Middle District of North Carolina
Press releases recorded for this federal judicial district.
United States Attorney Statement Relating to November 2016 ElectionsRead the Press Release
United States Attorney Ripley Rand announced today that Assistant United States Attorney (AUSA) Robert M. Hamilton will lead the efforts of the United States Attorney’s Office for the Middle District of North Carolina in connection with the Justice Department’s nationwide Election Day Program for the upcoming November 8, 2016, general elections. AUSA Hamilton has been appointed to serve as the District Election Officer (DEO) for the Middle District of North Carolina, and in that capacity is responsible for overseeing the District’s handling of complaints of election fraud and voting rights abuses in consultation with Justice Department Headquarters in Washington.
United States Attorney Rand said, "Every citizen must be able to vote without interference or discrimination and to have that vote counted fairly and accurately. The Department of Justice will act promptly and aggressively to ensure that the integrity of the election process is protected."
The Department of Justice has an important role in deterring election fraud and discrimination at the polls, and combating these violations whenever and wherever they occur. The Department’s long-standing Election Day Program furthers these goals, and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open on election day.
Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input. It also contains special protections for the rights of voters and provides that they can vote free from acts that intimidate or harass them. For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting may violate federal voting rights law. Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice.
The franchise is the cornerstone of American democracy. We all must ensure that those who are entitled to the franchise exercise it if they choose, and that those who seek to corrupt it are brought to justice. United States Attorney Rand stated that AUSA/DEO Hamilton will be on duty in this District while the polls are open on November 8, 2016, to respond to complaints of election fraud or voting rights abuses and to ensure that such complaints are directed to the appropriate authorities. He can be reached by the public at the following telephone number: 336-333-5351.
In addition, the FBI will have Special Agents available in each field office and resident agency throughout the country to receive allegations of election fraud and other election abuses on Election Day. The local FBI field office can be reached by the public at 336-855-7770.
Complaints about possible violations of the federal voting rights laws can be made directly to the Civil Rights Division’s Voting Section in Washington, DC by phone at 1-800-253-3931 or (202) 307-2767, by fax at (202) 307-3961, by email to [email protected] or by complaint form at http://www.justice.gov/crt/complaint/votintake/index.php.
United States Attorney Rand said, "Ensuring that our elections are both free and fair depends in large part on the cooperation of the American electorate. It is imperative that those who have specific information about discrimination or election fraud make that information available immediately to our Office, the FBI, or the Civil Rights Division."
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Former IRS Revenue Officer and Owner of Tax Consulting Business Pleads Guilty to Tax EvasionRead the Press Release
WASHINGTON — A former Internal Revenue Service (IRS) revenue officer pleaded guilty today in the U.S. District Court in the Middle District of North Carolina to one count of tax evasion and one count of corruptly endeavoring to impede the due administration of the internal revenue laws, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, and U.S. Attorney Ripley Rand of the Middle District of North Carolina.
According to documents filed with the court, Henti Lucian Baird, 60, and a resident of Greensboro, North Carolina, filed tax returns each year but has not paid his self-assessed taxes since at least 1998. Baird was an IRS revenue officer for 12 years before he established HL Baird’s Tax Consultants, which he operated from 1989 to 2014. Baird advertised himself to clients as specializing in “IRS problems, delinquent returns, offer-in-compromise, tax problems, delinquent employee taxes and release of liens and levies.” Baird, in turn, used his knowledge and experience to evade payment of his own taxes, creating over 10 nominee bank accounts in the names of his children to hide hundreds of thousands of dollars, submitting false Form 433-A to the investigating revenue officer that did not reveal all of his nominee bank accounts, filing, in bad faith, a Chapter 13 bankruptcy petition, a cash offer in compromise, a request for discharge and an application for subordination of his federal tax lien and transferring funds out of nominee accounts to avoid impending IRS levies. During this time, Baird continued to pay the mortgage on his 4,300 square-foot home, annual fees for his timeshare in Florida and car payments on his BMW. Baird admitted to the revenue officer and the mortgage holder that he did not keep money in bank accounts because he feared a levy or garnishment.
Baird also used his stepson’s identity, without his knowledge, to apply for a Preparer Tax Identification Number, which Baird then used to file over 900 income tax returns for clients, as well as his own income tax returns. Additionally, Baird submitted, under penalties of perjury, at least 120 Forms 2848, Power of Attorney and Declaration of Representative, on behalf of clients that falsely stated he was an enrolled agent, even though the IRS revoked his authorization to represent taxpayers.
The penalties and interest on Baird’s taxes will continue to accrue until he pays the IRS in full. As of Sept. 20, Baird’s evasion of payment totals $477,028.80 in tax, penalties and interest for tax years 1998 through 2013.
U.S. District Judge Thomas D. Schroeder for the Middle District of North Carolina set sentencing for Jan. 17, 2017. Baird faces a statutory maximum sentence of five years in prison for his conviction on the tax evasion count, and a statutory maximum sentence of three years in prison on the obstruction count, as well as a period of supervised release and monetary penalties. As a condition of the plea agreement, Baird agreed to pay full restitution to the IRS.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of IRS-Criminal Investigation, who conducted the investigation and Assistant U.S. Attorney Clifton T. Barrett of the Middle District of North Carolina and Trial Attorney Kathryn A. Kimball of the Justice Department’s Tax Division, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
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State Senator Indicted for Misuse of Campaign FundsRead the Press Release
GREENSBORO, N.C. -- A grand jury returned a federal indictment today, charging North Carolina State Senator Fletcher Lee Hartsell, Jr. with multiple counts related to fraudulent campaign fundraising and reporting and associated money laundering, announced the United States Attorney’s Office, John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Thomas J. Holloman, Special Agent in Charge of the Internal Revenue Service - Criminal Investigation Division (IRS-CI), Charlotte Division.
Hartsell, 69, of Concord, N.C., is charged with five counts of mail fraud, three counts of wire fraud, and six counts of money laundering. According to allegations in the Indictment, from 2007 through 2015, Hartsell engaged in a scheme to defraud and to obtain money through materially false pretenses by soliciting funds for the Hartsell State Senator Committee through mailings and interstate wires, using those funds for personal goods and services not authorized under relevant state campaign finance laws, and then concealing such conduct through false campaign filings mailed via the United States Postal Service to the North Carolina Board of Elections. The Indictment further alleges that Hartsell laundered Hartsell State Senator Committee funds through his law firm, Hartsell & Williams, P.A., as well as a corporation he owned with his wife, Equity Properties of Concord, LLC, to disguise the fact that campaign funds were being used for personal enrichment rather than for lawful purposes. The Indictment further alleges that, as a result of this scheme to defraud, Hartsell spent approximately $210,000 of monies properly belonging to the Hartsell State Senator Committee on personal goods and services for his own enrichment.
