District of Minnesota
Press releases recorded for this federal judicial district.
Blaine Man Sentenced for the Armed Robbery of A Carver County Convenience StoreRead the Press Release
MINNEAPOLIS—Yesterday in federal court, a 28-year-old Blaine man was sentenced for committing the December 3, 2011, armed robbery of a convenience store in Mayer, Minnesota. United States District Court Judge Patrick J. Schiltz sentenced Demetrius Charles Edward Derden to 170 months in federal prison on one count of interference with commerce by robbery, pursuant to the Hobbs Act. Derden was indicted on January 10, 2012, and pleaded guilty on August 24, 2012.
On December 3, 2011, Derden stole $2,259 from the Mayer Oil Company while brandishing a weapon. Derden demanded money from the store’s backroom safe. When the clerk told him he did not know the combination to the safe, Derden placed the barrel of the gun against the clerk’s neck and threatened him. A struggle ensued, and the clerk suffered injuries. Derden fled the store, but authorities arrested him a few hours later at his residence. They found some of the stolen money inside a stuffed animal. They also learned that the weapon used was a BB gun.
The Hobbs Act, passed by Congress in 1946, allows federal prosecutors to prosecute violent habitual criminals who commit armed robbery in places of business that involve interstate commerce. Federal prosecution of these cases is sometimes beneficial since the penalties are often tougher than under state law. Furthermore, because the federal system has no parole, those who receive federal sentences serve virtually the entire prison term imposed.
This case was the result of an investigation by the Carver County Sheriff’s Office, and the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. It was prosecuted by Assistant U.S. Attorney Julie E. Allyn.Rochester Woman Sentenced for Role in an Armed RobberyRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 30-year-old Rochester woman was sentenced for her role during an armed robbery at a McDonald’s in Byron, Minnesota. United States District Court Judge Donovan W. Frank sentenced Quiana Shaneea Evans to 130 months in federal prison on one count of interference with commerce by robbery and one count of aiding and abetting the use, carrying, possessing, and discharging of a firearm during and in relation to a crime of violence. Evans was indicted on May 21, 2012, and pleaded guilty on October 2, 2012.
In her plea agreement, Evans admitted that on June 15, 2011, she entered the McDonald’s in Byron, Minnesota, with Christian Aaron Alexander, who was armed with a Colt, .45-caliber pistol. While Alexander brandished the firearm, Evans and Alexander both demanded money from the restaurant employees. They stole approximately $1,851.68, including personal property belonging to the restaurant employees, who were present when Alexander’s firearm discharged. Evans and Alexander ultimately restrained the employees by locking them in a cold storage room.
On December 3, 2012, Alexander, was sentenced to 168 months in federal prison on three counts of interference with commerce by robbery, in violation of the Hobbs Act, and one count of brandishing and discharging a firearm in relation to a crime of violence. The Hobbs Act, passed by Congress in 1946, allows federal prosecutors to prosecute violent, habitual criminals who commit armed robbery in places of business involved in interstate commerce. Federal prosecution of those cases is sometimes beneficial since the penalties are often tougher than under state law. Furthermore, because the federal system has no parole, those who receive federal sentences serve virtually the entire time imposed.
This case was the result of an investigation by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives and the Olmsted County Sheriff’s Office. It was prosecuted by Assistant U.S. Attorney Thomas M. Hollenhorst.Redby Man Pleads Guilty to Harboring A FugitiveRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 23-year-old Redby man pleaded guilty to harboring a fugitive last spring. Andrew Oakgrove pleaded guilty to one count of harboring and concealing a fugitive. Oakgrove, who was indicted on December 10, 2012, entered his plea before United States District Court Judge John R. Tunheim.
In his plea agreement, Oakgrove admitted that on April 30, 2012, he concealed Jason King from federal authorities. King was wanted on a federal arrest warrant for his indictment in connection to the December 30, 2011, armed robbery of Newby’s Market in Bemidji. Oakgrove also admitted leading police on a high-speed pursuit over several miles. Both men were arrested following the pursuit.
For his crime, Oakgrove faces a potential maximum penalty of five years in prison. Judge Tunheim will determine his sentence at a future hearing, yet to be scheduled. This case is the result of an investigation by the Red Lake Tribal Police Department and the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. It is being prosecuted by Assistant U.S. Attorney Jeffrey S. Paulsen.Fridley Man Indicted in Connection with the Armed Robbery of Two Twin Cities-area Shoe StoresRead the Press Release
MINNEAPOLIS—Yesterday in federal court, a 41-year-old Fridley man was indicted in connection with the armed robbery of two Twin Cities-area shoe stores in early January. Peter Christopher Nunn was charged with two counts of interference with commerce by robbery, pursuant to the Hobbs Act.
The indictment alleges that on January 5, 2013, Nunn stole approximately $300 from the Payless ShoeSource store, located at 8510 Springbrook Drive in Coon Rapids while threatening employees with a weapon, later determined to be a BB gun. It also alleges that on January 7, 2013, Nunn stole approximately $700 from the Famous Footwear store located at 1593 E. 17th Avenue in Shakopee in the same manner.
As stated, Nunn was charged in federal court under the Hobbs Act, which was passed by Congress in1946. The Act allows federal prosecutors to prosecute violent habitual criminals who commit armed robberies in places of business that involve interstate commerce. Federal prosecution of these cases is sometimes beneficial since federal penalties are often tougher than those imposed under state law. Moreover, because the federal system has no parole, those who receive federal sentences serve virtually their entire prison terms behind bars.If convicted, Nunn faces a potential maximum penalty of 20 years in prison on each count. All sentences will be determined by a federal district court judge. This case is the result of an investigation by the police departments of Coon Rapids and Shakopee, and the United States Bureau of Alcohol, Tobacco, Firearms and Explosives. It is being prosecuted by Assistant U.S. Attorney Thomas M. Hollenhorst.
An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.St. Paul Man Indicted for Robbing US BankRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 47-year-old St. Paul man was indicted in connection with the December 13, 2012, armed robbery of the US Bank branch located at 711 Cleveland Avenue South in St. Paul. David Judin Greer was specifically charged with one count of armed bank robbery and one count of brandishing a firearm during a crime of violence.
The indictment alleges that on December 13, Greer stole $3,952 from the bank after brandishing a .38-caliber revolver. According to a law enforcement affidavit filed in the case, a man, later identified as Greer, walked into the bank at approximately 2:00 p.m. He allegedly approached the teller counter, pulled the gun, and demanded twenties, fifties, and one-hundred-dollar bills. The teller took money from the cash drawer and stuffed it into the white plastic bag that Greer provided. After reportedly demanding and receiving even more money, he fled the premises.
Immediately following the robbery, the Federal Bureau of Investigation released to the public digital images of the robber. Later that same day, the FBI received a telephone call from an anonymous individual who identified the robber as Greer. Authorities then began surveillance on Greer’s residence.On December 29, 2012, the FBI received a call from the St. Paul Police Department, indicating officers there had just conducted a welfare check on Greer at the request of a family member. Officials subsequently transported Greer to Regions Hospital, where Greer reportedly gave law enforcement consent to search his residence. There, officers located the revolver used in the bank robbery. It was hidden above the duct work in the basement.
If convicted, Greer faces a potential maximum penalty of 25 years in prison for armed robbery and seven years for brandishing of a firearm. All sentences will be determined by a federal district court judge. This case is the result of an investigation by the FBI and the St. Paul Police Department. It is being prosecuted by Assistant United States Attorney Clifford B. Wardlaw.An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.
St. Paul Felon Sentenced for Possessing A 12-gauge ShotgunRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 25-year-old felon from St. Paul was sentenced for possessing an unregistered 12-gauge shotgun. United States District Court Judge David S. Doty sentenced Michael Romeo Geraci to 120 months in prison on one count of possession of an unregistered firearm. Geraci was indicted on May 22, 2012, and pleaded guilty on September 6, 2012.
In the plea agreement, Geraci admitted that on April 10, 2012, he possessed a sawed-off shotgun, which was not registered to him in the National Firearms Registration and Transfer Record. Geraci had the shotgun in his possession while driving a stolen minivan in the parking lot of the Uni/Dale Mall in St. Paul, where he was ultimately arrested. Geraci further admitted that he had the firearm because he intended to use it in connection with another felony offense, namely aiding and abetting the distribution of methamphetamine.
Because he is a felon, Geraci is prohibited under federal law from possessing any type of firearm at any time. His prior Ramsey County convictions include fleeing from a police officer in a motor vehicle (2007) and second-degree assault with a dangerous weapon (2009).This case was the result of an investigation by the St. Paul Police Department and the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. It was prosecuted by Assistant U.S. Attorneys Surya Saxena and LeeAnn K. Bell.
Prosecutions Continue in Illegal Entry Cases Involving Those with Prior Criminal RecordsRead the Press Release
MINNEAPOLIS -- In the District of Minnesota, court action continued yesterday in two separate cases regarding foreign nationals who entered the United States illegally after being deported as criminals. In each case, the individual pleaded guilty to one count of illegal re-entry after removal.
In the first case, Adrian Vicente Gulliani-Gulliani, age 40, entered his plea before U.S. District Court Judge Richard H. Kyle in St. Paul. Gulliani-Gulliani was indicted on December 10, 2012.
In his plea agreement, Gulliani-Gulliani admitted that on November 14, 2012, he was found in the U.S. illegally after having been deported to Mexico. The deportation followed a 1998 Hennepin County conviction for first-degree sale of a controlled substance and second-degree possession of a controlled substance. According to a law enforcement affidavit filed in the current case, Gulliani-Gulliani was arrested in St. Paul by U.S. Immigration and Customs Enforcement’s Enforcement and Removal Operations (“ICE ERO”), who identified him as an illegal alien.If convicted, Gulliani-Gulliani faces a potential maximum penalty of 20 years in federal prison. Judge Kyle will determine his sentence at a future hearing, yet to be scheduled. This case is the result of an investigation by ICE ERO, with cooperation from the St. Paul Police Department. It is being prosecuted by Assistant U.S. Attorney Manda M. Sertich.
In the second case, Jose Silva-Mercado, age 29, entered his plea before U.S. District Court Judge Donovan W. Frank in St. Paul. Silva-Mercado was indicted on December 10, 2012. In his plea agreement, Silva-Mercado admitted that on September 2, 2012, he was found in the U.S. illegally after having been deported to Mexico. The deportation followed a 2009 Mower County conviction for aggravated forgery.
On September 2, 2012, while Silva-Mercado was in the Stearns County Jail on a charge of driving under the influence, authorities identified him as an illegal alien with a criminal record. That identification was made though the ICE’s Criminal Alien Program (“CAP”). The goal of that program is to locate criminal aliens incarcerated in federal and state prisons, as well as in local jails, and prevent them from being released into society by having them federally prosecuted for illegally re-entry. In some instances, federal prosecution occurs only after the individual has been prosecuted for the recent underlying offense.
For his crime, Silva-Mercado faces a potential maximum penalty of 20 years in federal prison. Judge Frank will determine his sentence at a future hearing, yet to be scheduled. This case is the result of an investigation by ICE ERO, with cooperation from the Stearns County Sheriff’s Office. This case is being prosecuted by Assistant U.S. Attorney John E. Kokkinen.
Both men will remain in custody until their current federal cases are resolved. To learn more about the CAP, visit www.ice.gov/criminal-alien-program/Crosby Felon Indicted for Possessing A Pistol and DrugsRead the Press Release
MINNEAPOLIS—A federal indictment filed yesterday charges a 32-year-old felon from the northern Minnesota community of Crosby with possessing a .40-caliber, semi-automatic pistol along with approximately 30 grams of methamphetamine and crack cocaine. Zachari Allen Kozar was specifically charged with one count of being a felon in possession of a firearm, one count of possession with intent to distribute methamphetamine and crack cocaine, and one count of using and carrying a firearm during and in relation to a drug-trafficking crime.
