District of Minnesota

United States Attorney Andrew M. Luger today announced the guilty plea of DIANE L. KROUPA, 61, to conspiring to defraud the United States. KROUPA, who was indicted on April 4, 2016, pleaded guilty today before United States District Judge Wilhelmina M. Wright in U.S. District Court in St. Paul, Minn.

“Abusing her position of public trust, Diane Kroupa conspired to defraud the government and break the very tax laws she was sworn to uphold,” said United States Attorney Andrew Luger. “My Office remains committed to prosecuting individuals who engage in fraud schemes such as this, regardless of their position or profession.”

“Those charged with upholding the laws are not above the law. While serving as a United States Tax Court Judge, Diane Kroupa conspired to break the law by evading the taxes she owed. Her actions were not only unlawful and dishonest, but they were a theft from the American public. No matter what your position, it is unacceptable to cheat the system that provides the government services and protections that we all enjoy. IRS Special Agents will continue to pursue tax cheats at all levels of society, regardless of position or status,” said Shea Jones, Special Agent in Charge of the St. Paul Field Office.

According to the plea agreement and KROUPA’s testimony at the plea hearing, KROUPA was a former judge who was appointed to the United States Tax Court on June 13, 2003 for a term of 15 years. During the same period, KROUPA was married to Robert E. Fackler, a self-employed lobbyist and political consultant who owned and operated a business known as Grassroots Consulting. From 2004 to 2013, KROUPA and Fackler owned a home in Plymouth, Minnesota. From 2007 to 2013, they also leased a second residence in Easton, Maryland, where KROUPA lived while fulfilling her duties as a Tax Court Judge in Washington DC.

According to the plea agreement and KROUPA’s testimony at the plea hearing, between 2002 and 2012, KROUPA and Fackler conspired to obstruct the Internal Revenue Service (IRS) from accurately determining their joint income taxes. As part of the conspiracy, KROUPA and Fackler worked together each year to compile numerous personal expenses for inclusion as supposed “business expenses” for Grassroots Consulting in their joint tax return. Those expenses included: rent and utilities for the Maryland home; utilities, upkeep and renovation expenses of the Minnesota home; pilates classes; spa and massage fees; jewelry and personal clothing; wine club fees; Chinese language tutoring; music lessons; personal computers; and expenses for vacations to Alaska, Australia, the Bahamas, China, England, Greece, Hawaii, Mexico and Thailand. In total, from 2004 through 2010, the defendants fraudulently deducted at least $500,000 of personal expenses as purported Schedule C business expenses. At times, KROUPA prepared and provided to Fackler summaries of personal expenses falsely described according to business expense categories. On other occasions, KROUPA herself compiled and provided to their tax preparer the fraudulent personal expenses.

According to the plea agreement and KROUPA’s testimony at the plea hearing, KROUPA made a series of other false claims on their tax returns, including failing to report approximately $44,520 that she received from a 2010 land sale in South Dakota. KROUPA also falsely claimed financial insolvency to avoid paying tax on $33,031 on cancellation of indebtedness income that she and her husband received.

According to the plea agreement and KROUPA’s testimony at the plea hearing, KROUPA and Fackler purposely concealed documents from their tax preparer and an IRS Tax Compliance Officer during an audit for their 2004 and 2005 tax returns.

According to the plea agreement and KROUPA’s testimony at the plea hearing, during a second audit in 2012, KROUPA and Fackler caused false and misleading documents to be delivered to an IRS employee in order to convince the IRS employee that certain personal expenses were actually business expenses of Grassroots Consulting. After the IRS requested documents pertaining to their tax returns, KROUPA and Fackler removed certain items from their personal tax files before giving them to their tax preparer because the documents could reveal they had illegally deducted numerous personal expenses. During the audit, KROUPA also falsely denied receiving money from the 2010 land sale. Later, when they learned the 2012 audit might progress into a criminal investigation, KROUPA instructed Fackler to lie to the IRS about her involvement in preparing the portion of their tax returns related to Grassroots Consulting.

According to the plea agreement and KROUPA’s testimony at the plea hearing, between 2004 and 2010, KROUPA and Fackler purposely understated their taxable income by approximately $1,000,000 and purposely understated the amount of tax they owed by at least $450,000.

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

Assistant U.S. Attorneys Benjamin Langner and Timothy Rank are prosecuting the case.

 

Defendant Information:                                                                                                                                                        

DIANE L. KROUPA, 61

Minnetonka, Minn.

Convicted:

• Conspiracy to Defraud the United States, 1 count

 

 

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

Sex Trafficking Organization Engaged in Visa Fraud and Debt Scheme to Recruit Victims into the United States for Prostitution

An indictment unsealed late yesterday in St. Paul, Minnesota, charges 17 members of an international sex trafficking organization with transporting hundreds of women from Thailand and profiting from advertising them for commercial sex throughout the United States.

The charged defendants include 12 Thai nationals and five U.S. nationals.  Eight of the 17 charged defendants were arrested yesterday at various locations in Minnesota, California, Illinois, Georgia and Hawaii.  One charged defendant was previously arrested in Belgium and four defendants remains at large.

The announcement was made by Attorney General Loretta E. Lynch; U.S. Attorney Andrew M. Luger of the District of Minnesota; Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division; Special Agent in Charge Alex Khu of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) St. Paul Division and Special Agent in Charge Shea Jones of the Internal Revenue Service-Criminal Investigation (IRS-CI) St. Paul Field Office.

“Human trafficking is a degrading crime that undermines our nation’s most basic promises of liberty and security," said Attorney General Lynch.  “This case demonstrates the Justice Department’s determination to hold traffickers accountable and to help the survivors of this appalling practice reclaim their freedom and dignity.  As part of our nationally recognized Anti-Trafficking Coordination Team Initiative, the District of Minnesota is playing a crucial role in those vital efforts, and I want to commend all of the team members whose cooperation led to today’s action.”

“The 17 people charged in this indictment ran a highly sophisticated sex trafficking scheme,” said U.S. Attorney Luger.  “They promised women in Thailand a chance at the American dream, but instead exploited them, coerced them and forced them to live a nightmare.  In short, the victims lived like modern day sex slaves.  Today’s indictment is our ninth sex trafficking case since 2014, but it is the first that targets an entire organization.  We will continue to work closely with our federal and local law enforcement partners to target and dismantle these types of far-reaching organizations.”

“The Justice Department created the Anti-Trafficking Coordination Team (ACTeam) Initiative to bring together federal law enforcement agencies to enhance our impact in investigating and prosecuting human trafficking,” said Principal Deputy Assistant Attorney General Gupta.  “This case is an outstanding example of these efforts.  We will continue to work tirelessly with them to bring traffickers to justice and vindicate the rights of vulnerable victims.”

“This week’s arrests reflect HSI’s global reach and ongoing efforts to dismantle criminal organizations that engage in human trafficking activities,” said Special Agent in Charge Khu.  “HSI also remains firmly committed to rescuing victims and getting them help they desperately need to begin recovering from the depredations forced on them by these criminals.”

“From coast to coast, IRS Criminal Investigation is determined to team with our law enforcement partners to track down the individuals who facilitate and launder the proceeds of sex trafficking crimes,” said Special Agent in Charge Jones.  “Those who seek to enrich themselves by exploiting the desperate circumstances of their victims will not be tolerated in our cities.”

According to the indictment, which was returned under seal on Sept. 28, 2016, since at least 2009, the criminal organization has recruited and transported hundreds of women, which the organization refers to as “flowers,” from Thailand to various locations across the United States, including Minneapolis, Los Angeles, Chicago, Atlanta, Phoenix, Washington D.C., Las Vegas, Houston, Dallas and Austin, for purposes of exploiting them for prostitution.  Once in the United States, victims were allegedly placed in houses of prostitution where they were forced to work long hours – often all day, every day.  As alleged in the indictment, the women were not allowed to leave the prostitution houses unless accompanied by a member of the criminal organization. 

According to allegations in the indictment, which identifies several of the women as victims of human trafficking, the organization often recruited women from impoverished backgrounds who spoke little English.  Recruiters exploited these vulnerabilities during the recruitment process, promising the victims access to a better life in the United States in exchange for a debt of between $40,000 and $60,000, which the women were required to pay off through prostitution earnings.  As alleged in the indictment, before transporting the women to the United States, the organization would typically arrange to have the women photographed for purposes of advertising them for sex on websites like backpage.com and eros.com.  The organization also encouraged the women to have breast implants in Thailand to make them “more appealing” to potential sex buyers in the United States and added the cost to the victims’ debt.

The organization engaged in widespread visa fraud to facilitate the international transportation of the women into their commercial sex enterprise, the indictment alleges.  Members of the criminal organization assisted in obtaining fraudulent visas and travel documents for the women, and members of the conspiracy used personal information on the women and their families, which they gathered in the course of obtaining the fraudulent documents, to threaten victims who became non-compliant or tried to flee.

The defendants include:

• Sumalee Intarathong, 55, who was a boss in the scheme is currently incarcerated in Liege, Belgium, is charged with conspiracy to commit sex trafficking; sex trafficking by use of force, fraud and coercion; conspiracy to commit forced labor; conspiracy to commit transportation to engage in prostitution; transportation to engage in prostitution; conspiracy to engage in money laundering; conspiracy to use a communication facility to promote prostitution and conspiracy to commit visa fraud.
• Chabaprai Boonluea, 42, of Winder, Georgia, was a house boss in the operation and is charged with conspiracy to commit sex trafficking; sex trafficking by use of force, fraud and coercion; conspiracy to commit forced labor; conspiracy to commit transportation to engage in prostitution; transportation to engage in prostitution; conspiracy to engage in money laundering and conspiracy to use a communication facility to promote prostitution.
• Watcharin Luamseejun, 46, was a house boss in the scheme and is charged with conspiracy to commit sex trafficking; conspiracy to commit forced labor; conspiracy to commit transportation to engage in prostitution; conspiracy to engage in money laundering and conspiracy to use a communication facility to promote prostitution.
• Pantilla Rodpholka, 31, of Mount Prospect, Illinois, was a house boss in the operation and is charged with conspiracy to commit sex trafficking; conspiracy to commit forced labor; conspiracy to commit transportation to engage in prostitution; conspiracy to engage in money laundering and conspiracy to use a communication facility to promote prostitution.
• Noppawan Lerslurchachai, 35, of Lomita, California, was a facilitator in the scheme and is charged with conspiracy to commit sex trafficking; sex trafficking by use of force, fraud and coercion; conspiracy to commit forced labor; conspiracy to commit transportation to engage in prostitution; transportation to engage in prostitution; conspiracy to engage in money laundering and conspiracy to use a communication facility to promote prostitution.
• Khanong Intharathong, 44, of Dunwoody, Georgia, was a facilitator in the operation and is charged with conspiracy to commit sex trafficking; conspiracy to commit transportation to engage in prostitution; transportation to engage in prostitution; conspiracy to engage in money laundering and conspiracy to use a communication facility to promote prostitution.
• Andrew Flanigan, 51, of Winder, was a facilitator in the operation and is charged with conspiracy to commit sex trafficking; conspiracy to commit transportation to engage in prostitution; conspiracy to engage in money laundering and conspiracy to use a communication facility to promote prostitution.
• Patcharaporn Saengkham, 41, of Los Angeles, was a facilitator in the scheme and is charged with conspiracy to commit visa fraud.
• Yadaporn Panngoen, 30, Los Angeles, was a facilitator in the scheme and is charged with conspiracy to commit visa fraud.
• Supapon Sonprasit, 31, of St. Paul, was a facilitator in the operation and is charged with conspiracy to commit visa fraud.
• Thi Vu, 48, of Atlanta, was a runner in the operation and is charged with conspiracy to commit sex trafficking; conspiracy to commit transportation to engage in prostitution; conspiracy to engage in money laundering and conspiracy to use a communication facility to promote prostitution.
• Todd Vassey, 54, of Lahanina, Hawaii, was a runner in the scheme and is charged with conspiracy to commit sex trafficking; conspiracy to commit transportation to engage in prostitution; transportation to engage in prostitution; conspiracy to engage in money laundering and conspiracy to use a communication facility to promote prostitution.
• John Zbracki, 59, of Lakeville, Minnesota, was a runner in the operation and is charged with conspiracy to commit sex trafficking; conspiracy to commit transportation to engage in prostitution; transportation to engage in prostitution; conspiracy to engage in money laundering and conspiracy to use a communication facility to promote prostitution.

According to the indictment, Intarathong served as a boss before her arrest in Belgium earlier this year.  As alleged in the indictment, each woman identified as a victim of human trafficking was “owned” by Intarathong or another boss until the victim could repay the debt.

According to the indictment, other members of the criminal organization served as “house bosses,” who owned one or more of the houses of prostitution where the “flowers” were exploited for commercial sex.  House bosses were responsible for day-to-day operations, including advertising the “flowers” for commercial sex, maintaining the houses of prostitution, scheduling appointments with sex buyers and ensuring that a significant portion of the prostitution proceeds were routed back to the trafficker/boss to pay down the debt.  The house boss kept the remainder of the prostitution proceeds, while the women were not permitted to retain any of their earnings, except for the occasional tip offered by a sex buyer.

As set forth in the indictment, other members of the criminal organization served as “facilitators,” who were primarily responsible for laundering the criminal proceeds of the organization and for directing the movement of victims within the United States, while other co-conspirators served as “runners.”  The runners were typically men who were paid, in part, by receiving access to sex acts with the women.  Runners accompanied the women anytime they were permitted to leave a house of prostitution to obtain personal items, travel as directed by the criminal organization or deposit money into accounts set up by the organization for repayment of the women’s debts.  Runners were also sometimes asked to rent hotel rooms, apartments or other facilities for the organization.

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

The District of Minnesota is one of six districts designated through a competitive, nationwide selection process as a Phase II ACTeam, through the interagency ACTeam Initiative of the Departments of Justice, Homeland Security and Labor.  ACTeams focus on developing high-impact human trafficking investigations and prosecutions involving forced labor, international sex trafficking and sex trafficking by force, fraud or coercion through interagency collaboration among federal prosecutors and federal investigative agencies. 

This case is the result of an investigation conducted by HSI; IRS-CI; Department of State’s Diplomatic Security Service; St. Paul Police Department; Anoka County, Minnesota, Sheriff’s Office; and Cook County, Minnesota, Sheriff’s Office, with the support of the International Organized Crime Intelligence and Operations Center.

Assistant U.S. Attorneys Melinda Williams and Laura Provinzino of the District of Minnesota are prosecuting the case with the assistance of the Civil Rights Division’s Human Trafficking Prosecution Unit.

SAINT PAUL – An indictment unsealed late yesterday in Saint Paul, Minn., charges seventeen members of an international sex trafficking organization with transporting hundreds of female Thai sex slaves from Thailand and trafficking them throughout the United States.

The charged defendants include 12 Thai Nationals and five U.S. Nationals. Eleven of the seventeen charged defendants were arrested yesterday at various locations in Minnesota, California, Illinois, Georgia, and Hawaii.  One charged defendant was previously arrested in Belgium. Four defendants remain at large.

The announcement was made by Attorney General Loretta E. Lynch; U.S. Attorney Andrew M. Luger of the District of Minnesota; Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division; Special Agent in Charge Alex Khu of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) St. Paul Division and Special Agent in Charge Shea Jones of the Internal Revenue Service (IRS) Criminal Investigation Division’s St. Paul Field Office.

“Human trafficking is a degrading crime that undermines our nation's most basic promises of liberty and security,” said Attorney General Lynch. “This case demonstrates the Justice Department’s determination to hold traffickers accountable and to help the survivors of this appalling practice reclaim their freedom and dignity. As part of our nationally recognized Anti-Trafficking Coordination Team Initiative, the District of Minnesota is playing a crucial role in those vital efforts, and I want to commend all of the team members whose cooperation led to today’s action.”

“The 17 people charged in this indictment ran a highly sophisticated sex trafficking scheme,” said U.S. Attorney Luger. “They promised women in Thailand a chance at the American dream, but instead exploited them, coerced them and forced them to live a nightmare. In short, the victims lived like modern day sex slaves. Today’s indictment is our ninth sex trafficking case since 2014, but it is the first that targets an entire organization. We will continue to work closely with our federal and local law enforcement partners to target and dismantle these types of far-reaching organizations.”

“The Justice Department created the Anti-Trafficking Coordination Team (ACTeam) Initiative to bring together federal law enforcement agencies to enhance our impact in investigating and prosecuting human trafficking,” said Principal Deputy Assistant Attorney General Gupta.  “This case is an outstanding example of these efforts.  We will continue to work tirelessly with them to bring traffickers to justice and vindicate the rights of vulnerable victims.”

“This week’s arrests reflect HSI’s global reach and on-going efforts to dismantle criminal organizations that engage in human trafficking activities,” said Special Agent in Charge Alex Khu, of HSI St. Paul. “HSI also remains firmly committed to rescuing victims and getting them help they desperately need to begin recovering from the depredations forced on them by these criminals.”

“As this operation clearly shows, human trafficking—in this case the trafficking of vulnerable Thai women for sex—knows no boundaries,” said Sgt. Sean Johnson, an investigator with the Saint Paul Police Department Human Trafficking Unit. “We’re proud to be part of a community in which agencies work together to send a clear message to anyone who would traffic or purchase women for sex: Your actions will not be tolerated here, and we will hold you accountable for your actions.”

“From coast to coast, IRS Criminal Investigation is determined to team with our law enforcement partners to track down the individuals who facilitate and launder the proceeds of sex trafficking crimes,” said Shea Jones, Special Agent in Charge of the St. Paul Field Office. “Those who seek to enrich themselves by exploiting the desperate circumstances of their victims will not be tolerated in our cities.”

According to the indictment, which was returned under seal on September 28, 2016, since at least 2009, the criminal organization has trafficked at least hundreds of women, which the organization refers to as “flowers,” from Bangkok, Thailand, to various cities across the United States, including Minneapolis, Los Angeles, Chicago, Atlanta, Phoenix, Washington, D.C., Las Vegas, Houston, Dallas, and Austin, among others. Once in the United States, victims are placed in houses of prostitution where they are forced to work long hours – often all day, every day – having sex with strangers. The victims are not allowed to leave the prostitution houses unless accompanied by a member of the criminal organization.

According to the indictment, victims are often from impoverished backgrounds and speak little English. Recruiters exploit these vulnerabilities during the recruitment process. Victims are promised access to a better life in the United States, in exchange for an exorbitant “bondage debt” of between $40,000 and $60,000. Before being transported to the United States, the organization would typically arrange to have professional-quality escort-style photographs taken of the victims, which would ultimately be sent to traffickers in the United States and used to advertise the victims for sex on websites like backpage.com and eros.com. The organization also encouraged victims to have breast implants in Thailand to make the victims “more appealing” to potential sex buyers in the United States. The cost of the cosmetic surgery was added to the victims’ bondage debt.

According to the indictment, the organization engaged in widespread visa fraud to facilitate the international transportation of the victims. Members of the criminal organization assisted the victims in obtaining fraudulent visas and travel documents. As a part of obtaining visa documents, members of the criminal conspiracy gathered personal information from the victims, including the location of the victims’ families in Thailand. This information was later used to threaten victims who became non-compliant or tried to flee the organization in the United States.

According to the indictment, SUMALEE INTARATHONG, a/k/a
“Joy,” served as a boss/trafficker before her arrest in Belgium on August 5, 2016. Each trafficked victim was “owned” by INTARATHONG or another boss/trafficker, until the victim could repay the bondage debt. The trafficker arranged for victims to travel from Thailand to the United States and placed the victims in a house of prostitution somewhere in the United States.

According to the indictment, other members of the criminal organization served as “house bosses,” who owned one or more of the houses of prostitution to which the flowers were trafficked. House bosses were responsible for day-to-day operations of the houses of prostitution they controlled, which included advertising the “flowers” for commercial sex, maintaining the houses of prostitution, scheduling sex buyers, and ensuring that a significant portion of the money earned by the victims was routed back to the trafficker/boss to pay down the bondage debt. The house boss kept the remainder of the money earned by the victim. The victim was not allowed to keep any money, except for the occasional tip offered by a sex buyer.

