blaine, Minn., where he gave them both alcohol and induced the two minors to engage with him in sexually explicit conduct. FORTIER used his cell phone to produce multiple videos of Minor Victim #1 and Minor Victim #2 engaged in that activity. In addition, FORTIER also possessed on his computer videos of prepubescent minors engaging is sexually explicit conduct.

 

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorney’s Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

 

This case is the result of an investigation conducted by the FBI.

 

This case is being prosecuted by Assistant U.S. Attorney Carol M. Kayser.

 

 

Defendant Information:

 

SCOTT FRANCIS FORTIER, 38

Blaine, Minn.

 

Charged:

• Production of child pornography, 4 counts
• Possession of child pornography, 1 count

 

 

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The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

 

Acting United States Attorney Gregory G. Brooker today announced a federal indictment charging SHAWN ROBERT DOOLING, 50, founder of a renewable energy company, with three counts of mail fraud, one count of wire fraud, and one count of engaging in a monetary transaction in criminally derived property.

 

As alleged in the indictment, in 2009, DOOLING founded Renewable Energy SD, LLC (“RESD”), a wind energy company headquartered in Excelsior, Minn. From 2010 through 2013, DOOLING executed a scheme to defraud RESD customers by falsely representing that for an agreed-upon contract price, his company would build and maintain wind energy turbines on customers’ land. DOOLING marketed the electricity-generating wind turbines as a way for customers to save money by generating enough electricity to supply their needs and eventually sell excess electricity to utility companies.

 

As alleged in the indictment, DOOLING told customers that he would send a portion of their money to a third-party manufacturer as a down payment to reserve a specific wind turbine. Then, when the wind turbine was completed and ready to be shipped, he would send the remaining portion of the money to the manufacturer to complete the wind turbine purchase In reality, instead of reserving and purchasing wind turbines for his customers, DOOLING often took customers’ money out of RESD bank accounts for his own personal use and benefit. As part of the scheme, DOOLING also used some customers’ money to pay for other customers’ wind turbine projects.

 

As alleged in the indictment, DOOLING furthered his scheme by lying to customers about the status of their orders and told customers that RESD’s failure to deliver the wind turbines was due to manufacturer delays. As a result of this scheme, more than 60 customers paid a combined total of more than $13 million to DOOLING and his company and never received the promised wind turbines or a refund of their money. In total, DOOLING used approximately $2 million from RESD’s bank accounts for his own personal benefit.

 

This case is the result of an investigation conducted by the FBI.

 

Assistant U.S. Attorneys Surya Saxena and John Kokkinen are prosecuting the case.

 

 

Defendant Information:

 

SHAWN ROBERT DOOLING, 50

Excelsior, Minn.

 

Charges:

• Mail fraud, 3 counts
• Wire fraud, 1 count
• Engaging in a monetary transaction in criminally derived property, 1 count

 

 

 

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The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Acting United States Attorney Gregory G. Brooker announced an indictment charging JAYSEN LANE HEYER, 38, with one count of possession with intent to distribute methamphetamine and two counts of being a felon in possession of a firearm. On April 13, 2017, HEYER made his initial appearance in U.S. District Court in Duluth, Minn.

 

According to the indictment, on December 28, 2016, HEYER was found to be in possession of approximately 210 grams of methamphetamine, a Smith and Wesson M&P 40 pistol and a Luger 9mm Tech 9 pistol. Because he is a felon, HEYER is prohibited under federal law from possessing a firearm at any time.

 

If convicted, HEYER faces a potential maximum penalty of 40 years in prison for drug possession and up to 10 years for being a felon in possession of a firearm. All sentences will be determined by a federal district court judge.

 

This case is the result of an investigation conducted by the Itasca County Sheriff’s Office, Minnesota Bureau of Criminal Apprehension, Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), and the U.S. Marshall’s Service.

 

This case is being prosecuted by Assistant United States Attorney Deidre Y. Aanstad.

 

 

Defendant Information:

 

JAYSEN LANE HEYER, 38

Squaw Lake, Minn.

 

Charges:

• Possession with Intent to Distribute Methamphetamine, 1 count
• Felon in Possession of a Firearm, 2 counts

 

 

 

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The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

A Russian citizen pleaded guilty today for his participation in a criminal enterprise that installed and exploited malicious computer software (malware) on tens of thousands of computer servers throughout the world to generate millions of dollars in fraudulent payments.  

Acting Assistant Attorney General Kenneth A. Blanco of the Department of Justice’s Criminal Division, Acting U.S. Attorney Gregory G. Brooker of the District of Minnesota and Assistant Director Scott Smith of the FBI’s Cyber Division made the announcement.

Maxim Senakh, 41, of Velikii Novgorod, Russia, pleaded guilty today to conspiracy to violate the Computer Fraud and Abuse Act and to commit wire fraud before U.S. District Judge Patrick J. Schlitz of the District of Minnesota.  Sentencing is set for Aug. 3, 2017.  Senakh was indicted on Jan. 13, 2015, and was subsequently arrested by Finnish authorities, who extradited him to the United States. 

According to admissions made in connection with the plea agreement, the malware, which is known as Ebury, harvested log-on credentials from infected computer servers, allowing Senakh and his co-conspirators to create and operate a botnet comprising tens of thousands of infected servers throughout the world, including thousands in the United States.  Senakh and his co-conspirators used the Ebury botnet to generate and redirect internet traffic in furtherance of various click-fraud and spam e-mail schemes, which fraudulently generated millions of dollars in revenue.  As part of the plea, Senakh admitted that he supported the criminal enterprise by creating accounts with domain registrars which helped build the Ebury botnet infrastructure and personally profited from traffic generated by the Ebury botnet. 

The FBI Minneapolis Field Office is investigating the case.  Senior Counsels Aaron Cooper and Benjamin Fitzpatrick of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Kevin Ueland of the District of Minnesota are prosecuting this case.  The Department of Justice extends its thanks to the government of Finland, the Bundeskriminalamt (BKA), CERT-Bund and the cyber security firm ESET.  The Criminal Division’s Office of International Affairs also provided substantial assistance.

WASHINGTON – A Russian citizen pleaded guilty today for his participation in a criminal enterprise that installed and exploited malicious computer software (malware) on tens of thousands of computer servers throughout the world to generate millions of dollars in fraudulent payments.

 

Acting Assistant Attorney General Kenneth A. Blanco of the Department of Justice’s Criminal Division, Acting U.S. Attorney Gregory G. Brooker of the District of Minnesota and Assistant Director Scott Smith of the FBI’s Cyber Division made the announcement.

 

MAXIM SENAKH, 41, of Velikii Novgorod, Russia, pleaded guilty today to conspiracy to violate the Computer Fraud and Abuse Act and to commit wire fraud before U.S. District Judge Patrick J. Schlitz of the District of Minnesota. Sentencing is set for August 3, 2017. SENAKH was indicted on January 13, 2015, and was subsequently arrested by Finnish authorities, who extradited him to the United States.

 

According to admissions made in connection with the plea agreement, the malware, which is known as Ebury, harvested log-on credentials from infected computer servers, allowing SENAKH and his co-conspirators to create and operate a botnet comprising tens of thousands of infected servers throughout the world, including thousands in the United States. SENAKH and his co-conspirators used the Ebury botnet to generate and redirect internet traffic in furtherance of various click-fraud and spam e-mail schemes, which fraudulently generated millions of dollars in revenue. As part of the plea, SENAKH admitted that he supported the criminal enterprise by creating accounts with domain registrars which helped build the Ebury botnet infrastructure and personally profited from traffic generated by the Ebury botnet.

 

The FBI Minneapolis Field Office is investigating the case. Senior Counsels Aaron Cooper and Benjamin Fitzpatrick of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Kevin Ueland of the District of Minnesota are prosecuting this case. The Department of Justice extends its thanks to the government of Finland, the Bundeskriminalamt (BKA), CERT-Bund and the cyber security firm ESET. The Criminal Division’s Office of International Affairs also provided substantial assistance.

 

 

Defendant Information:

 

Maxim Senakh, 41

Velikii Novgorod, Russia

 

Convicted:

• Conspiracy to Violate the Computer Fraud and Abuse Act, and to Commit Wire Fraud, 1 count

 

 

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Acting United States Attorney Gregory G. Brooker today announced the sentencing of STERLING KYLE ANDERSEN, 24, to 30 years in prison for second degree murder. ANDERSON, who was indicted on February 1, 2016, pleaded guilty on November 9, 2016, before U.S. District Judge Ann D. Montgomery in Minneapolis, Minn.

 

According to the defendant’s guilty plea and documents filed in court, on October 7, 2015, while babysitting his girlfriend’s three-year-old son (identified as S.W.W.), ANDERSEN became agitated when he was not able to stop S.W.W. from crying. As a result of his frustration, ANDERSEN brutally assaulted S.W.W. with his fists and knees causing traumatic internal and external injuries. When emergency personnel and law enforcement arrived, ANDERSEN said that S.W.W. had fallen in the woods while running and hit his head, but ultimately confessed to the brutal assault. The victim was transported to the hospital via helicopter but was pronounced dead shortly after arriving.