According to a law enforcement affidavit filed in the case, authorities began observing Kozar in the fall of 2012 as part of a drug trafficking investigation. Then, on December 26, 2012, officers stopped Kozar for a traffic violation while he was in Baxter, Minnesota. During that stop, Kozar allegedly became agitated when a drug-sniffing canine was brought to the scene. After the dog alerted to a controlled substance, police spotted a clear plastic baggie with crystal-like content, along with a handgun, under the vehicle’s front passenger seat. Police subsequently executed a search warrant on the vehicle, finding the loaded .40-caliber Steyr firearm in a nylon gun holster, a second .40 caliber magazine, a plastic baggy containing approximately 2.8 grams of crack cocaine, as well as ten baggies of various amounts of methamphetamine and crack cocaine, totaling approximately 32.1 grams. Kozar was arrested shortly after the initial traffic stop, and $896 in U.S. currency was found on his person.Because he is a felon, Kozar is prohibited under federal law from possessing a firearm or ammunition at any time. His prior convictions in St. Louis County include two counts of theft of a motor vehicle (1999), fleeing police in a motor vehicle (1999 and 2004), third-degree burglary (1999), damage to property (1999), escape from custody (2001), fifth-degree drug possession (2004 and two counts in 2008), and third-degree drug possession (2009) . Because some of these convictions constitute crimes of violence, Kozar is subject to the federal Armed Career Criminal Act. That act mandates a minimum of 15 years in prison for anyone subsequently convicted in federal court for being a felon in possession of a firearm or ammunition.
If convicted, Kozar faces a potential maximum penalty of life in prison for being a felon in possession, 20 years for drug possession, and a possible consecutive five-year to life sentence for carrying and using a firearm during or in relation to a drug trafficking crime. All sentences will be determined by a federal district court judge.
This case is the result of an investigation by the Lakes Area Drug Investigative Division, the Minnesota Bureau of Criminal Apprehension, and the United States Bureau of Alcohol, Tobacco, Firearms and Explosives. It is being prosecuted by Assistant U.S. Attorney Allen A. Slaughter.An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.
Mortgage Loan Officers Sentenced for $4.8 Million Mortgage FraudRead the Press Release
MINNEAPOLIS—Earlier today in federal court, two mortgage loan officers were sentenced for recruiting straw buyers to purchase properties at inflated prices and then distributing the excess loan funds among themselves, the straw buyers, and others involved in the scheme. United States District Court Judge Joan N. Ericksen sentenced Chad Arthur Anderson, age 39, and Troy Allen Huston, age 43, both of Chisago City, to federal prison terms of 60 months and 57 months, respectively, on one count of conspiracy to commit mortgage fraud through the use of interstate wires. They also were ordered to pay more than $4.8 million in restitution. The two were indicted on April 3, 2012, and pleaded guilty on August 13, 2012.
In their plea agreements, the defendants admitted that from 2006 through 2007, they recruited others, mainly relatives and friends, to act as straw buyers for the purchase of homes in the Twin Cities. At the time, the men worked as loan officers at Prestige Mortgage, a mortgage brokerage company in White Bear Lake, where they brokered numerous fraudulent mortgage loans by submitting false loan applications to prospective lenders. Anderson admitted to recruiting five straw buyers to purchase 17 homes during the course of the scheme, while Huston admitted to recruiting an unspecified number of buyers to purchase additional homes. The scheme involved a total of 32 homes in Minnesota. The properties involved are located in Otsego, Oak Grove, Elk River, St. Francis, Brooklyn Park, Isanti, St. Paul, Chisago City, Becker, Cambridge, Buffalo, Minneapolis, Zimmerman, and Albertville. All of the mortgage loans involved have gone into default, causing losses to the mortgage lenders that exceed $2.5 million.
At all times relevant to this case, Anderson and Huston were also involved in Lofton Property Management, a property management company in Chisago City. They used Lofton’s name on construction invoices and other statements to obtain loan proceeds for property management services never provided. In addition, they used Lofton’s name on property settlement statements, thereby receiving fraudulent mortgage loan proceeds, which they disbursed among themselves, the straw buyers, and others involved in the scam.
At the same time, Huston was involved in YES Financial, a property finance company in Chisago City. Through that company, he received additional illicitly acquired loan proceeds. Moreover, he prepared false loan applications on behalf of the straw buyers, often overstating their income, misrepresenting their employment, and failing to disclose their other mortgage obligations or the true source of their down payments.
This case was the result of an investigation by the Federal Bureau of Investigation. It was prosecuted by Assistant U.S. Attorney David J. MacLaughlin.Minnesota Man Sentenced for Robbing A US BankRead the Press Release
MINNEAPOLIS—Earlier today in federal court in St. Paul, a 55-year-old man was sentenced for the January 2, 2012, robbery of a US Bank in Calhoun Square. United States District Court Judge Richard H. Kyle sentenced Thomas Scott Wright, unknown address, to 60 months in prison on one count of bank robbery. Wright was indicted on February 6, 2012, and pleaded guilty on April 27, 2012.
In his plea agreement, Wright admitted stealing approximately $1,700 from the bank. According to police reports, a man, later identified as Wright, walked into the bank, placed a paper bag on the counter and said, “Please just do it. I have a gun. It’s tough times and the holidays.” After receiving the cash, Wright walked out of the bank. He was arrested on January 3, 2012. The money was not recovered.
This case was the result of an investigation by the Minneapolis Police Department and the Federal Bureau of Investigation. It was prosecuted by Assistant U.S. Attorney David P. Steinkamp.Minneapolis Man Sentenced for Distributing Child PornographyRead the Press Release
MINNEAPOLIS—Earlier today in federal court in St. Paul, a 51-year-old Minneapolis man was sentenced for distributing child pornography. United States District Court Judge Donovan W. Frank sentenced Robert Andrew Gozola to 240 months in federal prison and, following incarceration, supervised release for life. Gozola was indicted on May 8, 2012, and pleaded guilty on August 22, 2012, to one count of distribution of child pornography.
In his plea agreement, Gozola admitted that on November 23, 2011, he sent images of minors engaged in sexually explicit conduct to an undercover police officer over a peer-to-peer file-sharing program. In addition, Gozola admitted possessing more than 6,000 similar images on his computer, some of which included sadistic or masochistic content. The computer, on which Gozola had installed a peer-to-peer program, was seized during the execution of state search warrant at his residence on January 19, 2012.
This case was the result of an investigation by the Minnesota Cybercrime Task Force, which includes the Minneapolis Police Department and the Federal Bureau of Investigation. It was prosecuted by Assistant U.S. Attorney Thomas Calhoun-Lopez.Distribution of child pornography is against the law. In addition to prosecuting these cases, the Justice Department is presently funding a study focused on the correlation between involvement in child pornography and hands-on sexual abuse of children. A 2008 study (The Butner Study) published in the Journal of Family Violence found that up to 80 percent of federal inmates incarcerated for possession, receipt, or distribution of child pornography also admitted to hands-on sexual abuse of children, ranging from touching to rape.
This case was brought as part of Project Safe Childhood (PSC), a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, PSC marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children and identify and rescue victims. For more information about PSC, please visit http://www.justice.gov/psc/ For more information about internet safety education, please visit http://www.justice.gov/psc/resources.html and click on the tab “resources.”Maplewood Felon Pleads Guilty to Possessing .32-caliber RevolverRead the Press Release
MINNEAPOLIS—Earlier today in federal court in St. Paul, a 35-year-old felon from Maplewood pleaded guilty to possessing a loaded .32-caliber revolver. Derek Lee Preston pleaded guilty to one count of being a felon in possession of a firearm. Preston, who was indicted on April 12, 2011, entered his plea before United States District Court Judge Donovan W. Frank.
In his plea agreement, Preston admitted that on January 25, 2011, he possessed the weapon while a passenger in a vehicle that was stopped by Minneapolis Police. Preston was asked to exit the vehicle, and officers found the weapon while searching him. In addition, officers found recovered 7.5 grams of marijuana and nearly four grams of crack cocaine.
Because he is a felon, Preston is prohibited under federal law from possessing firearms or ammunition at any time. Preston’s prior Hennepin County convictions include unlawful possession of a pistol (1997), attempted first-degree aggravated robbery (1997), fifth-degree controlled substance crimes (1999 and 2009), a second-degree controlled substance crime (2001), terroristic threats (2005), violation of a no-contact order (2009), attempted violation of a no-contact order (2009), and domestic assault (2010). The U.S. contends that because at least three of these convictions constituted crimes of violence or serious drug offenses, Preston will be subject to the Armed Career Criminal Act in the current federal case. That act mandates a minimum of 15 years in prison for anyone convicted in federal court for being a felon in possession of a firearm or ammunition if they have three or more prior violent crime or serious drug convictions. Judge Frank will determine his sentence at a future hearing, yet to be scheduled.
This case is the result of an investigation by the Minneapolis Police Department, and the
Violent Crime Impact Team for the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. It is being prosecuted by Assistant U.S. Attorneys Surya Saxena and Andrew Dunne.
The case was charged federally through Project Exile Minneapolis. That law enforcement initiative was launched on July 22, 2010, as part of a city-wide effort to reduce gun violence. Through Project Exile, the Minneapolis Police Department and the ATF work together to apprehend serial criminals for violations of gun laws. Then, the Hennepin County Attorney’s Office teams up with the U.S. Attorney’s Office to determine where those offenders will most effectively be prosecuted – state or federal court. Those determinations are based on the offenders’ criminal histories and current charges, among other factors. To date, the U.S. Attorney’s Office has brought charges against more than a dozen serious habitual criminals through Project Exile Minneapolis.Apple Valley Woman Pleads Guilty to Defrauding A Home Health Care Company and MedicaRead the Press Release
MINNEAPOLIS—Earlier today in federal court, an Apple Valley woman pleaded guilty to defrauding both her employer and Medica. Lori Jo Mueller, age 48, pleaded guilty to one count of wire fraud and one count of health care fraud in connection to the crime. Mueller, who was charged on January 9, 2013, entered her plea before United States District Court Judge David S. Doty. In her plea agreement, Mueller admitted that from June of 2006 through June of 2012, she embezzled approximately $840,000 from Edelweiss Home Health Care, using the funds for her personal use.
Mueller began working for Edelweiss, located in Maple Grove, in 2002, and was ultimately promoted to the position of vice president of operations. In that capacity, she was responsible for the review and payment of corporate invoices, bookkeeping, and other financial matters. Mueller admitted using her access to the corporate checking account to issue payments to herself. She also concealed her actions from the company owners and made misrepresentations concerning the company’s financial state.
In addition, from March of 2010 through June of 2012, Mueller defrauded Medica, a non-profit corporation that provides health insurance products to individuals and families. She submitted claims to various insurers, seeking reimbursement for services provided by Edelweiss nursing staff. In some instances, Mueller double-billed by allowing claims for the same services to multiple insurance providers. For example, Mueller allowed both Minnesota Medicaid and Medica to be billed for identical services provided to one client. The particular double-billing resulted in a double-payment to Edelweiss with Medicaid being the proper payer and Medica being the overpayer. As a result of this criminal behavior, Mueller caused more than $631,000 in fraudulent proceeds to be paid by Medica.
For her crimes, Mueller faces a potential maximum penalty of 30 years in federal prison for wire fraud and ten years for health care fraud. Judge Doty will determine her sentence at a future hearing, yet to be scheduled.
This case is the result of an investigation by the Federal Bureau of Investigation and the U.S. Department of Health and Human Services-Office of Inspector General (“DHHS-OIG”). It is being prosecuted by Assistant U.S. Attorney David M. Genrich.
The U.S. Attorney’s Office participates in a task force with the Medicaid Fraud Control Unit at the Minnesota Attorney General’s Office that focuses on home health care fraud trends. The task force includes the DHHS-OIG, the FBI, the Internal Revenue Service, and other federal, state, and local law enforcement partners.
As a result of federal convictions for health care fraud, defendants are excluded from participating in federal health benefit programs, including Medicare and Medicaid. Exclusion determinations are made by the U.S. Department of Health and Human Services. Nationwide, more than 3,000 individuals were excluded from program participation in Fiscal Year 2010 based upon criminal convictions or patient abuse or neglect, license revocations, or other factors.
For more information, visit http://www.stopmedicarefraud.gov/or http://www.stopfraud.gov/protect-health.html.Frank Vennes Pleads Guilty to Lying to Investors in Petters’ Ponzi SchemeRead the Press Release
MINNEAPOLIS—Late this afternoon in federal court in St. Paul, a business associate of Thomas J. Petters, the Minnesota businessman convicted in 2009 of orchestrating a $3.65 billion Ponzi scheme, pleaded guilty to fraudulently raising money from individuals and through hedge funds for investment in Petters Company, Inc. (“PCI”). Frank Elroy Vennes, Jr., age 55, of Stuart, Florida, was charged on July 11, 2011, in a Second Superseding Indictment. Appearing today before United States District Court Judge Richard H. Kyle, he specifically pleaded guilty to one count of securities fraud and one count of money laundering.