According to the indictment, other members of the criminal organization serve as “facilitators.” These individuals were primarily responsible for laundering the criminal proceeds of the organization and for directing the movement of victims within the United States.

According to the indictment, others among the co-conspirators served as “runners.” The runners were typically men who were paid, in part, in sex with the victims. Runners accompanied the victims anytime they were permitted to leave a house of prostitution. Victims were allowed to obtain personal items, to travel at the direction of the criminal organization, or to deposit money into bank accounts set-up by the organization for the victims to repay their bondage debt. Runners were also sometimes asked to rent hotel rooms, apartments or other facilities for the organization.

This case is the result of an investigation conducted by Homeland Security Investigations, Criminal Investigation Division of the IRS, Diplomatic Security Service, St. Paul Police Department, Anoka County Sheriff’s Office and Cook County Sheriff’s Office, with the support of the International Organized Crime Intelligence and Operations Center (IOC-2).

The District of Minnesota is one of six districts designated through a competitive, nationwide selection process as a Phase II Anti-Trafficking Coordination Team (ACTeam), through the interagency ACTeam Initiative of the Departments of Justice, Homeland Security and Labor. ACTeams focus on developing high-impact human trafficking investigations and prosecutions involving forced labor, international sex trafficking and sex trafficking by force, fraud or coercion through interagency collaboration among federal prosecutors and federal investigative agencies. 

Assistant U.S. Attorneys Melinda Williams and Laura Provinzino are prosecuting the case with the assistance of the DOJ Civil Rights Division’s Human Trafficking Prosecution Unit.

 

Defendant Information:                                                                                                                     

Boss/Trafficker

SUMALEE INTARATHONG, a/k/a “Joy,” 55

Liege, Belgium (Incarcerated)

Charges:

• Conspiracy to commit sex trafficking, 1 count
• Sex trafficking by use of force, fraud, and coercion, 1 count
• Conspiracy to commit forced labor, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count
• Conspiracy to commit visa fraud, 1 count

 

House Bosses

CHABAPRAI BOONLUEA, 42

Winder, Ga.

Charges:

• Conspiracy to commit sex trafficking, 1 count
• Sex trafficking by use of force, fraud, and coercion, 1 count
• Conspiracy to commit forced labor, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

 

WATCHARIN LUAMSEEJUN, 46

Unknown

Charges:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to commit forced labor, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

 

PANTILLA RODPHOLKA, 31

Mount Prospect, Ill.

Charges:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to commit forced labor, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

 

Facilitators

NOPPAWAN LERSLURCHACHAI, 35

Lomita, Calif.

Charges:

• Conspiracy to commit sex trafficking, 1 count
• Sex trafficking by use of force, fraud, and coercion, 1 count
• Conspiracy to commit forced labor, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

 

KHANONG INTHARATHONG, 44

Dunwoody, Ga.

Charges:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

 

ANDREW FLANIGAN, 51

Winder, Ga.

Charges:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

 

PATCHARAPORN SAENGKHAM, 41

Los Angeles, Calif.

Charges:

• Conspiracy to commit visa fraud, 1 count

 

SUPAPON SONPRASIT, 31

St. Paul, Minn.

Charges:

• Conspiracy to commit visa fraud, 1 count

 

Runners

THI VU, 48

Atlanta, Ga.

Charges:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

 

TODD VASSEY, 54

Lahanina, Hawaii

Charges:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

 

JOHN ZBRACKI, 59

Lakeville, Minn.

Charges:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

   

   

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

 

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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 the guilty plea of ROBERT E. FACKLER, 63, with obstructing an IRS audit. FACKLER, who was indicted on April 4, 2016, pleaded guilty today before United States District Judge Wilhelmina M. Wright in U.S. District Court in St. Paul, Minn.

According to the plea agreement and FACKLER’s testimony at the plea hearing, FACKLER was married to Diane Kroupa, a former judge who was appointed to the United States Tax Court on June 13, 2003 for a term of 15 years. During the same period, FACKLER was a self-employed lobbyist and political consultant who owned and operated a business known as Grassroots Consulting. From 2004 to 2013, FACKLER and Kroupa owned a home in Minnesota. From 2007 to 2013, they also leased a second residence in Maryland, where Kroupa lived while fulfilling her duties as a Tax Court Judge in Washington DC.

According to the plea agreement and FACKLER’s testimony at the plea hearing, between 2002 and 2012, FACKLER and Kroupa conspired to obstruct the Internal Revenue Service (IRS) from accurately determining their joint income taxes. As part of the conspiracy, FACKLER and Kroupa worked together each year to compile numerous personal expenses for inclusion as supposed “business expenses” for Grassroots Consulting in their joint tax return. Those expenses included: rent and utilities for the Maryland home; utilities, upkeep and renovation expenses of the Minnesota home; pilates classes; spa and massage fees; jewelry and personal clothing; wine club fees; Chinese language tutoring; music lessons; personal computers; and expenses for vacations to Alaska, Australia, the Bahamas, China, England, Greece, Hawaii, Mexico and Thailand. In total, from 2004 through 2010, the defendants fraudulently deducted at least $500,000 of personal expenses as purported Schedule C business expenses. At times, Kroupa prepared and provided to FACKLER handwritten summaries of personal expenses falsely described according to business expense categories. On other occasions, Kroupa herself compiled and provided to their tax preparer the fraudulent personal expense.

According to the plea agreement and FACKLER’s testimony at the plea hearing, as part of the conspiracy, FACKLER also caused Grassroots Consulting business receipts to be understated by approximately $450,000 by fraudulently deducting purported business expenses which had previously been reimbursed. As a result, the defendants caused the amount of adjusted gross income, taxable income, and total tax shown on their income tax returns to be falsely understated.

According to the plea agreement and FACKLER’s testimony at the plea hearing, FACKLER and Kroupa made a series of other false claims on their tax returns, including failing to report approximately $44,520 that Kroupa received from a 2010 land sale in South Dakota. The defendants falsely claimed financial insolvency to avoid paying tax on $33,031 on cancellation of indebtedness income.

According to the plea agreement and FACKLER’s testimony at the plea hearing, FACKLER and Kroupa purposely concealed documents from their tax preparer and an IRS Tax Compliance Officer during an audit for their 2004 and 2005 tax returns.

According to the plea agreement and FACKLER’s testimony at the plea hearing, during a second audit in 2012, FACKLER and Kroupa caused false and misleading documents to be delivered to an IRS employee in order to convince the IRS employee that certain personal expenses were actually business expenses of Grassroots Consulting. After the IRS requested documents pertaining to their tax returns, Kroupa removed certain items from their personal tax files before FACKLER gave them to their tax preparer because the documents could reveal they had illegally deducted numerous personal expenses. FACKLER and Kroupa together concocted “false explanations” justifying payments questioned by the IRS. Later, when they learned the 2012 audit might progress into a criminal investigation, Kroupa instructed FACKLER to lie to the IRS about her involvement in preparing the portion of their tax returns related to Grassroots Consulting.

According to the plea agreement and FACKLER’s testimony at the plea hearing, between 2004 and 2010, FACKLER and Kroupa purposely understated their taxable income by approximately $1,000,000 and purposely understated the amount of tax they owed by at least $450,000.

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

Assistant U.S. Attorneys Benjamin Langner and Timothy Rank are prosecuting the case.

 

Defendant Information:                                                                                                                                                          

ROBERT E. FACKLER, 63

Minnetonka, Minn.

Convicted:

• Obstruction of an IRS audit, 1 count

 

 

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

 

United States Attorney Andrew M. Luger today announced a federal indictment charging JEROME RUZICKA, SCOTT NELSON, LAWRENCE MILLER, JEFFREY TAYLOR, and LAWRENCE HAGEN with conspiring to steal more than $20 million from Eden Prairie-based Starkey Laboratories, Inc. (Starkey) and its principal owner William F. Austin. The defendants are expected to make initial appearances in U.S. District Court in Minneapolis later this week.

“This indictment describes a massive and long running fraud scheme against a corporation by those in positions of trust,” said U.S. Attorney Luger. “The defendants carried out a complex scheme to accomplish a simple goal: to embezzle funds for their own benefit. Our federal law enforcement partners at the FBI, IRS, and U.S. Postal Inspection Service conducted a thorough investigation that exposed the defendants’ greed and abuse of trust.” 

“The charges today demonstrate an unrelenting effort by the FBI and our law enforcement partners to bring to justice those who are involved in corporate fraud schemes,” said FBI Special Agent in Charge for the Minneapolis Division Richard T. Thornton. “The FBI will continue to aggressively investigate business executives and others who misuse their positions for personal enrichment.”

“The indictment of these executives alleges the misuse of their positions of trust within their corporations,” said SAC Shea Jones IRS Criminal Investigation of the St. Paul Field Office. “High-ranking corporate officials hold positions of trust not only in their companies but also in the eyes of the public. That trust is broken when such officials abuse their power and commit crimes.”

“Postal Inspectors take very seriously their mission to deter the illegal use of the mail for any criminal activity,” said Postal Inspector in Charge, Craig Goldberg. “We are committed to working together with our law enforcement partners to identify, investigate and bring to justice those who would attempt to mask their criminal activity through the use of the mail.”

According to the indictment, between 2006 and September 2015, the defendants conspired to embezzle and misappropriate money and business opportunities belonging to Starkey and Sonion, a major supplier of hearing aid components to Starkey. The co-conspirators deployed various tactics to steal from Starkey, including controlling a complicated web of sham companies and dummy entities, surreptitiously awarding themselves restricted stock in Starkey’s retail affiliate, and embezzling money from the company by causing payments to be made by Starkey for the benefit of the co-conspirators and others.

According to the indictment, in 2006, RUZICKA and TAYLOR created a sham company called, Archer Consulting. RUZICKA caused Starkey to pay Archer Consulting “commission” payments for purported sales of hearing aid components from Sonion, where TAYLOR served as president. In 2010, RUZICKA and TAYLOR changed the description of the fraudulent payments from “commissions” to “consulting fees.” Thereafter, RUZICKA caused Starkey to begin paying consulting fees to Archer Consulting of $75,000 per month. Between 2006 and 2015, RUZICKA and TAYLOR stole approximately $7,650,000 through their sham company.

According to the indictment, RUZICKA, TAYLOR and HAGEN controlled two dummy entities, Claris Investments and Archer Acoustics. TAYLOR falsely represented to Sonion that these entities were Starkey affiliates, thereby securing Starkey’s discounted pricing on hearing-aid components for Claris and Archer Acoustics. RUZICKA, TAYLOR, and HAGEN, used their entities to purchase the discounted products that they later re-sold to other manufacturers to obtain illicit profits. At times, the illicit profits came in the form of fraudulent commissions and rebates.  The defendants obtained at least $600,000 in profits, commissions and rebates by fraudulently leveraging Starkey’s purchasing power for their own benefit.

Another facet of this scheme was related to Starkey’s retail affiliate, Northland US, LLC, which Austin created in 2002. He was the sole owner. The purpose of Northland LLC was to acquire and operate retail hearing aid establishments. In 2006, without Austin’s knowledge, RUZICKA and NELSON surreptitiously transferred Northland LLC’s assets to a new entity they controlled, Northland Hearing Centers, Inc. They forged Austin’s signature to complete the transfer of assets, later awarded themselves restricted stock, and ultimately paid themselves and another individual approximately $15 million in exchange for terminating the restricted stock grants.

According to the indictment, RUZICKA, NELSON and MILLER also abused their positions of authority as Starkey executives to embezzle money and fraudulently obtain benefits from Starkey. RUZICKA awarded himself and other co-conspirators hidden bonuses that were concealed from Austin by falsifying compensation reports.

For example, according to the indictment, in 2014, RUZICKA embezzled $200,000 from Starkey under the guise of “officer’s insurance.” He used those funds to pay his state and federal personal income taxes. RUZICKA also stole a 2011 Jaguar automobile that Starkey purchased for his use at a cost of $119,188.77. Starkey paid the fees, insurance premiums, and other costs associated with the automobile. Nevertheless, in July 2015, RUZICKA transferred ownership of the car from Starkey to himself by signing the title as both representative of the seller and also as the buyer. He did not pay Starkey for the vehicle, nor was it reported as a taxable benefit.

According to the indictment, NELSON used more than $200,000 in Starkey funds to purchase a condominium so that he could carry on a clandestine personal relationship with a Starkey employee. He further stole $225,000 to replenish his personal investment account after he bought a home in Prior Lake, Minn. To conceal this theft, NELSON prepared a phony “promissory note” to disguise this illicit payment as a loan from Starkey. He never reported the “loan” on Starkey’s loan register and has made no payments on the “loan.”

In total, RUZICKA, NELSON, MILLER, TAYLOR and HAGEN are alleged to have conspired to steal more than $20 million from Starkey and Sonion.

When some details of the scheme were discovered in September 2015, RUZICKA, NELSON and MILLER were terminated by Starkey. TAYLOR was also terminated by Sonion when Sonion became aware of the fraud.

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

Assistant U.S. Attorneys Benjamin Langner and Lola Velazquez-Aguilu are prosecuting the case.

 

Defendant Information:                                                                                                                     

JEROME C. RUZICKA, 59

Plymouth, Minn.

Charges:

• Conspiracy to commit mail fraud and wire fraud, 1 count
• Mail fraud, 6 counts
• Wire fraud, 16 counts
• Conspiracy to commit money laundering, 2 counts
• Financial transactions involving fraud proceeds, 4 counts

SCOTT A. NELSON, 58

Prior Lake, Minn.

Charges:

• Conspiracy to commit mail fraud and wire fraud, 1 count
• Mail fraud, 2 counts
• Wire fraud, 2 counts
• Financial transactions involving fraud proceeds, 1 count

W. JEFFREY TAYLOR, 55

Cologne, Minn.

Charges:

• Conspiracy to commit mail fraud and wire fraud, 1 count
• Mail fraud, 4 counts
• Wire fraud, 10 counts
• Conspiracy to commit money laundering, 2 counts
• Financial transactions involving fraud proceeds, 4 counts

LAWRENCE W. MILLER, 63

Chanhassen, Minn.

Charges:

• Conspiracy to commit mail fraud and wire fraud, 1 count
• Wire fraud, 4 counts

LAWRENCE T. HAGEN, 63

Minnetonka, Minn.

Charges:

• Conspiracy to commit mail fraud and wire fraud, 1 count
• Wire fraud, 3 counts
• Conspiracy to commit money laundering, 1 count

 

 

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

United States Attorney for the District of Minnesota Andrew M. Luger today announced the sentencing of LEE ANDREW PAUL, a/k/a “Black,” 36, to 33 years in prison for sex trafficking three victims, two minor girls and one young woman. On March 18, 2015, a superseding indictment charged PAUL with trafficking all three victims. On December 11, 2015, following a five-day trial before U.S. District Judge Ann D. Montgomery, a federal jury convicted PAUL of all charged counts.

“I remain amazed at the courage and fortitude shown by the young victims who stood up to Paul and who took back from him the power he tried to exert over them. Everything about Paul’s conduct belies any notion that he can be trusted to walk the streets ever again. My office is committed to prosecuting human traffickers like Paul and bringing to justice anyone who would exploit and abuse the most vulnerable in our community,” said U.S. Attorney Andrew M. Luger. 

“The defendant is a remorseless predator. He is a rapist, an exploiter of women and children, and an unquestionable danger to our society. Every day the defendant is behind bars is a day that our community is safer” said Assistant United States Attorney Melinda A. Williams.

“The buying and selling of children for commercial sex acts is among the most despicable of crimes and Mr. Paul's conviction represents a great victory in taking such criminals off our streets and out of our communities,” said Special Agent in Charge Alex Khu of HSI St. Paul. “HSI has had the honor of working with some of the best law enforcement partners available to see that this criminal spends a long time behind bars.”

As proven at trial, PAUL is a self-proclaimed “pimp.” During Memorial Day weekend of 2013, PAUL sought out a 12-year-old sixth grader to join his sex trafficking “family.” He lured the 12-year-old and a 16-year-old girl to a party at a motel in Rochester, Minn., where he gave them marijuana and alcohol. PAUL announced that he was a pimp and told the young victims they would be working for him. PAUL took the girls to the Twin Cities where they knew no one. PAUL sexually assaulted the 16-year-old victim and brutally raped the 12-year-old.

As proven at trial, while at a motel in Maple Grove, Minn., that same weekend, the 16-year-old victim escaped PAUL and found a police officer and reported what had happened to her. However, PAUL had been tipped off that the 16-year-old victim was trying to find the police and PAUL fled the scene. He then directed another victim, this one 19-years-old, to take the 12-year-old victim to Alexandria, Minn., to “show her the ropes.” The 12-year-old was sold two times that night for sex with men. Law enforcement arrested PAUL on the morning of May 27, 2013, and was in jail pending state charges in Olmsted and Anoka Counties until he made bail on August 26, 2013. PAUL fled in July 2014 on the eve of his Olmsted County trial.

As proven at trial, while on the run, PAUL got rid of his cell phone and shut down his Facebook page to avoid being tracked by law enforcement. He fled first to Chicago, Ill., and then Atlanta, Ga., where he lived under two different assumed identities and used “burner” phones to avoid being tracked by law enforcement. He was arrested on January 14, 2015 by the U.S. Marshals Service and brought back to Minnesota to face federal charges.

This case is the result of an investigation conducted by Homeland Security Investigations, the United States Marshal’s Service, Rochester Police Department, Alexandria Police Department, Douglas County Sheriff’s Office, Anoka County Sheriff’s Office, Pope County Sheriff’s Office, and the Maple Grove Police Department.

This case was prosecuted by U.S. Attorney Andrew M. Luger, Assistant U.S. Attorney Melinda A. Williams, and Special Assistant U.S. Attorney Erin Gustafson. The United States Attorney’s Office thanks the Olmsted County Attorney’s Office for its substantial assistance in the prosecution of this case.

 

Defendant Information:

LEE ANDREW PAUL, a/k/a “Black,” 36

Bloomington, Minn.

Convicted:

• Sex Trafficking of a Minor by Force, Fraud, and Coercion, 2 counts
• Sex Trafficking by Force, Fraud, and Coercion, 1 count

Sentenced:

• 33 years in prison

 

 

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United States Attorney Andrew M. Luger today announced the sentencing of JAY ANTHONY ANDERSON, 66, for smuggling elephant ivory from the United States in violation of the Lacey Act. ANDERSON, who pleaded guilty on June 6, 2016 to one count of smuggling and one count of violating the Lacey Act, was sentenced on September 20, 2016 before U.S. District Judge Susan R. Nelson in U.S. District Court in St. Paul, Minn.

ANDERSON was the owner and operator of an antique business, located in Wabasha, Minn., as well as a website used to sell items through various online auctions. According to the defendant’s guilty plea and documents filed in court, from January 2011 through May 2013, ANDERSON sold more than $200,000 worth of elephant ivory, domestically and abroad. The defendant used online advertising to target buyers located in Asia and used third-party shippers so that he would not have to personally ship the ivory internationally.

According to the defendant’s guilty plea and documents filed in court, on June 10, 2011, ANDERSON, knowingly attempted to export a carving made from elephant ivory to a buyer located in Foshan City, China for approximately $1,356.00. ANDERSON attempted to export the elephant ivory through the United States Postal Service declaring the object as “RESIN CARVINGS” valued at $30.00, when in fact the defendant knew the object was made from elephant ivory and held a much higher monetary value. On June 23, 2011, U.S. Fish and Wildlife Service officials inspected and intercepted the package at an International Mail Facility in Chicago, Ill.

According to the defendant’s guilty plea and documents filed in court, from January 29, 2012 through December 31, 2012, ANDERSON knowingly violated the laws and regulations of the United States by buying and selling an object made from elephant ivory with a market value of more than $350.00. Specifically, on January 29, 2012, ANDERSON purchased an object made from elephant ivory from an auction house in Montreal, Canada for approximately $300.00. ANDERSON subsequently sold the elephant ivory object for approximately $700.00, describing it as an “18th/19th CENTURY IVORY & EBONY EUROPEAN CRUCIFIX.” At the time the elephant ivory object was purchased and imported, ANDERSON failed to submit a declaration to USFWS, as required by law.