 

This case is the result of an investigation conducted by the Minnesota Bureau of Criminal Apprehension, White Earth Police Department, Becker County Sheriff’s Office, and the FBI.

 

Assistant U.S. Attorney Deidre Y. Aanstad prosecuted the case.

 

 

Defendant Information:

 

STERLING KYLE ANDERSEN, 24

Duluth, Minn.

 

Convicted:

• Murder in the second degree, 1 count

 

Sentenced:

• 360 months in prison

• Five years supervised release

   

   

   

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Acting United States Attorney Gregory G. Brooker today announced a federal indictment charging TIMOTHY WAYNE GUTHMAN, 43, a licensed chiropractor, with one count of conspiracy to commit health care fraud and one count of mail fraud. GUTHMAN made his initial appearance last week in U.S. District Court in Minneapolis.

 

Under the Minnesota No-Fault Automobile Insurance Act, auto insurance policies must include a personal injury protection provision (PIP). The PIP provision carries a minimum coverage amount of $40,000 for expenses resulting from injuries sustained in an automobile accident, $20,000 of which may be used for medical expenses.

 

According to the indictment, from 2012 through 2015, GUTHMAN engaged in a scheme to defraud automobile insurance companies by submitting fraudulent no-fault insurance claims and receiving reimbursements through his chiropractic clinics. These claims were for services that either were not medically necessary or were never rendered. GUTHMAN prescribed and purportedly provided services that were not determined medically necessary by the physical condition of each patient, but were instead designed to fraudulently maximize reimbursement from the patients’ automobile insurance companies.

 

According to the indictment, in order to get more patients to come to chiropractic appointments for treatment they did not need, GUTHMAN would make illegal kickback payments to patient recruiters, known as “runners.” The kickback payments typically ranged between $500 and $1,500 per automobile accident patient that the runner brought to GUTHMAN’S clinics. GUTHMAN would often require a refund of the kickback payment if the patient failed to attend a minimum number of treatment sessions. In order to keep the patients coming back for medically unnecessary appointments, the runners often paid illegal kickbacks to the patients.

 

This case is the result of an investigation conducted by the Minnesota Department of Commerce Fraud Bureau and the FBI.

 

Assistant U.S. Attorneys John E. Kokkinen and David M. Maria are prosecuting the case.

 

 

Defendant Information:

 

TIMOTHY WAYNE GUTHMAN, 43

Inver Grove Heights, Minn.

 

Charges:

• Conspiracy to commit health care fraud, 1 count
• Conspiracy to commit mail fraud, 1 count

 

 

 

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The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Acting United States Attorney Gregory G. Brooker today announced a federal indictment charging EDWARD S. ADAMS, an attorney and university law professor, with orchestrating an elaborate fraud scheme to embezzle millions of dollars of investors’ funds. ADAMS is expected to make his initial appearance in U.S. District Court in Minneapolis later this week.

 

“The defendant’s brazen theft of millions of dollars of investor’s funds over the course of several years is compounded by the fact that he holds positions of public trust as an attorney and law school faculty member,” said FBI Special Agent in Charge for the Minneapolis Division Richard T. Thornton. “The FBI remains committed to working with our law enforcement partners to detect corporate crime in all its forms and bring those responsible to justice.”

 

“The U.S. Postal Inspection Service vigorously pursues prosecution of criminals who callously defraud our citizens using the U.S. Mail. Postal Inspectors are committed to ensuring public confidence in the U.S. Mail. Fraud of this magnitude is not a victimless crime. Honest, hardworking Americans pay the price when fraudsters wrongfully steal their hard-earned money.” said Postal Inspector in Charge, Craig Goldberg.

 

“IRS Criminal Investigation Special Agents are proud to work with our law enforcement partners and the U.S. Attorney’s Office to investigate and prosecute individuals, such as Edward Adams, who attempt to enrich themselves by fraudulent means,” stated Shea Jones, Special Agent in Charge of the St. Paul Field Office. “IRS Criminal Investigation is committed to using our financial investigative expertise to stop investment fraud schemes and other types of white collar crime."

 

According to the indictment and documents filed in court, Apollo Diamond, Inc. (“Apollo Diamond”) and Apollo Diamond Gemstone Corporation (“Apollo Gemstone”) (collectively, “Apollo”) was a privately held company that produced lab-grown diamonds. ADAMS, a Minneapolis lawyer and law professor, became involved with Apollo through familial relations and held various managerial titles with the company such as CFO, Secretary, EVP, and General Counsel.

 

According to the indictment, in 2003, at the direction of ADAMS, Apollo retained ADAMS’ financial services firm, Equity Securities, Inc., to provide investment banking services and to raise money for Apollo. Equity Securities raised more than $25 million for Apollo, for which Equity Securities received approximately $4 million in commission. Following the fundraising efforts, ADAMS continued to handle the ongoing financial matters for Apollo with minimal oversight from the Board of Directors.

 

According to the indictment, from 2006 through 2009, ADAMS opened multiple bank accounts with various titles including “RL Investments,” “DL Investments,” “ADR Investments,” “Apollo Diamond, Inc.,” and “Apollo Diamond Gemstone Corporation,” none of which were authorized by Apollo or its Board of Directors. ADAMS was the sole signatory and the only person with access to the accounts and the account statements, which were mailed to his personal addresses.

 

According to the indictment, ADAMS told investors that they could purchase shares in Apollo by making their checks payable to the accounts he controlled. He promised that their money would be used for Apollo’s operations, including working capital, funding additional diamond growing equipment, and research and development, when, in reality, ADAMS was embezzling the money. For example, ADAMS deposited approximately $2,400,000 of investors’ funds into the RL Investments account and then surreptitiously diverted more than $1,200,000 for his own personal use, an additional $101,500 to his law firm’s bank account, and distributed the remainder of the funds to various individuals as determined by ADAMS.

 

According to the indictment, in 2010, due in part to ADAMS’ embezzlement, Apollo could no longer meet its financial obligations and was on the brink of insolvency. To prevent his theft from being uncovered through bankruptcy litigation, ADAMS devised a scheme to appease shareholders by convincing them to convert their worthless Apollo stock into stock in a new company, which ADAMS secretly controlled. In March 2011, ADAMS and his law partner (identified in the indictment as “M.M.”) created a privately held company called Scio Diamond Technology Corporation (“Private Scio”), of which ADAMS and his partner were the sole shareholders and board members. ADAMS and his partner then notified shareholders that Private Scio would acquire the assets of Apollo for approximately $2,000,000 and that shareholders, without expending any additional money, would receive the same number of shares in the new entity. However, Private Scio was not yet capitalized and did not have the funds to complete the asset purchase. To further this scheme, ADAMS orchestrated a “reverse merger” transaction between Private Scio and Krossbow Holding Corporation, a publicly traded shell company, which resulted in a new publicly traded company, also called Scio Diamond Technology Corporation (“Public Scio”).

 

According to the indictment, ADAMS used Public Scio to raise the $2,000,000 necessary to complete the Apollo asset purchase, leading the former Apollo investors to believe that their investments were safe and that they now held shares in a publicly traded, operational company. However, ADAMS used Public Scio’s acquisition of Apollo as yet another opportunity for personal profit and funneled the majority of the $2,000,000 into bank accounts controlled by ADAMS. In total, from 2006 through 2013, ADAMS stole from investors more than $4.38 million and paid to his own law firm more than $2.54 million.

 

This case is the result of an investigation conducted by the FBI, United States Postal Inspection Service, and the Criminal Investigation Division of the IRS.

 

Assistant U.S. Attorneys David M. Maria and John E. Kokkinen are prosecuting the case.

 

 

Defendant Information:

 

EDWARD S. ADAMS, 64,

Minneapolis, Minn.

 

Charges:

• Mail fraud, 8 counts

• Wire fraud, 6 counts

   

   

   

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The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Acting United States Attorney Gregory G. Brooker announced a 13 count indictment charging RYAN RANDALL GILBERTSON, 41, founder of Dakota Plains, Inc., DOUGLAS VAUGHN HOSKINS, 48, and NICHOLAS HARRIS SHERMETA, 49, with wire fraud stemming from a complex stock manipulation scheme that resulted in the company owing more than $30 million in fraudulent bonus payments. The defendants are expected to make their initial appearances in U.S. District Court in Minneapolis within the next week.

 

“This fraud scheme, like other financial crimes involving the mail, erodes public trust and threatens the integrity of the U.S. Mail," said Craig Goldberg, Inspector in Charge of the U.S. Postal Inspection Service, Denver Division, which includes Minnesota. "It is critical we make every effort to protect shareholders from being cheated. To help protect the public and ensure America's confidence in the U.S. Mail, Postal Inspectors are committed to working with our federal, state and local partners to aggressively investigate any fraud in which the mail is used.”

 

“IRS Criminal Investigation is committed to unraveling complex financial transactions where individuals, such as Ryan Randall Gilbertson, Douglas Vaughn Hoskins, and Nicholas Harris Shermeta operated a stock scheme to defraud investors,” stated Shea Jones, Special Agent in Charge of IRS-CI’s St. Paul Field Office. “Those individuals who engage in this type of stock manipulation fraud should know they will not go undetected and will be held accountable."