Following the plea hearing, U.S. Attorney B. Todd Jones said, “This case exemplifies one of the highest priorities of this office — protecting our citizens from financial fraud. Because of the tremendous dedication of this office and our investigative partners, we successfully constructed a very strong case. We were able to convict Tom Petters, the biggest fraudster in Minnesota history, who is now serving a 50-year sentence in Leavenworth. We also successfully prosecuted many of his associates, and today, yet another individual pleaded guilty. We are taking action to recoup the financial losses suffered by so many because of this fraud and know the court will appropriately sentence Mr. Vennes for his related crimes.”
FBI Special Agent in Charge Chris Warrener added, “This guilty plea today symbolizes the ongoing joint efforts between the FBI, the U.S. Attorney’s Office, IRS-CI, and the U.S. Postal Inspection Service to combat significant fraud in the State of Minnesota. It also reflects our continued joint commitment to ensuring that those responsible for the Petters fraud are held accountable.”
From 1995 through September of 2008, Vennes and his company, Metro Gem, obtained money from others for investment in PCI notes. He also assisted in the formation of hedge funds, known as the Arrowhead Funds, to help raise additional investment funds for that same purpose. Beginning in 2001 and proceeding through September 24, 2008, he knew that individuals associated with the Arrowhead Funds were making misrepresentations and omissions to investors regarding investments in PCI, and he aided and abetted in those misrepresentations.
“This complex investigation shows that the appearance of success can be a mask for a tangled financial web of lies,” said Kelly R. Jackson, Special Agent in Charge of the St. Paul Field Office of the IRS-CI. “Ponzi schemes can thrive for a long time because of the false representations about the investments that were made to investors. But that time is gone, and as Mr. Vennes’ plea shows, it’s time for those responsible to face judgment.”
PCI was owned and operated by Tom Petters, who, in or before 1993, initiated the Ponzi scheme by representing that funds invested in PCI promissory notes would finance the purchase of electronics and other consumer merchandise. Purportedly, PCI would resell that merchandise for a profit to certain “big box” retailers, including Sam’s Club and Costco. In truth, however, no merchandise was bought or resold. Instead, Petters diverted hundreds of millions of dollars for his own benefit and the benefit of his co-conspirators.
Petters’ Ponzi scheme unraveled in 2008, when federal agents executed search warrants at his business offices as well as other locations. He was subsequently prosecuted in federal court in the District of Minnesota and, in April of 2010, was sentenced to 50 years in federal prison. He is currently serving his sentence in the federal penitentiary in Leavenworth, Kansas.
In his plea agreement, Vennes admitted that he raised funds for investment in PCI notes through third-party agents, particularly after 1998. Because he had a federal criminal record, having been previously convicted on federal narcotics, firearms, and money laundering charges, he had difficulty obtaining funding on his own. As a result, he regularly worked through others, especially when trying to solicit money from banks and institutional investors. Arrowhead Capital Partners II, L.P. and Arrowhead Capital Finance, Ltd., collectively known as the Arrowhead Funds, were among those third-party agents.
From 1999 through September 2008, all paperwork and communication between PCI and the Arrowhead Funds went through Vennes or one of his employees. At the same time, Vennes received “commissions” from Petters for brokering deals involving the Arrowhead Funds. His commissions were based on the amount of money he raised for Petters and PCI. Between 2001 and 2008, Vennes received more than $48 million in commissions.
During that same time period, Vennes knew that those acting on his behalf were making material misrepresentations and omissions to investors in the Arrowhead Funds and did nothing to correct the situation. Investors were told, for example, that whenever a retailer purchased consumer electronics or other goods from PCI, those products were paid for by the retailer with funds directly deposited into a bank account under the control of a management company. Thus, investors were falsely assured that all PCI transactions were, in fact, taking place, and all money was secure. However, Vennes, among others, was well aware that no payments were ever received from retailers and, instead, came from PCI alone.
Furthermore, investors were never informed of Vennes’ criminal record or his involvement in the Arrowhead Funds’ transactions. And, finally, they were kept unaware that in late 2007 and early 2008, the PCI Notes held by the Arrowhead Funds were delinquent and were approaching default. Instead of disclosing that information to investors, Vennes and others arranged to secretly extend the due dates on the notes, the intent being to conceal the payment problems and to lull investors into believing their investments were secure and performing well.
Vennes’s co-defendant in this case, James Nathan Fry, age 59, of Orono, Minnesota, was charged with five counts of securities fraud, four counts of wire fraud, and three counts of making a false statement to the U.S. Securities and Exchange Commission during its investigation of investments in PCI by hedge funds under the management of Fry’s company, Arrowhead Capital Management. His trial is scheduled to begin on February 5, 2013.
For his crimes, Vennes faces a potential maximum penalty of ten years in prison on the money laundering count and five years on the securities fraud count. Judge Kyle will determine his sentence at a future hearing, yet to be scheduled.
If convicted, Fry faces a potential maximum penalty of 20 years on each wire fraud count and five years on each securities fraud and false statement count.
Two Florida hedge fund managers have pleaded guilty to committing fraud in connection to this scheme by making material misrepresentations to investors in their hedge funds concerning investments in PCI. David William Harrold, age 53, of Del Ray Beach, Florida, and Bruce Francis Prevost, age 52, of Palm Beach Gardens, Florida, await sentencing, each on four counts of securities fraud.
This case is the result of an investigation by the Federal Bureau of Investigation, the Internal Revenue Service–Criminal Investigations, and the U.S. Postal Inspection Service. It is being prosecuted by Assistant U.S. Attorneys Timothy C. Rank, Kimberly A. Svendsen, and Robert M. Lewis.
This law enforcement action is in part sponsored by the interagency Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive attack on financial crimes. It includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement, who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force hopes to improve efforts across the federal executive branch, and, with state and local partners, investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.The task force and the Minnesota U.S. Attorney’s Office want to remind people to protect themselves from securities fraud. For more information, visit http://www.stopfraud.gov/protect-securities.html.
Federal Jury Finds Red Lake Man Guilty of Domestic Assault by A Habitual OffenderRead the Press Release
MINNEAPOLIS—Yesterday in federal court in St. Paul, a trial jury found a 35-year-old Red Lake man guilty of domestic assault involving a woman on the Red Lake Indian Reservation. On January 31, 2012, Brian Gordon Graves was convicted on one count of assault with a dangerous weapon and one count of domestic assault by a habitual offender. This is the second time the United States Attorney’s Office for the District of Minnesota has prosecuted someone under the federal “domestic assault by a habitual offender” law. Graves was indicted for these crimes on November 5, 2012.
According to the indictment and evidence presented at trial, on October 6, 2012, Graves assaulted the victim with a 12-gauge shotgun. This assault was committed after Graves was convicted on at least two prior occasions in Red Lake Indian Tribal Court (criminal domestic violence in 1997 and first-degree assault in 1998).
The domestic assault by a habitual offender law was enacted in 2006 by Congress as support to the Violence Against Women Act of 2000. The 2006 statute is a valuable tool for federal prosecutors because research shows that many domestic violence offenders are repeat offenders and because domestic violence rates are extremely high in Indian Country.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 in 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.
For his crimes, Graves faces a potential maximum penalty of ten years in federal prison on the assault with a dangerous weapon count, and a potential maximum penalty of five years on the domestic assault by a habitual offender count. U.S. District Court Judge Donovan W. Frank will determine Graves’s sentences at a future hearing, not yet scheduled.
This case is the result of an investigation by the Federal Bureau of Investigation and the Red Lake Tribal Police Department. It is being prosecuted by Assistant U.S. Attorney Deidre Y. Aanstad.
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.Virginia, Minnesota, Felon Pleads Guilty to Possessing A .38-caliber RevolverRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 48-year-old felon from the northern Minnesota community of Virginia pleaded guilty to possessing a .38-caliber revolver. John Carl Pape specifically pleaded guilty to one count of being a felon in possession of a firearm. Pape, who was indicted on October 15, 2012, entered his plea before United States District Court Judge Patrick J. Schiltz.
In his plea agreement, Pape admitted possessing the Smith & Wesson, five-shot revolver on May 6, 2012. On that day, police received a complaint that two vehicles had been vandalized in a church parking lot in Eveleth, Minnesota. One of the victims stated that her purse was stolen, and that it contained the gun and credit cards, among other items. Later that day, Pape was questioned by authorities and admitted attempting to make purchases and withdrawals with the victim’s stolen credit card. During the subsequent execution of a search warrant at Pape’s residence on May 6 and 7, 2012, officers seized items linked to the theft, including the gun.
Because he is a felon, Pape is prohibited under federal law from possessing firearms at any time. His previous St. Louis County convictions include third-degree burglary (1991 and 2004), fifth-degree possession of drugs (2007 and 2008), and fifth-degree sale of marijuana (1998).Since at least three of Pape’s prior convictions constitute crimes of violence or major drug crimes, he is subject to the federal Armed Career Criminal Act if convicted in the current federal case. That act mandates a minimum of 15 years in federal prison. For his crime, Pape faces a potential maximum penalty of life in prison. Judge Schiltz will determine Pape’s sentence at a future hearing, not yet scheduled.
This case is the result of an investigation by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. It is being prosecuted by Assistant U.S. Attorney Thomas M. Hollenhorst.St. Peter Man Sentenced for Transporting Illegal AliensRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a St. Peter man was sentenced on one count of transporting illegal aliens. United States District Court Judge Patrick J. Schiltz sentenced Juan Arrazolo, also known as John Arrazolo, to three years of probation, six months of home confinement and a $2,000 fine. Arrazolo was indicted on April 16, 2012 and pleaded guilty on August 16, 2012.
Following today’s sentencing, Mike Feinberg, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations St. Paul Field Office (“ICE HSI”), said, “Those who transport or harbor illegal aliens require secrecy and often coercion to succeed. ICE HSI has a long history of targeting criminals who seek illegal gain at the expense of the innocent. We work with our state and local law enforcement partners to bring justice to anyone who exploits others for illegal profit.”
In his plea agreement, Arrazolo admitted that between October 2006 and October 2011, he transported two undocumented aliens from Texas to Minnesota to work in his business. Arrazolo’s company, Poultry Service Management, provided manual labor to large corporate chicken farms in Minnesota and the surrounding area. The workers loaded chickens for shipping, vaccinated chickens, trimmed chicken beaks, and provided other general labor as requested by the poultry producers. Arrazolo admitted that one of the individuals he transported was a citizen of Mexico, and that he knew the individual was not a U.S. citizen when he transported him from Texas to Minnesota.
This case was the result of an investigation by ICE HSI, the St. Peter Police Department, the Nicollet County Sheriff’s Office, the LeSueur County Sheriff’s Office, and the Minnesota Bureau of Criminal Apprehension. It was prosecuted by Assistant U.S. Attorney David P. Steinkamp.Colorado Man Sentenced for Scheming Investors Out of $7 MillionRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 37-year-old Colorado man was sentenced for scheming investors out of more than $7 million. United States District Court Judge Patrick J. Schiltz sentenced Evan Matthew Flaxman, of Silverthorne, Colorado, to 52 months in prison on one count of mail fraud in connection to the crime. Flaxman was charged on June 14, 2012, and pleaded guilty on July 25, 2012.
In his plea agreement, Flaxman admitted that from December of 2009 through March of 2012, he induced investors to give him money, telling them he had extensive financial expertise and personal wealth and resources. That was not the case. He subsequently provided one investor with documents indicating investment gains. In reality, however, Flaxman had used investment funds for personal use, including the purchase of a Ferraris and Porsche automobiles and a Rolex watch. He also paid his taxes with the money.
This case was the result of an investigation by the U.S. Postal Inspection Service and the Federal Bureau of Investigation. It was prosecuted by Assistant U.S. Attorney Thomas Calhoun-Lopez.Three Tax Preparers Indicted for Preparing False Tax ReturnsRead the Press Release
MINNEAPOLIS—A federal indictment unsealed earlier today charges three Minnesota tax preparers with filing false tax returns on behalf of their customers. Solomon Frank-Sawari, Chasma Dixon, and Tameca Stokes were each indicted on one count of conspiracy to defraud the United States and one count of aggravated identity theft. In addition, Frank-Sawari was charged with nine counts of preparing false income tax returns, and both Dixon and Stokes were charged with five counts of preparing false income tax returns. The indictment, which was filed on January 15, 2013, was unsealed following the defendants’ initial appearance in federal court.