"Dealers in the United States often begin illegally buying and selling rare wildlife after being lured by the prospects of huge profits. They choose to disregard how their greed fuels the black market and how the market affects living populations," said U.S. Fish and Wildlife Service Resident Agent in Charge Pat Lund, supervisor for Minnesota, Iowa, and Wisconsin. "We also find that many people think they won’t get caught or if they do, the consequences will be minimal. This sentence should serve as a reminder that this is not always the case," continued Lund.

Under the Lacey Act, it is unlawful to import, export, transport, sell or purchase wildlife, fish or plants that were taken, possessed, transported or sold in violation of a state, federal or foreign law. When it was passed in 1900, the Lacey Act became the first federal law protecting wildlife.

This case is the result of an investigation by the U.S. Fish and Wildlife Service.

This case was prosecuted by Assistant U.S. Attorney Andrew S. Dunne.

 

Defendant Information:                                                                                                                     

JAY ANTHONY ANDERSON, 66

Wabasha, Minn.

Convicted:

• Smuggling, 1 count
• Violation of the Lacey Act, 1 count

Sentenced:

• $100,000 fine payable to the Lacey Act Reward Fund
• Two years’ probation
• Forfeiture of elephant ivory totaling $85,000
• 200 hours community service

   

 

 

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United States Attorney Andrew M. Luger today announced the sentencing of KIRSTEN ANN TJOSAAS, 38, for embezzling $5,773,410 from Fagen, Inc. (Fagen), an industrial contracting company for which she served as Chief Financial Officer. TJOSAAS pleaded guilty on May 6, 2016, to wire fraud and money laundering.

According to her guilty plea, between 2006 and November 2015, TJOSAAS abused her authority as Corporate Controller and Chief Financial Officer of Fagen to issue at least 19 checks and make wire transfers totaling approximately $4.5 million from Fagen to Fairmont Investments, LLC (Fairmont), a Nebraska-based corporation controlled by the defendant.

According to her guilty plea, after registering Fairmont, TJOSAAS opened a bank account at Granite Falls Bank in the name of Fairmont for the purpose of embezzling money from Fagen. TJOSAAS signed these checks using the signature stamp of another Fagen executive without the authority or knowledge of that executive. The defendant also entered false entries into Fagen’s general ledger to disguise the illegitimate checks as payments to Fagen partners or payments to legitimate Fagen vendors. After depositing checks into the Fairmont account, TJOSAAS transferred the funds she had stolen into her own personal bank accounts.

According to her guilty plea, TJOSAAS also fraudulently issued Fagen checks payable to another company. TJOSAAS had access to and control over the bank account of this company. Between June 2006 and November 2015, TJOSAAS issued approximately 25 fraudulent checks into this account, totaling more than $1.2 million.

TJOSAAS used the illicit proceeds to buy homes in Florida, Minnesota, Kentucky, and Arizona. She purchased time-shares in Arizona and the U.S. Virgin Islands, as well as at least three automobiles, two all-terrain vehicles, a motorcycle, a jet-ski, and a sailboat.

TJOSAAS spent more than $500,000 of the stolen money on travel, including $346,000 on airplane tickets, $213,000 on hotel stays and more than $90,000 in restaurants.

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

Assistant U.S. Attorney Joseph H. Thompson prosecuted the case.

 

Defendant Information:                                                                                                                                                          

KIRSTEN ANN TJOSAAS, 38

Granite Falls, Minn.

Convicted:

• Wire fraud, 1 count
• Money laundering, 1 count

 

Sentenced:

• 78 months in prison
• 3 years supervised release
• $5,773,420 in restitution

 

 

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United States Attorney Andrew M. Luger today announced the guilty plea of RANDY MILAND, 62, for operating a Ponzi scheme through which he stole or attempted to steal more than $500,000 from purported investors. MILAND pleaded guilty today before United States District Judge Wilhelmina M. Wright in U.S. District Court in St. Paul, Minn.

“Randy Miland is a serial scam artist who has had a long career of defrauding his victims with false claims that he would use their money for legitimate investments,” said Minnesota Commerce Commissioner Mike Rothman. “He may once have worked as a chiropractor, but his real profession has been operating Ponzi schemes to steal people’s money. The Commerce Fraud Bureau worked with federal authorities to stop Miland’s criminal activities and prevent even more Minnesotans from being ripped off by him.”

“Today's guilty plea of Randy Miland demonstrates how law enforcement cooperatively works together to help put an end to the criminal behavior of those who prey on investors for their personal financial gain,” said Special Agent in Charge Shea Jones of St. Paul Field Office IRS Criminal Investigation. “IRS Special Agents will continue to use their financial expertise to identify and trace laundered funds in these types of investor fraud schemes.”

“Despite two prior convictions, Randy Miland continued to steal from friends and acquaintances through lies and misrepresentations,” said Assistant United States Attorney Joseph H. Thompson. “The Minnesota Department of Commerce and Criminal Investigation Division of the IRS worked together to investigate this case and put an end to Miland’s fraudulent conduct.” 

According to the defendant’s guilty plea, between 2010 and 2014, MILAND fraudulently solicited approximately $575,000 from investors, telling them that he would use their money to invest in futures and other legitimate investments. Instead, he used their money to pay personal expenses, including court-ordered restitution to victims of his prior scams, and to make Ponzi-type payments to other purported investors.

MILAND concealed from the new victims that he had been twice convicted of fraudulent conduct, that he was forbidden by the Minnesota Department of Commerce from offering or selling securities, and that he still owed more than $1.5 million in restitution to victims of prior schemes.

MILAND was convicted in 1999 in state court of theft by swindle and ordered to pay more than $1.5 million in restitution to the victims of his scheme. As of May 2016, MILAND still owed to the victims nearly the entire amount.

MILAND was convicted in 2006 in federal court of fraud and ordered to pay more than $250,000 in restitution to the victims. As of May 2016, MILAND owed approximately $124,000 in restitution.

The case is being prosecuted by Assistant United States Attorney Joseph H. Thompson.

This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS and the Minnesota Department of Commerce Fraud Bureau.

Defendant Information:

RANDY MILAND, 62
White Bear Lake, Minn.

Convicted: • Mail fraud, 1 count
• Money laundering, 1 count

Danny James Heinrich, 53, of Annandale, Minnesota, pleaded guilty today to federal child pornography charges.  As part of his allocution, Heinrich admitted in court that on Oct. 22, 1989, he abducted, sexually assaulted and murdered 11-year-old Jacob Wetterling.  Heinrich also admitted that, in January 1989, he abducted and sexually assaulted a 12-year-old. 

Investigators recovered Wetterling’s remains on Sept. 2; nearly 27 years after his disappearance from St. Joseph Township, Minnesota.

The announcement was made today by U.S. Attorney Andrew M. Luger for the District of Minnesota, Special Agent in Charge Richard T. Thornton for the FBI’s Minneapolis Division, Stearns County Sheriff John Sanner, Sterns County Attorney Janelle P. Kendall and Superintendent Drew Evans for the Minnesota Bureau of Criminal Apprehension (BCA).

“Danny Heinrich is no longer a person of interest,” said U.S. Attorney Luger.  “He is the confessed murderer of Jacob Wetterling and nearly 27 years after he committed this heinous crime, he has been brought to justice.  And Jacob is finally home.”

“This outcome is proof of what we can accomplish when law enforcement and prosecutors work together at the federal, state and local level,” said Special Agent in Charge Thornton.  “When the FBI proposed a cold case review with the assistance of an expert from the FBI’s Child Abduction Rapid Deployment team two years ago, our partners agreed to this and embraced the opportunity to have a new set of eyes help take a fresh look at the voluminous and complex case file.  I am extraordinarily proud of the FBI and of all the law enforcement personnel, past and present who poured their hearts and souls into this investigation, seeking justice for Jacob and answers for everyone.”

“Jacob Wetterling’s abduction in 1989 ended an age of innocence for Central Minnesota and beyond and had a dramatic impact on how parents raised their children,” said Sterns County Sheriff Sanner.  “As the investigation wore on and years turned to decades the hope of resolving the case and bringing Jacob home never once faltered.  A combination of steadfast determination, science and a unique collaborative effort involving local, state and federal agencies highlighted the value and importance of these relationships.  Even though the ending is not what we had hoped and prayed for, Jacob is finally home.”

“From the night he went missing, the BCA never gave up on finding Jacob,” said Superintendent Evans.  “For 27 years, BCA agents and our many partner agencies from all over the country doggedly followed every lead and pursued every tip.  The BCA team of agents, scientists, and crime scene examiners have been collecting and analyzing evidence throughout the investigation.  Last fall, our scientists connected Heinrich through DNA to another assault, which led to his arrest on the charges he faces today and eventually, led our agents and crime scene team to Jacob.  While this is not the result we hoped for, Jacob can now finally come home.”

“This event in the history of Minnesota, especially the history of Stearns County, could not have been accomplished without every member of this local, state and national team,” said Stearns County Attorney Kendall.  “Despite the complication of this path, this case demonstrates that no case is too hard to solve, no tip too insignificant to consider and no legal obstacle insurmountable in finding answers and accountability for Jacob Wetterling and for everyone near and far who knows his name.  We never stopped looking for Jacob; none of us will ever forget the moment we found him.  Our condolences and deepest sympathies remain with the Wetterling family.”

According to Heinrich’s guilty plea, on Oct. 22, 1989, he abducted, sexually assaulted and murdered Wetterling.

According to Heinrich’s guilty plea, on Jan. 13, 1989, he abducted and sexually assaulted a 12-year-old boy.

According to Heinrich’s guilty plea, he possessed between 10 and 150 child pornography images, including images of prepubescent minors under the age of 12.  The pornographic material portrays sadistic or masochistic conduct and images of morphed child pornography.

The parties have jointly recommended a federal prison sentence of 20 years.

This case is the result of an investigation conducted by the FBI, Minnesota Bureau of Criminal Apprehension and the Stearns County Sheriff’s Office.

This case is being prosecuted by Assistant U.S. Attorneys Steven L. Schleicher and Julie Allyn of the U.S. Attorney’s Office’s Special Prosecutions Unit.  Substantial assistance was provided by the Stearns County Attorney’s Office.  The Department of Justice Child Exploitation and Obscenity Section also provided assistance. 

DANNY JAMES HEINRICH, 53, pleaded guilty today to federal child pornography charges. As part of his allocution, HEINRICH admitted in court that on October 22,1989, he abducted, sexually assaulted and murdered 11-year-old Jacob Wetterling. HEINRICH also admitted that, in January 1989, he abducted and sexually assaulted 12-year-old J.S.  

Investigators recovered Jacob Wetterling’s remains on Friday, September 2, 2016; 26 years, 10 months, and 11 days after his disappearance from St. Joseph Township, Minn.

The announcement was made today by United States Attorney Andrew M. Luger, FBI Special Agent in Charge for the Minneapolis Division Richard T. Thornton, Stearns County Sheriff John Sanner, Stearns County Attorney Janelle P. Kendall and Minnesota Bureau of Criminal Apprehension (BCA) Superintendent Drew Evans.

“Danny Heinrich is no longer a person of interest,” said U.S. Attorney Andrew Luger. “He is the confessed murderer of Jacob Wetterling, and nearly 27 years after he committed this heinous crime, he has been brought to justice. And Jacob is finally home.”

“This outcome is proof of what we can accomplish when law enforcement and prosecutors work together at the federal, state and local level,” said FBI Special Agent in Charge for the Minneapolis Division Richard T. Thornton. “When the FBI proposed a cold case review with the assistance of an expert from the FBI’s Child Abduction Rapid Deployment team two years ago, our partners agreed to this and embraced the opportunity to have a new set of eyes help take a fresh look at the voluminous and complex case file. I am extraordinarily proud of the FBI and of all the law enforcement personnel, past and present who poured their hearts and souls into this investigation, seeking justice for Jacob and answers for everyone.”

“Jacob Wetterling's abduction in 1989 ended an age of innocence for Central Minnesota and beyond and had a dramatic impact on how parents raised their children,” said Stearns County Sheriff John Sanner. “As the investigation wore on and years turned to decades the hope of resolving the case and bringing Jacob home never once faltered. A combination of steadfast determination, science and a unique collaborative effort involving local, state and federal agencies highlighted the value and importance of these relationships. Even though the ending is not what we had hoped and prayed for, Jacob is finally home.”

“From the night he went missing, the BCA never gave up on finding Jacob,” said BCA Superintendent Drew Evans. “For 27 years, BCA agents and our many partner agencies from all over the country doggedly followed every lead and pursued every tip. The BCA team of agents, scientists, and crime scene examiners have been collecting and analyzing evidence throughout the investigation.  Last fall, our scientists connected Heinrich through DNA to another assault, which led to his arrest on the charges he faces today, and eventually, led our agents and crime scene team to Jacob. While this is not the result we hoped for, Jacob can now finally come home.”

“This event in the history of Minnesota, especially the history of Stearns County, could not have been accomplished without every member of this local, state and national team,” said Stearns County Attorney Janelle Kendall. “Despite the complication of this path, this case demonstrates that no case is too hard to solve, no tip too insignificant to consider, and no legal obstacle insurmountable in finding answers and accountability for Jacob Wetterling and for everyone near and far who knows his name. We never stopped looking for Jacob; none of us will ever forget the moment we found him. Our condolences and deepest sympathies remain with the Wetterling family.”

According to HEINRICH’s guilty plea, on October 22, 1989, he abducted, sexually assaulted, and murdered Jacob Wetterling.

According to HEINRICH’s guilty plea, on January 13, 1989, he abducted and sexually assaulted J.S., a 12-year-old boy.

According to HEINRICH’s guilty plea, he possessed between 10 and 150 child pornography images, including images of prepubescent minors under the age of 12. The pornographic material portrays sadistic or masochistic conduct, and images of morphed child pornography.

The parties have jointly recommended a federal prison sentence of 20 years.

This case is the result of an investigation conducted by the FBI, Minnesota Bureau of Criminal Apprehension and the Stearns County Sheriff’s Office.

This case is being prosecuted by Assistant United States Attorneys Steven L. Schleicher and Julie Allyn of the U.S. Attorney’s Office’s Special Prosecutions Unit. Substantial assistance was provided by the Stearns County Attorney’s Office. The Department of Justice Child Exploitation and Obscenity Section also provided assistance.

 

Defendant Information:

DANNY JAMES HEINRICH, 53

Annandale, Minn.

Convicted:

• Receipt of child pornography, 1 count

 

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United States Attorney Andrew M. Luger today announced the sentencing of EITAN BENJAMIN FELDMAN, 30, to 18 months in prison for illegally dealing in firearms without a license. The defendant pleaded guilty on April 29, 2016, and was sentenced today by U.S. District Judge Patrick J. Schiltz in United States District Court in Minneapolis, Minn.

“Feldman’s actions in this case put firearms in the hands of criminals in the Twin Cities, and jeopardized public safety,” said ATF Special Agent in Charge of the St. Paul Field Division James C. Modzelewski. “Today’s sentence should send a message to our community that ATF is committed to working with local police and prosecutors to identify illegal sources of firearms, and hold them accountable. If we’re going to impact gun violence in our communities, we all need to work together to prevent criminals from getting guns.” 

“Stemming the flow of illicit firearm sales is an important priority for law enforcement,” said Assistant United States Attorney Benjamin Bejar. “Engaging in the business of unlicensed firearms sales is a serious crime that circumvents the critical background check routinely performed by legitimate licensed firearms dealers to prevent those persons who cannot legally possess firearms from acquiring them.”

According to the defendant’s guilty plea, between January 2014 and January 2016, FELDMAN regularly dealt firearms without a license by repeatedly purchasing firearms and offering them for resale within days of getting them. FELDMAN routinely purchased firearms offered by out-of-state Federal Firearms Licensees (FFLs) through websites such as gunbroker.com, an online firearms auction site. He arranged to have the firearms transferred to L.E. Gun Sales, a FFL in Minnesota, where he got the guns after completing and signing the appropriate documentation.

According to the defendant’s guilty plea, during the same time period, FELDMAN regularly listed and offered the same firearms for sale – often at a higher price than what he paid – on armslist.com. On average, FELDMAN made a potential $90 profit on each firearm he resold. Of the 41 guns FELDMAN purchased and re-sold during this time, the average time he actually possessed a gun before offering it for resale was only nine days.

In July 2015, an ATF Special Agent told FELDMAN that some of the firearms he had received at L.E. Gun Sales, and subsequently sold, had been linked to crime scenes within days of FELDMAN taking possession of and selling the guns.

Despite being informed by ATF Agents that some of the firearms he had purchased and resold had been linked to crime scenes within days of his illicit transactions, the defendant continued to willfully engaging in the business of dealing in firearms without a license. Most egregiously, even after ATF Agents served the defendant with a written warning notice and explained that his actions were almost certainly in violation of federal law, the defendant continued his unlicensed and illegal dealing in firearms.

This case is the result of an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, Minneapolis Police Department, the Saint Paul Police Department and the Bloomington Police Department.

Assistant U.S. Attorney Benjamin Bejar prosecuted the case.

 

Defendant Information:                                                                                                                     

EITAN BENJAMIN FELDMAN, 30

Saint Paul, Minn.

Convicted:

• Willfully engaging in the business of dealing in firearms without a license, 1 count

Sentenced:

• 18 months in prison

• 2 years’ supervised release

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United States Attorney Andrew M. Luger today announced the sentencing of ROBERTA BARNES, 59, to 12 months in prison. BARNES pleaded guilty in December 2014 to using two nonprofit entities to defraud the State of Minnesota for more than $480,000. BARNES was sentenced today before Chief U.S. District Judge John R. Tunheim in U.S. District Court in Minneapolis, Minn.

According to her guilty plea and documents filed in court, BARNES was the president of two St. Paul-based nonprofit organizations, Agape House for Mothers (“Agape”) and Sierra Young Family Institute (“Sierra”). Through Agape and Sierra, BARNES won approximately $1.7 million in grant funds from by the Minnesota Department of Health (“MDH”) and the Minnesota Housing Finance Agency (“MHFA”).

From 2002 until May 2012, BARNES applied for and received grant money from MDH and MHFA to combat teen pregnancy and provide housing assistance to needy families. Instead, BARNES spent more than $480,000 of the grant funds on personal expenses for herself and her family; she attempted to conceal her fraud scheme by creating fraudulent invoices that reflected false expenses incurred by Agape and Sierra.

This case is the result of an investigation conducted by the Federal Bureau of Investigation and the U.S. Department of Health and Human Services.

Assistant U.S. Attorney Benjamin Langner prosecuted this case.

Defendant Information:

ROBERTA BARNES, 59
St. Paul, Minn.

Convicted: • Mail Fraud, 1 count

Sentenced: • 12 months + 1 day in prison
• 2 years supervised release
• Restitution to be determined

Numerous Alleged Co-Conspirators Previously Convicted at Trial and Pleaded Guilty in Minnesota

Mohamed Amiin Ali Roble, 20, formerly of Minneapolis, was charged today by criminal complaint with providing and conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL).

The charges were announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Andrew M. Luger of the District of Minnesota and Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Division.

According to the complaint and documents filed in court, on Oct. 4, 2014, Roble flew to China with a family member.  In November 2014, four of Roble’s associates in Minnesota attempted to travel from Minnesota to Syria to join ISIL, via JFK International Airport in New York.  The four defendants were stopped by federal law enforcement agents at JFK and were prevented from flying from New York to various destinations in Europe.  Also in November 2014, Roble bought airplane tickets and flew to Istanbul, but returned to China shortly thereafter.

On Dec. 27, 2014, Roble again traveled to Istanbul and, according to the complaint, subsequently made his way into Syria and joined ISIL.

A criminal complaint is merely an allegation, and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

This case is the result of an investigation conducted by members of the FBI-led Joint Terrorism Task Force (JTTF).  The Minnesota JTTF includes members from  the U.S. Marshals Service; Bloomington, Minnesota, Police Department; Ramsey County, Minnesota, Sheriff’s Office; Hennepin County, Minnesota, Sheriff’s Office, Federal Air Marshals Service; Customs and Border Patrol; Department of Homeland Security; Minneapolis Police Department; the Airport Police; Internal Revenue Service-Criminal Investigation; and the FBI.  The National Security Division’s Counterterrorism Section and the U.S. Attorney’s Office of the District of Minnesota are prosecuting the case.