 

“As alleged, each of the defendants played a key role in this complex fraud scheme,” said Special Agent in Charge Richard T. Thornton of the Minneapolis Division of the FBI. “The FBI will continue to work closely with our law enforcement partners to ensure those who engage in this type of criminal behavior will be brought to justice.”

 

According to the indictment, in December 2008, GILBERTSON and his business partner (identified in the indictment as “Individual A”) founded Dakota Plains, Inc. (Dakota Plains), a privately held Minnesota corporation that owned and operated a transloading facility in New Town, North Dakota, for loading crude oil onto trains for transport to oil refineries.

 

According to the indictment, in January 2011, GILBERTSON and his partner caused Dakota Plains to issue a $1.9 million cash dividend to shareholders, from which GILBERTSON and his ex-wife received nearly $450,000 in dividend payments. That same month, GILBERTSON and his partner caused Dakota Plains to issue $3.5 million in promissory notes (the “Senior Notes”) from which GILBERTSON purchased a $1 million promissory note and another $100,000 promissory note in the name of Total Depth Foundation, GILBERTSON’S nonprofit corporation. In April 2011, GILBERTSON and his partner caused Dakota Plains to issue $5.5 million in promissory notes (the “Junior Notes”) in which GILBERTSON instructed the company to include an “additional payment” provision stating that the noteholders would receive bonus payments based on the price of Dakota Plains’ stock at the time of an initial public offering (“IPO”). From the Junior Notes, GILBERTSON purchased a $2 million promissory note and another $250,000 promissory note on behalf of Total Depth Foundation.

 

According to the indictment, in November 2011, at GILBERTSON’S direction, Dakota Plains combined the Senior Notes and Junior Notes into a series of consolidated promissory notes (the “Consolidated Notes”). GILBERTSON then directed Dakota Plains to alter the “additional payment” provision from the Junior Notes to (a) apply to the new total value of the Consolidated Notes; and (b) apply not only in the event of an IPO but also if Dakota Plains became public via a reverse merger. Specifically, the “additional payment” provision provided that if Dakota Plains’ average stock price exceeded $2.50 per share during the first 20 days of public trading, the noteholders would receive bonus payments which would increase relative to the average stock price.

 

According to the indictment, as part of the scheme, in late 2011 and early 2012, GILBERTSON arranged for Dakota Plains to become a publicly traded company by entering into a “reverse merger” agreement with MCT Holding Corporation (“MCT”), a public shell company that owned a single defunct tanning salon in Salt Lake City, Utah. At GILBERTSON’S direction, HOSKINS, who was a player and manager for GILBERTSON’S polo team, purchased 50,000 freely trading shares of MCT stock and opened a trading account with a broker in Salt Lake City, Utah, which would allow him to sell the MCT stock. HOSKINS, who had no prior investing experience or assets and a significant amount of debt, received $30,000 from GILBERTSON to purchase the stock. On March 23, 2012, following the merger of Dakota Plains with MCT, Dakota Plains Holdings became a publicly traded company.

 

According to the indictment, on the first day of public trading, HOSKINS offered to sell his newly acquired shares for an inflated price of approximately $12 per share at GILBERTSON’S direction, and continued to do so throughout the first 20 days of trading following the reverse merger. During this same time period, SHERMETA, who had a series of bogus consulting agreements with GILBERTSON, began purchasing shares of Dakota Plains stock on behalf of both himself and his clients at inflated prices without their knowledge. Throughout the 20-day period following the reverse merger, GILBERTSON, with the help of SHERMETA and HOSKINS, manipulated the price of Dakota Plains stock to increase the average trading price to $11.30 per share which, as stated in the “additional payment” provision in the Consolidated Notes, triggered a bonus payment of approximately $32,851,800 to GILBERTSON and the other noteholders. GILBERTSON, who controlled 40 percent of the Consolidated Notes, was entitled to more than $12 million in bonus payments.

 

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.

 

This case is being prosecuted by Assistant United States Attorneys Joseph H. Thompson and Kimberly A. Svendsen.

 

 

Defendant Information:

 

RYAN RANDALL GILBERTSON, 41

Delano, Minn.

 

Charges:

• Wire Fraud, 13 counts

 

DOUGLAS VAUGHN HOSKINS, 48,

Wayzata, Minn.

 

Charges:

• Wire Fraud, 7 counts

 

NICHOLAS HARRIS SHERMETA, 49

Minnetonka, Minn.

 

Charges:

• Wire Fraud, 5 counts

   

   

   

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The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Acting United States Attorney Gregory G. Brooker announced an indictment charging JEFFREY MARCUS LUCAS, 62, with one count of conspiracy to distribute methamphetamine, one count of possession with intent to distribute methamphetamine, one count of possession of a stolen firearm, and one count of being a felon in possession of a firearm. On March 17, 2017, LUCAS made his initial appearance in U.S. District Court in St. Paul, Minn.

 

According to the indictment and documents filed in state court, from 2009 through August 2016, LUCAS, operating from his residence in Isanti, Minn., sold and traded methamphetamine for stolen property and firearms.

 

According to the indictment and documents filed in state court, on August 8, 2016, law enforcement executed a search warrant for the property, which includes a house, two campers and several pole barns. As a result of the search, law enforcement officers recovered several stolen firearms, ammunition and more than $25,000 in stolen property.

 

This case is the result of an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) and the East Central Drug and Violent Offenders Task Force, with assistance from the Braham Police Department, Cambridge Police Department, Isanti Police Department, Isanti County Sheriff’s Office, and the Anoka Hennepin Drug Task Force.

 

This case is being prosecuted by Assistant United States Attorney David P. Steinkamp.

 

Defendant Information:

 

JEFFREY MARCUS LUCAS, 62

Isanti, Minn.

 

Charges:

• Conspiracy to Distribute Methamphetamine, 1 count

• Possession with Intent to Distribute Methamphetamine, 1 count

• Possession of Stolen Firearms, 1 count

• Felon in Possession of a Firearm, 1 count

   

   

   

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The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

“At the request of the Attorney General of the United States, I have submitted my resignation to the President, effective immediately. Serving the people of Minnesota as their United States Attorney has been the most fulfilling and rewarding experience of my professional life. The Office that I am leaving this evening is comprised of the most talented and motivated professionals I have ever known. The women and men of the United States Attorney’s Office are deeply committed to public service. I was fortunate to work alongside them for the past three years. I also have had the honor of working with federal, state and local law enforcement on some of the most difficult and impactful cases our state has faced. All Minnesotans should know that we are protected by these highly skilled law enforcement officials. I admire them greatly. Finally, I have had the honor of developing close working relationships and deep friendships with diverse communities across Minnesota. I am proud of our accomplishments and encourage the work to continue.”

 

 

 

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The Justice Department announced that Daniel George Fisher, 57, of Minneapolis, Minnesota was sentenced today in the District of Minnesota to 12 months in prison and three years of supervised release for mailing a letter in which he threatened to blow up an Islamic Center.

On Nov. 30, 2016, Fisher pleaded guilty to violating 18 U.S.C. § 247, for obstructing, by threat of force, the free exercise of religious beliefs.  According to his guilty plea, in September 2015, Fisher wrote and mailed an anonymous letter to the Tawfiq Islamic Center (TIC), located in Minneapolis, and threatened to “blow up your building with all you immigrants in it.”  The letter also included slurs and disparaging statements, evincing the Defendant’s strong anti-Muslim animus.

Fisher told investigators that he had been increasingly angry with Muslims since the 9/11 terrorist attacks in New York and DC.  Fisher admitted that he sent the letter to scare and intimidate the TIC's members so they would stop building the Center in his former neighborhood.

“The free exercise of one’s religious beliefs is a fundamental tenet of our Democracy,” said Acting Assistant Attorney General Tom Wheeler.  “This sentence sends a message that anyone who threatens others with violence because of religious intolerance will face significant consequences.”

“My Office takes very seriously any threat of violence against an individual or their place of worship based on race, religion or cultural practices,” said U.S. Attorney Andrew Luger of the District of Minnesota. “We will continue to work closely with the FBI to prosecute these types of crimes, which threaten religious freedoms and violate fundamental civil rights.”

“The sentence handed down today committing the defendant to federal prison reflects the severity of his appalling hate crime,” said Special Agent in Charge Richard T. Thornton of the FBI's Minneapolis Division. “The FBI will continue to prioritize, investigate, and bring to justice those who commit federal hate crimes and other civil rights violations.”

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 prosecuted the case.

United States Attorney Andrew M. Luger today announced the sentencing of DANIEL GEORGE FISHER, 57, to 12 months in prison for threatening to blow up the Tawfiq Islamic Center in Minneapolis. FISHER pleaded guilty on November 30, 2016, before U.S. District Judge Wilhelmina M. Wright in Saint Paul, Minn.

 

"My Office takes very seriously any threat of violence against an individual or their place of worship based on race, religion or cultural practices,” said United States Attorney Andrew Luger. "We will continue to work closely with the FBI to prosecute these types of crimes, which threaten religious freedoms and violate fundamental civil rights."

 

“The free exercise of one’s religious beliefs is a fundamental tenet of our Democracy,” said Acting Assistant Attorney General Tom Wheeler. “This sentence sends a message that anyone who threatens others with violence because of religious intolerance will face significant consequences.”