The indictment alleges that from 2007 through February of 2010, the defendants conspired with each other to obstruct the Internal Revenue Service (“IRS”) in its collection of income taxes. At the time, Frank-Sawari owned and operated two tax-return preparation businesses: Merit Tax Service in Robbinsdale and Capitol Income Tax in Minneapolis. Dixon worked at Merit in 2007 and at Capitol in 2008 and 2009. Stokes worked at Capitol. All three prepared and filed federal and state income tax returns on behalf of customers.
Allegedly, the defendants prepared false tax returns that generated excessive refunds, totaling more than $200,000. In turn, those refunds purportedly resulted in excessive fees and other payments to the defendants.For tax years 2006 through 2009, the defendants prepared and filed hundreds of federal and state tax returns.
The tax returns also allegedly contained false or inflated income figures as well as false dependents, whose identities the defendants used unlawfully. The false dependents fraudulently qualified the customers for a more favorable filing status, allowed them to take dependent exemptions, and inflated their refundable earned income and child tax credits.
The indictment alleges that the defendants recruited customers, instructing them to sign false income declarations and other paperwork. In many instances, one of the defendants reportedly accompanied the customers to check-cashing businesses to ensure that the defendants would receive some portion of the fraudulent tax refund checks.
If convicted, the defendants face a potential maximum penalty of five years in federal prison for conspiracy, three years on each count of preparing false tax returns, and a mandatory minimum penalty of two years on each count of aggravated identity theft. All sentences will be determined by a federal district court judge.
This case is being investigated by the IRS-Criminal Investigations. It is being prosecuted by Assistant U.S. Attorney William J. Otteson.
An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial. Per U.S. Department of Justice policy, the U.S. Attorney’s Office is not allowed to provide the age and city of residence for defendants charged in criminal tax cases.Minneapolis Man Pleads Guilty to Conspiring to Distribute Controlled SubstancesRead the Press Release
MINNEAPOLIS—Earlier today in federal court in St. Paul, a 38-year-old Minneapolis man pleaded guilty to distributing cocaine, crack cocaine, and the semisynthetic psychedelic drug MDPV, commonly known as ecstasy. Antoine Kenyetta Poole specifically pleaded guilty to one count of conspiracy to distribute controlled substances. Poole, who was indicted along with Jermaine Aquarius Edison on September 11, 2012, entered his plea before United States District Court Judge Donovan W. Frank. On December 18, 2012, Edison, age 40, also of Minneapolis, pleaded guilty to one count of conspiracy.
In their plea agreements, the defendants admitted that from February 14 through August 16, 2012, they conspired with others to distribute 500 or more grams of cocaine, 28 grams of crack cocaine, and ecstasy. The conspiracy involved sending large amounts of cash to California for the purchase of cocaine. For example, on May 2012, law enforcement seized a package containing $18,000, which Edison was sending to California. In entering their pleas, the defendants also admitted distributing the controlled substances once they were received from their California suppliers.According to a law enforcement affidavit filed in the case, authorities began investigating Edison in February of 2012 and subsequently made several controlled purchases of cocaine, crack cocaine, and ecstasy.
For their crimes, the defendants face a potential maximum penalty of 40 years in prison. Judge Frank will determine their sentences at a future hearing, yet to be scheduled.
This case is the result of an investigation by the U.S. Drug Enforcement Administration, the Minneapolis Police Department, and the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. It is being prosecuted by Assistant U.S. Attorney Jeffrey S. Paulsen.Colorado Man Sentenced for Receiving Child PornographyRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 26-year-old Denver, Colorado, man, formerly of Plymouth, Minnesota, was sentenced for receiving, via his computer, thousands of images of child pornography. United States District Court Judge Patrick J. Schiltz sentenced Russell Ronald Brimeyer to 85 months in federal prison on one count of receipt of child pornography. Brimeyer was charged on May 7, 2012, and pleaded guilty on June 26, 2012.
In his plea agreement, Brimeyer admitted that on April 15, 2009, he received, by way of his computer, thousands of images of a minor under the age of 12 engaged in sexually explicit conduct. He received the images through an Internet peer-to-peer, file-sharing program. Authorities discovered the images on Brimeyer’s computer and other media devices on September 24, 2009, during the execution of a search warrant at his residence.
This case was the result of an investigation by the Minnesota Cyber Crimes Task Force, which is sponsored by the Federal Bureau of Investigation and the U.S. Secret Service, and the National Center for Missing and Exploited Children. It was prosecuted by Assistant U.S. Attorney Clifford B. Wardlaw.Presently, the Justice Department is funding a study concerning the correlation between involvement in child pornography and the hands-on sexual abuse of children. A 2008 study (The Butner Study) published in the Journal of Family Violence found that up to 80 percent of federal inmates incarcerated for possession, receipt, or distribution of child pornography also admitted to hands-on sexual abuse of children, ranging from touching to rape.
The U.S. Department of Justice is committed to combating the sexual exploitation of
children, particularly via the Internet. In Fiscal Year 2010, 2,235 defendants pleaded guilty to
federal child pornography charges, 2,222 of whom were sentenced to prison. In Fiscal Year
2009, 2,083 defendants were sentenced to prison on child pornography charges. For more
information about these efforts, please visit the Department’s Project Safe Childhood website,
at www.projectsafechildhood.gov.Federal Inmate Indicted for Fraudulently Obtaining $23,000 in Social Security BenefitsRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 32-year-old woman incarcerated at the Federal Correctional Institute in Waseca, Minnesota, was indicted for stealing more than $23,000 in Social Security benefits. Nefertiti Randall was charged with one count of theft of government money or property.
The indictment alleges that from June 12, 2009, through May 16, 2012, Randall stole $23,012 from the Social Security Administration. The funds, which were deposited automatically into a bank account accessible to both Randall and her mother, represented benefits intended solely for Randall’s mother. Her mother died in June of 2009, and in August of 2009, Randall began serving an unrelated, multi-year, identity-theft sentence at the Federal Correctional facility in Waseca. According to the indictment, Randall nonetheless continued to access her mother’s social security benefits until spring of 2012.
If convicted, Randall faces a potential maximum penalty of ten years in prison. All sentences will be determined by a federal district court judge. This case is the result of an investigation by the Social Security Administration-Office of Inspector General, with cooperation from the United States Bureau of Prisons. It is being prosecuted by Assistant U.S. Attorney Manda M. Sertich.An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.
Brooklyn Park Man Sentenced for Health Care FraudRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 52-year-old Brooklyn Park man was sentenced for executing a scheme to defraud Medicaid out of more than $500,000. United States District Court Judge David S. Doty sentenced Allwell Tam Inimgba to 18 months in prison on one count of health care fraud. Inimgba, was charged on September 21, 2012, and pleaded guilty on October 9, 2012.
In his plea agreement, Inimgba admitted that from January of 2006 to March of 2009, he executed a scheme to defraud Medicaid, a federal health benefit program, by billing it for services supposedly provided by Registered Nurses (“RNs”), when that was not the case. At the time, Inimgba was the responsible billing party for Victory Home Care, Inc. (“Victory”), a home health care agency that provided, or purported to provide, RN services to Medicaid recipients.
During the time period noted above, Inimgba billed Medicaid for more than 20,000 hours of services supposedly provided to various clients by RNs, and Medicaid paid Victory more than $1,400,000 as a result of those claims. However, RNs provided far less care than noted in Victory’s claims. In fact, approximately $513,734 awarded to Victory was ultimately found to be for work not done by RNs.This case was the result of an investigation by the U.S. Department of Health and Human Services-Office of Inspector General, the Federal Bureau of Investigation, the Minnesota Department of Health, and the Minnesota Attorney General Office’s Medicaid Fraud Control Unit. It was prosecuted by Assistant U.S. Attorney David M. Genrich.
According to the Justice Department, health care fraud investigations have been growing, and the Department has formed a senior-level task force to tackle the problem nationwide. The Health Care Fraud Prevention and Enforcement Action Team, represented by the Department of Justice and Health and Human Services, will look at how to share more effectively real-time intelligence data on health care fraud patterns as well as critical information about health care services, pharmaceuticals, and medical devices. In 2008, the Justice Department filed criminal charges in 502 health care fraud cases involving 797 defendants.
In Minnesota, the U.S. Attorney’s Office is also participating in a task force with the Minnesota Attorney General Office’s Medicaid Fraud Control Unit that focuses on home health care fraud. That task force includes the U.S. Department of Health and Human Services-Office of Inspector General, the Federal Bureau of Investigation, the Internal Revenue Service, and other federal, State and local law enforcement partners.
For more information, visit http://www.stopmedicarefraud.gov/Murder Charges Added for 2011 New Year Day Robbery and Killing on Red Lake Indian ReservationRead the Press Release
MINNEAPOLIS—A federal superseding indictment unsealed earlier today charges a previously indicted man with murder in connection to the deaths of a couple on the Red Lake Indian Reservation on New Year’s Day 2011. Twenty-one-year-old Kevin John Needham, previously charged with one count of robbery, has now also been charged with two counts of murder in the first degree and two counts of murder in the second degree. The superseding indictment, originally filed under seal on January 15, 2013, was unsealed today, after Needham’s initial court appearance on the murder charges.
The charges against Needham’s four co-defendants remain unchanged. All four were indicted on two counts of murder in the first degree, two counts of murder in the second degree, and one count of robbery. The four co-defendants include Geshik-O-Binese Martin, age 30; Edward McCabe Robinson, age 28; David John Martin, age 46, of Columbia Heights; and George Allen Martin, age 24, of Red Lake. All four are in federal custody.
The original indictment alleges that on January 1, 2011, Needham, Robinson, and the Martins killed Craig David Roy and Darla Ann Beaulieu while stealing money and illegal drugs from Roy’s reservation residence. The bodies of Beaulieu and Roy were found in the remains of the house, which was destroyed by fire on that day. Autopsies determined that both victims were killed as a result of multiple stab wounds and not the fire itself.If convicted of murder, Needham, Robinson, and the Martins face potential maximum penalties of life in federal prison. They also face a potential maximum penalty of 15 years in federal prison on the robbery charge. Because the federal criminal justice system does not have parole, convicted offenders spend virtually their entire prison sentences behind bars. Of course, actual sentences are determined by federal district court judges.
This case is the result of an investigation by the Federal Bureau of Investigation and the Red Lake Tribal Police Department, with assistance from the Minnesota Bureau of Criminal Apprehension and the State Fire Marshal. It is being prosecuted by Assistant United States Attorneys Deidre Y. Aanstad and Nathan P. Petterson.
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.An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.
Minneapolis Felon Sentenced for Possessing A .32-caliber PistolRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 34-year-old Minneapolis felon was sentenced for possessing a .32-caliber pistol. United States District Court Judge Joan N. Ericksen sentenced Bryant Duane Griffin to 240 months in prison on one count of being a felon in possession of a firearm. Griffin was indicted on May 15, 2012, and was convicted on September 14, 2012.
The evidence presented at trial proved that on March 25, 2012, Griffin possessed the gun while on a Metro Transit bus. On that date, police received a call at approximately 1:00 a.m. The caller reported that a man with a gun was riding a city bus. Officers located the bus and the man. He was later identified as Griffin. They found the gun under a seat in front of him.
Because he is a felon, Griffin is prohibited under federal law from possessing a firearm at any time. His prior Hennepin County convictions include fifth-degree possession of a controlled substance (1999) and attempted terroristic threats (2001). In addition, he was convicted of second-degree sale of a controlled substance in Stearns County (2008) and third-degree sale of a controlled substance in Benton County (2008). Since three of those prior offenses were crimes of violence or major drug crimes, Griffin was subject to the federal Armed Career Criminal Act. That act mandates a minimum of 15 years in federal prison. Since the federal criminal justice system does not have parole, Griffin will serve virtually his entire sentence behind bars.
This case was the result of an investigation by the Brooklyn Park Police Department, the Metro Transit Police Department, and the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. It was prosecuted by Assistant U.S. Attorneys John E. Kokkinen, Kimberly A. Svendsen, and Surya Saxena.Woodbury Woman Sentenced for Using Two Identities to Receive HUD Tax Credits FraudulentlyRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 53-year-old Woodbury woman was sentenced for using an alternative identity to receive, among other things, more than $18,000 in Low Income Housing Tax Credits (“LIHTC”) from the United States Department of Housing and Urban Development (“HUD”).