United States Attorney for the District of Minnesota Andrew M. Luger and Special Agent in Charge for the Minneapolis Division of the FBI Richard T. Thornton today announced a criminal complaint charging MOHAMED AMIIN ALI ROBLE, 20, with conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL) and providing material support to ISIL. 

According to the complaint and documents filed in court, on October 4, 2014, ROBLE and his mother flew from Minneapolis to Beijing, China. From Beijing, ROBLE flew to Wuhan, in Hubei Province, China.

Approximately one-month later, four of ROBLE’s co-defendants attempted to travel from Minnesota to Syria to join ISIL, via New York’s JFK International Airport. The four co-defendants were stopped by federal law enforcement agents at JFK from flying from New York to various destinations in Europe.

According to the complaint and documents filed in court, during the same time period that his co-defendants made their attempt to travel through New York to Turkey, ROBLE made six cash withdrawals of approximately $1,000 each from an ATM in Wuhan, China. The withdrawals were made from an account containing funds ROBLE obtained from a monetary settlement he was awarded after suffering personal injuries in the I-35W bridge collapse of August 1, 2007.

According to the complaint and documents filed in court, in November 2014 ROBLE bought airfare and flew to Istanbul, Turkey. From Turkey, ROBLE called his mother and told her that he was in Turkey “shopping,” and that he needed an airline ticket back to China, which she purchased for him. ROBLE returned to China shortly thereafter.

On December 27, 2014, ROBLE again traveled to Istanbul. ROBLE did not return to China from this second trip to Turkey.

This case is the result of an investigation conducted by members of the FBI-led Joint Terrorism Task Force (JTTF). The JTTF includes members from the following departments:  the United States Marshals Service, Bloomington Police Department, Ramsey County Sheriff’s Office, Hennepin County Sheriff’s Office, Federal Air Marshals Service, Customs and Border Patrol, Department of Homeland Security, Minneapolis Police Department, the Airport Police, IRS-CI, and the FBI.

Defendant Information: 

MOHAMED AMIIN ALI ROBLE, 20
Minneapolis, Minn.

Charges:

• Conspiracy to provide material support to a designated foreign terrorist organization, 1 count
• Providing material support to a designated foreign terrorist organization, 1 count

United States Attorney Andrew M. Luger announced the sentencing of PERCY MINIFER LACEY, JR., a/k/a “P3,” 23, to 140 months in prison. LACEY, who pleaded guilty on February 23, 2016, to conspiracy to possess firearms in furtherance of a drug trafficking crime, was sentenced today before U.S. District Judge Patrick Schiltz in U.S. District Court in Minneapolis, Minn.

LACEY is the final defendant to be sentenced as part of an August 2015 indictment charging members of the 10z and 20z street gangs with crimes related to a multi-year gang war, which included a broad daylight shooting in August 2014 outside the Hennepin County Medical Center.

“Gangs like the 10z and 20z that engage in violent warfare endanger innocent lives and pose a significant threat to communities throughout Minneapolis,” said Assistant United States Attorney Thomas Calhoun-Lopez. “The ATF and the Minneapolis Police Department have worked hard to stem the tide of gang violence in Minneapolis, and today’s sentence is an important step forward.”

According to the defendant’s guilty plea and documents filed in court, LACEY and his co-conspirators engaged in a series of public shootings as part of gang warfare on behalf of the 10z and 20z, gangs which make money through the sale of illegal drugs. 10z and 20z members repeatedly engaged in street warfare against rival gangs, primarily the Bloods and the Bogus Boys, to protect and seize new drug dealing territory and to attack and rob drug distributors associated with rival gangs. All together, the defendants were involved in at least five shootings between August 19 and September 23, 2014. 

According to the defendant’s guilty plea and documents filed in court, two days after being caught on tape shooting at Bloods gang members with a semi-automatic weapon, LACEY sprayed 30 rounds of bullets outside Hennepin County Medical Center, ignoring nearby staff, families and children, in his pursuit of Bloods who were visiting a member of their gang who had been shot earlier in the day. One round narrowly missed a child in her car seat.

According to the defendant’s guilty plea and documents filed in court, LACEY was a proud gang member. He has multiple photos of himself posted to social media showing off stacks of money, and videos in which he boasts about his capacity for violence. Even after he was indicted, LACEY posted a photo of himself with fellow gang members flashing gang signs while incarcerated.

This case was prosecuted by Assistant U.S. Attorney Thomas Calhoun-Lopez.

This case is the result of an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Minneapolis Police Department.

Defendant Information:

PERCY MINIFER LACEY, JR., a/k/a “P3,” 23
Richfield, Minn.

Convicted: • Conspiracy to possess firearms in furtherance of a drug trafficking crime, 1 count

Sentenced: • 140 months in prison
• 3 years supervised release

DANIEL ALFRED ADAMS, a/k/a “Funk,” 30
Minneapolis, Minn.

Convicted: Conspiracy to possess firearms in furtherance of a drug trafficking crime, 1 count

Sentenced: • 120 months in prison
• 3 years supervised release

CLARENCE JAMES DICKENS, JR., a/k/a “Claro,” a/k/a, “Sneaky,” 26
Roseville, Minn.

Convicted: • Conspiracy to possess firearms in furtherance of a drug trafficking crime, 1 count

Sentenced: • 129 months in prison
• 3 years supervised release

ANTHONY PIERRE DOSS, a/k/a “Two Tone,” a/k/a “Tony,” 25
Brooklyn Park, Minn.

Convicted: • Conspiracy to possess firearms in furtherance of a drug trafficking crime, 1 count

Sentenced: • 105 months in prison
• 3 years supervised release

THOMAS DUPREE BENNETT, a/k/a “Deandre Clay,” a/k/a “Trigga,” 28
Minneapolis, Minn.

Convicted: • Felon in possession of ammunition, 1 count
Sentenced: • 60 months in prison
• 3 years supervised release

ANDREW INDELICATO PETERSON, a/k/a “Boo Boo,” 26
St. Louis Park, Minn.

Convicted: • Felon in possession of ammunition, 1 count

Sentenced: • 120 months in prison
• 3 years supervised release

PAUL ANTONIO EARLY, a/k/a “Stamps,” a/k/a, “Man Man,” 24
Minneapolis, Minn.

Convicted: • Distribution of cocaine base, 1 count

Sentenced: • 100 months in prison
• 3 years supervised release

United States Attorney Andrew M. Luger announced the sentencing of DIANE MARIE EILER, 48, to 42 months in prison for stealing $1.7 million from her employer. EILER, who pleaded guilty to one count of wire fraud on April 15, 2016, was sentenced today before Senior U.S. District Judge Patrick J. Schiltz in U.S. District Court in Minneapolis, Minn.

“Eiler systematically abused the trust of her employer to steal more than $1.7 million,” said Assistant United States Attorney Joseph H. Thompson. “The sentence imposed today by the court demonstrates that financial crimes are taken seriously and that white collar criminals are subject to significant consequences for their illegal acts.”

According to the defendant’s guilty plea and documents filed in court, EILER was the Director of Accounting at AgQuest Financial Services, Inc., a financial services company based in Morgan, Minn., which offers loans and insurance to farmers and other agricultural producers. From 2007 through November 2015, EILER used her position to funnel money from AgQuest to her own personal bank accounts.

According to the defendant’s guilty plea, EILER stole company checks and wrote them out to herself, using the signature stamps of the company’s executives. She hid the theft by creating false entries in AgQuest’s ledger to disguise the payments as payments to AgQuest customers. In total, EILER wrote more than 250 checks to herself, which totaled more than $1.7 million. EILER gambled away almost all of the stolen money.

This case was prosecuted by Assistant U.S. Attorney Joseph H. Thompson.

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

Defendant Information:

DIANE MARIE EILER, 48
Bird Island, Minn.

Convicted:

• Wire fraud, 1 count

Sentenced:

• 42 months in prison
• 3 years supervised release
• $1,738,459 in restitution

United States Attorney Andrew M. Luger today announced the guilty plea of EBONY SHANTE YARBROUGH, 28, to aggravated identity theft. YARBROUGH pleaded guilty today before U.S. District Judge Patrick J. Schiltz in U.S. District Court in Minneapolis, Minn.

“Today's plea by Ebony Yarbrough to an aggravated identity theft charge exemplifies IRS Special Agents' intense focus on the rigorous pursuit of identity theft and refund fraud," said Shea Jones, Special Agent in Charge of IRS Criminal Investigation St. Paul Field Office. IRS Criminal Investigation remains committed to the pursuit of identity theft crimes and, together with our partners at the U.S. Attorney’s Office, we will hold those who engage in similar conduct accountable.”

According to the defendant’s guilty plea, between 2013 and 2015, YARBROUGH convinced friends and family members to allow her to file their state and federal income tax returns by claiming she knew how to prepare the returns and would charge less than a tax preparation service.

According to her guilty plea, YARBROUGH prepared taxpayers’ returns by claiming false Schedule C income characterized as “hair stylist,” “cleaner” or “exotic dancer.” Additionally, YARBROUGH included dependents on taxpayers’ returns by using stolen personal identifying information belonging to minors, enabling them to qualify for other tax credits. YARBROUGH’S scheme accounted for more than $500,000 in false state and federal claims.

This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS. The Minnesota Department of Revenue assisted in the investigation.

Assistant U.S. Attorney Kimberly A. Svendsen is prosecuting the case.

 

Defendant Information:                                                                                                                            

EBONY SHANTE YARBROUGH, 28

St. Paul, Minn.

Convicted:

• Aggravated Identity Theft, 1 count

 

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

United States Attorney Andrew M. Luger yesterday announced the guilty plea of NODIN MAKWA, 21, for charging at a police officer with his car after a high-speed chase. On January 5, 2016, MAKWA was indicted on one count of assaulting, resisting or impeding certain officers or employees. MAKWA pleaded guilty yesterday before Senior U.S. District Court Judge Michael J. Davis.

According to the defendant’s guilty plea, on August 8, 2015 Red Lake Police responded to a call from a woman who said MAKWA threatened her child with a sword. When police located his vehicle and tried to pull him over, MAKWA sped away at 120 miles per hour. After several police cars boxed in MAKWA’s car, a Beltrami County deputy sheriff attempted to approach MAKWA, who then reversed his vehicle into the officer. The officer was knocked unconscious, and sustained a broken hip and a concussion.

To learn more about the Justice Department’s Tribal Safety program, visit http://www.justice.gov/tribal/.

This case is the result of an investigation conducted by the Minnesota Highway Patrol and the Beltrami County Sheriff.

This case is being prosecuted by Assistant U.S. Attorney Clifford B. Wardlaw.

 

Defendant Information:

NODIN MAKWA, 21

Red Lake, Minn.

Convicted:

• Assaulting, resisting or impeding certain officers or employees, 1 count

 

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

 

United States Attorney Andrew M. Luger today announced the sentencing of DANA LEE COBENAIS, 24, an enrolled member of the Red Lake Band of Chippewa, for aggravated sexual abuse. Following a three-day trial before Senior U.S. District Judge Richard Kyle, a jury on November 19, 2015 found COBENAIS guilty. COBENAIS was sentenced today before Judge Kyle in Duluth, Minn. to 20 years in prison. 

As proven at trial, on March 14, 2015, COBENAIS brutally assaulted a woman on the Red Lake Indian Reservation, after forcing her to give him a ride in her car. COBENAIS grew angry during the ride and punched the victim several times in the face before sexually assaulting her. When the Red Lake Police responded to a call for help they found substantial amounts of blood in the car and on the victim. COBENAIS’ sexual violence was so severe that the victim needed surgery to repair the lacerations.

Because the Red Lake Indian Reservation is a federal-jurisdiction reservation, some of the crimes that occur there are investigated by the FBI in conjunction with the Red Lake Tribal Police Department. Those cases are prosecuted by the U.S. Attorney’s Office.

Violence against American Indian women occurs at epidemic rates. In 2005, Congress found that one in three American Indian women is raped during her lifetime, and American Indian women are nearly three times more likely to be battered during their lives than Caucasian women.

The U.S. Justice Department is taking steps to increase engagement, coordination, and action relative to public safety in tribal communities, including the creation of the Violence Against Women Federal and Tribal Prosecution Task Force. This task force will explore current issues raised by professionals in the field and recommend “best practices” in prosecution strategies involving domestic violence, sexual assault and stalking.

To learn more about the Justice Department’s Tribal Safety program, visit http://www.justice.gov/tribal/.

This case is the result of an investigation conducted by the FBI and Red Lake Police Department.

This case was prosecuted by Assistant U.S. Attorney Clifford B. Wardlaw.

 

Defendant Information:

DANA LEE COBENAIS, 24

Ponemah, Minn.

Convicted:

• Aggravated sexual abuse, 1 count

Sentenced:

• 20 years in prison
• Lifetime supervised release

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

United States Attorney Andrew M. Luger yesterday announced the sentencing of LOUIS LEE FRASIER BANKS, 26, a leader of a known Minneapolis gang, the Taliban/Young N’ Thuggin (YNT) gang. On March 4, 2015, BANKS was charged in a seven-defendant indictment with conspiracy to distribute cocaine base (crack) and distribution of crack. On October 13, 2015 BANKS pleaded guilty to a two count information charging him with conspiracy to distribute crack cocaine and possessing a firearm during a drug trafficking crime.  The defendants include other members of the gang. BANKS appeared yesterday before U.S. District Judge Patrick J. Schultz.

According to the defendant’s guilty plea and documents filed in court, between January and December 2014, the defendants named in the indictment were organizers and members of two closely associated street gangs, the Taliban and the YNT. BANKS had more influence in the gangs, based on seniority and criminal activity. The Taliban/YNT gangs claim an area of north Minneapolis as their territory, and other north Minneapolis gangs, including the 1-9 Dipset and Stick Up Boys, as enemies. The members carry guns to protect themselves and their money against their rivals, in order to further their ability to sell illegal drugs.         

                                    
According to the defendant’s guilty plea and documents filed in court, the Taliban/YNT are organized for the purpose of making money by trafficking illegal drugs, among other criminal activity. Members of the Taliban/YNT frequently travel to St. Cloud and Duluth, Minnesota, and to Fargo, North Dakota, to sell crack. Crack that the Taliban/ YNT could sell in Minneapolis for $20 could be sold for $50 in Greater Minnesota and in North Dakota. Similarly, an amount of crack cocaine sold for $150 in the Metro area would sell for between $220 and $250 in Greater Minnesota.

The other defendants in this case were sentenced as follows: CARNEL LAVEL HARRISON, a/k/a “Boo Man,” 26, was sentenced to 120 months in prison and 5 years of supervised release. DEJUAN PIERRE DARKYSE WASHINGTON, a/k/a “DJ,” 25, was sentenced to 120 months in prison and 3 years of supervised release. LAQUEDRICK LEMEL AS-SIDIQ, a/k/a “Quady,” a/k/a “C,” 26, was sentenced to 120 months in prison and 3 years of supervised release. DONTE TRAMAYNE SMITH, a/k/a “Five,” 26, was sentenced to 18 months in prison and 3 years of supervised release. CORTEZ DAVON BLAKEMORE, a/k/a “Tez,” 26, was sentenced to 21 months in prison and 3 years of supervised release. Defendant TERRELL VONSHAY ROBERSON, a/k/a “Get Right,” a/k/a “Slim,” is awaiting sentencing.

This case is the result of an investigation conducted by the Safe Streets Task Force, which is comprised of federal and local law enforcement agencies, including, but not limited to, the FBI, Minneapolis Police Department, Minnesota Bureau of Criminal Apprehension and St. Paul Police Department. The St. Cloud Violent Crimes Task Force and the St. Cloud Police Department were a critical part of this investigation.

This case was prosecuted by Assistant U.S. Attorney David Steinkamp.

 

Defendant Information:

LOUIS LEE FRASIER BANKS, a/k/a “G.I.,” 26

Anoka County Jail

Convicted:

• Conspiracy to distribute Cocaine Base, 1 count
• Felon in Possession of a Firearm in furtherance of a drug trafficking crime, 1 count

Sentenced:

• 15 years in prison
• 5 years of supervised release

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

United States Attorney Andrew M. Luger today announced the trial conviction of SANDRA LEE BART, 68, for requiring foreign workers on temporary H-2A work visas to pay illegal fees and kickbacks. BART was found guilty by a jury of conspiring with others to commit fraud.

Co-defendant WILIAN SOCRATE CABRERA pleaded guilty on July 14, 2016, to conspiracy to commit fraud in foreign labor contracting, and co-defendant JOHN JAMES SVIHEL pleaded guilty on June 16, 2016, to conspiracy to commit fraud in foreign labor contracting.

“Today’s verdict should serve as a warning to those who seek to exploit foreign workers through the U.S. guest worker visa programs,” said Assistant United States Attorney Manda Sertich. “We commend the investigating agencies for their collaboration and thank the jury for its service.”

As proven at trial, from 2008 to May of 2015 BART and CABRERA operated an unregistered business called “Labor Listo,” which they used to recruit employers like SVIHEL, who ran Svihel Vegetable Farm in Foley, Minn., to hire seasonal workers from the Dominican Republic on temporary work visas. The visa programs require employers to pay for workers’ housing and travel expenses to and from their home country, and forbid employers from collecting recruitment fees or wage kickbacks. BART and CABRERA violated all of these rules.

As proven at trial, CABRERA charged the workers a one-time recruitment fee of between $420 and $2,385, as well as an annual fee of $374, which he split with BART. The workers were told that if they didn’t pay the fees they would not be allowed to return for the following growing season. BART and CABRERA also collected full reimbursement from the workers for their flights. SVIHEL kept a percentage of the workers’ wages. BART and CABRERA were clearly using the program to profit from the workers. “Costs – pass on to applicant,” was written on a business plan from a 2008 Labor Listo meeting between BART and CABRERA.

As proven at trial, BART and CABRERA recruited SVIHEL in 2010 to hire four Dominican workers using the H-2A visa program, which provides temporary visas to agriculture workers, falsely telling him that a church in the Dominican Republic would pay for workers’ airfares. When the wage Svihel was required to pay the workers was increase from $9.75 per hour to $10.62 per hour in 2011, SVIHEL expressed hesitation in continuing to use the program. BART told SVIHEL that the workers would be willing to pay wage and airfare kickbacks to make up the difference. SVIHEL kept a total of $90,000 in kickbacks and spent it on travel and leisure expenses.

As proven at trial, when BART learned there was an investigation into the working conditions at Svihel Farm, she tried to have CABRERA talk the workers into signing a document retracting any statements they made to the Department of Labor about illegal fees. SVIHEL and BART exchanged a list of workers, labeling the workers “G” for good or “B” for bad, based on which workers they thought had spoken to the Department of Labor. The workers labeled “bad” were sent back to the Dominican Republic first in the 2014 season and were not invited back in 2015.

This case is the result of an investigation conducted by the U.S. Department of State Diplomatic Security Service, U.S. Department of Labor Office of the Inspector General, and the Homeland Security Investigations Document and Benefit Fraud Task Force.

This case is being prosecuted by Assistant United States Attorneys and Manda Sertich and David Maria.

Defendant Information:

SANDRA LEE BART, 68
Seven Hills, 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

WILIAN SOCRATE CABRERA, 43
Dominican Republic

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

JOHN JAMES SVIHEL, 54
Foley, Minn.

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

United States Attorney Andrew M. Luger today announced the sentencing of DANIEL MARTEZ WALKER, a/k/a “Ghost,” 24, for stealing and using credit card processing machines to steal approximately $215,000. WALKER, who pleaded guilty to conspiracy to commit access device fraud on April 13, 2016, was sentenced today before U.S. District Judge Susan R. Nelson in U.S. District Court in St. Paul, Minn.

“Identity theft crimes wreak havoc on business owners and consumers,” said Assistant U.S. Attorney Kate Buzicky. “Mr. Walker’s sentence shows the seriousness of these offenses, and the need to punish them appropriately.”