"Our campaign finance laws must be enforced in order to protect the integrity of the American democratic process. If you abuse the power granted to you as an elected official, the FBI will work tirelessly to ensure you are held accountable for your actions," said John Strong, FBI’s Special Agent in Charge. "Confidence in the integrity of our elected officials is essential and is at the heart of our democracy. To be elected to serve in public office is an unmistakable privilege, not an opportunity to fraudulently enrich oneself using a position of trust. IRS
Criminal Investigation Special Agents play a crucial role in unraveling complex schemes in service to the American taxpayer," said Thomas J. Holloman, III, IRS-CI’s Special Agent in Charge.
Hartsell will have his initial appearance on September 29, 2016 in U.S. District Court in Greensboro. Each charge carries a maximum sentence of twenty years and a $500,000 fine, or twice the value of the property involved in the transaction, whichever is greater.
An indictment is merely an allegation, and Hartsell is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The investigation is being handled by the FBI and IRS-CI with assistance from the North Carolina State Bureau of Investigation, and is being prosecuted by Assistant U.S. Attorney JoAnna G. McFadden.
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North Carolina Man Pleads Guilty to Failing to Pay Employment TaxesRead the Press Release
WASHINGTON – A North Carolina businessman pleaded guilty today to one count of failing to pay over employment taxes, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division.
According to documents filed with the court, Paul Harvey Boone, 54, operated Boone Audio Inc. in Burlington, North Carolina, since 2004. For much of 2008 through 2011, Boone used Boone Audio to pay thousands of dollars in personal expenditures even though he did not pay over the employment taxes withheld from his employees’ paychecks. Boone also failed to file personal income tax returns and pay income tax for tax years 2008 through 2011.
The sentencing hearing is set for Jan. 19, 2017. Pursuant to the plea agreement, Boone faces a potential statutory maximum sentence of five years in prison, as well as a period of supervised release and monetary penalties.
Principal Deputy Assistant Attorney General Ciraolo commended special agents of Internal Revenue Service’s Criminal Investigation, who investigated the case and Trial Attorneys Lauren Castaldi and Nathan Brooks of the Tax Division, who are prosecuting this case. Principal Deputy Assistant Attorney General Ciraolo also thanked the U.S. Attorney’s Office for the Middle District of North Carolina for their assistance.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
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North Carolina Tax Return Preparer Sentenced to PrisonRead the Press Release
WASHINGTON – A Durham, North Carolina, tax return preparer was sentenced today to 12 months and one day in prison for aiding in the preparation of false tax returns, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand for the Middle District of North Carolina.
According to documents filed with the court, Reyna Nembiu Montes, operated “Su Manu Amiga,” a tax return preparation business in Durham. Montes admitted that she prepared multiple false individual income tax returns for clients, claiming false dependents in order to generate fraudulent refunds. She further admitted that she failed to disclose the existence of her tax return preparation business on her personal income tax returns.
Montes pleaded guilty on June 26. In addition to serving her prison sentence, Montes was ordered to serve one year of supervised release and to pay restitution in the amount of $115,287 to the Internal Revenue Service (IRS).
Principal Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of IRS-Criminal Investigation, who conducted the investigation and Assistant U.S. Attorney Anand Ramaswamy and Trial Attorney Nathan Brooks of the Tax Division, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
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Raleigh Attorney Sentenced for Federal Fraud ChargesRead the Press Release
GREENSBORO, N.C. – Raleigh attorney Joseph Lee Levinson was sentenced on August 9, 2016, for conspiracy to make false statements to federally insured financial institutions, announced Ripley Rand, United States Attorney for the Middle District of North Carolina.
Levinson was sentenced to 15 months imprisonment; 2 years supervised release, $100.00 special assessment, and $230,079 in restitution by Senior United States District Judge James A. Beaty, Jr. Levinson had pleaded guilty on January 12, 2016.
From 2005 until 2010, Jotham Walker Pruitt and other individuals operated a marijuana "grow" operation in Orange County, North Carolina. The operation involved the production of marijuana inside houses in the vicinity of the Town of Hillsborough, Orange County, North Carolina. Levinson was a licensed attorney practicing in Raleigh and is a college friend of Jotham Pruitt. Levinson conspired with Jotham Pruitt to obtain mortgage funding for properties to be used as "grow houses," knowing full well that banks would not loan money to Jotham Pruitt if they knew that the houses were to be used for illegal purposes. Levinson and Jotham Pruitt prepared loan applications to Long Beach Mortgage Corporation and SunTrust Bank falsely representing that the properties would be used for legal purposes, such as a residence or as rental property, when in fact both knew that the houses would be used to grow marijuana. Levinson acted as closing attorney for purchase of the first two grow houses used in the operation.
Levinson also conspired with Jotham Pruitt to present false leases to Countrywide Bank, N.A., to support Pruitt’s application for mortgage funding to purchase a third grow house. Levinson provided Jotham Pruitt with a sample lease to use as a template in creating false leases to present to Countrywide Bank, N.A., showing that previous properties purchased by Jotham Pruitt were rental properties occupied by tenants. In fact, these properties were being used to grow marijuana.
The grow operation ceased in December 2010. Upon completion of the business, Jotham Pruitt ceased making payments on the mortgages on the grow houses, including those he had purchased with the aid of Levinson. The houses were foreclosed on by the lending banks at a total loss of over $230,000.
Jotham Pruitt, Aubrey Pruitt, and Dustin Fisher have pleaded guilty in the United States District Court for the Middle District of North Carolina to related charges.
The case was investigated by the Orange County Sheriff’s Office and Internal Revenue Service - Criminal Investigations in conjunction with the United States Attorney’s Office for the Middle District of North Carolina.
Case Number 1:15CR413-1
Tax Return Preparer Pleads Guilty to Preparing and Filing False Tax Returns with the IRSRead the Press Release
WASHINGTON - A Guilford County, North Carolina, resident pleaded guilty today to four counts of aiding and assisting in the preparation of false tax returns, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina.