United States District Court Judge Joan N. Ericksen sentenced Victoria Ayoola to two years of probation on one count of social security fraud and one count of making false statements. In addition, Ayoola was ordered to pay $18,114 in restitution. Ayoola was indicted on July 10, 2012, and pleaded guilty on August 23, 2012.
Following today’s sentencing, Michael Feinberg, Special Agent in Charge of U.S. Immigration and Customs Enforcement-Homeland Security Investigations’ St. Paul Field Office (“ICE HSI”), said, “This type of fraud poses serious security vulnerability, one that often contributes to a host of other crimes – including identity theft and financial fraud. Targeting schemes like this that enable individuals to obtain fraudulent U.S. identity documents is a top priority for ICE HSI, and we are committed to working with our law enforcement partners to detect, investigate, and dismantle this type of activity.”
In the plea agreement, Ayoola admitted that she applied for and received a social security card under the name Oluremi George on November 19, 1996. On the application, Ayoola indicated to the Commissioner of Social Security that she had never before been issued a social security number. However, Ayoola knew she already had a social security number under the name Victoria Ayoola, issued on November 26, 1991.
Since 1996, Ayoola has used both social security numbers and identities to apply for and renew Minnesota identification cards and driver’s licenses, seek and obtain employment, and file federal and state tax returns. George also used the false identity to receive a lower monthly housing rental rate by qualifying for a LIHTC rental unit at Pondview Townhomes in Woodbury.
Pondview is a low income housing development that provides housing assistance to its residents through the use of HUD loans and funds as well as through LIHTCs. To be eligible to live in one of the units, a person must make less than the federal annual tax credit income limit. In 2011, that limit for Washington County, Minnesota, was $35,280. In an effort to qualify for the subsidized housing unit, George certified that her anticipated 2011 income would be $30,930, even though she knew it would be approximately $55,887.13.
Ayoola’s fraud has resulted in more than $18,000 in underpayments of rent since 2004.
This case was the result of an investigation by ICE HSI and its Document and Benefit Fraud Task Force, the Social Security Administration’s Office of Inspector General, HUD’s Office of Inspector General, the U.S. State Department’s Diplomatic Security Service, and the Minnesota State Patrol, with assistance from the Minnesota Secretary of State’s Office. It was prosecuted by Assistant U.S. Attorney Andrew Dunne.State Inmate Pleads Guilty to Fraudulently Obtaining $29,000 in Social Security BenefitsRead the Press Release
MINNEAPOLIS—Earlier today in federal court in St. Paul, a 38-year-old woman pleaded guilty to fraudulently obtaining more than $29,000 in Social Security benefits. Dora White, who is incarcerated at the Shakopee Women’s Prison, pleaded guilty to one count of theft of government funds. White, who was charged on December 27, 2012, entered her plea before United States District Court Judge Richard H. Kyle.
In her plea agreement, White admitted that from May of 2007 to January of 2011 she received $29,755.30 in Social Security benefit payments on behalf of her daughter. In August of 2005, White became the representative payee for her daughter. White also admitted that between May of 2007 and January of 2011, she completed and signed accounting reports that falsely attested that her daughter resided with her and that the funds were going to be used for her daughter’s care. In fact, in April of 2007, the daughter was placed in foster care and was not in White’s custody.
For her crime, White faces a potential maximum penalty of ten years in federal prison. Judge Kyle will determine her sentence at a future hearing, not yet scheduled. This case is the result of an investigation by the Social Security Administration’s Office of Inspector General. It is being prosecuted by Assistant U.S. Attorney David P. Steinkamp.Sentencings in Illegal Re-entry Cases Involving Those with Prior Criminal RecordsRead the Press Release
MINNEAPOLIS -- In the District of Minnesota, court action continued this week in two separate cases involving foreign nationals who entered the United States illegally after being deported as criminals. Yesterday, one of those men was sentenced on one count of illegal entry after removal, while earlier in the week a second man was sentenced for the same crime.
In the first case, U.S. District Court Judge David S. Doty sentenced Miguel Angel Renteria-Garcia, age 40, to 41 months in federal prison. Renteria-Garcia was indicted on July 23, 2012, and pleaded guilty on September 21, 2012. In his plea agreement, Renteria-Garcia admitted that on July 5, 2012, he was found in the U.S. after having been previously deported in 1996, following California convictions for possession of a controlled substance while armed and possession with intent to sell a controlled substance. On July 5, 2012, Renteria-Garcia, also known as Rodolfo Amescua-Flores, was stopped by the Minnesota State Patrol near Owatonna in connection to the seizure of approximately 235 pounds of marijuana.
This case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Minnesota State Patrol. It was prosecuted by Assistant U.S. Attorney Thomas M. Hollenhorst.In the second case, Daniel Gonzalez-Deleone, age 35, was sentenced to 24 months in federal prison by U.S. District Court Judge Richard H. Kyle. Gonzalez-Deleone was indicted on June 18, 2012, and pleaded guilty on August 10, 2012. In his plea agreement, Gonzalez-Deleone admitted that on May 15, 2012, he was found in the U.S. illegally after having been previously deported. His deportation followed a 2005 California conviction for sale or transportation of marijuana. On May 15, 2012, he was arrested for loitering and for public consumption and was held in the Hennepin County jail, where he was identified as an illegal alien with a criminal record.
That identification was made though the U.S. Immigration and Customs Enforcement’s (“ICE”) Criminal Alien Program (“CAP”). The goal of that program is to locate criminal aliens incarcerated in federal and state prisons as well as in local jails and prevent them from being released into society by having them federally prosecuted for illegally re-entering the U.S. In some instances, federal prosecution will occur only after the individual is prosecuted for the recent underlying offense.
This case was the result of an investigation by ICE’s Enforcement and Removal Operations (“ICE ERO”). It was prosecuted by Assistant U.S. Attorneys Kevin S. Ueland and Lola Velazquez-Aguilu.
Both men will be deported after serving their federal sentences. To learn more about the CAP, visit www.ice.gov/criminal-alien-program/Career Criminal Sentenced for Possessing .38-caliber RevolverRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 25-year-old career criminal was sentenced for possessing a .38-caliber revolver. United States District Court Judge Ann D. Montgomery sentenced Lewis Pate, no known address, to 200 months in prison on one count of possession of a firearm by a career criminal. Pate was indicted on May 8, 2012, and was convicted on August 15, 2012.
The evidence presented at trial proved that on March 20, 2012, St. Paul police were called to the 980 block of Reaney Avenue at approximately 2:30 p.m., following a report of shots fired. Witnesses claimed three men had exchanged gunfire in a nearby alley. A police canine tracked the scent of one of the reported suspects to a house in the 970 block of Margaret Avenue. There, police found Pate inside. During the execution of a search warrant at the house, police also found a six-shot revolver with four live rounds. It was in the bathroom clothes hamper, wrapped in a towel.
Because he is a felon, Pate is prohibited under federal law from possessing a firearm at any time. His prior Ramsey County convictions include auto theft and fleeing a police officer in a motor vehicle (2007) and auto theft and fleeing a police officer in a motor vehicle (2008). Pate was also convicted in Hennepin County for third-degree burglary in 2008 and Dakota County for aggravated robbery in 2010.
Since those offenses constitute crimes of violence, Pate was subject to the federal Armed Career Criminal Act. That act mandates a minimum of 15 years in prison for anyone convicted in federal court of being a felon in possession of a firearm if that person also has at least three prior state or federal convictions for crimes of violence or serious drug crimes.
This case was the result of an investigation by the St. Paul Police Department and the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. It was prosecuted by Assistant U.S. Attorney Jeffrey S. Paulsen.Two Men Indicted for Robbing the First State Bank of Bigfork in KelliherRead the Press Release
MINNEAPOLIS—Yesterday in federal court, two men from northern Minnesota were indicted in connection with the December 10, 2012, armed robbery of the First State Bank of Bigfork, located in Kelliher, Minnesota. Cody Lowell Troy, age 19, of Mizpah, and Travis Michael Burns, age 20, of Bemidji, were charged with one count of armed bank robbery. In addition, Troy was charged with one count of brandishing a firearm during a crime of violence and one count of being a felon in possession of a firearm.
The indictment alleges that on December 10, 2012, the defendants stole approximately $3,738 from the bank while putting the lives of others in jeopardy by brandishing a 12-gauge, sawed-off shotgun. In addition, authorities assert that the shotgun’s serial number was partially obliterated.
According to a law enforcement affidavit filed in the case, an individual, later identified as Troy, entered the bank at approximately 2:24 p.m. He reportedly wore a white protective containment suit, a “Halloween” movie style mask, Nike Air Jordan shoes, and black gloves. Allegedly, he approached a teller, placed a black backpack on the counter, pointed the shotgun in the teller’s direction, and pumped the gun. The teller immediately placed the money in the backpack, which Troy allegedly grabbed before fleeing the premises in a red pickup truck.On December 12, 2012, police arrested Troy in Bemidji on an outstanding Itasca County warrant for failure to appear in connection with a prior felony. At that time, officers also located a red pickup that matched the description of the one witnesses spotted in the vicinity of the bank immediately after the robbery.
During the subsequent execution of a search warrant at the Bemidji apartment where Burns lived and Troy was staying, authorities seized shotgun shells, a hacksaw, and a loaded sawed-off shotgun, as well as the sawed-off gun stock and barrel. They also recovered a white protective containment suit, black gloves, Nike Air Jordan shoes, and a “Halloween” movie style mask. The backpack used in the robbery, as well as some money from the bank were recovered in Burns’ bedroom.
Because he is a felon, Troy is prohibited under federal law from possessing a firearm at any time. In 2011, Troy was convicted of third-degree burglary in Koochiching County.
If convicted, the defendants face a potential maximum penalty of 25 years in prison for armed bank robbery. In addition, Troy faces a potential maximum penalty of ten years for being a felon in possession of a firearm and a mandatory minimum penalty of ten years for brandishing a firearm during a violent crime. All sentences will be determined by a federal district court judge.
This case was investigated by the Federal Bureau of Investigation, the Beltrami County Sheriff’s Office, the Headwaters Safe Trails Task Force, and the Minnesota Bureau of Criminal Apprehension. It is being prosecuted by Assistant United States Attorneys Manda M. Sertich and Kevin S. Ueland.An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.
St. Paul Felon Indicted for Possessing .22-caliber Revolver, Ammunition, MethamphetamineRead the Press Release
MINNEAPOLIS—Recently in federal court, a 25-year-old St. Paul felon was indicted for possessing a .22-caliber revolver, ammunition, and methamphetamine. On January 15, 2013, Christopher Lee Rousseau was charged with one count of being an armed career criminal in possession of a firearm, one count of being an armed career criminal in possession of ammunition, one count of carrying a firearm in relation to a drug-trafficking crime, and one count of possession with intent to distribute methamphetamine.
The indictment alleges that on December 3, 2012, Rousseau possessed the revolver, two rounds of .22-caliber ammunition, and methamphetamine. Because he is a felon, Rousseau is prohibited under federal law from possessing a firearm or ammunition at any time. His prior convictions in Ramsey County include aiding and abetting second-degree burglary (2010) and fleeing police in a motor vehicle (2011). In addition, Rousseau was convicted in Pine County for fleeing police in a motor vehicle in 2007 and, in Dakota County, for third-degree burglary in 2010. Because these convictions constituted crimes of violence, Rousseau is subject to the federal Armed Career Criminal Act. That act mandates a minimum of 15 years in prison for anyone subsequently convicted in federal court for being a felon in possession of a firearm and/or ammunition.According to a law enforcement affidavit filed in the current case, at approximately 12:30 a.m. on December 3, 2012, officers stopped Rousseau on a traffic violation near the intersection of U.S. Highway 61 and Warner Road. He was arrested for driving after cancellation of license. During a search of Rousseau’s person, police found the ammunition and $385. A search of the vehicle led to the recovery of the gun and the methamphetamine.
If convicted, Rousseau faces a potential maximum penalty of 20 years in prison on the methamphetamine possession count, and a mandatory minimum penalty of five years on the carrying a firearm count, as well as the 15-year mandatory minimum penalty on each of the two armed career criminal counts. All sentences will be determined by a federal district court judge.