 

"The sentence handed down today committing the defendant to federal prison reflects the severity of his appalling hate crime," said Special Agent in Charge Richard T. Thornton of the FBI's Minneapolis Division. "The FBI will continue to prioritize, investigate, and bring to justice those who commit federal hate crimes and other civil rights violations."

 

According to the defendant’s guilty plea and documents filed in court, 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 and documents filed in court, 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.

 

Assistant United States Attorney Angela Munoz-Kaphing and Trial Attorney Olimpia Michel of the Civil Rights Division’s Criminal Section prosecuted the case.

 

 

Defendant Information:

 

DANIEL GEORGE FISHER, 57

No known address

 

Convicted:

• Obstruction of Persons in the Free Exercise of Religious Beliefs, 1 count

 

Sentenced:

• 12 months in prison

• Supervised release term of three years

• Six months of community confinement

 

 

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United States Attorney’s Office, District of Minnesota: (612) 664-5600

 

United States Attorney Andrew M. Luger today announced the guilty plea of WALLACE DAVID GREGERSON, 65, for operating an embezzlement scheme to defraud his employees and steal more than $755,000 from their pension plans. The defendant pleaded guilty on March 6, 2017, before United States District Judge Joan N. Ericksen in Minneapolis, Minn.

 

According to his guilty plea 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 his guilty plea 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. Between December 2014 and March 2015, after Lighting Affiliates had closed, GREGERSON drained his former employees’ individual 401(k) accounts by withdrawing a total of approximately $80,667.23.

 

According to his guilty plea 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 made at employee requests.

 

According to his guilty plea 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, tickets for sporting events, clothing purchases, and tuition payments for 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, 1 count

   

 

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United States Attorney’s Office, District of Minnesota: (612) 664-5600

United States Attorney Andrew M. Luger today announced the guilty plea of JOHN L. STEELE, 45, for his role in a multi-million dollar scheme to fraudulently obtain payments to settle sham copyright infringement lawsuits by lying to state and federal courts throughout the country. On March 6, 2017, STEELE pleaded guilty to conspiracy to commit mail fraud and wire fraud and conspiracy to commit money laundering before U.S. District Judge Joan N. Ericksen of the District of Minnesota. Sentencing has not yet been scheduled.

 

“John Steele and his co-defendant devised an egregious fraudulent scheme by abusing their positions of trust and exploiting our justice system,” said U.S. Attorney Andrew Luger. “My Office will continue working diligently to ensure that criminals who engage in corrupt and fraudulent behavior are held responsible for their actions, regardless of their position or profession.”

 

According to STEELE’S admissions in the plea, between 2011 and 2014, STEELE and co-defendant PAUL HANSMEIER, both practicing lawyers, executed a scheme to fraudulently obtain more than $6 million by threatening copyright lawsuits against individuals who supposedly downloaded pornographic movies from file-sharing websites. STEELE admitted that he and HANSMEIER created 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. STEELE and HANSMEIER then filed bogus copyright infringement lawsuits that concealed both their role in distributing the movies, and their personal stake in the outcome of the litigation. After fraudulently inducing courts to give him and co-defendants the power to subpoena Internet service providers and to thereby identify the subscriber who controlled the IP address used to download the movie, STEELE and HANSMEIER used extortionate tactics such as letters and phone calls that threatened victims with enormous financial penalties and public embarrassment unless they agreed to pay a $3,000 settlement fee.

 

To distance themselves from the specious lawsuits and any potential fallout, STEELE admitted that he and co-defendants created and used Prenda Law, among other law firms, to pursue their claims.

 

According to the plea, after various courts began to restrict the defendants’ ability to sue multiple individuals in the same copyright lawsuit, the defendants changed their tactics and began filing lawsuits falsely alleging that computer systems belonging to their sham clients had been hacked. To facilitate their phony “hacking” lawsuits, STEELE and HANSMEIER recruited “ruse defendants,” who had been caught downloading pornography from a file-sharing website, to be sued in exchange for STEELE and HANSMEIER waiving their settlement fees while pursuing claims against their supposed “co-conspirators.”

 

According to the plea, as courts began to uncover the defendants’ unscrupulous litigation tactics, judges began denying the defendants’ requests to subpoena ISPs, dismissing lawsuits, accusing STEELE and co-defendants of deceptive and fraudulent behavior and imposing sanctions against STEELE and his associates. For example, on May 6, 2013, the U.S. District Court for the Central District of California issued an order imposing sanctions against the defendants. In total, STEELE and co-defendants obtained approximately $6 million from the fraudulent copyright lawsuits.

 

PAUL R. HANSMEIER, of St. Paul, Minnesota, was charged as a co-defendant in an indictment filed on December 16, 2016. The charges contained in the indictment against him are merely accusations, and he is presumed innocent unless and until proven guilty.

 

FBI and IRS-CI are investigating the case. Assistant U.S. Attorneys Benjamin Langner and David Maclaughlin of the District of Minnesota and Senior Trial Counsel Brian Levine of the Criminal Division’s Computer Crime and Intellectual Property Section and are prosecuting the case.

 

Defendant Information:

 

JOHN L. STEELE, 45

Unknown, Pennsylvania

 

Convicted:

• Conspiracy to commit mail fraud and wire fraud, 1 count
• Conspiracy to commit money laundering, 1 count

 

 

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United States Attorney’s Office, District of Minnesota: (612) 664-5600

 

 

An Illinois attorney pleaded guilty today for his role in a multi-million dollar scheme to fraudulently obtain payments to settle sham copyright infringement lawsuits by lying to state and federal courts throughout the country.  

Acting Assistant Attorney General Kenneth A. Blanco of the Department of Justice’s Criminal Division, U.S. Attorney Andrew M. Luger of the District of Minnesota, Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) and Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Division made the announcement.

John L. Steele, 45, currently residing in Pennsylvania, pleaded guilty to conspiracy to commit mail fraud and wire fraud and conspiracy to commit money laundering before U.S. District Judge Joan N. Ericksen of the District of Minnesota.  Sentencing has not yet been scheduled. 

According to Steele’s admissions in the plea, between 2011 and 2014, Steele and co-defendant Paul Hansmeier, both practicing lawyers, executed a scheme to fraudulently obtain more than $6 million by threatening copyright lawsuits against individuals who supposedly downloaded pornographic movies from file-sharing websites.  Steele admitted that he and Hansmeier created 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.  Steele and Hansmeier then filed bogus copyright infringement lawsuits that concealed their role in distributing the movies, as well as their personal stake in the outcome of the litigation.  After fraudulently inducing courts into giving him and co-defendants the power to subpoena Internet service providers and thereby identify the subscriber who controlled the IP address used to download the movie, Steele and Hansmeier used extortionate tactics such as letters and phone calls to threaten victims with enormous financial penalties and public embarrassment unless they agreed to pay a $3,000 settlement fee.

To distance themselves from the specious lawsuits and any potential fallout, Steele admitted that he and co-defendants created and used Prenda Law, among other firms, to pursue their claims.  

According to the plea, after various courts began to restrict the defendant’s ability to sue multiple individuals in the same copyright lawsuit, the defendant changed his tactics and began filing lawsuits falsely alleging that computer systems belonging to their sham clients had been hacked.  To facilitate their phony “hacking” lawsuits, Steele and Hansmeier recruited “ruse defendants,” who had been caught downloading pornography from a file-sharing website, to be sued in exchange for Steele and Hansmeier waiving their settlement fees while pursuing claims against their supposed “co-conspirators.”

According to the plea agreement, as courts began to uncover the defendant’s unscrupulous litigation tactics, judges began denying the defendant’s requests to subpoena ISPs, dismissing lawsuits, accusing Steele and co-defendants of deceptive and fraudulent behavior and imposing sanctions against the Steele and his associates.  For example, on May 6, 2013, the U.S. District Court for the Central District of California issued an order imposing sanctions against the defendant.  In total, the Steele and co-defendants obtained approximately $6 million from the fraudulent copyright lawsuits.

Paul R. Hansmeier, of St. Paul, Minnesota, was charged as a co-defendant in an indictment filed on Dec. 16, 2016.  The charges contained in the indictment against him are merely accusations, and he is presumed innocent unless and until proven guilty.

FBI and IRS-CI are investigating the case.  Senior Trial Counsel Brian Levine of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Benjamin Langner of the District of Minnesota are prosecuting the case.

steele_plea_agreement_1.pdf

On, Feb. 27, 2017, Michael John Harris, 34, was sentenced to six months imprisonment and one year of supervised release for making telephonic threats to two medical clinics in Minneapolis, Minnesota, that provide reproductive health services.    

On March 2, 2016, Harris pleaded guilty to two violations of 18 U.S.C. § 248(a)(1).  During his plea hearing, Harris admitted that on May 12, 2014, he made telephonic threats to two different health clinics in Minneapolis that provide reproductive health services.  In a call to the first clinic, Harris threatened to kill the recipient of the call with his bare hands and to cut the recipient’s head off with a band saw.  In a call to the second clinic, Harris told the recipient that he was going to kill the recipient and the recipient’s co-workers, and that he was going to travel to the clinic and shoot everyone present.  Harris further admitted that he made these threats because the recipient was and has been, and in order to intimidate the recipient and any other person from, obtaining and providing reproductive health services. 