Marvin Flythe, 53, admitted that he ran a tax preparation business in Greensboro, North Carolina, called “TAXHOVA.” Between January 2012 and January 2015, Flythe admitted preparing and filing numerous individual income tax returns for clients on which he reported false business losses and false unreimbursed employee business expenses. Flythe maintained a YouTube video channel on which he advertised TAXHOVA. Flythe admitted to filing at least 36 false returns for clients, for which $130,949 in fraudulent refunds were paid. Flythe also admitted to filing false personal returns for himself for tax years 2011, 2012 and 2013 and to failing to file his 2014 return.
Flythe is scheduled to be sentenced on Nov. 14. He faces a statutory maximum sentence of three years in prison for each count of aiding and assisting in the preparation of false tax returns, as well as a term of supervised release and monetary penalties.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of Internal Revenue Service Criminal Investigation, who investigated the case, and Trial Attorney Robert J. Boudreau of the Tax Division and Assistant U.S. Attorney Anand Ramaswamy of the Middle District of North Carolina, who are prosecuting this case.
Additional information about the Tax Division and its enforcement efforts may be found on the Division’s website.
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North Carolina Couple Pleads Guilty to Bank Fraud and Tax Fraud Related to Their Online BusinessRead the Press Release
WASHINGTON - A Greensboro, North Carolina, couple, who operated an online sales business, pleaded guilty today to bank fraud and tax fraud charges announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina.
Daniel Balson, 51, pleaded guilty to one count of filing a false tax return for 2010 and one count of making a false statement on a loan application. Renee Balson, 53, pleaded guilty to one count of making a false statement on a loan application.
According to court documents, Daniel Balson owned and operated Southern Sales Online (SSO), an online retail business that sold a variety of merchandise through eBay and Amazon, including scrapbooking and art materials, books, inspirational DVDs, pet supplies and tools. Daniel Balson admitted selling stolen merchandise through SSO. Although SSO earned over $1 million in gross receipts during tax years 2005 through 2011, the Balsons failed to report those gross receipts on their tax returns. The Balsons also failed to report the income from SSO on a bank application for a mortgage loan modification in 2011.
The sentencing hearing has been scheduled for Nov. 3. The Balsons each face a statutory maximum sentence of 30 years in prison for making a false statement on a loan application. Daniel Balson also faces a statutory maximum sentence of three years for filing a false tax return. The Balsons also face substantial monetary penalties and restitution.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of the Internal Revenue Service Criminal Investigation, who investigated the case and Assistant Chief Todd A. Ellinwood and Trial Attorney Mara A. Strier of the Tax Division, who are prosecuting the case. Principal Deputy Assistant Attorney General Ciraolo also thanked the U.S. Attorney’s Office of the Middle District of North Carolina for their assistance.
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Lee County Men SentencedRead the Press Release
Greensboro, N.C. – Two Lee County men were recently sentenced in federal court, United States Attorney for the Middle District of North Carolina Ripley Rand announced today.
Rayshawn Donaldson was sentenced on May 10, 2016 by United States District Court Judge James A. Beaty, Jr., to 180 months’ imprisonment, a 5 year term of supervised release, and a $100 special assessment fee. Donaldson had pled guilty on December 29, 2015 to the charge of possession of a firearm by a felon. (Case Number 15CR381-1).
Ramese Augustus McKoy was sentenced on June 8, 2016 by United States District Court Judge James A. Beaty, Jr., to 172 months’ imprisonment, a 3 year term of supervised release, and a $100 special assessment fee. McKoy had pled guilty on March 9, 2016 to the charge of conspiracy to possess with intent to distribute heroin. (Case Number 1:15CR411-1).
The convictions referenced above are the result of close cooperation between the members of the Lee County Project Safe Neighborhoods ("PSN") coalition. PSN is a nationwide gun and violent crime strategy designed to protect communities. The Lee County PSN coalition is comprised of the Broadway Police Department, the Sanford Police Department, the Lee County Sheriff’s Office, the Department of Public Safety Division of Adult Correction and Juvenile Justice (probation), the State Bureau of Investigation, the Lee County District Attorney’s Office, the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the United States Attorney’s Office, and many other community members and agencies.
These cases were investigated by the Sanford Police Department, the Lee County Sheriffs’ Office, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Drug Enforcement Administration. These cases were prosecuted by Assistant United States Attorney JoAnna G. McFadden.
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National Reentry WeekRead the Press Release
Greensboro, N.C. – To encourage and highlight United States Department of Justice efforts to improve federal reentry outcomes, the week of April 24 – 30, 2016, has been designated as National Reentry Week. Supporting successful reentry is an important part of the Department’s mission to promote public safety. If recidivism can be reduced by assisting individuals return to productive law-abiding lives, we can reduce crime across the country and make our neighborhoods better and safer.
Each year, more than 600,000 individuals return to our communities after serving time in federal or state prisons. There are another 11.4 million individuals that cycle through local jails every year. Almost one in four Americans has an arrest record, mostly for relatively minor, non-violent offenses. The impact of a criminal record often prevents motivated people from obtaining employment, housing, higher education, and credit. These barriers affect returning individuals even after they have paid their debt to society, turned their lives around, and are unlikely to reoffend.
The United States Attorney’s Office for the Middle District of North Carolina has been involved in efforts to assist returning individuals for over two decades. Partnerships across the Middle District communities involving courts, probation, law enforcement, schools, clergy, service agencies, and non-profits have demonstrated that recidivism rates can be greatly reduced when people work together. The United States Attorney’s Office for the Middle District of North Carolina has ongoing reentry partnerships throughout the District.
The Middle District of North Carolina works with these partners using cutting edge evidence-based programming. By welcoming home and helping those reentrants who want to change and providing them opportunities, our communities grow stronger and we save tax dollars at the same time.
The United States Attorney’s Office for the Middle District of North Carolina will be participating in the following events during National Reentry Week:
Wednesday 4/27/2016: Cabarrus County Jail, 30 Corban Ave SE, Concord, NC 28025
10 AM Cabarrus Jail Reentry Graduation - presentation of graduation and certificates of completion to the successful graduates of this innovative locally-funded program of Cabarrus County Sheriff’s Office, Sheriff Brad Riley.