This case is the result of an investigation by the St. Paul Police Department and the United States Bureau of Alcohol, Tobacco, Firearms and Explosives. It is being prosecuted by Assistant U.S. Attorney Lola Velazquez-Aguilu.An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.
St. Paul Man Indicted for Robbing US BankRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 47-year-old St. Paul man was indicted in connection with the December 13, 2012, armed robbery of the US Bank branch located at 711 Cleveland Avenue South in St. Paul. David Judin Greer was specifically charged with one count of armed bank robbery and one count of brandishing a firearm during a crime of violence.
The indictment alleges that on December 13, Greer stole $3,952 from the bank after brandishing a .38-caliber revolver. According to a law enforcement affidavit filed in the case, a man, later identified as Greer, walked into the bank at approximately 2:00 p.m. He allegedly approached the teller counter, pulled the gun, and demanded twenties, fifties, and one-hundred-dollar bills. The teller took money from the cash drawer and stuffed it into the white plastic bag that Greer provided. After reportedly demanding and receiving even more money, he fled the premises.
Immediately following the robbery, the Federal Bureau of Investigation released to the public digital images of the robber. Later that same day, the FBI received a telephone call from an anonymous individual who identified the robber as Greer. Authorities then began surveillance on Greer’s residence.
On December 29, 2012, the FBI received a call from the St. Paul Police Department, indicating officers there had just conducted a welfare check on Greer at the request of a family member. Officials subsequently transported Greer to Regions Hospital, where Greer reportedly gave law enforcement consent to search his residence. There, officers located the revolver used in the bank robbery. It was hidden above the duct work in the basement.
If convicted, Greer faces a potential maximum penalty of 25 years in prison for armed robbery and seven years for brandishing of a firearm. All sentences will be determined by a federal district court judge. This case is the result of an investigation by the FBI and the St. Paul Police Department. It is being prosecuted by Assistant United States Attorney Clifford B. Wardlaw.An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.
Red Lake Man Indicted for Endangering Baby’s HealthRead the Press Release
MINNEAPOLIS—A federal indictment unsealed earlier today charges a 33-year-old Red Lake man with endangering the health of a baby. On January 8, 2013, Chad Joseph Sumner was charged with one count of child endangerment. The indictment was unsealed following Sumner’s initial appearance in court.
The indictment alleges that on August 17, 2011, Sumner intentionally placed the child in a situation likely to be harmful. As a result, the infant suffered substantial physical harm, including head trauma and skull fractures.
If convicted of the crime, Sumner faces a potential maximum penalty of five years in federal prison. All sentences will be determined by a federal district court judge. This case is the result of an investigation by the Red Lake Tribal Police Department and the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorney Deidre Y. Aanstad.
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.An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.
Minneapolis Man Indicted for Armed Robbery of Three Convenience Stores and A Jimmy John’sRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 26-year-old Minneapolis man was indicted in connection with the armed robbery of three Twin-Cities area convenience stores and on two separate occasions, the same Jimmy John’s sandwich shop. Derrel Johon Pruitt was charged with five counts of interference with commerce by robbery, pursuant to the Hobbs Act, five counts of possession of a firearm in furtherance of a crime of violence, and one count of possession of an unregistered firearm.
The indictment alleges that on five occasions, Pruitt stole money from the businesses while brandishing a sawed-off shotgun: On October 13, 2011, he allegedly robbed the Quick Stop store in South St. Paul; on October 22, 2011, he allegedly robbed the Stop N’ Go store in Minneapolis; on November 18, 2011, he allegedly robbed the Jimmy John’s in Minneapolis; on November 24, 2011, he allegedly robbed the Holiday store in Inver Grove Heights; and on December 2, 2011, he allegedly robbed the same Jimmy John’s in Minneapolis.
In addition, on December 5, 2011, Pruitt possessed the shotgun, which had a barrel length of less than 18 inches and an overall length of less than 26 inches. The firearm was not registered to Pruitt in the National Firearms Registration and Transfer Record, as required by law.As stated, Pruitt was charged in federal court under the Hobbs Act, which was passed by Congress in1946. The Act allows federal prosecutors to prosecute violent habitual criminals who commit armed robberies in places of business that involve interstate commerce. Federal prosecution of these cases is sometimes beneficial since federal penalties are often tougher than those imposed under state law. Moreover, because the federal system has no parole, those who receive federal sentences serve virtually their entire prison terms behind bars.
If convicted, Pruitt faces a potential maximum penalty of 20 years in federal prison on each count of violating the Hobbs Act, ten years for possession of an unregistered firearm, and a mandatory minimum of seven years on each count of possession of a firearm in furtherance of a crime of violence. The potential maximum penalty on those counts is life in prison. All sentences will be determined by a federal district court judge.
This case is the result of an investigation conducted by the United States Bureau of Alcohol, Tobacco, Firearms and Explosives, along with the Federal Bureau of Investigation, and the police departments of Inver Grove Heights, Minneapolis, St. Paul, and South St. Paul. It is being prosecuted by Assistant U.S. Attorneys Julie E. Allyn and Amber Brennan.An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.
Man Sentenced for the Armed Robbery of A Bemidji Convenience StoreRead the Press Release
MINNEAPOLIS—Earlier today in federal court in Duluth, a 22-year-old man was sentenced for committing the December 30, 2011, armed robbery of Newby’s Market in Bemidji. United States District Court Judge Richard H. Kyle sentenced Jason Lee King, no known address, to 132 months in federal prison on one count of interference with commerce by robbery, pursuant to the Hobbs Act, and one count of using, carrying, and brandishing a firearm during and in relation to a crime of violence. King was indicted on April 3, 2012, and pleaded guilty on June 11, 2012.
In his plea agreement, King admitted that on December 30, 2011, he stole approximately $1,476 from the store while threatening a store clerk with a loaded, short-barreled shotgun. According to a law enforcement affidavit filed in the case, the market was robbed just before 9:00 p.m. by two masked men armed with a shotgun and a knife. After the robbery, the men fled in a blue pickup.
In responding to the robbery, officers spotted the truck and the men abandoning it and fleeing into the woods. King and a juvenile male were ultimately found and taken into custody. Officers recovered the 20-gauge shotgun in the woods, along the route the men had taken in their attempt to escape authorities. Inside the pickup, police also found $1,420 in cash, a black ski mask, several Newby’s Market receipts, and a check made out to Newby’s Market.
The Hobbs Act, passed by Congress in 1946, allows federal prosecutors to prosecute violent, habitual criminals who commit armed robbery in places of business involved in interstate commerce. Federal prosecution of these cases is sometimes beneficial since the penalties are often tougher than under state law. Furthermore, because the federal system has no parole, those who receive federal sentences serve virtually their entire sentence behind bars.
This case was the result of an investigation by the Beltrami County Sheriff’s Office and the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. It was prosecuted by Assistant U.S. Attorney Jeffrey S. Paulsen.Federal Jury Convicts Felon of Possessing A Nine-millimeter PistolRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a jury found a St. Paul man guilty of being a felon in possession of a nine-millimeter, semi-automatic pistol. Demetrius Demarco Spencer, age unknown, was convicted on one count. He was indicted on November 14, 2012.
According to the indictment and the evidence presented at trial, Spencer possessed the gun on August 23, 2012. On that day, officers on routine patrol outside of a Minneapolis nightclub saw Spencer standing in the parking lot. He reached into his pants and removed an “L-shaped” item covered with a white sock. He carried the item to a nearby car and placed it under the front seat. Later officers recovered the pistol, which had been hidden inside the sock.
Because he is a felon, Spencer is prohibited under federal law from possessing a firearm at any time. His prior Hennepin County convictions include possession of a pistol by a prohibited person (2003), assault in the third degree (2007), and aggravated robbery (2007). Spencer was also convicted in Ramsey County for possession of a pistol by a prohibited person (2000).In the current federal case, Spencer faces a potential maximum penalty of ten years in prison. United States District Court Chief Judge Michael J. Davis will determine his sentence at a future hearing, yet to be scheduled.
This case resulted from an investigation by the Minneapolis Police Department and the Violent Impact Team for the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. It was prosecuted by Assistant U.S. Attorney Richard Newberry.
The case was charged federally through Project Exile Minneapolis. That law enforcement initiative was launched on July 22, 2010, as part of a city-wide effort to reduce gun violence. Through Project Exile, the Minneapolis Police Department and the ATF work together to apprehend serial criminals for violations of gun laws. Then, the Hennepin County Attorney’s Office teams up with the U.S. Attorney’s Office to determine where those offenders will most effectively be prosecuted – state or federal court. Those determinations are based on the offenders’ criminal histories and current charges, among other factors. To date, the U.S. Attorney’s Office has brought charges against more than a dozen serious habitual criminals through Project Exile Minneapolis.Faribault Man Pleads Guilty to Bank FraudRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 39-year-old Faribault man pleaded guilty to writing 127 fraudulent checks to himself. Ronald Leo Schaeffer pleaded guilty to one count of bank fraud in connection to the crime. Schaeffer was charged on December 6, 2012, and entered his plea before United States District Court Judge David S. Doty.
In his plea agreement, Schaeffer admitted that from August of 2008 through April of 2012, he stole approximately $432,504.10 from his employer, Environmental Tillage Systems, Inc. (“ETS”). ETS, an agricultural manufacturing company in Faribault, hired Schaeffer as its sole in-house accountant. Among other duties, he was responsible for using the QuickBooks accounting software to record information regarding payments owed by ETS to vendors and employees.
Schaeffer admittedly wrote approximately 127 fraudulent checks against the ETS checking account, in amounts ranging from approximately $400 to $12,000, for deposit into his personal account. To conceal his actions, he also made false entries in ETS’s QuickBooks accounting records in an effort to make it appear as if the checks were issued to legitimate ETS vendors.For a period of time, Schaeffer had the authority to use a signature stamp to validate company checks. Beginning in November of 2010, he was directed to obtain the actual signatures of ETS’s CEO or CFO on all checks before disbursing them. At that point, he began forging the signature of the CEO or CFO on any check he wrote to himself. He used the money he stole to build a lake home in Elysian, Minnesota, and make payments on his auto and home-equity loans.
For his crime, Schaeffer faces a potential maximum penalty of 30 years in federal prison, as well as possible fines and orders of forfeiture. Judge Doty will determine his sentence at a future hearing, yet to be scheduled.
This case is the result of an investigation by the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorney Benjamin F. Langner.Belview Woman Sentenced for Embezzling from Minnwest BankRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 48-year-old woman from the southwestern Minnesota community of Belview was sentenced for stealing hundreds of thousands of dollars from the customers of Minnwest Bank, in Marshall, Minnesota, where she worked. United States District Court Judge John R. Tunheim sentenced Barbara Kaye Rechtzigel to 24 months in federal prison on one count of embezzlement by a bank officer. The judge also ordered her to pay $1,013,018.27 in restitution to the bank. Rechtzigel was charged on July 23, 2012, and pleaded guilty on August 6, 2012.
In her plea agreement, Rechtzigel admitted that from 1998 through June of 2012, she embezzled the money for her personal use, primarily to pay off shopping debts. When she was terminated from employment on June 4, 2012, Rechtzigel was the senior operations manager at the bank’s Marshall location.
To carry out her embezzlement scheme, Rechtzigel created false paperwork to make bank customers believe their CDs were being renewed and earning interest, when, in fact, she was stealing and spending the money. The bank ultimately repaid the customers victimized by the scheme. In total, the bank paid out more than $1 million.This case was the result of an investigation by the Federal Bureau of Investigation and the Marshall Police Department, with assistance from the Federal Deposit Insurance Corporation—Office of Inspector General. It was prosecuted by Assistant U.S. Attorney William J. Otteson.
St. Paul Man Sentenced for Filing False Insurance Claim for Purportedly Stolen ArtRead the Press Release
MINNEAPOLIS—Earlier today in federal court in St. Paul, a 39-year-old St. Paul man was sentenced for filing a false insurance claim for $250,000. United States District Court Judge Susan Richard Nelson sentenced Jason William Sheedy to three years of probation on one count of wire fraud in connection to this incident. In addition, Sheedy must pay $352,539.58 in restitution and serve 500 hours of community service. He was charged on August 6, 2012, and pleaded guilty on August 17, 2012.
In his plea agreement, Sheedy admitted that between September 2007 and December 2011, he devised a scheme to defraud the AXA Art Insurance Corporation (“AXA”). AXA is an insurance company that insures artwork and items of historical value.