“This defendant threatened these clinic workers with death and brutality,” said Acting Assistant Attorney General Tom Wheeler of the Justice Department’s Civil Rights Division. “The department is pleased that the defendant accepted responsibility and will face consequences for his actions. The Department is committed to vigorously enforcing the civil rights of all individuals in this country.”

“The violence threatened by this defendant against health care workers is unacceptable,” said United States Attorney Andrew M. Luger of the District of Minnesota.  “This sentence should serve as a reminder to individuals who would engage in such threats that the federal government will prosecute these crimes.”

This case is being investigated by the Federal Bureau of Investigation, and is being prosecuted by Trial Attorney Risa Berkower of the Civil Rights Division of the United States Department of Justice and Assistant U.S. Attorney Manda M. Sertich of the U.S. Attorney’s Office for the District of Minnesota.

United States Attorney Andrew M. Luger announced the sentencing of JULIUS LEE BOSTON, 37, to 41 months in prison for filing false income tax returns seeking approximately $135,000. BOSTON pleaded guilty on August 31, 2016, before U.S. District Judge Patrick J. Schiltz.

“At the IRS, protecting taxpayer dollars is a serious matter.  Detecting and catching fraudulent tax refund claims is an integral part of our mission,” said IRS Criminal Investigation Special Agent in Charge Shea Jones of the St. Paul Field Office. “The 41-month sentencing for Julius Boston serves as a strong warning to those who are considering filing false tax returns to obtain fraudulent refunds this filing season.” 

According to the defendant’s guilty plea, between July 2011 and at least August 6, 2012, BOSTON filed almost 100 fraudulent income tax returns with the IRS. In order to file the fraudulent income tax returns, BOSTON convinced various people to provide him with their personal identifying information, including dates of birth and social security numbers, to use in filing the returns. He filed returns in the names of those individuals which reported false or inflated W-2 wage income, false withholding amounts, and other fraudulent information.

According to his guilty plea and documents filed in court, during the course of executing the scheme, BOSTON filed fraudulent claims for tax refunds seeking approximately $135,000. The IRS paid more than $64,000 in tax refunds, which BOSTON had mailed to his home or other addresses to which he had access. He later shared a portion of the proceeds of his fraud with the taxpayers who had provided him with their personal identifying information.

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. Attorney Michelle E. Jones prosecuted the case.

Defendant Information:                                                                                                                     

JULIUS LEE BOSTON, 37

Convicted: • Making false claims for tax refunds, two counts

Sentenced: • 41 months in prison
• Supervised release for a term of three years
• Restitution of $64,139

United States Attorney Andrew M. Luger announced the sentencing of JAIME EDWARD MCCLELLAN, a/k/a “Goldie Armani Callaway,” a/k/a, “Jaime Edward McClennan,” a/k/a, “Armando Blanco,” a/k/a, “Red,” 32, to 15 years in prison for conspiring to distribute heroin and related charges. MCCLELLAN pleaded guilty on October 17, 2016.

According to the defendant’s guilty plea and documents filed in court, between January 2014 and December 2015, MCCLELLAN conspired with others in Minnesota to distribute more than two pounds of heroin. In December 2015, MCCLELLAN sold heroin on at least four separate occasions to undercover law enforcement agents. When arrested on December 16, 2015, the defendant was in possession of 10mm semi-automatic pistol, which he was prohibited from owning because he had previously been convicted of a felony.

This case is the result of an investigation conducted by the Anoka-Hennepin Narcotics and Violent Crime Task Force, West Metro Drug Task Force, Anoka County Sheriff’s Office, Hennepin County Sheriff’s Office, Sherburne County Sheriff’s Office, Blaine Police Department, Coon Rapids Police Department, Elk River Police Department, Maple Grove Police Department, Medina Police Department, Mounds View Police Department, and U.S. Drug Enforcement Administration.

Assistant U.S. Attorney David Steinkamp prosecuted the case.

Defendant Information: 

JAIME EDWARD MCCLELLAN, a/k/a, “Goldie Armani Callaway,” a/k/a, “Jaime Edward McClennan,” a/k/a, “Armando Blanco,” a/k/a, “Red,” 32

Brooklyn Park, Minn.

Convicted: • Conspiring to distribute heroin, 1 count
• Possession of a firearm during and in relation to a drug trafficking crime, 1 count

Sentenced: • 15 years in prison
• Supervised release for a term of five years

United States Attorney Andrew M. Luger announced an indictment charging ALEX BOYD, 38, SASAH MARIE ERDNER, 30, and TRINITY JAMES WICKA, 19, with stealing and attempting to sell approximately 75 guns.  BOYD, who is a convicted felon, was also charged with illegally possessing a firearm. The indictment was unsealed yesterday in U.S. District Court in Minneapolis, Minn.

“This was one of the largest Minnesota gun shop burglaries we’ve seen in the past few years,” said James Modzelewski, ATF Special Agent in Charge. “Although we’ve been able to identify folks involved in the robbery and have recovered some of the stolen firearms, there are still a number of guns left to recover. Anyone with information regarding the remaining firearms is encouraged to reach out to ATF or local authorities. It’s been a pleasure to work with the Wabasha County Sheriff’s Office, Winona County Sheriff’s Office, the Winona Police Department and the Winona County Attorney’s office, and we look forward to continuing our partnership with them.”

According to the indictment and documents filed in court, on September 1, 2016, WICKA and others met and decided to rob the Millville Rod and Gun Shop in Millville, Minn. Early the next morning, WICKA and two of his associates robbed the gun shop by kicking in the door and breaking into glass display cases. They stole approximately 75 firearms, most of which were handguns.

According to the indictment, on the evening of September 2, 2016, BOYD and three other individuals committed two aggravated robberies in Winona, Minn., while in possession of stolen guns from the Millville Rod and Gun Shop.

According to the indictment, on September 16, 2016, a juvenile male was found in possession of 15 handguns that had all been stolen during the Millville Gun Shop burglary.

This case is the result of an investigation conducted by U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Wabasha County Sheriff’s Office, Winona County Sheriff’s Office, Winona Police Department, and the Winona County Attorney’s Office.

Assistant U.S. Attorney David Steinkamp is prosecuting the case.

Defendant Information: 

ALEX BOYD, 38
Unknown

Charges: • Conspiracy to possess and distribute stolen firearms, 1 count
• Possession of stolen firearms, 1 count
• Felon in possession of a firearm, 1 count

SASHA MARIE ERDNER, 30
Unknown

Charges: • Conspiracy to possess and distribute stolen firearms, 1 count
• Possession of stolen firearms, 1 count

TRINITY JAMES WICKA, 19
Winona, Minn.

Charges: • Conspiracy to possess and distribute stolen firearms, 1 count
• Possession of stolen firearms, 1 count

United States Attorney Andrew M. Luger today announced the conviction of SENG XIONG, 49, for operating an affinity scheme targeting Hmong elders. After a trial lasting more than two weeks, the jury verdict was returned in approximately two hours. A sentencing date has not been set.

“Seng Xiong took the Hmong people’s tragic history of war and displacement and manipulated that for his own benefit,” said Assistant United States Attorney Amber Brennan. “We hope today’s verdict sends a message that the United States will protect those who have been defrauded. We’d especially like to thank the dedicated officers of the Saint Paul Police Department who serve the largest population of Hmong immigrants in the United States.”

As proven at trial, XIONG conducted a fraud scheme through his organization “Hmong Tebchaws,” in which Hmong elders were directed to deposit $3,000 to $5,000 into a bank account held in the name of SENG XIONG. In exchange for the payments, victims were promised 10 acres of land, a house, and many other benefits in a future country that would be established as a Hmong homeland somewhere in Southeast Asia.

As proven at trial, XIONG claimed to be working with the White House and United Nations to establish the new Hmong country.  He also claimed that a piece of land had already been set aside for the Hmong people somewhere in Southeast Asia.

As proven at trial, XIONG offered several “investment” options which purported to represent varying levels of return that “founders” would be able to receive on their investment in the new country. Investments between $3,000 and $5,000 would guarantee the “investor” and his or her future generations, land, a house, free healthcare, free education, and government financial assistance for people over 65 years of age, as well as a return on that investment equal to a percentage of the income generated by the new Hmong country.  Those who could not afford the $3,000 - $5,000 “founders” option could pay $20 per month, or $240 per year. This lesser investment would secure a spot in the new Hmong country along with some of the benefits.

If you or someone you know could be a victim, please contact the Minnesota Financial Crimes Task Force by sending an email to [email protected].

This case is the result of an investigation conducted by the Saint Paul Police Department, United States Secret Service, Federal Bureau of Investigation, Minnesota Financial Crimes Task Force, and Appleton Police Department.

Special assistance was provided by the United States Attorney’s Offices for the Eastern District of California.

This case is being prosecuted by Assistant United States Attorneys Amber M. Brennan and Surya Saxena.

Defendant Information:

SENG XIONG, 49
Maplewood, Minn.