11-1PM Roundtable discussion with long-time resource providers from Cabarrus County about re-entry programming that has improved public safety in Cabarrus County.
Thursday 4/28/2016: Silverspot Cinema, 201 S. Estes Dr. University Place Chapel Hill, NC
9am-12pm North Carolina Middle District reentry meeting
Members of the Middle Districts Project Safe Neighborhoods Advisory team will meet to recognize successful reentrants and the agencies across the Middle District that serves them.
The media is invited to attend these meetings.
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Former President of North Carolina Board of Funeral Service and His Business Partner Sentenced to Prison for Tax FraudRead the Press Release
The former President of the North Carolina Board of Funeral Service and his business partner were sentenced to prison yesterday for their involvement in a conspiracy to defraud the Internal Revenue Service (IRS), announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina.
Kenneth Dale Stainback, 62, of Burlington, North Carolina, the secretary of McClure Funeral Service (McClure) and former president of the North Carolina Board of Funeral Service, was sentenced to 14 months in prison and three years of supervised release. Stephen Ray Smith, 60, of Mebane, North Carolina, the president of McClure, was sentenced to six months in prison and three years of supervised release. The court ordered both defendants to pay $158,530.11 in restitution to the IRS for the corporate tax loss. The court also ordered Stainback and Smith to pay $12,213 and $116, respectively, in restitution to the IRS for their individual tax loss. The court also ordered Stainback and Smith to pay $8,000, respectively, in fines.
According to court documents and statements in court, Stainback and Smith conspired to defraud the United States by filing false corporate tax returns for McClure. Stainback, Smith and another co-conspirator bought McClure in 2004 and began diverting gross receipts from the business and omitting that income from the corporation’s tax returns. The co-conspirators opened a checking account at Mid-Carolina Bank for the purpose of diverting funds from McClure, including commission checks payable from insurance providers and checks from clients for payment of services. The co-conspirators wrote checks to themselves from this account, with Stainback and Smith receiving the vast majority of the diverted funds. Stainback also opened another bank account at SunTrust Bank, which he used to embezzle additional funds from McClure without the knowledge of his co-conspirators. The co-conspirators also pocketed cash payments from clients of McClure. To conceal discovery of their scheme, the co-conspirators deleted and altered invoices in the business’s accounting system. Even after they were aware that the IRS was conducting an examination of the business, Stainback and Smith continued to divert funds from McClure.
“As Messrs. Stainback and Smith have learned, cheating the IRS and stealing from the U.S. Treasury brings serious penalties, including prison, fines and the potential loss of professional licenses,” said Acting Assistant Attorney General Ciraolo. “Taxpayers who think they can skim funds from their own businesses and conceal their criminal conduct by falsifying records underestimate the ability of the IRS and Department of Justice to detect, investigate and prosecute these crimes.”
During the 2009 through 2012 fiscal years, Stainback, Smith and the other co-conspirator diverted more than $419,000 from McClure. Because the co-conspirators also deleted and falsified invoices, the amount diverted underestimates the amount the co-conspirators excluded from the corporate tax returns. The co-conspirators caused a corporate tax loss of $158,530.11 and additional individual tax loss based on their failure to report the diverted funds on their individual income tax returns.
Acting Assistant Attorney General Caroline D. Ciraolo and U.S. Attorney Ripley Rand commended special agents of IRS – Criminal Investigation who investigated the case, and Assistant U.S. Attorney Clifton T. Barrett of the Middle District of North Carolina and Trial Attorney Kathryn A. Kimball of the Tax Division, who prosecuted the case.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
North Carolina Man Sentenced to Prison for Bankruptcy and Tax FraudRead the Press Release
WASHINGTON – A Burlington, North Carolina, man was sentenced today to 24 months in prison for bankruptcy fraud and tax fraud, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Department of the Justice’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina.
“The department, working with our partners within the IRS, is committed to identifying and prosecuting individuals who lie to or mislead the IRS in an effort to obstruct tax administration and evade the assessment or collection of tax due,” said Acting Assistant Attorney General Ciraolo. “Our system of voluntary compliance only works if individuals like Mr. Blackwell, who abuse the system and cheat their fellow citizens, are held accountable for their criminal conduct.”
“The fraudulent use of bankruptcy and other court proceedings to steal from taxpayers is of grave concern, and the U.S. Attorney’s Office remains vigilant in the effort to hold accountable those who would defraud the government,” said U.S. Attorney Rand.
According to court documents, Faiger Blackwell, 59, owned several businesses, including a funeral home, in North Carolina. In 2007, Blackwell filed for bankruptcy for himself and his funeral home after accumulating more than $300,000 in outstanding federal taxes and more than $1 million in other debts. During the bankruptcy proceedings, Blackwell concealed rental income from the bankruptcy court and instead used the money to pay for business and personal expenses. In July 2009, after the Internal Revenue Service (IRS) levied one of Blackwell’s business bank accounts, he set up another company that was created for banking purposes only and corresponding bank accounts in order to divert funds and circumvent the levy. Blackwell concealed these funds from the bankruptcy court, the IRS, and other creditors and used them to pay for business and personal expenses, including a cruise. Blackwell pleaded guilty in November 2015 to one count of concealment of assets from a bankruptcy estate and one count of impeding the due administration of the internal revenue laws.
In addition to the prison term, Chief U.S. District Court Judge William L. Osteen Jr. for the Middle District of North Carolina ordered Blackwell to serve three years of supervised release following his prison term and also ordered him to pay $404,619.29 in restitution.
“Today’s sentencing of Mr. Blackwell for bankruptcy fraud sends a clear signal for those who may be considering similar actions,” said Special Agent in Charge Thomas J. Holloman III of IRS-Criminal Investigation, Charlotte Field Office. “The bankruptcy system is based on a debtor making a full disclosure of all assets and liabilities. When individuals use this system to evade their debt obligations to the government and their creditors, they are engaging in criminal activity. IRS-Criminal Investigation is proud to work with our law enforcement partners by lending its expertise in these complex financial investigations.”
Acting Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of IRS-Criminal Investigation, who investigated the case and Assistant U.S. Attorney Frank Chut of the Middle District of North Carolina and Trial Attorney Nathan Brooks of the Tax Division, who prosecuted the case.
More information about the Tax Division and its enforcement efforts can be found on the division’s website.