According to the defendant’s guilty plea and documents filed in court, from July to September 2014, WALKER conspired with others to steal point-of-sale (POS) machines from Twin Cities businesses, including bowling alleys and liquor stores. The conspirators used the stolen machines to process fraudulent “refunds” from the victim businesses. In total, WALKER and the co-conspirators used the stolen machines to cause 275 unauthorized refunds totaling more than $215,000 in losses to the victim businesses.

This case was the result of an investigation conducted by the United States Secret Service and Brooklyn Park Police Department.

This case was prosecuted by Assistant U.S. Attorneys Sarah Hudleston and Kate Buzicky.

 

Defendant Information:

DANIEL MARTEZ WALKER, 24

Frazee, Minn.

Convicted:

• Conspiracy to commit access device fraud, 1 count

Sentenced:

• 33 months in prison

 

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United States Attorney Andrew M. Luger today announced the sentencing of TYWIN BENDER, a/k/a “Finn Winn,” 26, to a total of 130 months in prison for attempting to retaliate violently against federal witnesses. On April 7, 2016, following a three-day trial before Senior U.S. District Court Judge Richard H. Kyle, a jury found BENDER guilty of conspiracy to retaliate against two federal witnesses. Bender previously had pleaded guilty to federal firearms charges in a related case. Today he was sentenced to 60 months on the firearms charge and 70 months consecutive for the witness retaliation charge.

“Our system of justice depends on the willingness of witnesses to take the stand and testify truthfully,” said Assistant United States Attorney Jeffrey Paulsen. “When Tywin Bender ordered two federal witnesses to be beaten in retaliation for their testimony against a violent gang leader, he committed an assault on the judicial system itself. This prosecution shows that such assaults will not go unpunished.”

BENDER, a known member of the Stick Up Boys street gang based in North Minneapolis, was charged in November 2014 in an 11-defendant indictment for conspiracy to commit the crime of being a felon in possession of firearms, a crime to which BENDER pleaded guilty. One of his co-defendants, Veltrez Black, a/k/a “Chief,” was also charged in that indictment and exercised his right to go to trial. Two other gang members, Antonio Lewis and Kibbie Walker, testified against Black at trial. On October 22, 2015, a jury found Black guilty of all charges against him.

As proven at BENDER’s witness retaliation trial, the day after Black’s conviction, BENDER used a prison phone to call an accomplice who was not incarcerated and dictated an email for her to send to two fellow gang members, D.W. and D.G., who were confined at Minnesota Correctional Facility – Rush City, which is the same facility where witnesses Lewis and Walker were then held. The email stated, “the nigga bogus [Lewis’s nickname] is a rat.  he took the stand on chief. smash him as soon as you see him. green light. the nigga Kibbie took the stand too on chief. let everybody know. no talking no explanations.” The plot was foiled when an alert Department of Corrections employee noticed the threatening language in the email and steps were taken to protect the intended victims.

This case is the result of an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives.

This case was prosecuted by Assistant U.S. Attorney Jeffrey Paulsen.

 

Defendant Information:

TYWIN BENDER, a/k/a/ “Finn Winn,” 26

Stillwater, Minn.

Convicted:

• Conspiracy to possess firearms as a convicted felon, 1 count
• Conspiracy to retaliate against a federal witness, 1 count

Sentenced:

• Firearms charge – 60 months
• Witness retaliation charge – 70 months consecutive

 

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

United States Attorney Andrew M. Luger today announced the sentence of JOHN HUNTER, SR., 47, to 70 months in federal prison for filing false tax returns. Following a four-day trial before Senior U.S. District Court Judge David S. Doty, a jury on December 3, 2015, found HUNTER guilty of all the charges against him, including conspiracy to defraud the United States, false claims, and aggravated identity theft. HUNTER was sentenced today before Judge Doty in U.S. District Court in Minneapolis, Minn.

"Today's 70 month sentencing of Mr. John Hunter exemplifies the driven focus of IRS Special Agents as they relentlessly pursue identity theft and refund fraud crimes," said Shea Jones, Special Agent in Charge of the St. Paul Field Office IRS Criminal Investigation. “IRS Criminal Investigation, together with the U.S. Attorney’s Office, will continue to investigate the criminals who are stealing from the American taxpayer.”

As proven at trial, in 2010, HUNTER fraudulently claimed more than $200,000 in tax refunds to which he was not entitled. HUNTER misrepresented both his income and the incomes of 48 others, using their personal identifying information to file false tax returns. In 2009, HUNTER claimed a $8,222 tax refund based on earnings of $13,000 from his job at the Maplewood nightclub, Club Rage, in 2009. His actual earnings were closer to $4,000 and no taxes had been withheld from his paychecks.

As proven at trial, HUNTER also recruited dozens of friends and acquaintances, including minors, for whom he would file fraudulent returns by exaggerating or falsifying their incomes. HUNTER claimed that several of these acquaintances had worked at Club Rage or Holiday Stores, though they never had.

As proven at trial, HUNTER unsuccessfully tried to continue his scheme in 2012, claiming that he had earned over $19,000 at Jimmy John’s sandwich shop. He also filed false taxes for two others without their knowledge, claiming almost $20,000 in fraudulent refunds. The IRS rejected his claims.

This case was the result of an investigation conducted by IRS Criminal Investigations Division with substantial assistance from the Minnesota Department of Revenue.

This case was prosecuted by Assistant U.S. Attorneys Joseph Thompson and Amber Brennan. 

 

Defendant Information:

JOHN HUNTER, SR., 47

Eagan, Minn.

Convicted:

• Conspiracy to defraud the United States, 1 count
• False claims, 8 counts
• Aggravated identity theft, 2 counts

 

Sentenced:

• 70 months in prison

 

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

United States Attorney Andrew M. Luger announced a federal indictment charging SCOT MCNAMARA, 56, for embezzlement and theft of labor union assets.[1] MCNAMARA is expected to appear before Magistrate Judge Steven E. Rau in United States District Court in St. Paul, Minn.

According to the indictment and documents filed in court, MCNAMARA is a member of the International Association of Heat and Frost Insulators and Allied Workers, Local 34 (“Local 34”), a labor union representing 458 Minnesota members. Beginning in December 2007, MCNAMARA served as financial secretary of the union, until December 2012 when he lost his bid for re-election.

According to the indictment, as financial secretary, MCNAMARA had a Visa rewards credit card for use on behalf of Local 34. Use of the card resulted in earned credit card reward points, which Local 34 owned. However, before leaving office as financial secretary, MCNAMARA cashed in the reward points in exchange for other items, including $1,900 in gas cards, which were sent to MCNAMARA’s home.

According to the indictment and documents filed in court, MCNAMARA also used the Visa rewards card to pay personal expenses, including more than $2,800 in airline tickets for a family vacation to the Grand Cayman Islands.

According to the indictment and documents filed in court, from October 30, 2011, through November 2, 2011, MCNAMARA attended a training in New Orleans, La., regarding his role as trustee for Local 34’s health and welfare and pension funds. Local 34 paid a total of $3,054.84 for costs associated with MCNAMARA’s attendance at the training yet MCNAMARA personally requested and received a $3,087.84 reimbursement. Nearly all of the expenses MCNAMARA claimed in his reimbursement request had already been paid by Local 34. Instead of turning over the reimbursement funds to Local 34, MCNAMARA used the money to cover personal expenses, including payments associated with a December 2012 trip for his family to the Grand Cayman Islands.

A related felony information has also been filed charging KEITH CHRISTOPHERSON, 53, for embezzlement and theft of labor union assets.[2]

This case is the result of an investigation conducted by the U.S. Department of Labor.

Assistant U.S. Attorney Lola Velazquez-Aguilu is prosecuting the case.

Defendant Information:                                                                                                                     

SCOT MCNAMARA, 56
Cottage Grove, Minn.

Charges: • Embezzlement and theft of labor union assets, 4 counts

KEITH CHRISTOPHERSON, 53
Coon Rapids, Minn.

Charges: • Embezzlement and theft of labor union assets, 1 count

 

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

[2] The charges contained in the information are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

 

United States Attorney Andrew M. Luger today announced the sentencing of REX LEE FURMAN, 53, to life in prison for preying on children both online and in-person. Following a three-day trial before Senior U.S. District Judge David S. Doty, a jury on October 22, 2015, found FURMAN guilty of all the charges against him, including 13 counts of production of child pornography and related charges.

“This defendant is a determined and dangerous predator who has spent decades abusing and raping little girls,” said Assistant United States Attorney Melinda A. Williams. “As a result of today’s sentence, his days of harming the most vulnerable in our society have finally come to an end.”

As proven at trial, while residing in Federal Dam, Minn., FURMAN photographed and sexually abused two young girls who were then in his care. He also collected images and videos of child pornography, including videos of girls as young as three-years-old being sexually violated.

During a search of the Federal Dam residence, FURMAN informed law enforcement that they would probably find thousands of images of child pornography, including images that he had produced. An investigation revealed more than five hundred such videos and images, including of the two girls who had been in his care. FURMAN had equipped his room with tools to enable the abuse of children, including a mounted computer monitor over his bed, a mirror underneath the monitor and a security camera outside of his bedroom door to see anyone approaching.

FURMAN has two prior convictions for sexually abusing prepubescent girls. In 1981 FURMAN was convicted of criminal sexual conduct in the fourth degree in Wright County for sexual misconduct with a five-year-old girl. In 1999, FURMAN was convicted of criminal sexual conduct in the first degree in Hennepin County for sexually violating a developmentally disabled young girl in his care.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice.  Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.justice.gov/psc.
In addition, if you know of any child who may have been a victim of exploitation, please contact the National Center for Missing or Exploited Children (NCMEC) at 1-800-THE-LOST (1-800-843-5678) or visit NCMEC’s web site at www.missingkids.com.

The Minnesota BCA, which leads the Minnesota Internet Crimes Against Children Task Force, and the Minneapolis Police Department, which is a member of the FBI Child Exploitation Task Force, investigated the case.

This case was prosecuted by Assistant U.S. Attorney Melinda A. Williams and Deputy Chief Alexandra R. Gelber of the Department of Justice Criminal Division’s Child Exploitation and Obscenity Section.

Defendant Information:

REX LEE FURMAN, 53
Federal Dam, Minn.

Convicted: • Production of child pornography, 13 counts
• Distribution of child pornography, 2 counts
• Possession of child pornography, 1 count
• Receipt of child pornography, 1 count
• Committing a sex offense while being required to register as a sex offender, 1 count

Sentenced: • Life in prison

A Minnesota man with two prior convictions for sexually abusing children was sentenced today to serve life plus 10 years in prison for production, distribution, receipt and possession of child pornography, as well as committing a child sex offense while being required to register as a sex offender, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Andrew M. Luger of the District of Minnesota. 

Rex Lee Furman, 52, of Federal Dam, Minnesota, was sentenced by U.S. District Judge David S. Doty of the District of Minnesota, who also ordered Furman to pay restitution in the amount of $3,000 to two victims.  Furman was convicted on Oct. 21, 2015, following a three-day jury trial.

According to the evidence presented at trial, in 2013, during separate investigations by the Minnesota Bureau of Criminal Apprehension (BCA) and the Minneapolis Police Department, law enforcement officers obtained child pornography videos from an internet protocol (IP) address linked to Furman’s home.  The evidence showed that during a search of his residence that was executed with the assistance of the Cass County Sheriff’s Office on Feb.13, 2014, Furman admitted that he had downloaded child pornography.  According to the trial evidence, he also informed a special agent that he had produced images depicting child exploitation involving two girls who had been in his care, both of whom were younger than six years old at the time of the abuse.  The trial evidence showed that subsequent forensic analysis of Furman’s computers and digital media confirmed that he produced pornographic photographs and a video of those children in 2012.  According to the trial evidence, investigators also found in Furman’s possession hundreds of images and videos that depicted other children engaged in sex acts with adults.

Furman has two prior Minnesota state court convictions for engaging in sex acts with minors.  In December 1981, Furman pleaded guilty to sexually abusing a five-year-old girl who was in his care.  In January 1999, Furman was convicted after a bench trial of sexually abusing a 10-year-old girl in his care.  As a result, he was required to register as a sex offender until 2021.

The Minnesota BCA, which leads the Minnesota Internet Crimes Against Children Task Force, and the Minneapolis Police Department, which is a member of the FBI Child Exploitation Task Force, investigated the case.  Assistant U.S. Attorney Melinda A. Williams of the District of Minnesota and Deputy Chief Alexandra R. Gelber of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) prosecuted the case.

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

United States Attorney Andrew M. Luger today announced an indictment charging RONALD DAVID JOHNSON, 50, for stealing more than $2.1 million from victims hoping to invest successfully in the North Dakota oil boom. JOHNSON is charged with five counts of wire fraud, one count of money laundering.  JOHNSON is expected to appear tomorrow before Magistrate Judge Becky R. Thorson in U.S. District Court in Saint Paul, Minn. 

According to the indictment and documents filed in court, JOHNSON came up with an investment idea to address the need to house oil workers in the Bakken in North Dakota and Montana. The idea, registered as Indoor RV Parks, LLC, would allow oil workers to eschew more common barracks-style housing in favor of comfortable indoor RV parks, which would have been large warehouses where oil workers could park their RVs and have access to shared amenities like laundry and vending machines.

According to the indictment, JOHNSON fraudulently solicited $2.1 million from four investors in Indoor RV Parks, LLC, telling the investors that their money would be used to build and manage indoor RV parks for oil workers. Instead of using the invested money for RV parks, JOHNSON used more than $1.8 million to fund his personal cattle farm, take vacations, buy vintage Chevrolets, and purchase real estate, including an entire 17-acre island on Mink Lake in Maple Lake, Minn.

This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS and the FBI.

This case is being prosecuted by Assistant U.S. Attorney Joseph H. Thompson.

Defendant Information:

RONALD DAVID JOHNSON, 50
Corcoran, Minn.

Charges: • Wire fraud, 5 counts
• Money laundering, 1 count

United States Attorney Andrew M. Luger announced an information charging BRADLEY SMEGAL, 63, for stealing more than $5.1 million from at least 14 of his investment advisory clients. SMEGAL is charged with two counts of securities fraud.[1]

According to the information and documents filed in court, SMEGAL was a registered broker and investment advisor from 1980 until May 2012 when the Financial Industry Regulatory Authority (FINRA) barred him from the securities industry.

According to the information and documents filed in court, between August 2007 and January 2013, SMEGAL convinced at least 14 investment advisory clients to invest in entities in which SMEGAL had an undisclosed ownership interest or otherwise controlled the investment vehicle. SMEGAL often described the investments as conservative and guaranteed specific rates of return to the clients. SMEGAL did not disclose his personal stake in these investments to his clients.

According to the information and documents filed in court, SMEGAL fraudulently convinced his clients to invest approximately $5.14 million into these entities. He diverted $825,900 of those funds to his personal bank account. As part of an effort to hide this theft, SMEGAL often routed the money through multiple bank accounts before depositing it into his personal account. In order to keep the scheme going, SMEGAL sometimes made Ponzi-type payments to investors.

According to the information and documents filed in court, just prior to being barred by FINRA, in November 2011, Wells Fargo, where SMEGAL had been working, terminated his employment. SMEGAL had not disclosed to his employer that he had a financial interest in all of the entities to which he steered his investment advisory clients. After he was terminated, SMEGAL led certain clients to believe that he was still employed by Wells Fargo.

This case is the result of an investigation conducted by the FBI and the United States Postal Inspection Service.

This case is being prosecuted by Assistant U.S. Attorney David M. Maria.

 

Defendant Information:

BRADLEY SMEGAL, 63

Bainbridge Island, Wash.

 

Charges:

• Securities fraud, 2 counts

 

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[1] The charges contained in the information are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

United States Attorney Andrew M. Luger today announced the sentencing of TERRANCE MICHAEL PICK, 68, for receiving child pornography. PICK, who pleaded guilty on March 23, 2016, was sentenced today before Senior U.S. District Judge Ann D. Montgomery in U.S. District Court in Minneapolis, Minn.

“We are grateful to our partners at the Internet Crimes Against Children Task Force for helping us investigate this case,” said Assistant United States Attorney Laura M. Provinzino. “Child pornography is a crime that has profound repercussions for the victims throughout their lifetimes. This is a just sentence for a man with a troubling history of harming children.”

“This disturbing case is an example of why investigators must continue to uncover and bring to justice those who would prey on children,” said Minnesota Bureau of Criminal Apprehension Superintendent Drew Evans. “The Internet Crimes Against Children Task Force will continue to identify and investigate predators who would conduct such criminal acts with such vulnerable victims.”

According to the defendant’s guilty plea and documents filed in court, PICK had several thousand electronic images and almost 200 videos of child pornography. The search history on PICK’s web browser also included nefarious phrases such as “training them young.”

According to the defendant’s guilty plea and documents filed in court, PICK was convicted of second-degree manslaughter in 1974 in Stearns County when he killed a two-year-old child. The child bled to death from internal injuries caused by PICK. On January 20, 1988 PICK was convicted of first-degree criminal sexual conduct in Wright County for sexually assaulting his 7-year-old niece and her 8-year-old friend.

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

In addition, if you know of any child who may have been a victim of exploitation, please contact the National Center for Missing or Exploited Children (NCMEC) at 1-800-THE-LOST (1-800-843-5678) or visit NCMEC’s web site at www.missingkids.com.

This case is the result of an investigation led by the Minnesota Bureau of Criminal Apprehension, with assistance from the Meeker County Sheriff’s Office, the Eden Valley Police Department and the Federal Bureau of Investigation.

This case was prosecuted by Assistant U.S. Attorney Laura M. Provinzino.

Defendant Information:

TERRANCE MICHAEL PICK, 68
Eden Valley, Minn.

Convicted: • Receipt of child pornography, 1 count

Sentenced:

• 15 years in prison
• 15 years of supervised release

The United States Attorney’s Office for the District of Minnesota announced the guilty plea of DAVID BLAINE WELLIVER, 56, for defrauding investors in the Dblaine Fund, a mutual fund for which WELLIVER acted as investment adviser, of at least $1.2 million. WELLIVER pleaded guilty to one count of securities fraud today before Senior U.S. District Judge Paul A. Magnuson.in U.S. District Court in St. Paul, Minn.

“Today's guilty plea demonstrates how federal law enforcement works together to help put an end to the criminal behavior of those who prey on investors for their personal financial gain,” said Special Agent in Charge Shea Jones of IRS Criminal Investigation. “IRS Criminal investigators will continue to use their financial expertise to identify these types of investor fraud schemes.”

According to the defendant’s guilty plea, WELLIVER was the CEO and CIO of Dblaine Capital, LLC, an investment advisory company he founded in Buffalo, Minn. In September 2010, WELLIVER negotiated an agreement with Lazy Deuce Capital Company, LLC (Lazy Deuce), to purportedly finance the merger between Dblaine Capital and other mutual funds.

According to the defendant’s guilty plea, WELLIVER, in 27 separate transactions between October 2010 and May 2011, borrowed a total of $4 million from Lazy Deuce. Aside from a $95,000 payment to acquire the assets of a mutual fund, WELLIVER did not use any of the other proceeds of the Lazy Deuce loans to acquire mutual funds as he had represented to Lazy Deuce. Instead, WELLIVER diverted over $500,000 in proceeds from the Lazy Deuce loans to his own personal use, including for landscaping and interior decorating at his personal residence, to purchase land adjacent to his personal residence, to buy a personal vehicle, and to pay for his son’s college tuition.

According to the defendant’s guilty plea, between December 16, 2010, and April 15, 2011, WELLIVER caused $1.725 million in Dblaine Fund investors’ money to be invested in a shell company formed by several Lazy Deuce principals, called Semita Partners LLC (Semita). At the time WELLIVER made the investments in Semita, he knew that Semita was a shell company formed by principals of Lazy Deuce – the same company from which Dblaine Capital had borrowed money – and that Semita had no operations. On December 31, 2010, in order to meet a series of redemptions in the Dblaine Fund, WELLIVER liquidated nearly all of the stocks held by the Dblaine Fund. Following this liquidation, the Dblaine Fund’s only holdings consisted of worthless Semita shares and cash held in a money market account.

As a result of WELLIVER’s fraud scheme, Dblaine Fund investors lost more than $1.2 million.

This case is the result of an investigation conducted by the United States Postal Inspection Service, the Federal Bureau of Investigation, and the Internal Revenue Service – Criminal Investigation.