Convicted: • Wire fraud, 1 count
• Mail fraud, 1 count

United States Attorney Andrew M. Luger today announced the sentencing of SANDRA LEE BART, 69, to five years in prison 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 and agreed to pay more than $974,000 in restitution, unpaid wages, and a forfeiture money judgment.

“The Diplomatic Security Service is pleased with the success of this case. This shows the positive outcome when federal agencies work together to stop criminals from exploiting U.S. visas and foreign workers for illegal profit,” said Diplomatic Security Service’s Minneapolis Resident Agent-In-Charge Daniel Bleakmore. “We’re committed to investigating U.S. business operators who cause criminal visa applications at overseas U.S. Embassies and Consulates.”

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, CABRERA, and SVIHEL 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. At the end of each season, SVIHEL collected a percentage of the workers’ wages along with full reimbursement from the workers for their flights. BART, CABRERA, and SVIHEL 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 for the first year. 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. Over three farming seasons, SVIHEL kept a total of more than $200,000 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 Wage and Hour Division, 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, 69
Seven Hills, Ohio

Convicted: • 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

Sentenced: • Five years in prison

WILIAN SOCRATE CABRERA, 44
Dominican Republic

Convicted: • Conspiracy to commit fraud in foreign labor contracting, 1 count

Sentenced: • 26 months in prison

JOHN JAMES SVIHEL, 53
Foley, Minn.

Convicted: • Conspiracy to commit fraud in foreign labor contracting, 1 count

Sentenced: • Six months in prison

United States Attorney Andrew M. Luger announced the guilty plea of COLIN ALEXANDER CHISHOLM, 67, for stealing more than $2.1 million from investors by lying to them about an investment in a purported television network startup. The defendant pleaded guilty yesterday before U.S. District Chief Judge John R. Tunheim in Minneapolis, Minn.  

“Colin Chisholm is now facing the consequences for his long trail of lies as he ripped people off,” said Minnesota Commerce Commissioner Mike Rothman. “Chisholm lied to prospective investors about his personal and professional background. But most damaging for his victims, he lied about what he was doing with the money they had entrusted to him. Stopping this investment scam and bringing this white-collar criminal to justice demonstrate the strong partnership between the Commerce Fraud Bureau and federal authorities.”

“The U.S. Postal Inspection Service will continue to protect the integrity of the US Mail and aggressively investigate individuals such as Colin Chisholm who use the mail to defraud individuals or businesses of money and property,” said Craig Goldberg, Inspector in Charge of the Denver Division of the United States Postal Inspection Service, which covers Minnesota.

According to the defendant’s guilty plea, since 2004, CHISHOM used The Caribbean Television Network, Inc., (TCN) an entity he formed purportedly to broadcast satellite television throughout the Caribbean, to solicit funds from investors. Throughout the scheme, CHISHOLM told investors that TCN was on the verge of securing between $20 million and $100 million in funding to begin broadcasting, and that their investment would be used as interim financing for TCN.

According to the defendant’s guilty plea, as part of his scheme to obtain money from potential investors, CHISHOLM lied to them about the progress and viability of the main funding sources for TCN.

According to documents filed in court, CHISHOLM also lied to investors about his personal background. He told some investors that he was the grandson of Hugh J. Chisholm, Jr., and the son of William Chisholm, of the Oxford Paper Company. In falsely claiming this family lineage, CHISHOLM gave the false impression that he came from considerable family wealth. CHISHOLM also claimed to be a Scottish Chieftain of the Clan Chisholm and claimed to have close personal ties to members of the Bush family, specifically to Prescott S. Bush, Jr., the deceased brother of former President George H.W. Bush. CHISHOLM further claimed to provide scholarships to Bowdoin College, where Hugh J. Chisholm, Jr., received an honorary degree.

According to his guilty plea, CHISHOLM also lied about his professional background, most notably making the claim to potential investors that he had worked as Vice President for Turner Program Services, to have a relationship with Ted Turner, and to have participated in the development and launch of CNN and CNN Headline News, including writing the business plan for CNN.

According to his guilty plea, CHISOLM stole a total of more than $2.1 million from at least 38 investors.

This case is the result of an investigation conducted by the Minnesota Department of Commerce Fraud Bureau and the United States Postal Inspection Service.

The U.S. Attorney’s Office thanked the Hennepin County Attorney’s Office for its substantial assistance in this case.

This case is being prosecuted by Assistant United States Attorney Lola Velazquez-Aguilu.

Defendant Information:

COLIN ALEXANDER CHISHOLM, 67
Minneapolis, Minn.

Convicted: • Mail fraud, 1 count

United States Attorney Andrew M. Luger today announced the sentencing of JORDAN JAMES DAVIS, 36, to 24 months in prison for conspiring with his father, WILLIAM JAMES DAVIS, to steal funds from Community Action of Minneapolis (CAM). JORDAN DAVIS was convicted on June 28, 2016, after a jury trial. He was sentenced today before U.S. District Judge Patrick J. Schiltz in U.S. District Court in Minneapolis, Minn.

As proven at trial, WILLIAM DAVIS used CAM funds to pay his son JORDAN DAVIS for a no-show job at a Ben & Jerry’s ice cream shop operated by CAM as a PartnerShop near the University of Minnesota campus in Minneapolis. Ben & Jerry’s waived its standard franchise fees so that CAM could operate the store to provide job and entrepreneurial training to underprivileged youth facing barriers to employment.

Between 2002 and October 2006, JORDAN DAVIS worked as the manager of the Ben & Jerry’s PartnerShop. In October 2006, JORDAN DAVIS obtained employment with the Minneapolis Police Department, and thereafter stopped working at the Ben & Jerry’s.

WILLIAM DAVIS instructed CAM’s fiscal staff to continue issuing JORDAN DAVIS the full paycheck he had been receiving for managing the ice cream shop. Even though JORDAN DAVIS never again worked a shift at the Ben & Jerry’s, from at least November 2006 until January 2011, he continued to receive his full paycheck, $1,320 biweekly. In addition to receiving paychecks for his no-show job, Jordan Davis also used a CAM-owned vehicle, made personal purchases using a Ben & Jerry's debit card, and received a $6,000 “bonus” check. During this same period, the Ben & Jerry’s store was consistently losing money, forcing CAM to transfer approximately $100,000 in federal grant funds each year in order to keep the doors open.

In April 2011, CAM closed the Ben & Jerry’s PartnerShop because CAM could no longer afford the rent for the store, and CAM terminated its youth job skills training program.

This case is the result of an investigation conducted by the Federal Bureau of Investigation, United States Department of Health and Human Services Office of the Inspector General, Internal Revenue Service – Criminal Investigation and the United States Department of Energy Office of the Inspector General.

This case was prosecuted by Assistant United States Attorneys Kimberly A. Svendsen and Amber M. Brennan.

Defendant Information:

JORDAN JAMES DAVIS, 36
Ostego, Minn.

Convicted: • Conspiracy to commit theft concerning programs receiving federal funds, 1 count
• Mail fraud, 5 counts

Sentenced: • 24 months in prison
• Two years of supervised release
• Restitution in an amount to be determined

United States Attorney Andrew M. Luger today announced an indictment charging FOZIA SHEIK ALI, 50, for fraudulently obtaining at least hundreds of thousands of dollars for child care services that had not been provided.  ALI is charged with wire fraud and theft of public money. The indictment was unsealed late yesterday in U.S. District Court in Minneapolis, Minn.

“This indictment describes a selfish criminal act that kept money from being available for deserving families,” said Minnesota Bureau of Criminal Apprehension Superintendent Drew Evans. “BCA agents, along with our partners, will continue to identify and arrest people who commit these costly crimes.”

According to the indictment and documents filed in state court, ALI operated the Salama Child Care Center (Salama) in Minneapolis. Between at least December 2013 and May 2015, ALI defrauded the Child Care Assistance Program (CCAP) to obtain payments from the Minnesota Department of Human Services (DHS) for child care services that were not actually provided. The CCAP program was designed to help eligible families pay for the costs of child care. CCAP in Minnesota is administered by DHS and funded by the United States Department of Health and Human Services (HHS) and the State of Minnesota.

According to the indictment, ALI submitted claims for CCAP payments that overstated the number of children who actually attended and received day care services from Salama. The claims asserted that more than 100 children attended and received child care at Salama on a given day. On more than one occasion, the claims falsely inflated the number of children that had attended Salama on a given day by more than 400 percent, including on days when Salama was closed.

According to the indictment, ALI stole hundreds of thousands of dollars from the State of Minnesota and the federal government.

This case is the result of an investigation conducted by the Minnesota Bureau of Criminal Apprehension, Criminal Investigation Division of the IRS, FBI, HHS-OIG, and the Minnesota Department of Human Services.

Assistant U.S. Attorney John Kokkinen is prosecuting the case.

Defendant Information: 

FOZIA SHEIK ALI, 50
Hopkins, Minn.

Charges: • Wire fraud, 4 counts
• Theft of public money, 1 count

United States Attorney Andrew M. Luger today announced the guilty plea of JOSEPH LEON EDMINSTER, 70, for stealing thousands of black spruce tree tops from the Chippewa National Forest. EDMINSTER pleaded guilty to one count of theft of government property today before U.S. District Judge Wilhelmina M. Wright in St. Paul, Minn.