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North Carolina Man Pleads Guilty to Tax Evasion and Serving as Pilot Without LicenseRead the Press Release
A North Carolina man pleaded guilty today to tax evasion and four counts of serving as a pilot without an airman’s certificate, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina.
According to court documents, from 2011 through 2014, Paul Douglas Tharp attempted to evade payment of an outstanding federal income tax debt by filing false documents, including false tax returns, with the Internal Revenue Service (IRS). After Tharp failed to file tax returns for the years 2003 through 2006, the IRS assessed federal income taxes for those years. Tharp also late-filed his 2007 income tax return. According to court documents, Tharp owed more than $300,000 in taxes for the years 2003 through 2007. In 2011, Tharp provided a false Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, to an IRS revenue officer who was assigned to collect his unpaid taxes, on which he failed to report that he owned an airport and an investment firm, and concealed his business bank accounts and rental income he had received under penalty of perjury. In 2012 and 2014, Tharp also filed tax returns for the 2011 through 2013 tax years on which he omitted significant income that he received from his airport and rental properties.
“Collection Information Statements are an important tool that the IRS uses to determine an individual’s ability to pay his outstanding tax liability,” said Acting Assistant Attorney General Ciraolo. “When taxpayers submit false information, or willfully omit income or assets, impeding the IRS’s efforts to collect taxes due, the Tax Division stands ready to prosecute. Taxpayers who are engaged in this criminal conduct will pay a heavy price, including incarceration and monetary penalties.”
As part of his plea, Tharp also admitted that he served as a pilot without the required certification on four different occasions in 2012. Tharp surrendered his pilot certificate on Aug. 2, 2012 and after that date, he flew four flights in and out of Davidson County Airport in Lexington, North Carolina, without valid registration and while his pilot certificate was suspended in 2012.
Pursuant to the plea agreement, Tharp faces a potential statutory maximum sentence of five years in prison for the tax evasion charge and three years in prison for each count of serving as a pilot without an airman’s certificate, as well as a maximum fine of $250,000 for each count of conviction. He must also pay restitution in the amount of $281,366.62 to the IRS. The sentencing hearing is set for April 22, 2016.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorney Nathan Brooks of the Tax Division and Assistant U.S. Attorney Anand Ramaswamy of the Middle District of North Carolina, who are prosecuting this case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
North Carolina Man Pleads Guilty to Tax Evasion and Serving as Pilot Without LicenseRead the Press Release
WASHINGTON – A North Carolina man pleaded guilty today to tax evasion and four counts of serving as a pilot without an airman’s certificate, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina.
According to court documents, from 2011 through 2014, Paul Douglas Tharp attempted to evade payment of an outstanding federal income tax debt by filing false documents, including false tax returns, with the Internal Revenue Service (IRS). After Tharp failed to file tax returns for the years 2003 through 2006, the IRS assessed federal income taxes for those years. Tharp also late-filed his 2007 income tax return. According to court documents, Tharp owed more than $300,000 in taxes for the years 2003 through 2007. In 2011, Tharp provided a false Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, to an IRS revenue officer who was assigned to collect his unpaid taxes, on which he failed to report that he owned an airport and an investment firm, and concealed his business bank accounts and rental income he had received under penalty of perjury. In 2012 and 2014, Tharp also filed tax returns for the 2011 through 2013 tax years on which he omitted significant income that he received from his airport and rental properties.
“Collection Information Statements are an important tool that the IRS uses to determine an individual’s ability to pay his outstanding tax liability,” said Acting Assistant Attorney General Ciraolo. “When taxpayers submit false information, or willfully omit income or assets, impeding the IRS’s efforts to collect taxes due, the Tax Division stands ready to prosecute. Taxpayers who are engaged in this criminal conduct will pay a heavy price, including incarceration and monetary penalties.”
As part of his plea, Tharp also admitted that he served as a pilot without the required certification on four different occasions in 2012. Tharp surrendered his pilot certificate on Aug. 2, 2012 and after that date, he flew four flights in and out of Davidson County Airport in Lexington, North Carolina, without valid registration and while his pilot certificate was suspended in 2012.
Pursuant to the plea agreement, Tharp faces a potential statutory maximum sentence of five years in prison for the tax evasion charge and three years in prison for each count of serving as a pilot without an airman’s certificate, as well as a maximum fine of $250,000 for each count of conviction. He must also pay restitution in the amount of $281,366.62 to the IRS. The sentencing hearing is set for April 22, 2016.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorney Nathan Brooks of the Tax Division and Assistant U.S. Attorney Anand Ramaswamy of the Middle District of North Carolina, who are prosecuting this case.
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Greensboro Man Sentenced for Tax EvasionRead the Press Release
GREENSBORO, N.C.: United States Attorney Ripley Rand of the Middle District of North Carolina announced today that Douglas Michael Lang, 50, of Greensboro has been sentenced for charges of tax evasion.
Lang was sentenced by Senior United States District Judge James A. Beaty, Jr., to 18 months confinement, a special assessment of $ 100.00, a fine of $5000.00, and 3 years supervised release. Lang must also pay $607,608.00 in restitution.
A Bill of Information was filed on January 15, 2015, charging Lang with failing to file income tax returns, failing to pay income tax, and committing acts of tax evasion. The acts included the payment of personal expenses from Protocol LLC and R & J Vending LLC, two companies that Lang controlled and owned. Lang also retitled his interest in Protocol LLC, of which he was the sole owner, in the name of House of Psalms, an ostensibly religious non-profit entity controlled by Lang. Lang was also charged with opening a bank account in the name Spirit of Angels, another ostensibly religious non-profit entity controlled by Lang. Each of these acts represented conduct Lang undertook to evade the assessment of tax liability.
The case was investigated by the Internal Revenue Service, Criminal Investigation Division. The case was prosecuted by Assistant United States Attorney Robert M. Hamilton.
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Lee County Offenders Convicted and SentencedRead the Press Release
Greensboro, NC - As a result of continued initiatives focused on violent crime in Lee County, the following individuals have recently been sentenced in federal court, announced United States Attorney Ripley Rand.
CASES ADJUDICATED
Shamar Davell Petty, Age 29, of Sanford, NC, was federally indicted in the Middle District of North Carolina on April 27, 2015, for a firearm offense that occurred on March 17, 2015. On July 15, 2015, Petty pleaded guilty to possession of a firearm by a felon. On October 28, 2015, Petty was sentenced to ninety-two (92) months in prison, 3 years supervised release, and a $100.00 special assessment by United States District Court Judge Catherine C. Eagles.