This case is being prosecuted by Assistant United States Attorneys Kimberly A. Svendsen and Benjamin F. Langner.

Defendant Information:

DAVID BLAINE WELLIVER, 56
Buffalo, Minn.

Convicted: • Securities fraud, 1 count

United States Attorney Andrew M. Luger today announced a superseding indictment charging ADAM JONATHAN MARTIN, 35, for stealing more than $350,000 from a brewery at which he worked, and for fraudulently obtaining an additional $330,000 from purported investors in a fraudulent investment scheme. MARTIN is charged with six counts of wire fraud, three counts of monetary transactions in criminally derived property, and one count of aggravated identity theft.

According to the superseding indictment, while MARTIN was a controller at a Minnesota-based brewery, he stole more than $350,000. After MARTIN left the company in November of 2014, an investigation revealed that in December 2011, MARTIN allegedly transferred more than $240,000 from the company’s business checking account to a business brokerage account that MARTIN opened and controlled.

According to the superseding indictment, MARTIN used his sister-in-law’s name and personal identifying information to open the aforementioned business brokerage account. He listed the name of the business entity on the account as “DCI Change” and characterized his sister-in-law as the “director” of DCI Change.

According to the superseding indictment and documents filed in court, MARTIN used the fraudulently obtained funds for various personal expenses, including to make a $106,000 down payment on a new home. MARTIN also allegedly used his employer’s credit card to pay for $78,000 worth of personal expenses, including on an all-inclusive vacation resort. Finally, the investigation revealed that MARTIN had allegedly stolen $30,000 in cash from the brewery.

According to the superseding indictment and documents filed in court, MARTIN also was involved in a separate Ponzi scheme in which he defrauded friends, relatives, and acquaintances out of more than $330,000, claiming he would make legitimate investments. Instead, he used the victims’ money to pay for personal expenses and to pay off previous investors.

A trial is scheduled for August 29, 2016. 

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

This case is being prosecuted by Assistant U.S. Attorney John Kokkinen.

 

Defendant Information:

ADAM JONATHAN MARTIN, 35

St. Cloud, Minn.

Charges:

• Wire fraud, 6 counts

• Money laundering, 3 counts

• Aggravated identity theft, 1 count

 

A former Minnesota National Guardsman was sentenced today to 210 months in prison for inducing a 14-year-old girl to create and send to him sexually explicit photos over the Internet while he was deployed to Afghanistan, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Andrew M. Luger of the District of Minnesota.

Andrew Schiller, 28, of Lakeville, Minnesota, was sentenced by U.S. District Judge Susan Richard Nelson of the District of Minnesota, who ordered that he also serve a lifetime term of supervised release and pay restitution to the victim.  Schiller pleaded guilty to one count of production of child pornography on Sept. 10, 2015.

According to his guilty plea, between Sept. 23, 2013, and Jan. 12, 2014, while deployed to Afghanistan, Schiller contacted a 14-year-old female from Minnesota online and requested that she create and forward to him via the internet sexually explicit photos of herself.  The victim did, in fact, send several images in response to Schiller’s requests, including at least one sexually explicit image.  Schiller further admitted that he communicated online with numerous other minors and that he attempted to convince the minors to send to him sexually explicit videos or images of themselves.

The Army Criminal Investigative Division and FBI investigated the case.  Trial Attorney Jeffrey H. Zeeman, formerly of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), and Assistant U.S. Attorney Katherine T. Buzicky of the District of Minnesota prosecuted the case.

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

In addition, if you know of any child who may have been a victim of exploitation, please contact the National Center for Missing or Exploited Children (NCMEC) at 1-800-THE-LOST (1-800-843-5678) or visit NCMEC’s web site at www.missingkids.com. 

United States Attorney Andrew M. Luger today announced the guilty plea of MST MINERALIEN SCHIFFAHRT SPEDITION UND TRANSPORT GMBH (“MST”), a German company and operator of the M/V Cornelia, with violating the Act to Prevent Pollution from Ships (APPS) by failing to maintain an accurate ship record about the disposal of oil-contaminated waste. MST pleaded guilty today before U.S. District Judge Joan N. Ericksen in U.S. District Court in Minneapolis, Minn.

"Lake Superior is a vital part of Minnesota’s natural environment," said Assistant United States Attorney John Kokkinen. "The criminal fine and community service payment imposed by the Court provide a strong deterrent to future would-be polluters and significant funding to preserve and protect Lake Superior for future generations. This case was made possible by the excellent work of members of the United States Coast Guard who served as critical partners throughout this investigation."

"This case is an excellent example of the Coast Guard's and Department of Justice's commitment to holding shipping companies and crews accountable for non-compliance with International and U.S. environmental laws and regulations," said Rear Adm. June Ryan, commander of the Coast Guard 9th District. "Part of the terms of the plea agreement provide future protections for the pristine waters of the Great Lakes, a noteworthy outcome in the continued partnership between the U.S. Attorney's Office and the Coast Guard throughout the Great Lakes, in particular the U.S. Attorney's Office in Minnesota."

"The oceans and our inland waterways cannot be used as dumping grounds," said Jeff Martinez, Special Agent in Charge of EPA’s criminal enforcement program in Minnesota. "Today’s sentencing should send a clear message to would-be violators that the American people will not allow U.S. environmental laws to be violated, adversely affecting both public health and marine life."

According to the defendant’s guilty plea and documents filed in court, from February 2015 through October 2015, the M/V Cornelia, a German-owned commercial vessel, experienced significant leakages of oily waste-water. As a result, the M/V Cornelia was accumulating a substantial volume of machinery space bilge water.

On at least ten occasions, the M/V Cornelia’s Chief Engineer and/or Second Engineer instructed members of the engine room crew to transfer machinery space bilge water from the dirty bilge tank to the clean bilge tank, which is a separate tank that is supposed to contain only clean, oil-free water, and then discharge the oily waste-water overboard. At least one occasion when machinery space bilge water was transferred to the clean bilge tank and then discharged overboard occurred in approximately May 2015 while the ship was in the Great Lakes.

On each occasion in which oily waste-water was transferred internally and then discharged overboard, the Chief Engineer intentionally failed to record the transfers and subsequent discharges of oily waste-water in the M/V Cornelia’s Oil Record Book (ORB).  This gave the false impression in the ORB that all of the oily waste-water had been properly handled and disposed.

On November 3, 2015, the M/V Cornelia called upon the Port of Duluth to load grain for transport to Africa. At that time, U.S. Coast Guard inspectors boarded the vessel to conduct a Port State Control examination and were presented with the M/V Cornelia’s ORB containing the omissions and false entries.

As a condition of the defendant’s guilty plea, MST will be required to pay an $800,000 criminal fine to the United States. In addition to the criminal fine, MST will be required to make a community service payment of $200,000 to support the protection and preservation of Lake Superior and the Lake Superior watershed.

As an additional condition of the defendant’s guilty plea, MST will serve three years of probation, during which time the organization must commit no further violations of the International Convention for the Prevention of Pollution from Ships (MARPOL), federal, state or local law. In addition, MST must fund and implement an Environmental Compliance Plan (ECP) for all vessels that it operates which call at ports or places in the United States.

This case is the result of an investigation conducted by the U.S. Coast Guard Investigative Service and the U.S. Environmental Protection Agency.

This case was prosecuted by Assistant U.S. Attorneys Benjamin F. Langner and John Kokkinen.

Defendant Information:

MST MINERALIEN SCHIFFAHRT SPEDITION UND TRANSPORT GMBH
Schnaittenbach, Germany

Convicted: • Violation of the Act to Prevent Pollution from Ships, 1 count

Sentenced: • $800,000 criminal penalty
• $200,000 community service payment
• 3 years of probation

United States Attorney Andrew M. Luger announced the sentencing of MYKEL LAMAR HARRIS, 25, for trafficking a teenage girl who he sold for sex. HARRIS, who pleaded guilty on January 25, 2016, was sentenced Thursday before U.S. District Judge Donovan W. Frank in U.S. District Court in St. Paul, Minn.

“Sex trafficking is not just an international or national problem—it is also a local one,” said Assistant United States Attorney Laura M. Provinzino. “The U.S. Attorney’s Office is committed to protecting the children of Minnesota from commercial sexual exploitation by prosecuting those who harm children. We urge members of the community to continue to contact law enforcement when children are in danger.”

According to the defendant’s guilty plea, in September 2013, HARRIS used Facebook to recruit a teenage girl who was in high school at the time, to commit sex acts in exchange for money. HARRIS took partially nude photos of the victim and used them to advertise the victim on a backpage.com post linked to his personal email account. Over a three-day period in December 2013, HARRIS sold the victim for sex at a hotel in Roseville, Minn. Customers were charged $150 for a half hour and $250 for an hour. HARRIS took all of the money the victim collected for those sexual encounters.

According to documents filed in court, HARRIS again caused the victim to engage in commercial sex in January, February and April 2014, during which time she missed days of high school and at her legitimate place of employment. HARRIS used the victim’s own debit card to rent hotel rooms in which he sold her for sex.

The successful prosecution resulted from an anonymous tip handwritten on a backpage.com advertisement.  Based on the victim’s photographs, the tipster reported: “I am as sure as I can be ‘this is a child.’  Please do something!”

This case was prosecuted by Assistant U.S. Attorney Laura M. Provinzino.

This case is the result of an investigation conducted by the Saint Paul Police Department and Homeland Security Investigations.

 

Defendant Information:

MYKEL LAMAR HARRIS, 25

Brooklyn Park, Minn.

Convicted:

• Sex trafficking of a minor, 1 count

Sentenced:

• 120 months in prison
• 10 years of supervised release

 

 

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United States Attorney Andrew M. Luger today announced the conviction of JORDAN JAMES DAVIS, 35, for conspiring with his father, WILLIAM JAMES DAVIS, to steal funds from Community Action of Minneapolis (CAM). JORDAN DAVIS was convicted today after a jury trial before U.S. District Judge Patrick J. Schiltz in U.S. District Court in Minneapolis, Minn. WILLIAM DAVIS pleaded guilty on June 16, 2016 to all of the charges against him.

“Jordan Davis took more than $140,000 in salary that he did not earn,” said Assistant United States Attorney Kimberly A. Svendsen. “The agreement this defendant made with his father to steal from CAM destroyed opportunities for underprivileged youth to learn valuable job skills. I am thankful to the jury for the time and attention they gave to this case, and hope that this verdict brings some measure of justice for those harmed by Jordan Davis’ crimes.”

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.

As proven at trial, 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.

As proven at trial, 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 March 2007 until January 2011, he continued to receive his full paycheck, $1,320 biweekly. In fact, while DAVIS was receiving paychecks for his no-show job, CAM hired four other managers for the Ben & Jerry’s store, three of whom were paid less in the full-time jobs than JORDAN DAVIS received for his no-show role.

As proven at trial, during the time JORDAN DAVIS was receiving a paycheck for his no-show job, 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.

As proven at trial, WILLIAM DAVIS also gave JORDAN DAVIS a CAM vehicle for his personal use, and JORDAN DAVIS also had a Ben & Jerry’s debit card that he used to pay personal expenses such as gas and cell phone bills.

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 is being prosecuted by Assistant United States Attorneys Kimberly A. Svendsen and Amber M. Brennan.

Defendant Information:

JORDAN JAMES DAVIS, 35
Ostego, Minn.

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

United States Attorney for the District of Minnesota Andrew M. Luger today announced the guilty plea of MUHAMMED FATTY, 41, to multiple charges related to tax refund fraud and fraudulently obtaining U.S. citizenship. On June 15, 2016, FATTY pleaded guilty before Judge Donovan W. Frank to one count of unlawful procurement of naturalization and one count of making false claims in relation to tax refunds.

“Investigating refund fraud is a top priority for IRS Criminal Investigation,” said IRS Criminal Investigation Special Agent in Charge Shea Jones of the St. Paul Field Office. “Filing false tax returns is a serious crime that hurts innocent taxpayers. Law enforcement and the United States Attorney’s Office are serious about investigating these crimes and holding accountable those who defraud the government and taxpayers.”

According to documents filed in court, law enforcement became aware of the defendant’s scheme when U.S. Department of State consular officials identified a visa applicant using the same name as an individual already in the U.S., who had previously naturalized in 2013.

According to the defendant’s guilty plea and documents filed in court, in January 2015, FATTY devised a scheme in which he prepared and electronically filed a false tax return using the name and social security number of another person and knowingly made and presented to the Internal Revenue Service a claim for refund in the amount of $9,332. From 2006 until 2015, the defendant falsely used the name and Social Security number of another person and fraudulently claimed and received tax refunds from the United States in the amount of $46,109. In addition, as of May 2016, under the defendant’s true name and Social Security number, the defendant owed the Internal Revenue Service $7,407 in back taxes and fees.

According to the defendant’s guilty plea and documents filed in court, FATTY attempted to obtain medical assistance by fraudulently using the name and social security number of another person. FATTY has fraudulently received approximately $7,857 in benefits, involving premiums paid by the State of Minnesota.

This guilty plea resulted from an investigation by the U.S. Department of State’s Diplomatic Security Service (DSS), the Internal Revenue Service’s (IRS) Criminal Investigation Division and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

Special Assistant United States Attorney Ryan R. Wood is prosecuting the case.

 

Defendant Information:

MUHAMMED FATTY, 41

Little Canada, Minn.

Convicted:

• Unlawful procurement of naturalization, 1 count

• Making a false, fictitious or fraudulent claim, 1 count

   

   

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United States Attorney Andrew M. Luger today announced the guilty plea of WILLIAM JAMES DAVIS, 65, for conspiring to steal funds from Community Action of Minneapolis (CAM). DAVIS pleaded guilty today before U.S. District Judge Patrick J. Schiltz in U.S. District Court in Minneapolis, Minn.

“Improving people’s lives was the mission of Community Action of Minneapolis,” said U.S. Attorney Luger. “Instead, Bill Davis stole from those in need to line his own pockets. The evidence of fraud was overwhelming, and the defendant’s guilty plea to all of the charges against him is a just result.”

According to the defendant’s guilty plea, CAM’s primary funding sources included federal grants administered by the Minnesota Department of Commerce and Minnesota Department of Human Services. CAM also received funding from CenterPoint Energy and Xcel Energy in exchange for providing certain conservation and weatherization services to qualifying homeowners.

According to his guilty plea, DAVIS concealed his diversion of CAM funds to his personal use by charging the majority of his CAM-paid personal expenses to a slush fund on CAM’s books that was not subject to the same oversight as CAM’s state and federal grant proceeds. DAVIS could therefore instruct CAM’s fiscal staff to charge personal expenses to this slush fund with less risk of detection.

According to his guilty plea, DAVIS concealed from CAM’s Board of Directors that he was using his position as CAM’s CEO to divert CAM funds to his personal use and that of his family and friends.

According to his guilty plea, between March 2007 and October 2014, DAVIS diverted at least $5,000 per year in CAM funds intended to be used to provide services to low-income residents of Minneapolis to his own personal use and the use of his family and friends, including JORDAN DAVIS. As part of the scheme, DAVIS used CAM funds for personal expenses, including airline tickets, hotel stays, rental cars and a Caribbean cruise.

According his guilty plea, DAVIS also used CAM funds to pay for his personal vehicle, a 2011 Chrysler 300. In May 2011, DAVIS traded in a 2005 Chrysler 300 owned by CAM. He then used the $10,079.53 in proceeds from the trade-in of the CAM vehicle and $36,430 in additional CAM funds to buy a new car for himself.

According to his guilty plea, DAVIS also 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 operated the store to provide job and entrepreneurial training to underprivileged youth facing barriers to employment.

According to the defendant’s guilty plea, between 2002 and October 2006, WILLIAM DAVIS’s son 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.

According to the defendant’s guilty plea, DAVIS instructed CAM’s fiscal staff to continue issuing JORDAN DAVIS the full paycheck he had been receiving for managing the ice cream shop. From at least March 2007 until January 2011, J. DAVIS continued to receive his full paycheck, $1,320 biweekly, for his work at the Ben & Jerry’s, even though he was doing no work for the ice cream shop.

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.

In October 2013, the Minnesota Department of Human Services (DHS) began an audit intended to determine whether CAM was using the federal and state grant funds that it received through DHS in accordance with the applicable contracts. DHS personnel sought documents and information about the purposes of various CAM expenditures.

According to the defendant’s guilty plea, DAVIS sent correspondence to the Commissioner of DHS containing false material representations about his personal travel.

On October 13, 2014, W. DAVIS was suspended from his position as CEO without pay.

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 is being prosecuted by Assistant United States Attorneys Kimberly A. Svendsen and Amber M. Brennan.

Defendant Information:

WILLIAM JAMES DAVIS, 65
Brooklyn Park, Minn.

Convicted: • Conspiracy to commit theft concerning programs receiving federal funds, 1 count
• Mail fraud, 10 counts
• Wire fraud, 1 count
• Theft concerning programs receiving federal funds, 4 counts

United States Attorney Andrew M. Luger today announced an indictment charging SENG XIONG, 48, with wire and mail fraud for operating an affinity scheme targeting Hmong elders.  XIONG was arrested on Thursday, March 24, 2016, at Los Angeles International Airport, prior to boarding a flight bound for Thailand.

According to the Indictment, XIONG was conducting a fraud scheme through his organization “Hmong Tebchaws,” in which Hmong elders were being 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 allegedly 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.

According to the Indictment, 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.

According to the Indictment, 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, which would secure their spot in the new Hmong country along with some of the benefits, although those who “enrolled” at that level would not receive a return on their investment.

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 Minnesota Financial Crimes Task Force, Saint Paul Police Department, United States Secret Service, Federal Bureau of Investigation 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 Attorney Amber M. Brennan.

Defendant Information:

SENG XIONG, 48
Maplewood, Minn.

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

United States Attorney Andrew M. Luger and Special Agent in Charge of the United States Secret Service Minneapolis Division Louis Stephens today announced the conviction of ZIBO LI, 31, for conspiring to traffic in stolen cell phones. LI led a conspiracy to traffic more than $3.8 million in stolen cellular devices throughout the United States and Hong Kong.

“Zibo Li led an organization that used the stolen identities of ordinary people to perpetrate a multi-million-dollar fraud,” said Assistant United States Attorney Manda M. Sertich. “Honest consumers bear the cost of the illegal activity of retail thieves like Li and his conspirators. We would like to thank the jury for its service during this trial and for returning a just verdict.”

“At its core, this case is about widespread identity theft, contact fraud and financial crimes,” said Louis Stephens, Special Agent in Charge of the United States Secret Service Minneapolis Field Office. “The collaborative approach of talented local and federal law enforcement officers and prosecutors ended a multi-year criminal conspiracy adept at widespread victimization of Minnesota based victims and businesses.”

As proven at trial, between 2011 and 2014, ZIBO LI and eight co-conspirators fraudulently obtained mobile cellular devices for steeply reduced rates by entering into service contacts, often using stolen identities. ZIBO LI ultimately sold the stolen merchandise to contacts in Hong Kong, where a new Apple iPhone could, at the time of the conspiracy, retail for as much as $2,000.

As proven at trial, three co-conspirators who have already pleaded guilty served as middlemen in LI’s organization. They purchased stolen or fraudulently obtained phones from buyers, and subsequently sold them to ZIBO LI. LI paid the middlemen in cash and by depositing cash directly into their bank accounts.

As proven at trial, buyers for the organization were responsible for obtaining discounted phones from retailers by agreeing to a two-year service contract. Among the methods employed to obtain phones was “credit muling,” a scheme through which buyers, or those acting at their direction, signed cellular telephone service contracts, often using stolen identities, to obtain reduced cost phones in other people’s names, but never intended to or did honor those contracts. Some of the buyers also recruited people residing in homeless shelters to sign up for cell phone contracts and obtain reduced cost phones, in exchange for nominal payments or goods.

This case is the result of an investigation conducted by the United States Secret Service, Saint Paul Police Department, Minnesota Bureau of Criminal Apprehension, Minnesota Financial Crimes Task Force, University of Minnesota Police Department, and Plymouth Police Department.

This case is being prosecuted by Assistant United States Attorneys Manda M. Sertich and Steven L. Schleicher.