In September of 2007, Sheedy insured several items, including artwork, with AXA. Then, on September 27, 2007, he filed an insurance claim for $274,905 with the company, reporting that some of the insured pieces, including several works of art, had been stolen from a moving van. On January 28, 2008, pursuant to that claim, AXA mailed Sheedy a check for $254,832. On May 24, 2011, however, Sheedy listed six of the reportedly stolen paintings on Artbrokerage.com, an Internet website for a Nevada auction house. A December 2011 search of Sheedy’s residence yielded all but one of the art pieces reportedly stolen.Sheedy further admitted filing a false claim with the Farmer’s Insurance Company in September 2007. That claim was purportedly for stolen household items, valued at $93,302, that were, in fact, not stolen. The insurance company paid the claim on February 12, 2008.
This case was the result of an investigation by the Federal Bureau of Investigation. It was prosecuted by Assistant U.S. Attorneys Lola Velazquez-Aguilu and Benjamin F. Langner.Minneapolis Man Pleads Guilty to Bank RobberyRead the Press Release
MINNEAPOLIS—Late last week in federal court, a 51-year-old Minneapolis man pleaded guilty to robbing the TCF Bank on West Lake Street in Minneapolis. He also admitted robbing three other banks. On January 11, 2013, Phillip Leo Nietz specifically pleaded guilty to one count of bank robbery. Nietz, who was indicted on October 10, 2012, entered his plea before United States District Court Judge Patrick J. Schiltz.
In his plea agreement, Nietz admitted that on August 22, 2012, he walked into the West Lake Street branch of TCF Bank and gave a teller a note demanding money. He took approximately $3,794, placed it in a black bag, and left the premises on foot. Nietz also admitted robbing three other banks in the same manner: a U.S. Bank in Roseville on August 14, 2012 ($1,047); a Wells Fargo in St. Paul on August 28, 2012 ($7,389); and a U.S. Bank in St. Paul on September 13, 2012 ($1,045).
For his crime, Nietz faces a potential maximum penalty of 20 years in prison. Judge Schiltz will determine his sentence at a future hearing, yet to be scheduled. This case is the result of an investigation by the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorney Thomas Calhoun-Lopez.Felon from Aurora, Minnesota, Sentenced for Possessing A 20-gauge ShotgunRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 34-year-old felon from the northeastern Minnesota community of Aurora was sentenced for possessing a 20-gauge shotgun. United States District Court Judge Patrick J. Schiltz sentenced John Joseph Douglas to 240 months in federal prison on one count of being an armed career criminal in possession of a firearm. Douglas was indicted on this charge on October 4, 2011, and convicted on February 10, 2012, following trial.
The evidence presented at trial proved that on May 30, 2011, Douglas possessed the gun and, while surrounded by a group of people, fired it into the air several times. Upon their arrival on the scene, officers found the people seated around a campfire in a vacant lot. Searching the grounds, the officers discovered a box of ammunition and several freshly fired shotgun shell casings. They found the sawed-off shotgun itself nearby.
Because Douglas was previously convicted of a felony, he was prohibited under federal law from possessing firearms at any time. His prior convictions include third-degree burglary (1999), first-degree burglary (1999), second-degree assault (1999 and 2007), and aggravated robbery (twice in 1999), all of which occurred in St. Louis County. Since each of those offenses constituted crimes of violence, Douglas’s sentence in the current federal case was subject to the federal armed career criminal statute, which mandates a minimum sentence of 15 years in federal prison. Since the federal criminal justice system does not have parole, Douglas will serve virtually his entire sentence behind bars.
This case was the result of an investigation by the St. Louis County Sheriff’s Office, the Hoyt Lakes Police Department, the Gilbert Police Department, and the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. It was prosecuted by Assistant U.S. Attorneys Andrew Dunne and Jeffrey M. Bryan.Career Criminal Sentenced for Possessing A Nine-millimeter PistolRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 45-year-old career criminal was sentenced for possessing a nine-millimeter pistol. United States District Court Judge Joan N. Ericksen sentenced Michael Dennis Stanke, of Lino Lakes, to 180 months in prison on one count of being a felon in possession of a firearm. Stanke was indicted on June 11, 2012, and pleaded guilty on August 9, 2012.
In his plea agreement, Stanke admitted that on March 8, 2012, while visiting his mother at her residence, he took a nine-millimeter Norinco pistol from the house. He then stole a neighbor’s vehicle from a nearby driveway. A few hours later, Minnetonka police stopped the car Stanke was driving and arrested him. The officers found the loaded firearm lying on the front passenger seat, loaded with seven rounds in the magazine.
Because he is a felon, Stanke was prohibited under federal law from possessing a firearm at any time. His prior Ramsey County convictions include third-degree burglary (1989), theft (1989), fleeing a peace officer in a motor vehicle (1991), theft of a motor vehicle (1993), first-degree assault (2000), and first-degree aggravated robbery (2000). In addition, Stanke was convicted in Hennepin County for theft in 1996 and Dakota County for theft of a motor vehicle in 1997.Since at least three of those offenses constituted crimes of violence, Stanke’s sentence in the current federal case was subject to the federal Armed Career Criminal Act. That act mandates a minimum of 15 years in federal prison. Because the federal criminal justice system does not have parole, Stanke will spend virtually his entire sentence behind bars.
This case was the result of an investigation by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives and the Minnetonka Police Department. It was prosecuted by Assistant U.S. Attorney Allen A. Slaughter.Federal Inmate Pleads Guilty to Assaulting Another InmateRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 46-year-old woman pleaded guilty to assaulting another inmate at the Federal Correctional Institute in Waseca, Minnesota. Felecia Thomas pleaded guilty to one count of assault with a dangerous weapon. She did not enter into a plea agreement with the United States, but, rather, offered a “straight plea” to the single count in the indictment, which was filed on May 15, 2012.
The indictment alleges that on June 10, 2011, Thomas, who was then serving time at the correctional facility in Waseca following a 2004 conviction for arson and use of explosives in commission of a felony, assaulted an inmate with a rope. The rope allegedly had been removed from a laundry bag.
For her crime, Thomas faces a potential maximum penalty of ten years in prison. U.S. District Court Chief Judge Michael J. Davis will determine her sentence at a future hearing, yet to be scheduled. This case is the result of an investigation by the Federal Bureau of Investigation and the U.S. Bureau of Prisons. It is being prosecuted by Assistant U.S. Attorneys John E. Kokkinen and Lola Velazquez-Aguilu.Ponemah Man Indicted for Involuntary ManslaughterRead the Press Release
MINNEAPOLIS—Earlier today in federal court, an indictment was unsealed, charging a 46-year-old man from the Red Lake Indian Reservation community of Ponemah with one count of involuntary manslaughter in connection with the August 19, 2012, death of Kaishauna Thunder. On January 8, 2013, Gordon Dean Johnson was charged with the crime. The indictment was unsealed following Johnson’s initial appearance in court today.
The indictment alleges that during the early morning of August 19, 2012, Johnson killed Thunder without malice. It alleges that at approximately 3:00 a.m., Johnson was operating a motor vehicle in a reckless manner while under the influence of alcohol. He struck Thunder, who was walking alongside State Highway 1.
If convicted, Johnson faces a potential maximum penalty of eight years in prison. All sentences will be determined by a federal district court judge. This case is the result of an investigation by the Federal Bureau of Investigation and the Red Lake Tribal Police Department. It is being prosecuted by Assistant United States Attorney Clifford B. Wardlaw.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.
An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.
Apple Valley Woman Charged with Defrauding Home Health Care Company, MedicaRead the Press Release
MINNEAPOLIS—Yesterday in federal court, an Apple Valley woman was charged with defrauding both her employer and Medica. On January 9, 2012, Lori Jo Mueller, age 48, was charged via an Information with one count of wire fraud and one count of health care fraud.
Allegedly, from June of 2006 through June of 2012, Mueller embezzled approximately $840,000 from Edelweiss Home Health Care and used the funds for her personal use. Mueller began working for Edelweiss, located in Osseo, in 2002, and was promoted to the position of vice president of operations. In that capacity, Mueller was responsible for the review and payment of corporate invoices, bookkeeping, and other financial matters. Mueller allegedly used her access to the corporate checking account to issue payments from corporate accounts to herself. Also, Mueller allegedly concealed her actions from the company owners and made misrepresentations concerning the company’s financial state.
In addition, from March of 2010 through June of 2012, Mueller allegedly defrauded Medica, a health care benefit program. She purportedly submitted claims to various insurers, seeking reimbursement for services provided by Edelweiss nursing staff. In some instances, Mueller double-billed by submitting claims for the same services to multiple insurance providers. For example, Mueller allegedly billed both Minnesota Medicaid and Medica for services provided to one client. The double-billing resulted in a double-payment to Edelweiss with Medicaid being the proper payer and Medica being the overpayer. As a result of this criminal behavior, Mueller obtained for Edelweiss more than $631,000 in fraudulent proceeds. Medica is a non-profit corporation that provides health insurance products to families and individuals.
If convicted in this case, Mueller faces a potential maximum penalty of 30 years in federal prison on the wire fraud count and ten years on the health care fraud count. All sentences will be determined by a federal district court judge.
This case is the result of an investigation by the Federal Bureau of Investigation and the United States Department of Health and Human Services-Office of Inspector General (“DHHS-OIG”). It is being prosecuted by Assistant U.S. Attorney David M. Genrich.
The U.S. Attorney’s Office participates in a task force with the Medicaid Fraud Control Unit at the Minnesota Attorney General’s Office that focuses on home health care fraud trends. The task force includes the DHHS-OIG, the FBI, the Internal Revenue Service, and other federal, state, and local law enforcement partners.
As a result of federal convictions for health care fraud, defendants are excluded from participating in federal health benefit programs, including Medicare and Medicaid. Exclusion determinations are made by the U.S. Department of Health and Human Services. Nationwide, more than 3,000 individuals were excluded from program participation in Fiscal Year 2010 based upon criminal convictions or patient abuse or neglect, license revocations, or other factors.
For more information, visit http://www.stopmedicarefraud.gov/
A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.Prosecutions Continue in Illegal Entry Cases Involving Those with Prior Criminal RecordsRead the Press Release
MINNEAPOLIS – In the District of Minnesota, separate charges have been filed against two Mexican nationals who allegedly entered the United States illegally after being deported as criminals. Earlier today in federal court in St. Paul, indictments were filed against two individuals for illegal entry after deportation.
Mario Mireles-Flores, age 23, was charged in the first case. His indictment alleges that on December 5, 2012, authorities found him in the U.S. illegally after he had been previously deported. His deportation followed a 2010 McLeod County conviction for escape from custody. Authorities recently identified him as an illegal alien with a criminal record while he was serving a sentence in the Sibley County Jail for providing false information to police. That identification was made through the U.S. Immigration and Customs Enforcement’s (“ICE”) Criminal Alien Program (“CAP”). The goal of that program is to locate criminal aliens incarcerated in federal and state prisons, as well as in local jails, and prevent them from being released into society by having them federally prosecuted for illegally re-entering the U.S.
If convicted of the federal charge now levied against him, Mireles-Flores faces a potential maximum penalty of 20 years in federal prison, followed by deportation. All sentences will be determined by a federal district court judge. This case is the result of an investigation by ICE’s Enforcement and Removal Operations (“ICE ERO”). It is being prosecuted by Assistant U.S. Attorney Lola Velazquez-Aguilu.
In the second case, Sergio Vasquez, age 36, was charged with illegally entering the U.S. following deportation. His indictment alleges that on December 4, 2012, authorities found him in the U.S. after he had been deported in 2008, following a 2003 Pennsylvania conviction for delivery of a controlled substance. On December 3, 2012, Vasquez was arrested by Minneapolis Police for DWI in connection to a personal-injury crash in south Minneapolis. He was identified as an illegal alien with a criminal record via the CAP.
If convicted of the federal charge now filed against him, Vasquez faces a potential maximum penalty of 20 years in federal prison, followed by deportation. All sentences will be determined by a federal district court judge. This case is the result of an investigation by the Minneapolis Police Department and ICE ERO. It is being prosecuted by Assistant U.S. Attorney Clifford B. Wardlaw.
In some instances, federal prosecution will occur only after the individual is prosecuted for the recent underlying offense. Both men will remain in custody until their current federal cases are resolved. To learn more about the CAP, visit www.ice.gov/criminal-alien-program/An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.