Jaquell Maurice Tysor, Age 29, of Sanford, NC, was federally indicted in the Middle District of North Carolina on April 27, 2015, for a firearm offense that occurred on March 1, 2015. On July 10, 2015, Petty pleaded guilty to possession of a firearm by a felon. On January 26, 2016, Tysor was sentenced to 120 months in prison, 3 years supervised release, and a $100.00 special assessment by United States District Court Judge Catherine C. Eagles.
"We are very pleased to be part of the team fighting gun crime in Lee County," said United States Attorney Ripley Rand. "The effective partnership between Lee County law enforcement and our office will continue to work hard to make our communities safer for all."
The convictions noted above are the result of close cooperation of the Lee County Project Safe Neighborhoods (PSN) coalition. PSN is a nationwide gun and violent crime strategy to create and maintain safer communities. The Lee County PSN coalition is comprised of a number of law enforcement agencies, including Broadway Police Department, Sanford Police Department, Lee County Sheriff’s Office, Department of Public Safety Division of Adult Correction and Juvenile Justice (probation), State Bureau of Investigation, Lee County District Attorney’s Office, Federal Bureau of Investigation, Bureau of Alcohol, Tobacco, Firearms and Explosives, United States Attorney’s Office, as well as many community partners.
The Sanford Police Department, Lee County Sheriff’s Office, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives investigated these cases. Assistant United States Attorney JoAnna McFadden prosecuted the cases for the United States Attorney’s Office.
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Raleigh Attorney Pleads Guilty to Federal Fraud ChargesRead the Press Release
GREENSBORO, N.C. – Raleigh attorney Joseph Lee Levinson pleaded guilty to conspiracy to make false statements to federally insured financial institutions, announced Ripley Rand, United States Attorney for the Middle District of North Carolina. He will be sentenced by United States District Judge James A. Beaty, Jr., in Winston-Salem on May 19, 2016.
Joseph Lee Levinson pleaded guilty to one count of conspiracy to make false statements to federally insured financial institutions in violation of Section 1014 of Title 18 of the United States Code. This charge carries a maximum sentence of five years in prison and a $250,000 fine. Levinson remains out of custody on pretrial release pending sentencing.
From 2005 until 2010, Jotham Walker Pruitt and other individuals operated a marijuana “grow” operation in Orange County, North Carolina. The operation involved the production of marijuana inside houses in the vicinity of the Town of Hillsborough, Orange County, North Carolina. Levinson is a licensed attorney practicing in Raleigh and is a college friend of Jotham Pruitt. Levinson conspired with Jotham Pruitt to obtain mortgage funding for properties to be used as “grow houses,” knowing full well that banks would not loan money to Jotham Pruitt if they knew that the houses were to be used for illegal purposes. Levinson and Jotham Pruitt prepared loan applications to Long Beach Mortgage Corporation and SunTrust Bank falsely representing that the properties would be used for legal purposes, such as a residence or as rental property, when in fact both knew that the houses would be used to grow marijuana. Levinson acted as closing attorney for purchase of the first two grow houses used in the operation.
Levinson also conspired with Jotham Pruitt to present false leases to Countrywide Bank, N.A., to support Pruitt’s application for mortgage funding to purchase a third grow house. Levinson provided Jotham Pruitt with a sample lease to use as a template in creating false leases to present to Countrywide Bank, N.A., showing that previous properties purchased by Jotham Pruitt were rental properties occupied by tenants. In fact, these properties were being used to grow marijuana.
The grow operation ceased in December 2010. Upon completion of the business, Jotham Pruitt ceased making payments on the mortgages on the grow houses, including those he had purchased with the aid of Levinson. The houses were foreclosed on by the lending banks at a total loss of over $250,000.
Jotham Pruitt has pleaded guilty in the United States District Court for the Middle District of North Carolina to related charges. Charges remain pending against other individuals indicted in connection with the scheme.
The case was investigated by the Orange County Sheriff’s Office and Internal Revenue Service - Criminal Investigations in conjunction with the United States Attorney’s Office for the Middle District of North Carolina.
Case Number 1:15CR413-1
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Middle District of North Carolina U.S. Attorney’s Office Collects More Than $9.0 Million for U.S. Taxpayers in Fiscal Year 2015Read the Press Release
Greensboro, NC - U.S. Attorney Ripley Rand announced today that the United States Attorney’s Office for the Middle District of North Carolina collected $9,082,850.56 in criminal and civil actions during Fiscal Year 2015. Of this amount, $1,338,633.11 was collected in criminal actions and $7,744,217.45 was collected in civil actions.
The Middle District of North Carolina also worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $58,749,483.17 in cases pursued jointly with these offices. Of this amount, $58,724,483.17 was collected in criminal actions and $25,000.00 was collected in civil actions.
Attorney General Loretta E. Lynch announced on December 3, 2015, that the Justice Department collected $23.1 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2015. The more than $23 billion in collections in FY2015 represents more than seven and a half times the approximately $2.93 billion of the Justice Department’s combined appropriations for the 93 U.S. Attorneys’ offices and the main litigating divisions in that same period."The Department of Justice is committed to upholding the rule of law, safeguarding taxpayer resources, and protecting the American people from exploitation and abuse,” said Attorney General Loretta Lynch. “The collections we are announcing today demonstrate not only the strength of that commitment, but also the significant return on public investment that our actions deliver. I want to thank the prosecutors and trial attorneys who made this achievement possible, and to reiterate our dedication to this ongoing work.”
“Our office is dedicated to recovering ill-gotten gains from fraud, drug offenses, and other crimes, and returning these funds and assets to victims and to the treasury,” said United States Attorney Rand. “In FY2015, our office collected more than three times its annual budget through criminal and civil actions and forfeiture, which is a significant benefit to taxpayers.”