According to the defendant’s guilty plea and documents filed in court, between October 2008 and October 2014, JOSEPH EDMINSTER cut and stole more than 2,700 black spruce tree tops from the Chippewa National Forest. EDMINSTER did not have the authority to take the tree tops from federal lands.

After taking the tree tops, EDMINSTER would sell them to wholesalers for use as Christmas decorations. EDMINSTER sold the tops for $1.50 to $2.50 each to various wholesale vendors, who in turn would sell each top for up to $6 each to various retail outlets in Minnesota, Iowa and Illinois. The retail cost for individual spruce tops ranges from $2.50 to $7.50 depending on the height.  Spruce tops are most often sold in bundles of five or 10 depending on the height with each bundle retailing from $12.99 to $36.99. Since 2008, EDMINSTER stole at least $24,199.50 worth of spruce tops from federal land.

“We will vigorously pursue those responsible for such acts, dedicating any and all investigative resources needed in order to bring these matters to a just conclusion,” said Darla Lenz, the Chippewa National Forest supervisor. “The public can rest assured that this matter has been resolved and we will continue to protect our national forests.”

Black spruce is a North American pine species. It is widespread across Canada and the northern United States, including the Great Lakes region. Black Spruce is found in northern and northeastern parts of Minnesota, extending as far south as northern Anoka County.

The popularity of black spruce tops and other forest products that are used in the seasonal holiday decorative market has surged over the last 20 years. The spruce tops are sold at landscape retailers and some grocery and home improvement stores nationwide.

The cutting or otherwise damaging any timber, tree or other forest product, to include black spruce is prohibited on National Forest land except as authorized by a special use authorization, timber sale, contract or other federal law or regulation.

This case is the result of an investigation conducted by the U.S. Forest Service’s Law Enforcement and Investigations division.

This case is being prosecuted by Assistant United States Attorney Laura Provinzino.

Defendant Information:

JOSEPH LEON EDMINSTER, 70
Grand Rapids, Minn.

Convicted: • Theft of government property, 1 count

United States Attorney Andrew M. Luger today announced the sentencing of EBONY SHANTE YARBROUGH, 28, to two years in prison for aggravated identity theft. YARBROUGH pleaded guilty on August 12, 2016, before U.S. District Judge Patrick J. Schiltz in U.S. District Court in Minneapolis, Minn.

“Tax season is almost here and the sentencing of Ebony Yarbrough for filing false tax returns is a powerful reminder of what can happen when you decide to steal from honest taxpayers,” said Shea Jones, Special Agent in Charge of the St. Paul Field Office. “Through our partnership with the US Attorney’s Office and other law enforcement agencies, IRS Criminal Investigation’s Special Agents will continue the aggressive pursuit of those who would attempt to defraud America's tax system.”

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 prosecuted the case.

Defendant Information:   EBONY SHANTE YARBROUGH, 28
Saint Paul, Minn.

Convicted: • Aggravated Identity Theft, 1 count

Sentenced: • 24 months in prison
• Restitution in the amount of $298,054.01

United States Attorney Andrew M. Luger announced the sentencing of EUGENE RYAN BOOS, 44, to 195 months in prison after pleading guilty on August 15, 2016, to conspiracy to distribute methamphetamine and possession of a firearm in furtherance of a drug-trafficking crime. BOOS was sentenced before Senior U.S. District Judge David S. Doty in U.S. District Court in Minneapolis, Minn.

“Eugene Boos is a dangerous, repeat offender,” said James Modzelewski, Bureau of Alcohol, Tobacco, Firearms and Explosives Special Agent in Charge. “Getting him off the streets is critical to keeping our communities safe. I want to commend the Hennepin and Anoka County Sheriff’s Offices for their contributions in this case. ATF will continue to partner with all Minnesota law enforcement to reduce gun-related violent crimes.”

According to BOOS’ guilty plea and documents filed in court, on December 10, 2014, while BOOS was on felony supervised release from the Minnesota Department of Corrections for a 1994 second-degree murder conviction, officers with the Hennepin County Sheriff’s Office seized from the defendant’s home three firearms, ammunition, 132.5 grams of highly pure methamphetamine, digital scales, packaging materials, over 100 controlled substance pills, and more than $12,000 hidden in a speaker.

According to the defendant’s guilty plea and documents filed in court, in addition to the aforementioned contraband, BOOS possessed additional quantities of methamphetamine and materials commonly used to manufacture methamphetamine in the garage of the residence. In fact, the strong chemical odor of ammonia emanating from the garage was so overwhelming that officers summoned a haz-mat cleanup team to respond to the residence and properly dispose of the hazardous chemicals.

According to the defendant’s guilty plea and documents filed in court, among the firearms that BOOS illegally possessed were a .380-caliber semi-automatic handgun with an obliterated serial number and a stolen .45 caliber semi-automatic pistol.

The case was prosecuted by Assistant United States Benjamin Bejar and was the result of an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, in collaboration with the Anoka County Sheriff’s Office and the Hennepin County Sheriff’s Office.

Defendant Information:

EUGENE RYAN BOOS, 44
Minneapolis, Minn.

Convicted: • Possession with intent to distribute methamphetamine, 1 count
• Possession of firearms in furtherance of a drug-trafficking crime, 1 count

Sentenced: • 195 months in prison
• Supervised release for a term of five years

 

United States Attorney Andrew M. Luger announced the sentencing of EDUARDO PENALOZA-ROMERO, 27, to 196 months in prison after pleading guilty last year to conspiracy to distribute methamphetamine and marijuana. PENALOZA-ROMERO was sentenced before U.S. District Judge Susan Richard Nelson in U.S. District Court in Saint Paul, Minn.

“HSI’s collaboration with our federal, state and local law enforcement partners continues to yield significant results in Minnesota,” said Alex Khu, special agent in charge of HSI St. Paul. “Individuals like Mr. Penaloza, who conspire to flood our communities with dangerous and illicit drugs, can expect to face serious consequences.  HSI will continue to seek them out and dismantle the entire criminal organization.”

According to PENALOZA-ROMERO’s guilty plea and documents filed in court, between at least November 2013 and August 2014, he conspired with others to distribute methamphetamine and marijuana. At various times during the indicted period, PENALOZA-ROMERO sold controlled substances to law enforcement, including one pound of methamphetamine on November 15, 2013, and one pound of marijuana on January 15, 2014.

According to the defendant’s guilty plea and documents filed in court, in August 2014, PENALOZA-ROMERO arranged for methamphetamine to be trafficked from California to Minnesota. Approximately 8 pounds of methamphetamine was recovered from a vehicle transporting that methamphetamine into Minnesota.

According to the defendant’s guilty plea and documents filed in court, when law enforcement executed a search warrant at PENALOZA-ROMERO’s home on September 24, 2014, law enforcement recovered a semiautomatic pistol and more than 2.5 pounds of methamphetamine in both crystal and liquid form.

The case was prosecuted by Assistant United States Allen Slaughter and was the result of an investigation conducted by Homeland Security Investigations, in collaboration with the Anoka County Drug Task Force, the Drug Enforcement Administration, the Fridley Police Department, the Minneapolis Police Department, the Minnesota State Patrol, the Ramsey County Violent Crime Enforcement Team, the Saint Paul Police Department, and the Spring Lake Police Department.

Defendant Information:

EDUARDO PENALOZA-ROMERO, 27
Spring Lake Park, Minn.

Convicted: • Conspiracy to distribute methamphetamine and marijuana, 1 count

Sentenced: • 196 months in prison

The United States Attorney’s Office for the District of Minnesota announced the sentencing of DAVID BLAINE WELLIVER, 56, to five years in prison for defrauding investors in the Dblaine Fund of $1.725 million. WELLIVER pleaded guilty on July 13, 2016, to one count of securities fraud. He was sentenced today before Senior U.S. District Judge Paul A. Magnuson in U.S. District Court in St. Paul, Minn.

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.

This case was 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 was 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

Sentenced: • Five years in prison
• Three years of supervised release
• Restitution of $2,161,079.83

United States Attorney Andrew M. Luger announced an indictment charging KYLE LEWIS KIRSCHMAN, 52, and HOLLY KAY BLOOM, 37, with conspiring to commit public assistance fraud.  The indictment was filed in U.S. District Court in Minneapolis on December 21, 2016.

According to the indictment, KIRSCHMAN owned a house in Mankato, Minn. The house was divided into two apartments. KIRSCHMAN occupied apartment 1. On June 13, 2006, KIRSCHMAN and BLOOM entered into a lease for BLOOM and her family to reside in apartment 2. KIRSCHMAN filed an application to have the apartment designated as Section 8 housing under the US Department of Housing and Urban Development (HUD) Section 8 program. Among the requirements for Section 8 approval were that no member of BLOOM and KIRSCHMAN’s immediate families were related and that apartment 2 was the BLOOM family’s only residence. Around the same time, BLOOM applied for the Supplemental Nutrition Assistance Program (SNAP) and Medical Assistance (MA) benefits. She did not list KIRSCHMAN as a member of her household.