Minneapolis Felon Indicted for Possessing .40-caliber PistolRead the Press Release
MINNEAPOLIS—Earlier today in federal court in St. Paul, a 36-year-old Minneapolis felon was indicted for possessing a .40-caliber, semi-automatic pistol. Demario Kentrell Booker was charged with one count of being a felon in possession of a firearm.
The indictment alleges that on November 20, 2012, Booker possessed the gun. Because he is a felon, he is prohibited under federal law from possessing a firearm at any time. Booker’s prior Hennepin County convictions include assault in the third degree (2004), assault in the fourth degree (2008), and prohibited person in possession of a firearm (2009).
According to a law enforcement affidavit filed in the current federal case, at approximately 2:00 a.m. on November 20, police noticed a vehicle cross the center line and fail to signal for a turn. In response, the officers activated their lights. The driver of the vehicle, later found to be Booker, sped away. Police pursued him, eventually bringing him to a stop in Robbinsdale. He was arrested after a brief scuffle. The pistol was found in the vehicle.
If convicted, Booker faces a potential maximum penalty of ten years in federal prison. All sentences will be determined by a federal district court judge. This case is the result of an investigation by the Minneapolis Police Department and the United States Bureau of Alcohol, Tobacco, Firearms and Explosives. It is being prosecuted by Assistant U.S. Attorney Richard A. Newberry.An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.
Home Health Care Agency Operator Charged with Health Care FraudRead the Press Release
MINNEAPOLIS—Yesterday in federal court, the operator of Lucky Home Health Care, Inc., a home health care agency in Minneapolis, was charged with defrauding Medicaid. On January 8, 2013, Abshir Mohammed Ahmed, age 40, of Minneapolis, was charged via an Information with one count of health care fraud.
Allegedly, from January of 2008 through June of 2011, Ahmed defrauded Medicaid, a federal health care benefit program, out of more than $400,000 by submitting fraudulent billings. Ahmed submitted claims that falsely represented that home health care services were purportedly provided by identified Personal Care Assistants (“PCA”) that were not in fact provided by those PCAs.
For example, a claim for reimbursement, submitted on July 16, 2009, billed Medicaid $1,330.56 for PCA services allegedly, but not actually, provided by the identified PCA.
The Medicaid program provides medical care and services to low-income people who meet certain income and eligibility requirements. Home health care, provided by PCAs, is one of the services reimbursed by Medicaid.If convicted, Ahmed faces a potential maximum penalty of ten years in federal prison. All sentences will be determined by a federal district court judge.
This case is the result of an investigation by the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorney David M. Genrich.
The U.S. Attorney’s Office participates in a task force with the Medicaid Fraud Control Unit at the Minnesota Attorney General’s Office that focuses on home health care fraud trends. The task force includes the U.S. Department of Health and Human Services-Office of Inspector General, the FBI, the Internal Revenue Service, and other federal, state, and local law enforcement partners.
As a result of federal convictions for health care fraud, defendants are excluded from participating in federal health benefit programs, including Medicare and Medicaid. Exclusion determinations are made by the U.S. Department of Health and Human Services. Nationwide, more than 3,000 individuals were excluded from program participation in Fiscal Year 2010 based upon criminal convictions or patient abuse or neglect, license revocations, or other factors.
For more information, visit http://www.stopmedicarefraud.gov/
A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.Garfield Man Found Guilty of Constructing A Road Through A Protected Wetland BasinRead the Press Release
MINNEAPOLIS – Last week in federal court, a 48-year-old man from the central
Minnesota community of Garfield was found guilty of constructing a road through a federallyprotected
wetland basin located on his property. Based on evidence presented during a two-day
bench trial last August, United States Magistrate Judge Leo I. Brisbois issued a written order on
January 4, 2013, convicting James Bosek of one misdemeanor count of filling a wetland that was
subject to a federal easement under the National Wildlife Refuge System Act.
Judge Brisbois found that Bosek engaged in prohibited activity when he built a road across
the eastern edge of his property, located in rural Douglas County. The property is subject to a
perpetual easement that the U.S. Department of Interior purchased in 1963. Bosek purchased the
property subject to the easement in 2001.
Judge Brisbois found that Bosek knew of the easement before building the road, and that
Bosek did not obtain permission or authorization from the U.S. Fish and Wildlife Service
(“USFWS”) before building the road. The USFWS discovered the road while making an
unrelated visit to Bosek’s property in April of 2008. Judge Brisbois credited the trial testimony
of a USFWS biologist, who surveyed the property and concluded that Bosek’s filling of the
wetland damaged the wetland as a protected native habitat for waterfowl. Bosek was charged on
August 19, 2011, after refusing the USFWS’s demand that he remove the road and restore the
wetland.
Under the statute of conviction, Bosek faces a potential maximum penalty of 180 days in
prison, a $5,000 fine, and costs of restoring the wetland. Judge Brisbois will determine his
sentence at a future hearing, scheduled for March 27, 2013, at the federal courthouse in Fergus
Falls. This case is the result of an investigation by the USFWS. It is being prosecuted by Assistant U.S. Attorneys Lola Velazquez-Aguilu, Thomas Calhoun-Lopez, and William J.
Otteson.Three Individuals Sentenced in Connection to Trevor Cook Ponzi SchemeRead the Press Release
MINNEAPOLIS— Earlier today in federal court, United States District Court Chief Judge Michael J. Davis sentenced three individuals in connection to the multi-million-dollar Ponzi scheme orchestrated by Trevor Cook.
Jason Bo-Alan Beckman, age 43, of Plymouth, was sentenced to 360 months in federal prison, on 17 counts of wire and mail fraud, two counts of conspiracy to commit mail and wire fraud, four counts of money laundering, two counts of filing a false tax return, and one count of tax evasion. Because the federal criminal justice system does not have parole, Beckman will spend virtually his entire sentence behind bars. He and the other co-defendants sentenced today were also solely and jointly ordered to pay $155,359,411.77 in restitution to the victims of their fraud scheme.
Gerald Joseph Durand, age 61, of Faribault, was sentenced to 240 months on 12 counts of wire and mail fraud, one count of conspiracy to commit mail and wire fraud, and two counts of money laundering, two counts of concealing a material fact from the United States, and three counts of filing a false tax return.
Christopher Pettengill, age 56, also of Plymouth, was sentenced to 90 months in federal prison on one count of securities fraud, one count of conspiracy to commit wire fraud, and one count of money laundering.
The sentencing of Patrick Kiley, age 74, was rescheduled for January 18, 2013, after he requested and received a continuance following the appointment of a new lawyer. Kiley will be sentenced on 12 counts of wire and mail fraud, one count of conspiracy to commit mail and wire fraud, and two counts of money laundering.
Beckman, Durand and Kiley were charged in a second superseding indictment on February 22, 2012, and were convicted on June 12, 2012, after a near-two-month trial. Pettengill was charged on June 13, 2011, and pleaded guilty on June 21, 2011.
In sentencing Beckman, Judge Davis called him a central figure in the fraud scheme, adding that the harm he caused was worse than using a gun because he “used the English language to violate so many.” Beckman and his co-conspirators defrauded more than 725 people during the course of their fraud scheme.
Following the sentencings, U.S. Attorney B. Todd Jones said, “We are very pleased with today’s sentences. These are the types of cases this office will vigorously pursue—cases where defendants prey on vulnerable populations, such as the elderly, or use special relationships, like those established through faith communities, to commit financial fraud that devastates thousands of people, crushing their dreams of retirement or college for their children.”
Kelly R. Jackson, Special Agent in Charge of the Internal Revenue Service-Criminal Investigations’ St. Paul Field Office, added, “IRS-Criminal Investigation is committed to unraveling complex financial transactions and money laundering schemes and will continue to vigorously pursue those individuals who victimize their investors and violate the public trust. Today’s sentencings demonstrate the government’s determination to restore and ensure that trust.”
The evidence presented at trial proved that between 2005 and November of 2009, the defendants, along with Cook, defrauded investors by soliciting them to invest money in a foreign currency trading program that they alleged would earn a double-digit rate of return, typically between 10.5 and 12 percent annually, with little or no risk. They also claimed investor assets would be held in a segregated account and could be withdrawn at any time. Those representations were false.
The defendants and Cook made the investment offers through entities known as Universal Brokerage Services or bearing the acronym “UBS.” (The UBS entities had no legitimate affiliation to the global provider of financial services UBS, AG.) Cook operated the currency program through various foreign currency trading firms, including but not limited to one in Chicago and another in Switzerland.
To induce investors, the defendants and Cook, directly or through others, made false representations regarding the performance, safety, and liquidity of the currency program. They also omitted material information concerning their own backgrounds and qualifications as well as the backgrounds and qualifications of those working for them.
Once investments were made, some investors received UBS account statements that indicated that the currency program was performing as promised, while others received checks for “returns on their investments.” Both the statements and checks, however, were actually produced by the co-conspirators, the purpose being to lull investors or encourage them to make additional investments. At the same time, most investors received nothing from the true custodians of their funds.
Although some investment funds were invested in foreign currency trading, most of that trading was high risk in nature, often resulting in significant losses, none of which was disclosed to investors. Moreover, the co-conspirators concealed that the currency trading firm in Switzerland was in dire financial condition and, instead, continued to solicit investor assets to be sent to that trading firm. Co-conspirators also concealed from investors their own concerns about Cook’s operation of the currency program and alleged illegalities relative to the currency program.
In 2007, when UBS, AG, filed a trademark infringement lawsuit against Cook, Durand, Kiley, and others, the defendants began operating their scheme under other names, including but not limited to those identified by the terms “Oxford” and “Universal Brokerage FX.” They then continued to solicit investors for the currency program, utilizing telemarketing, media spots, and seminars in which they repeated the false representations noted above. Kiley, a Christian radio host, solicited investors for the scam through his radio talk show, which was carried on more than 200 stations across the country. On those programs, he regularly warned listeners to avoid financial ruin by giving their life savings to his company for investment.
Between 2005 and July 2009, the defendants, the defendants, Cook, and others secured approximately $194 million in investments for the currency program. Of that amount, only about $109 million was actually sent to currency trading firms. About $52 million was paid to investors in the form of lulling payments, and approximately $30 million was diverted to fund the business and personal expenses of the defendants, Cook, and others.
While Beckman was soliciting investors for the currency program, he also was attempting to purchase a minority ownership interest in the Minnesota Wild hockey team. He made misrepresentations to the National Hockey League that investments in certain trading accounts were his alone. He also claimed an extraordinary amount of assets under management and lied about the management of his grandfather’s estate and other acts reflecting dishonesty.
Moreover, Beckman filed false individual income tax returns for tax years 2007 and 2009 and failed to file a tax return for 2008. For that year, Beckman and his wife owed more than $1.3 million in federal income taxes. In addition, he caused two life insurance policies of an investor to be sold and stole millions of dollars in proceeds in order to prop up currency trading accounts held in his name.
For his part, Durand concealed more than $20,000 from the court-appointed receiver, who was searching for assets of the currency program fraud. Durand had another individual exchange the Swiss francs for U.S. currency, thereby concealing from law enforcement that he was in truth the source of the funds. Furthermore, Durand filed false individual income tax returns for tax years 2006 through 2008.In his plea agreement, Pettengill admitted that from February through September of 2008, he concealed material information from investors concerning the foreign currency program sold by Pettengill, Cook, and others known as the Oxford Entities Currency Program. He also conducted numerous wire transfers during the course of the conspiracy and made a personal credit card payment of $11,369.19 with funds derived from proceeds of the fraud scheme.
In August of 2010, Cook was sentenced to 300 months in federal prison for his role in the scam. On July 18, 2011, Jon Jason Greco pleaded guilty to two counts of making false statements to federal agents, specifically lying about assets he had concealed relative to this scam. He was sentenced to ten months in prison for his crimes.
This case was the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigations, with cooperation from the Securities and Exchange Commission and the Commodities Futures Trading Commission. It was prosecuted by Assistant U.S. Attorneys Tracy L. Perzel and David J. MacLaughlin.
Proceeds from the Cook fraud scheme are the subject of an ongoing investigation and recovery efforts led by R.J. Zayed, of the law firm Carlson, Caspers, Vandenburg, and Lindquist. Zayed was appointed Receiver by Judge Davis.
This law enforcement action is in part sponsored by the interagency Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort in investigating and prosecuting financial crimes. It includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, will investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.