As examples, this past year the Middle District of North Carolina reached settlements in the following cases:
USA v. Duke Energy Carolinas, LLC:
Under a plea agreement with the United States (through the Department of Justice Environmental Crimes Section and USAOs for the Eastern, Middle and Western Districts of North Carolina) Duke Energy was ordered to pay $102,000,000.00 as a result of the February 2014 coal ash spill into the Dan River near Eden, NC. On May 14, 2015, $58.7 million of the total was paid to the Middle District of NC.USA v. Renegade Holdings and Alternative Brands, Inc.:
Settlement of USDA’s claim in bankruptcy netted $4,670,194.92.Civil Health Care Fraud Recovery:
The United States alleged that Dr. John Shen, owner of Albemarle Women’s Clinic, submitted claims for unnecessary ultrasounds. Shen paid $975,000 to settle the case in January 2015.The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Additionally, the U.S. Attorney’s office in Middle District of North Carolina working with partner agencies and divisions, collected $4,705,670 in asset forfeiture actions in FY 2015. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
###President of North Carolina Board of Funeral Service and Business Partner Plead Guilty to Cospiracy to Defraud the United StatesRead the Press Release
WASHINGTON — Two North Carolina businessmen pleaded guilty in the U.S. District Court in the Middle District of North Carolina to conspiracy to defraud the United States, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina.
Kenneth Dale Stainback, 61, of Burlington, North Carolina, pleaded guilty on Nov. 24 and Stephen Ray Smith, 60, of Mebane, North Carolina pleaded guilty on November 23. According to court documents and statements in court, Stainback and Smith conspired to defraud the United States by filing false corporate tax returns for McClure Funeral Service (McClure). Stainback, Smith and another co-conspirator bought McClure in 2004 and began diverting gross receipts from the business and omitting that income from the corporation’s tax returns. The co-conspirators opened a checking account at Mid-Carolina Bank for the purpose of diverting funds from McClure, including commission checks from insurance providers and checks from clients for payment of services. The co-conspirators wrote checks to themselves from this account, with Stainback and Smith receiving the vast majority of the diverted funds. Stainback also opened another bank account at SunTrust Bank, which he used to divert additional funds from McClure without the knowledge of his co-conspirators. Finally, the co-conspirators also pocketed cash payments from clients of McClure. In order to conceal discovery of their scheme, the co-conspirators deleted and altered invoices in the business’s accounting system. Stainback and Smith also closed their bank account at Mid-Carolina bank after being contacted by the Internal Revenue Service (IRS) regarding the corporate tax returns.
During the 2009 through 2012 fiscal years, Stainback, Smith and the other co-conspirator diverted more than $419,000 from McClure. These diverted funds were not reported on McClure’s corporate tax returns, which resulted in a corporate tax loss of $158,530.11. Stainback and Smith also failed to report the diverted funds on their individual income tax returns.
In addition to owning McClure, Stainback also serves as the President of the North Carolina Board of Funeral Service.
Stainback and Smith each face a statutory maximum sentence of five years in prison, a $250,000 fine and restitution to the IRS. The court set sentencing for Smith and Stainback on March 24, 2016.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of IRS – Criminal Investigation who investigated the case and Assistant U.S. Attorney Clifton T. Barrett of the Middle District of North Carolina and Trial Attorney Kathryn A. Kimball of the Justice Department’s Tax Division, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
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Richmond County Defendants Sentenced in Methamphetamine ConspiracyRead the Press Release
GREENSBORO, N.C. – Nine of the fifteen defendants convicted in the Phillip McGee methamphetamine conspiracy were sentenced on October 29-30, 2015, in federal court in Greensboro by the Honorable Catherine C. Eagles, United States District Judge. The group, which operated in Richmond County between 2012 and 2015, was responsible for the manufacture and distribution of large amounts of methamphetamine during this time period.
Phillip Allen McGee was sentenced to 234 months in the Federal Bureau of Prisons, followed by a three year term of supervised release.
Thomas Leslie Snead, Jr., was sentenced to 160 months in the Federal Bureau of Prisons, followed by a three year term of supervised release.
Thomas Brantley Jenkins, II, was sentenced to 150 months in the Federal Bureau of Prisons, followed by a three year term of supervised release.
Christopher Jared Jenkins was sentenced to 69 months in the Federal Bureau of Prisons, followed by a three year term of supervised release.
Tracy Alan McDonald was sentenced to 59 months in the Federal Bureau of Prisons, followed by a three year term of supervised release.
Jason Franklin Jacobs was sentenced to 69 months in the Federal Bureau of Prisons, followed by a three year term of supervised release.
Nickolas Craig Smith was sentenced to 70 months in the Federal Bureau of Prisons, followed by a three year term of supervised release.
Cayce Leigh Honeycutt was sentenced to 41months in the Federal Bureau of Prisons, followed by a three year term of supervised release.
Taylor Dawn Loftus was sentenced to 24 months in the Federal Bureau of Prisons, followed by a three year term of supervised release.
Remaining defendants in this case are scheduled for sentencing on November 12, 2015, November 19, 2015, and December 1, 2015.
In a related case, on October 23, 2015, John David McCuiston was sentenced by the Honorable Loretta C. Biggs, United States District Judge, to a term of 135 months in the Federal Bureau of Prisons, followed by a three year term of supervised release. McCuiston had earlier pleaded guilty to conspiracy to possess pseudoephedrine knowing or having reasonable cause to believe it would be used to manufacture methamphetamine.
In another related case, on September 30, 2015, Sandra Martin Leviner was sentenced by the Honorable James A. Beaty, Jr., United States District Judge, to a term of 24 months in the Federal Bureau of Prisons, followed by a three year term of supervised release. Leviner had earlier pleaded guilty to possession of pseudoephedrine knowing or having reasonable cause to believe it would be used to manufacture methamphetamine.
These cases were investigated by the North Carolina State Bureau of Investigation, the Richmond County Sheriff’s Office, and the Rockingham Police Department.
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Winston-Salem Man Sentenced for Firearms ViolationRead the Press Release
GREENSBORO, N.C. – A Winston-Salem man was sentenced to 180 months of imprisonment for possession of a firearm by a felon, announced United States Attorney Ripley Rand.
Xavier Pierre Walker, 44, of Winston-Salem, North Carolina, pleaded guilty to one count of possession of a firearm by a felon. Walker was sentenced on September 29, 2015, by United States District Judge Catherine C. Eagles, to 180 months imprisonment followed by five years of supervised release and a special assessment of $100.00.
Walker was arrested on June 1, 2014, in Chatham County on state charges. At that time, Walker possessed two firearms, in violation of federal of federal law.