According to the indictment, BLOOM claimed for at least six years that she lived in apartment 2. However, from at least June 2007 through February 2014, KIRSCHMAN and the BLOOM family lived together in Apartment 1 and 2. During this time, KIRSCHMAN was an immediate family member of a member of the BLOOM family and the BLOOM family lived in both apartments 1 and 2, so KIRSCHMAN unlawfully received Section 8 rental subsidies. Additionally, BLOOM unlawfully received SNAP and MA benefits during this time because KIRSCHMAN was a member of her household, was continuously employed, and earned an income that disqualified the household for any such benefits.

During the relevant time period, KIRSCHMAN and BLOOM received Section 8 rental subsidies for apartment 2 in the amount of $35,221. BLOOM received SNAP benefits totaling $25,216 and MA benefits totaling $14,624.

This case is the result of an investigation conducted by the Blue Earth County Sheriff’s Office Welfare Fraud Investigator and US Department of Housing and Urban Development OIG.

This case is being prosecuted by Assistant U.S. Attorney Manda Sertich. 

Defendant Information: 

KYLE LEWIS KIRSCHMAN, 52
Mankato, Minn.

Charges: • Conspiracy to commit public assistance fraud, 1 count

HOLLY KAY BLOOM, 37
Mankato, Minn.

Charges: • Conspiracy to commit public assistance fraud, 1 count

The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

United States Attorney Andrew M. Luger today announced federal criminal charges filed against 21 defendants for conspiring to commit health care fraud. The defendants, charged by four indictments and two felony informations, fraudulently billed insurance companies for millions of dollars over the course of the parallel conspiracies. 

“State and federal law enforcement are cracking down on no-fault automobile insurance fraud,” said U.S. Attorney Luger. “The charges unsealed today represent a serious effort to expose crooked billing abuses that harm consumers. The Commerce Fraud Bureau and FBI continue to work closely with my office to ensure that our efforts to stop fraud and abuse are aligned with the interests of all Minnesotans.”
 
“Today’s charges send a clear message to criminal networks that committing insurance fraud will result in a concerted effort by the FBI and our law enforcement partners to bring those responsible to justice,” said Special Agent in Charge of the FBI Minneapolis Division Richard T. Thornton. “Fraud schemes perpetrated by those in the health care sector not only undermine public trust and betray the medical profession, but also result in the theft of funds earmarked to cover legitimate health care expenses. For these reasons, the FBI will continue to aggressively investigate all forms of insurance fraud to include the types of schemes charged today.”

“We will not tolerate those who perpetrate staged car accidents, illegal kickbacks, nor fake medical billing,” said Commerce Commissioner Mike Rothman. “Today’s crackdown will help stop these fraud schemes that threaten our public safety and prey on Minnesota consumers. I commend the great teamwork among our Commerce Fraud Bureau, the U.S. Attorney’s Office, and the FBI, with the assistance from partners in state and local law enforcement agencies, which are focused on stopping these kinds of criminal schemes.”

Under the Minnesota No-Fault Automobile Insurance Act, auto insurance policies must include a personal injury protection provision (PIP). The PIP provision carries a minimum coverage amount of $40,000 for expenses resulting from injuries sustained in an automobile accident, $20,000 of which may be used for medical expenses.

According to the charging documents, at various times between at least 2010 and 2015, chiropractors PRESTON E. FORTHUN, ANGELA A. SCHULZ, HUY NGOC NGUYEN, ADAM J. BURKE, and other Doctors of Chiropractic, engaged in schemes with others to defraud automobile insurance companies. The schemes, which were nearly identical fraud schemes largely carried out independent of one another, involved the submission of fraudulent no-fault insurance claims.

According to the charging documents, chiropractors involved in the scheme would submit claims and receive reimbursements for chiropractic services that either were not medically necessary or were never rendered. Each chiropractor would prescribe and purportedly provide services that were not determined medically necessary by the physical condition of each patient, but were instead designed to fraudulently maximize reimbursement from the patients’ automobile insurance companies.

According to the charging documents, in order to get more patients to come to chiropractic appointments for treatment they did not need, the chiropractors charged would make illegal payments to patient recruiters, known as “runners.” Runners typically made upwards of $1,000 per automobile accident patient in exchange for bringing the patient into the chiropractor’s office. Runners were often not paid, or paid only in part, until after the patient had attended a minimum threshold number of treatment sessions.  In order to keep the patients coming back for medically unnecessary appointments, the runners often paid illegal kickbacks to the patients.

According to the charging documents, some of the charged chiropractors would conceal the kickback payments in various ways. For example, FORTHUN wrote checks to runners and falsely described those checks on the memo lines as payments for services such as “transportation” or “marketing.” Defendant BURKE encouraged runners to form corporate entities such as LLCs with names that sounded like legitimate businesses to which BURKE made kickback payments. And defendant NGUYEN tried to conceal kickback payments by making checks out to “cash” for several thousand dollars. He often wrote multiple such checks each week, falsely characterizing them as having been for “chiropractic supplies” of “office supplies.”

This case is the result of an investigation conducted by the Minnesota Commerce Fraud Bureau and the FBI. Additional assistance was provided by the Minneapolis Police Department, Saint Paul Police Department, Minnesota State Patrol, and Homeland Security Investigations.

This case is being prosecuted by Assistant U.S. Attorneys David M. Maria and John E. Kokkinen. 

Defendant Information: 

Chiropractors

ANGELA A. SCHULZ, 47
Chaska, Minn.

Charges: • Conspiracy to commit health care fraud, 1 count
• Conspiracy to commit mail fraud, 1 count

PRESTON E. FORTHUN, 38
Bloomington, Minn.

Charges: • Conspiracy to commit health care fraud, 1 count
• Conspiracy to commit mail fraud, 1 count

HUY NGOC NGUYEN, 42
Brooklyn Park, Minn.

Charges: • Conspiracy to commit health care fraud, 1 count
• Conspiracy to commit mail fraud, 1 count

ADAM JOHN BURKE, 32
Minneapolis, Minn.

Charges: • Conspiracy to commit health care fraud, 1 count
• Conspiracy to commit mail fraud, 1 count

Runners

ABDISALAN ABDULAHAB HUSSEIN, 48
Minneapolis, Minn.

Charges: • Conspiracy to commit health care fraud, 2 counts
• Conspiracy to commit mail fraud, 2 counts

SAHAL ALI WARSAME, 35
Minneapolis, Minn.

Charges: • Conspiracy to commit health care fraud, 2 counts
• Conspiracy to commit mail fraud, 2 counts

YAHYE MOHAMED HERROW, 45
Minneapolis, Minn.

Charges: • Conspiracy to commit health care fraud, 1 count
• Conspiracy to commit mail fraud, 1 count

TEMITAYO IFELOJU OLUSHOLDA DANIEL, 35
Minneapolis, Minn.

Charges: • Conspiracy to commit health care fraud, 1 count
• Conspiracy to commit mail fraud, 1 count

MERRON REDI SAMUEL, 36
Saint Paul, Minn.

Charges: • Conspiracy to commit health care fraud, 1 count
• Conspiracy to commit mail fraud, 1 count

ABDIRAHIN KHALIF IBRAHIM, 25
Saint Paul, Minn.

Charges: • Conspiracy to commit health care fraud, 1 count
• Conspiracy to commit mail fraud, 1 count

DANA ENOCH KIDD, 35
Elk River, Minn.

Charges: • Conspiracy to commit health care fraud, 1 count
• Conspiracy to commit mail fraud, 1 count

SAMATAR HASSAN OMAR, 28
Edina, Minn.

Charges: • Conspiracy to commit health care fraud, 1 count
• Conspiracy to commit mail fraud, 1 count

ABDINASIR MAYON ABIKAR, 31
Minneapolis, Minn.

Charges: • Conspiracy to commit health care fraud, 1 count
• Conspiracy to commit mail fraud, 1 count

ALI M ABIKAR, 28
Edina, Minn.

Charges: • Conspiracy to commit health care fraud, 1 count
• Conspiracy to commit mail fraud, 1 count

DANA STEPHEN COMEAUX, 57
Brooklyn Center, Minn.

Charges: • Conspiracy to commit health care fraud, 1 count
• Conspiracy to commit mail fraud, 1 count

CARLOS PATRICIO LUNA, 48
Minneapolis, Minn.

Charges: • Conspiracy to commit health care fraud, 1 count
• Conspiracy to commit mail fraud, 1 count

JEROME TARLVE DOE, 52
Brooklyn Park, Minn.

Charges: • Conspiracy to commit health care fraud, 1 count
• Conspiracy to commit mail fraud, 1 count

NAPOLEAN TUTEX DEAH, 32
New Brighton, Minn.

Charges: • Conspiracy to commit health care fraud, 1 count
• Conspiracy to commit mail fraud, 1 count

SAMMANY RATHY SPANGLER, 27
Woodbury, Minn.

Charges: • Conspiracy to commit health care fraud, 1 count
• Conspiracy to commit mail fraud, 1 count

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 count

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 counts

JOHN L. STEELE, 45
Unknown, Florida

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 counts

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.

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 Agreement

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 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 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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The charges contained in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

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 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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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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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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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 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.”

 

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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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.

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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The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

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 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