Defendant Information:

ZIBO LI, 31
Golden Valley, Minn.

Convicted: • Conspiracy to traffic unauthorized access devices, 1 count
• Fraud and related activity in connection with access devices, 2 counts

United States Attorney Andrew M. Luger announced the sentencing of FRANTZ PIERRE, 36, for orchestrating a multi-million dollar tax fraud scheme and engaging in money laundering. PIERRE, who pleaded guilty on October 27, 2015 to counts one and two of the indictment, was sentenced on June 9, 2016 before U.S. District Judge Donovan W. Frank in U.S. District Court in St. Paul, Minn.

"Today's announcement regarding the 210 month sentencing of Frantz Pierre exemplifies IRS Special Agents' intense focus and rigorous pursuit of identity theft and refund fraud crimes," said Shea Jones, Special Agent in Charge of IRS Criminal Investigation, St. Paul Field Office. “Individuals such as Frantz Pierre who commit refund fraud and identity theft of this magnitude deserve to be punished to the fullest extent of the law.”

According to documents filed in court, from July 2010 through May 2011, PIERRE was the leader and organizer of a scheme to steal from the federal government by filling hundreds of fraudulent income tax returns. PIERRE and his co-conspirators used stolen social security numbers and other personal identifiers as well as fabricated employment and income information to complete hundreds of income tax returns and to claim millions of dollars in fraudulent tax refunds.

According to documents filed in court, as part of the scheme, PIERRE and his co-conspirators would establish fictitious tax preparation businesses and then open multiple bank accounts in the names of the fictitious businesses. In addition, PIERRE directed the IRS to deposit the fraudulently obtained income tax refunds into the bank accounts set up by the defendant and his co-conspirators. In total, PIERRE and his co-conspirators submitted approximately 776 fraudulent tax returns to the IRS, resulting in $5,249,935 in tax refunds to be deposited into the fictitious companies’ bank accounts.

As part of his sentence, PIERRE was ordered to forfeit his house in Parkland, Florida and pay $906,556 in restitution.

This case was prosecuted by Assistant U.S. Attorneys Joseph Thompson and Lola Velazquez-Aguilu.

This case is the result of an investigation conducted by the Internal Revenue Service- Criminal Investigation Division.

 

Defendant Information:

FRANTZ PIERRE, 36

Parkland, FL

Convicted:

• Conspiracy to Defraud the Government, 1 count
• Money Laundering, 1 count

Sentenced:

• 210 months in prison
• $906,556 in restitution

 

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United States Attorney Andrew M. Luger today announced an indictment charging RANDY MILAND, 62, for operating a Ponzi scheme through which he stole or attempted to steal more than $500,000 from purported investors. MILAND made an initial appearance today before Magistrate Judge Steven E. Rau in U.S. District Court in St. Paul, Minn.

“IRS-Criminal Investigation is committed to unraveling complex financial transactions and money laundering schemes. We will vigorously pursue those individuals who victimize investors and violate the public trust," said Special Agent in Charge Shea Jones of the IRS-Criminal Investigation Division of the St. Paul Field Office. "The indictment of Randy Miland demonstrates the government's determination to restore and ensure that trust.”

“As the indictment alleges, Randy Miland is a serial scam artist with no regard for his victims,” said Minnesota Commerce Commissioner Mike Rothman. “He used fake investments to steal people’s life savings before, and now he’s done it again. The Commerce Fraud Bureau worked with federal authorities to stop his fraudulent schemes and protect Minnesotans.”

According to the indictment and documents filed in court, in 1999, MILAND was convicted in state court of theft by swindle and ordered to pay more than $1.5 million in restitution to the victims of his scheme. As of May 2016, MILAND still owed to the victims nearly the entire amount.

According to the indictment and documents filed in court, in 2006, MILAND was convicted of fraud in federal court and ordered to pay more than $250,000 in restitution to the victims. As of May 2016, MILAND owed approximately $124,000 in restitution.

According to the indictment and documents filed in court, between 2010 and 2014, MILAND fraudulently solicited approximately $575,000 from investors, telling them that he would use their money to invest in futures and other legitimate investments. Instead, he used their money to pay personal expenses, including court-ordered restitution to victims of his prior scams, and to make Ponzi-type payments to other purported investors.

According to the indictment and documents filed in court, MILAND concealed from the new victims that he had been twice convicted of fraudulent conduct, that he was forbidden by the Minnesota Department of Commerce from offering or selling securities, and that he still owed more than $1.5 million in restitution to victims of prior schemes.

The case is being prosecuted by Assistant United States Attorney Joseph H. Thompson.

This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS and the Minnesota Department of Commerce Fraud Bureau.

 

Defendant Information:

RANDY MILAND, 62

White Bear Lake, Minn.

Charges:

• Mail fraud, 5 counts
• Money laundering, 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.

United States Attorney Andrew M. Luger today announced the guilty plea of JAY ANTHONY ANDERSON, 66, for smuggling elephant ivory from the United States in violation of the Lacey Act. ANDERSON, who was charged on May 16, 2016, pleaded guilty to knowingly importing and exporting objects made from elephant ivory in violation of the laws and regulations of the United States, including the Lacey Act and the Endangered Species Act. A sentencing date has not yet been set.

According to the defendant’s guilty plea and documents filed in court, on June 10, 2011, ANDERSON, knowingly attempted to export an object made from elephant ivory, described as a “CARVED CHINESE IVORY FIGURE OF A [sic] ELDER FISHERMAN,” to a buyer located in Foshan City, China for approximately $1,356.00. ANDERSON attempted to export the elephant ivory through the United States Postal Service declaring the object as “RESIN CARVINGS” valued at $30.00, when in fact the defendant knew the object was made from elephant ivory and held a much higher monetary value. On June 23, 2011, U.S. Fish and Wildlife Service officials inspected and intercepted the package at an International Mail Facility in Chicago, Ill.

According to the defendant’s guilty plea and documents filed in court, from January 29, 2012 through December 31, 2012, ANDERSON knowingly violated the laws and regulations of the United States by buying and selling an object made from elephant ivory with a market value of more than $350.00. Specifically, on January 29, 2012, ANDERSON purchased an object made from elephant ivory described as “IVORY HANd [sic] CARVED CRUCIFIX circa 1920” from an auction house in Montreal, Canada for approximately $300.00. ANDERSON subsequently sold the elephant ivory object for approximately $700.00, describing it as an “18th/19th CENTURY IVORY & EBONY EUROPEAN CRUCIFIX.” At the time the elephant ivory object was purchased and imported, ANDERSON failed to submit a declaration to USFWS, as required by law.

The fair market value of the illegal elephant ivory products documented in this case was between $40,000 and $95,000.

"Thanks to the diligent interdiction work of our Chicago-based wildlife inspectors, our special agents can build quality cases like these and stop those who try to illegally profit from the tusks of elephants,” said Edward Grace, the Service’s Deputy Assistant Director for Law Enforcement. “We will continue to investigate these crimes until ultimately elephants are brought back from the brink of extinction,” continued Grace.

Under the Lacey Act, it is unlawful to import, export, transport, sell or purchase wildlife, fish or plants that were taken, possessed, transported or sold in violation of a state, federal or foreign law. When it was passed in 1900, the Lacey Act became the first federal law protecting wildlife.

This case is the result of an investigation by the U.S. Fish and Wildlife Service and is being prosecuted by Assistant U.S. Attorney Andrew S. Dunne.

 

Defendant Information:                                                                                                                     

JAY ANTHONY ANDERSON, 66

Wabasha, Minn.

Convicted:

• Smuggling, 1 count
• Violation of the Lacey Act, 1 count

 

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GULED ALI OMAR, ABDURAHMEN YASIN DAUD, and MOHAMED ABDIHAMID FARAH were convicted by a federal jury today of conspiring to commit murder in Syria on behalf of the Islamic State of Iraq and the Levant (ISIL) and to provide material support to the designated foreign terrorist organization.

The convictions were announced by U.S. Attorney Andrew M. Luger, Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Division, and Assistant Attorney General for National Security John P. Carlin.

“The evidence in this case made clear that the defendants made a deeply personal and deliberate decision back in 2014,” said United States Attorney Andrew Luger. “They wanted to fight for a brutal terrorist organization, kill innocent people and destroy their own families in the process. This trial should serve as a wake-up call that it will take the entire community to stop terror recruiting in Minnesota.”

“These verdicts affirm the FBI's investigative efforts,” said Special Agent in Charge Richard T. Thornton. “The FBI will not induce people to break our laws. However, the FBI, through all legal means at its disposal, will investigate and pursue those who aim to bring about harm to others.”

“In the first multi-defendant ISIL-related trial, Mohamed Farah, Abdirahman Daud and Guled Omar were convicted of conspiring to provide material support to the foreign terrorist organization and other federal offenses,” said Assistant Attorney General Carlin.  “The defendants conspired with a larger group of individuals to travel to Syria to fight on behalf of ISIL.  Countering terrorist threats remains the highest priority of the National Security Division.  We will continue to work to disrupt the recruitment and radicalization of Americans by terrorist organizations, and bring to justice those who conspire to provide material support to terrorists.  I would like to thank the many agents, analysts and prosecutors who worked tirelessly to secure this conviction.”
 
Between May 2014 and their arrests on April 19, 2015, these three defendants and their co-conspirators made multiple attempts to join the Islamic State of Iraq and the Levant (ISIL) in Syria.

In May 2014, some members of the conspiracy, including defendant GULED OMAR and co-conspirators ABDI NUR, ABDULLAHI YUSUF, traveled or attempted to travel to Syria to join ISIL. To facilitate the travel of his co-conspirators, defendant DAUD provided contact information for an ISIL member in Turkey to NUR and YUSUF so they could gain assistance crossing the border from Turkey into Syria. NUR succeeded in his plan, joining ISIL in Syria in June 2014. YUSUF was stopped at the Minneapolis/ St. Paul Airport and was later arrested.

 Also 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. 

In October 2014, members of conspiracy communicated with “Antar,” a self-described member of ISIL in Syria, about how best to travel to Syria to join ISIL. Members of conspiracy met with one another to discuss routes, methods and the timing of leaving the United States to join ISIL in Syria.

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 and three of his co-conspirators, defendants ZACHARIA ABDURAHMAN, HANAD MUSSE, and HAMZA AHMED, took a Greyhound bus to New York City and attempted to board flights 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.

Ten Minnesotans were 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 one, ABDI NUR, joined ISIL in Syria in June 2015.

This case is the result of an investigation conducted by the FBI-led Joint Terrorism Task Force. 

The case is being prosecuted by Assistant United States Attorneys Andrew Winter, John Docherty, and Julie Allyn, with assistance provided by the National Security Division’s Counterterrorism Section

Special thanks to San Diego and New York Field Offices of the FBI and the United States Attorney’s Office in the Southern District of California.

Defendant Information: 

GULED ALI OMAR, 21
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

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

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

GULED ALI OMAR, ABDURAHMEN YASIN DAUD, and MOHAMED ABDIHAMID FARAH were convicted by a federal jury today of conspiring to commit murder in Syria on behalf of the Islamic State of Iraq and the Levant (ISIL) and to provide material support to the designated foreign terrorist organization.

The convictions were announced by U.S. Attorney Andrew M. Luger, Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Division, and Assistant Attorney General for National Security John P. Carlin.

“The evidence in this case made clear that the defendants made a deeply personal and deliberate decision back in 2014,” said United States Attorney Andrew Luger. “They wanted to fight for a brutal terrorist organization, kill innocent people and destroy their own families in the process. This trial should serve as a wake-up call that it will take the entire community to stop terror recruiting in Minnesota.”

“These verdicts affirm the FBI's investigative efforts,” said Special Agent in Charge Richard T. Thornton. “The FBI will not induce people to break our laws. However, the FBI, through all legal means at its disposal, will investigate and pursue those who aim to bring about harm to others.”

“In the first multi-defendant ISIL-related trial, Mohamed Farah, Abdirahman Daud and Guled Omar were convicted of conspiring to provide material support to the foreign terrorist organization and other federal offenses,” said Assistant Attorney General Carlin.  “The defendants conspired with a larger group of individuals to travel to Syria to fight on behalf of ISIL.  Countering terrorist threats remains the highest priority of the National Security Division.  We will continue to work to disrupt the recruitment and radicalization of Americans by terrorist organizations, and bring to justice those who conspire to provide material support to terrorists.  I would like to thank the many agents, analysts and prosecutors who worked tirelessly to secure this conviction.”

Between May 2014 and their arrests on April 19, 2015, these three defendants and their co-conspirators made multiple attempts to join the Islamic State of Iraq and the Levant (ISIL) in Syria.

In May 2014, some members of the conspiracy, including defendant GULED OMAR and co-conspirators ABDI NUR, ABDULLAHI YUSUF, traveled or attempted to travel to Syria to join ISIL. To facilitate the travel of his co-conspirators, defendant DAUD provided contact information for an ISIL member in Turkey to NUR and YUSUF so they could gain assistance crossing the border from Turkey into Syria. NUR succeeded in his plan, joining ISIL in Syria in June 2014. YUSUF was stopped at the Minneapolis/ St. Paul Airport and was later arrested.

Also 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. 

In October 2014, members of conspiracy communicated with “Antar,” a self-described member of ISIL in Syria, about how best to travel to Syria to join ISIL. Members of conspiracy met with one another to discuss routes, methods and the timing of leaving the United States to join ISIL in Syria.

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 and three of his co-conspirators, defendants ZACHARIA ABDURAHMAN, HANAD MUSSE, and HAMZA AHMED, took a Greyhound bus to New York City and attempted to board flights 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.

Ten Minnesotans were 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 one, ABDI NUR, joined ISIL in Syria in June 2015.

This case is the result of an investigation conducted by the FBI-led Joint Terrorism Task Force. 

The case is being prosecuted by Assistant United States Attorneys Andrew Winter, John Docherty, and Julie Allyn, with assistance provided by the National Security Division’s Counterterrorism Section.

Special thanks to San Diego and New York Field Offices of the FBI and the United States Attorney’s Office in the Southern District of California.

 

Defendant Information:                                                                                                                     

GULED ALI OMAR, 21

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

 

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

 

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

   

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Nine Members of the Conspiracy Convicted of Terrorism Charges in Largest Multi-Defendant ISIL-Related Case in United States

Guled Ali Omar, Abdurahman Yasin Daud and Mohamed Abdihamid Farah were convicted by a federal jury today of conspiring to commit murder in Syria on behalf of the Islamic State of Iraq and the Levant (ISIL) and to provide material support to the designated foreign terrorist organization.  Omar was also convicted of one count of attempted financial aid fraud, and Farah was also convicted of one count of perjury and providing a false statement.

The convictions were announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Andrew M. Luger of the District of Minnesota and Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Division.

“In the first multi-defendant ISIL-related trial, Mohamed Farah, Abdirahman Daud and Guled Omar were convicted of conspiring to provide material support to the foreign terrorist organization and other federal offenses,” said Assistant Attorney General Carlin.  “The defendants conspired with a larger group of individuals to travel to Syria to fight on behalf of ISIL.  Countering terrorist threats remains the highest priority of the National Security Division.  We will continue to work to disrupt the recruitment and radicalization of Americans by terrorist organizations, and bring to justice those who conspire to provide material support to terrorists.  I would like to thank the many agents, analysts and prosecutors who worked tirelessly to secure these convictions.”

“The evidence in this case made clear that the defendants made a deeply personal and deliberate decision back in 2014,” said U.S. Attorney Luger.  “They wanted to fight for a brutal terrorist organization, kill innocent people and destroy their own families in the process.  This trial should serve as a wake-up call that it will take the entire community to stop terror recruiting in Minnesota.”

“These verdicts affirm the FBI's investigative efforts,” said Special Agent in Charge Thornton.  “The FBI will not induce people to break our laws.  However, the FBI, through all legal means at its disposal, will investigate and pursue those who aim to bring about harm to others.”

Between May 2014 and April 19, 2015, the three defendants and their co-conspirators made multiple attempts to join ISIL in Syria.

In May 2014, some members of the conspiracy, including Omar and co-conspirators Abdi Nur and Abdullahi Yusuf, traveled or attempted to travel to Syria to join ISIL.  To facilitate the travel of his co-conspirators, Daud provided contact information for an ISIL member in Turkey to Nur and Yusuf so that they could gain assistance crossing the border from Turkey into Syria.  Nur succeeded in his plan, joining ISIL in Syria in June 2014.  Yusuf was stopped at the Minneapolis/St. Paul Airport and was later arrested.

Omar and two other members of the conspiracy also made an attempt to join ISIL by traveling across the U.S.–Mexico border near San Diego in May 2014, but failed when members of Omar’s family prevented his travel. 

In October 2014, members of the conspiracy communicated with “Antar,” a self-described member of ISIL in Syria, about how best to travel to Syria to join ISIL.  Members of the conspiracy met with one another to discuss routes, methods and the timing of leaving the United States to join ISIL in Syria.

Omar again attempted to join ISIL in Syria on Nov. 6, 2014, by flying from Minneapolis/St. Paul International Airport to San Diego, crossing the border into Mexico and traveling onward to Syria.  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 U.S. Department of Education to attend college.

Also in November 2014, Farah and three of his co-conspirators, Zacharia Abdurahman, Hanad Musse and Hamza Ahmed, took a bus from Minneapolis to New York City and attempted to board flights to Europe with an eventual destination of Syria.  Federal agents in New York prevented the four from traveling abroad.

In April 2015, Daud and Farah drove from Minneapolis to San Diego, where they intended to purchase fake passports, cross the border into Mexico and 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.

Ten Minnesotans were 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 Nur remains a fugitive.

This case is the result of an investigation conducted by the FBI-led Joint Terrorism Task Force.  The case is being prosecuted by Assistant U.S. Attorneys Andrew R. Winter, John Docherty and Julie Allyn of the District of Minnesota with assistance provided by the National Security Division’s Counterterrorism Section.  The department would also like to thank the FBI’s San Diego and New York Field Offices and the U.S. Attorney’s Office of the Southern District of California for their contributions.

The Justice Department announced today that the independent federal investigation into the fatal shooting of Jamar Clark on Nov. 15, 2015 in North Minneapolis, Minnesota, found insufficient evidence to support federal criminal civil rights charges against Minneapolis Police Department (MPD) Officers Mark Ringgenberg and Dustin Schwarze.  Prosecutors from the U.S. Attorney’s Office of the District of Minnesota and the Justice Department’s Civil Rights Division, along with officials from the FBI and the Justice Department’s Community Relations Service, met today with Clark’s family and their representatives to inform them of the findings of the investigation and the decision.

The department conducted a comprehensive independent investigation of the events surrounding Clark’s death and reviewed the materials and evidence provided by the Hennepin County, Minnesota, Attorney’s Office and the Bureau of Criminal Apprehension (BCA).  Federal agents and prosecutors examined evidence from numerous sources, including surveillance videos from a Hennepin County Medical Center (HCMC) ambulance parked near the site of the shooting; statements from witnesses; evidence gathered by the MPD’s crime lab; MPD documents related to the shooting; personnel files and background material for both involved officers; MPD policies and training materials; squad car videos; 911 recordings; and DNA, blood stain and autopsy reports, including a report of an independent review of the Hennepin County autopsy conducted by the Office of the Armed Forces Medical Examiner at the Department of Defense.  Some witness interviews were conducted jointly by the BCA and FBI in the interest of efficiency and completeness.  Additionally, the department reviewed the officers’ phone records and interviewed witnesses that spoke with the officers after the incident. 

In order to proceed with a prosecution under the applicable federal criminal civil rights law, section 242, prosecutors must establish beyond a reasonable doubt that a law enforcement officer acted willfully to deprive an individual of a constitutional right.  Since Clark had not been arrested when he was shot, the right involved is his Fourth Amendment right to be free from an unreasonable seizure.  This right includes the right to be free from unreasonable physical force by police.

To prove that a shooting violated the Fourth Amendment, the government must prove beyond a reasonable doubt that the use of force was objectively unreasonable based on all of the surrounding circumstances.  The law requires that the reasonableness of an officer’s use of force on an arrestee be judged from the perspective of a reasonable officer on the scene, rather than with added perspective of hindsight.  The law set forth by the Supreme Court requires that allowances must be made for the fact that law enforcement officers are often forced to make split-second judgments in circumstances that are tense, uncertain and rapidly evolving. 

Additionally, to prove that a shooting violated section 242, the government must prove beyond a reasonable doubt that the officers acted willfully.  This high legal standard – one of the highest standards of intent imposed by law – requires proof that the officer acted with the specific intent to do something the law forbids.  It is not enough to show that the officer made a mistake, acted negligently, acted by accident or mistake or even exercised bad judgment.

Although Clark’s death is undeniably tragic, the evidence is insufficient to meet these substantial evidentiary requirements. In light of this, and for the reasons explained below, this matter is not a prosecutable violation of the federal civil rights statutes.
 
Officers Ringgenberg and Schwarze each provided a detailed statement to state investigators offering their version of how and why this shooting happened.  In order to pursue any prosecution in this case, the government would have to disprove these accounts and establish that the shooting constituted a willful violation of Clark’s Fourth Amendment rights.  During a detailed and thorough investigation, FBI agents and federal prosecutors conducted numerous interviews of witnesses to the shooting.  In determining whether it was possible to disprove the officers’ statements beyond a reasonable doubt, the agents and prosecutors took into account all of the witnesses’ statements.  According to the officers, Clark was taken to the ground un-handcuffed, Officer Ringgenberg fell on top of Clark and landed with his back facing Clark.  Officer Ringgenberg stated that while he was in this position, Clark grabbed his gun and tried to pull it out of his holster, and that he (Officer Ringgenberg) shouted this information to his partner, Officer Schwarze.  The officers stated that Officer Schwarze ordered Clark to release the gun, but Officer Ringgenberg continued to shout that Clark had his gun and that Officer Schwarze should shoot Clark.  Officer Schwarze stated that, fearing for his life based on what he heard from Officer Ringgenberg and based on Clark’s and Officer Ringgenberg’s body positioning, he shot Clark.
 
In order to fully assess whether this shooting constituted an unreasonable use of force, federal investigators closely examined, among other things, all of the evidence concerning whether Clark was handcuffed when he was shot.  Federal investigators spent considerable time and resources investigating this specific question because the fact that a suspect was handcuffed would change the analysis of whether a particular use of force was reasonable, since a restrained person generally presents less risk of harm to an officer than an unrestrained person.     

Based on this extensive investigation, the Justice Department concluded that the evidence suggests that Clark was not handcuffed during this incident.  Although approximately half of the civilian eyewitnesses interviewed by the FBI reported having seen handcuffs on Clark (and other witnesses believed, based on Clark’s body positioning, that he was handcuffed) these witnesses’ accounts varied significantly in the details of when he was handcuffed, what position he was in when he was handcuffed and even whether one or both hands were handcuffed.  These conflicting witness accounts seriously undermine the degree to which they could be used to either disprove the officers’ accounts or to affirmatively establish that Clark was handcuffed. 

Additionally, the relevant physical evidence, while not conclusive, tends to support the officers’ account.  Neither the Hennepin County Medical Examiner’s autopsy, nor the independent autopsy review conducted by the Office of the Armed Forces Medical Examiner, found evidence of injuries to Clark’s wrists that would be consistent with handcuffing.  Further, the department conducted DNA analysis of a pair of handcuffs found in the grass next to Clark’s body.  Laboratory swabs of the inner and outer edges of the handcuffs found in the grass, the part that would have touched Clark’s wrists, revealed insufficient DNA for analysis.  While these results are not definitive they do not support the conclusion that Clark was handcuffed.

In addition, the department reviewed the surveillance video from the HCMC ambulance that captured part of the incident.  When considered in conjunction with the accounts of on-scene paramedics, the footage suggests that Clark was not handcuffed when he was shot.   Two paramedics reported exiting the ambulance and moved towards Clark who is lying on his back and not wearing handcuffs.  During that same time, Officer Ringgenberg can be seen on the video standing behind the ambulance, pacing around, without kneeling on the ground to remove handcuffs from Clark.  Additional video shows that when Clark was transported into an ambulance a short time later, he was not handcuffed.  While this evidence that Clark was not handcuffed in the moments following the shooting is not conclusive regarding whether Clark was handcuffed moments before when the shooting occurred, such evidence suggests that he was not.  In sum, taken together, the witness accounts and the physical evidence simply cannot establish beyond a reasonable doubt that Clark was handcuffed when he was shot.  

Federal investigators also considered whether, even if Clark was not handcuffed, the other evidence in the case is sufficient to establish beyond a reasonable doubt that the shooting was objectively unreasonable, in violation of the Fourth Amendment.  The government would be required to produce admissible evidence that would disprove the officers’ accounts, establish the facts, and further establish that the officers’ actions were objectively unreasonable under the circumstances. 

The evidence in this case is insufficient to meet this legal standard.  Federal investigators obtained statements from 29 witnesses to the shooting.  The witness accounts do not provide any consistent narrative that establishes the details of exactly what happened between the officers and Clark, including how Clark was positioned on the ground, where his hands were located, where the officers were positioned and what happened to Officer Ringgenberg’s gun while he was on top of Clark.  Additionally, none of these witnesses were close enough to see exactly what happened between Officer Ringgenberg and Clark while they were entangled with each other on the ground.  To the extent that video from the ambulance partially provides this vantage point, it shows Officer Ringgenberg, face-up, struggling to get up off of Clark, which tends to corroborate Officer Ringgenberg’s version of events.  Moreover, during this investigation, DNA testing revealed the presence of Clark’s DNA on Officer Ringgenberg’s gun.  While the exact means by which Clark’s DNA was transferred to the gun cannot be established, its presence makes it impossible to disprove Officer Ringgenberg’s claim that Clark grabbed the gun.
 
In light of this, the evidence gathered during this investigation is insufficient to prove beyond a reasonable doubt that the shooting was objectively unreasonable, in violation of the Fourth Amendment. 

Finally, in analyzing a potential charge under section 242, federal investigators also considered whether the evidence was sufficient to prove the statutory element of willfulness. To establish that the officers acted willfully, the government would be required both to disprove the reason the officers gave for the shooting and to affirmatively establish that the officers instead acted with the specific intent to violate Clark’s rights.   For many of the same reasons described above, the evidence is insufficient to prove willfulness.  . 
 
In sum, after extensive investigation into this tragic event, the Justice Department concludes that the evidence is insufficient to prove beyond a reasonable doubt that Officers Ringgenberg and Schwarze willfully violated Clark’s civil rights.  Accordingly, the investigation into this incident has been closed without prosecution.

In this case, the U.S. Attorney’s Office of the District of Minnesota, the Civil Rights Division and the FBI each devoted significant time and resources to investigating the circumstances surrounding Clark’s death and to completing a thorough analysis of the evidence gathered.  The Justice Department remains committed to investigating allegations of excessive force by law enforcement officers and will continue to devote the resources required to ensure that all serious allegations of civil rights violations are thoroughly examined.  The department aggressively prosecutes criminal civil rights violations whenever there is sufficient evidence to do so.

The Justice Department announced today that the independent federal investigation into the fatal shooting of Jamar Clark on Nov. 15, 2015, in North Minneapolis, Minnesota, found insufficient evidence to support federal criminal civil rights charges against Minneapolis Police Department (MPD) Officers Mark Ringgenberg and Dustin Schwarze.  Prosecutors from the U.S. Attorney’s Office of the District of Minnesota and the Justice Department’s Civil Rights Division, along with officials from the FBI and the Justice Department’s Community Relations Service, met today with Clark’s family and their representatives to inform them of the findings of the investigation and the decision.

The department conducted a comprehensive independent investigation of the events surrounding Clark’s death and reviewed the materials and evidence provided by the Hennepin County, Minnesota, Attorney’s Office and the Bureau of Criminal Apprehension (BCA).  Federal agents and prosecutors examined evidence from numerous sources, including surveillance videos from a Hennepin County Medical Center (HCMC) ambulance parked near the site of the shooting; statements from witnesses; evidence gathered by the MPD’s crime lab; MPD documents related to the shooting; personnel files and background material for both involved officers; MPD policies and training materials; squad car videos; 911 recordings; and DNA, blood stain and autopsy reports, including a report of an independent review of the Hennepin County autopsy conducted by the Office of the Armed Forces Medical Examiner at the Department of Defense.  Some witness interviews were conducted jointly by the BCA and FBI in the interest of efficiency and completeness.  Additionally, the department reviewed the officers’ phone records and interviewed witnesses that spoke with the officers after the incident.

In order to proceed with a prosecution under the applicable federal criminal civil rights law, section 242, prosecutors must establish beyond a reasonable doubt that a law enforcement officer acted willfully to deprive an individual of a constitutional right.  Since Clark had not been arrested when he was shot, the right involved is his Fourth Amendment right to be free from an unreasonable seizure.  This right includes the right to be free from unreasonable physical force by police.

To prove that a shooting violated the Fourth Amendment, the government must prove beyond a reasonable doubt that the use of force was objectively unreasonable based on all of the surrounding circumstances.  The law requires that the reasonableness of an officer’s use of force on an arrestee be judged from the perspective of a reasonable officer on the scene, rather than with added perspective of hindsight.  The law set forth by the Supreme Court requires that allowances must be made for the fact that law enforcement officers are often forced to make split-second judgments in circumstances that are tense, uncertain and rapidly evolving.  

Additionally, to prove that a shooting violated section 242, the government must prove beyond a reasonable doubt that the officers acted willfully.  This high legal standard – one of the highest standards of intent imposed by law – requires proof that the officer acted with the specific intent to do something the law forbids.  It is not enough to show that the officer made a mistake, acted negligently, acted by accident or mistake or even exercised bad judgment.

Although Clark’s death is undeniably tragic, the evidence is insufficient to meet these substantial evidentiary requirements. In light of this, and for the reasons explained below, this matter is not a prosecutable violation of the federal civil rights statutes.

Officers Ringgenberg and Schwarze each provided a detailed statement to state investigators offering their version of how and why this shooting happened.  In order to pursue any prosecution in this case, the government would have to disprove these accounts and establish that the shooting constituted a willful violation of Clark’s Fourth Amendment rights.  During a detailed and thorough investigation, FBI agents and federal prosecutors conducted numerous interviews of witnesses to the shooting.  In determining whether it was possible to disprove the officers’ statements beyond a reasonable doubt, the agents and prosecutors took into account all of the witnesses’ statements.  According to the officers, Clark was taken to the ground un-handcuffed, Officer Ringgenberg fell on top of Clark and landed with his back facing Clark.  Officer Ringgenberg stated that while he was in this position, Clark grabbed his gun and tried to pull it out of his holster, and that he (Officer Ringgenberg) shouted this information to his partner, Officer Schwarze.  The officers stated that Officer Schwarze ordered Clark to release the gun, but Officer Ringgenberg continued to shout that Clark had his gun and that Officer Schwarze should shoot Clark.  Officer Schwarze stated that, fearing for his life based on what he heard from Officer Ringgenberg and based on Clark’s and Officer Ringgenberg’s body positioning, he shot Clark.

In order to fully assess whether this shooting constituted an unreasonable use of force, federal investigators closely examined, among other things, all of the evidence concerning whether Clark was handcuffed when he was shot.  Federal investigators spent considerable time and resources investigating this specific question because the fact that a suspect was handcuffed would change the analysis of whether a particular use of force was reasonable, since a restrained person generally presents less risk of harm to an officer than an unrestrained person. 

Based on this extensive investigation, the Justice Department concluded that the evidence suggests that Clark was not handcuffed during this incident.  Although approximately half of the civilian eyewitnesses interviewed by the FBI reported having seen handcuffs on Clark (and other witnesses believed, based on Clark’s body positioning, that he was handcuffed) these witnesses’ accounts varied significantly in the details of when he was handcuffed, what position he was in when he was handcuffed and even whether one or both hands were handcuffed.  These conflicting witness accounts seriously undermine the degree to which they could be used to either disprove the officers’ accounts or to affirmatively establish that Clark was handcuffed.

Additionally, the relevant physical evidence, while not conclusive, tends to support the officers’ account.  Neither the Hennepin County Medical Examiner’s autopsy, nor the independent autopsy review conducted by the Office of the Armed Forces Medical Examiner, found evidence of injuries to Clark’s wrists that would be consistent with handcuffing.  Further, the department conducted DNA analysis of a pair of handcuffs found in the grass next to Clark’s body.  Laboratory swabs of the inner and outer edges of the handcuffs found in the grass, the part that would have touched Clark’s wrists, revealed insufficient DNA for analysis.  While these results are not definitive they do not support the conclusion that Clark was handcuffed.

In addition, the department reviewed the surveillance video from the HCMC ambulance that captured part of the incident.  When considered in conjunction with the accounts of on-scene paramedics, the footage suggests that Clark was not handcuffed when he was shot.  Two paramedics reported exiting the ambulance and moved towards Clark who is lying on his back and not wearing handcuffs.  During that same time, Officer Ringgenberg can be seen on the video standing behind the ambulance, pacing around, without kneeling on the ground to remove handcuffs from Clark.  Additional video shows that when Clark was transported into an ambulance a short time later, he was not handcuffed.  While this evidence that Clark was not handcuffed in the moments following the shooting is not conclusive regarding whether Clark was handcuffed moments before when the shooting occurred, such evidence suggests that he was not.  In sum, taken together, the witness accounts and the physical evidence simply cannot establish beyond a reasonable doubt that Clark was handcuffed when he was shot.

Federal investigators also considered whether, even if Clark was not handcuffed, the other evidence in the case is sufficient to establish beyond a reasonable doubt that the shooting was objectively unreasonable, in violation of the Fourth Amendment.  The government would be required to produce admissible evidence that would disprove the officers’ accounts, establish the facts and further establish that the officers’ actions were objectively unreasonable under the circumstances.

The evidence in this case is insufficient to meet this legal standard.  Federal investigators obtained statements from 29 witnesses to the shooting.  The witness accounts do not provide any consistent narrative that establishes the details of exactly what happened between the officers and Clark, including how Clark was positioned on the ground, where his hands were located, where the officers were positioned and what happened to Officer Ringgenberg’s gun while he was on top of Clark.  Additionally, none of these witnesses were close enough to see exactly what happened between Officer Ringgenberg and Clark while they were entangled with each other on the ground.  To the extent that video from the ambulance partially provides this vantage point, it shows Officer Ringgenberg, face-up, struggling to get up off of Clark, which tends to corroborate Officer Ringgenberg’s version of events.  Moreover, during this investigation, DNA testing revealed the presence of Clark’s DNA on Officer Ringgenberg’s gun.  While the exact means by which Clark’s DNA was transferred to the gun cannot be established, its presence makes it impossible to disprove Officer Ringgenberg’s claim that Clark grabbed the gun.

In light of this, the evidence gathered during this investigation is insufficient to prove beyond a reasonable doubt that the shooting was objectively unreasonable, in violation of the Fourth Amendment.

Finally, in analyzing a potential charge under section 242, federal investigators also considered whether the evidence was sufficient to prove the statutory element of willfulness.  To establish that the officers acted willfully, the government would be required both to disprove the reason the officers gave for the shooting and to affirmatively establish that the officers instead acted with the specific intent to violate Clark’s rights.

For many of the same reasons described above, the evidence is insufficient to prove willfulness.

In sum, after extensive investigation into this tragic event, the Justice Department concludes that the evidence is insufficient to prove beyond a reasonable doubt that Officers Ringgenberg and Schwarze willfully violated Clark’s civil rights.  Accordingly, the investigation into this incident has been closed without prosecution.

In this case, the U.S. Attorney’s Office of the District of Minnesota, the Civil Rights Division and the FBI each devoted significant time and resources to investigating the circumstances surrounding Clark’s death and to completing a thorough analysis of the evidence gathered.  The Justice Department remains committed to investigating allegations of excessive force by law enforcement officers and will continue to devote the resources required to ensure that all serious allegations of civil rights violations are thoroughly examined.  The department aggressively prosecutes criminal civil rights violations whenever there is sufficient evidence to do so.

In Minneapolis there are a number of ongoing efforts led by the Justice Department intended to bring community members together to address public safety and public trust concerns.  Minneapolis is one of six pilot cities in the department’s National Initiative for Building Community Trust & Justice which is designed to increase trust and transform relationships between communities of color and police.  Additionally, the department’s Office of Community Oriented Policing Services (COPS) is conducting an independent review of the city’s response to last fall’s occupation of the Fourth Precinct station to identify significant findings about critical decisions and practices in order to help develop recommendations that Minneapolis, the Minneapolis Police Department and cities and law-enforcement agencies nationwide can use to help build trust, improve relationships and protect civil rights in the communities they serve.

United States Attorney Andrew M. Luger today announced the sentencing of TIMOTHY PAUL OWENS, 55, to 18 months in federal prison for obstructing an examination by the Board of Governors of the Federal Reserve (Federal Reserve Board). OWENS was indicted on December 15, 2014, and pleaded guilty on July 30, 2015. He was sentenced today before Judge Ann D. Montgomery in U.S. District Court in Minneapolis, Minn.

“Mr. Owens’ obstruction of a Federal Reserve Board examination is the type of criminal conduct that harms federal regulators’ ability to appropriately supervise banking institutions,” said Mark Bialek, Inspector General for the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau. “Today’s sentencing is another step in a joint effort with our law enforcement partners to hold accountable those who undermine the integrity of the examination process.”

“The integrity of the examination process is central to ensuring the safety and soundness of the nation’s banking system,” said Fred W. Gibson, Jr., Acting Inspector General for the Federal Deposit Insurance Corporation. “When a bank official misuses his position of trust to obstruct that process, he needs to be held accountable. The Federal Deposit Insurance Corporation Office of Inspector General is pleased to have joined the U.S. Attorney’s Office and our law enforcement colleagues in assisting with this case and bringing about today’s sentencing of Mr. Owens.”

“This case is a perfect example of how well various law enforcement agencies in Minnesota work together to combat financial crimes,” said Assistant U.S. Attorney Robert Lewis. “Agents from OIG and FBI worked together to get to the bottom of Mr. Owens’ conduct. That level of cooperation makes these prosecutions possible.”

According to the defendant’s guilty plea and documents filed in court, OWENS served as CEO and Chairman of Voyager Bank (“Voyager”) and the President and CEO of Voyager Financial Services Corporation (“VFSC”). In June 2009 the Federal Reserve Board (“FRB”) conducted an examination of VFSC, focusing specifically on loans made to VFSC insiders, including OWENS. During the examination, FRB representatives found that VFSC had issued four direct loans to OWENS, totaling more than $5.4 million, and had purchased participation in a letter of credit (“LOC”), worth $7.5 million, obtained by OWENS from another bank.

According to the defendant’s guilty plea and documents filed in court, the FRB formally demanded in writing that the VFSC Board of Directors review OWENS’ loans and submit documentation showing that the loans to OWENS had been reviewed by the Board of Directors and were consistent with existing bank policies.  On July 7, 2009, OWENS received the letter from the FRB, but did not disclose it to the VFSC board, and secretly prepared a response that was false and misleading. OWENS’ response to the FRB stated that the VFSC board had reviewed the loans, that OWENS had only three loans and had exclusive access to a $3.6 million family trust, that the board had approved his loans pursuant to a revised loan policy, and that OWENS was reducing his overall debt levels. In addition, OWENS submitted a false and misleading three-page “Policy Statement” that had not been approved by the VFSC board; he also submitted documents that inaccurately portrayed his financial circumstances and ability to repay his loans by exaggerating his wealth and concealing his liabilities.

This case is the result of an investigation conducted by the Office of Inspector General for the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau; the Federal Deposit Insurance Corporation, Office of Inspector General; the Federal Housing Finance Agency, Office of Inspector General; and the Federal Bureau of Investigation.

The Office of Inspector General for the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau provides independent oversight to improve their programs and operations and to prevent and detect fraud, waste, and abuse.

Assistant U.S. Attorney Robert Lewis prosecuted this case.

 

Defendant Information:

TIMOTHY PAUL OWENS, 55

Wayzata, MN

Convicted:

• Obstructing Examination of a Financial Institution, 1 count

Sentenced:

• 18 months in federal prison

• 2 years supervised release

   

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