This case was investigated by the Chatham County Sheriff’s Office, North Carolina State Bureau of Investigation, Bureau of Alcohol, Tobacco and Firearms Division and was prosecuted by Assistant United States Attorney Michael A. DeFranco.
Docket Number 1:15CR117
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North Carolina Landowner Sentenced for Impeding and Obstructing Administration of Internal Revenue CodeRead the Press Release
WASHINGTON – A Chapel Hill and Durham, North Carolina, millionaire businessman was sentenced to prison yesterday for his involvement in a decades-long scheme to evade paying his federal income taxes, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina.
“The sentence imposed on Mr. Tilley demonstrates the department’s commitment to prosecuting and seeking incarceration of and restitution from those who repeatedly evade their tax obligations and impede and obstruct our nation’s tax laws,” said Acting Assistant Attorney General Ciraolo. “No one is above the law and Mr. Tilley will pay a heavy price for his criminal conduct.”
Thomas Tilley, 80, was sentenced by Chief U.S. District Judge William L. Osteen Jr. of the Middle District of North Carolina to serve 32 months in prison to be followed by one year of supervised release, and ordered to pay $7,676,757 in restitution to the Internal Revenue Service (IRS). At the sentencing hearing, Judge Osteen found that Tilley obstructed justice by providing misleading information to probation and the court after pleading guilty and revoked his acceptance of responsibility credit based on this conduct. Tilley pleaded guilty on Nov. 21, 2014, to one count of corruptly endeavoring to impede and obstruct the administration of the Internal Revenue Code, which carries a statutory maximum sentence of 36 months in prison.
“Individuals like Thomas Tilley, who engage in complex schemes to impede the administration of the tax laws in order to enrich themselves and not pay their fair share, should take notice of today’s sentencing,” said Special Agent in Charge Thomas J. Holloman III of IRS-Criminal Investigation (CI). “If you engage in these type of schemes, IRS-Criminal Investigation will be there for the duration to ensure that you are brought to justice.”
According to court documents, beginning in 1993 and continuing through at least 2010, Tilley sent the IRS fraudulent financial instruments in an attempt to fraudulently discharge his tax debt; used nominee and sham trusts to purchase and sell real estate to conceal his assets; and placed false liens on properties to impede the IRS’ collection of his tax debt. Tilley also failed to file federal and state income tax returns for tax years 1994 through 2013, despite earning substantial income and, in 2009, claiming a net worth as high as $30 million and annual income of $822,000 on a financial statement.
Acting Assistant Attorney General Ciraolo commended special agents of IRS-CI, who investigated the case, and Assistant U.S. Attorney Frank J. Chut of the Middle District of North Carolina and Trial Attorney Todd P. Kostyshak of the Tax Division, who prosecuted the case.
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Duke Energy Corporation to Reduce Emissions from Power Plants in North Carolina, Fund Environmental ProjectsRead the Press Release
WASHINGTON – The Department of Justice and the Environmental Protection Agency (EPA) today announced a settlement with Duke Energy Corporation to resolve Clean Air Act violations at five coal-fired power plants across North Carolina. The settlement resolves long-standing claims that Duke violated the federal Clean Air Act by unlawfully modifying 13 coal-fired electricity generating units located at the Allen, Buck, Cliffside, Dan River and Riverbend plants, without obtaining air permits and installing and operating the required air pollution control technologies.
Duke recently shut down 11 of the 13 units and under today's settlement those shutdowns also become a permanent and enforceable obligation under the consent decree. At the remaining two units, Duke must continuously operate pollution controls and meet interim emission limits before permanently retiring them. In addition, the settlement requires that Duke retire another unit at the Allen plant, spend a total of $4.4 million on environmental mitigation projects and pay a civil penalty of $975,000. The United States is joined in the settlement by co-plaintiffs Environmental Defense, the North Carolina Sierra Club and Environment North Carolina.
EPA estimates that the settlement will reduce emissions by approximately 2,300 tons per year from the three Allen units, as compared to recent emission levels. With these additional retirements, total emissions from all 13 allegedly modified units – which were in excess of 51,000 tons in 2000 when the suit was filed – will be zero.
“The settlement announced today marks another milestone in our ongoing efforts to enforce the Clean Air Act and reduce air pollution from coal-fired power plants,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “This settlement is a just and fair resolution to this long-running enforcement action in which we alleged that Duke modified these plants in ways that significantly increased their annual emissions. It is good news for the environment and public health in North Carolina.”
“This settlement brings five more power plants into compliance under EPA’s national initiative to cut pollution from the country’s largest sources,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “After many years, we’ve secured a strong resolution, one that will help reduce asthma attacks and other serious illnesses for the people of North Carolina.”
The United States initially sued Duke in 2000 and trial was set to begin in October 2015 following years of pre-trial litigation, including a landmark 2007 Supreme Court decision agreeing with EPA’s interpretation of Clean Air Act regulations covering modifications that increase the annual amount of pollution from a plant. Under the settlement, Duke must continuously operate existing equipment to control sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions at two electricity-generating units at the Allen facility in Belmont, North Carolina, and meet enforceable emission limits, prior to permanently retiring both units in 2024. In addition, to help mitigate the harm from the alleged violations, the settlement also requires Duke to retire an additional unit at the Allen plant by 2024.
The settlement also requires Duke to spend at least $4.4 million to fund several environmental mitigation projects. These projects include restoring native wildlife and plants on National Park Service and Forest Service lands in North Carolina, a program to help North Carolina residents replace higher polluting wood stoves and fireplaces with cleaner burning alternatives and a program to increase the use of clean energy and energy efficiency measures in economically distressed communities. Other projects may include efforts towards increasing truck stop electrification and electric vehicle charging stations in North Carolina.
SO2 and NOx, two predominant pollutants emitted from power plants, have numerous adverse effects on human health and are significant contributors to acid rain, smog and haze. These pollutants are converted in the air to particulate matter that can cause severe respiratory and cardiovascular impacts and premature death.
This settlement is part of EPA’s national enforcement initiative to control harmful emissions from large sources of pollution, which includes coal-fired power plants, under the Clean Air Act’s Prevention of Significant Deterioration requirements. The total combined SO2 and NOx emission reductions secured from all these settlements will exceed two million tons each year once all the required pollution controls have been installed and implemented.
The settlement was lodged with the U.S. District Court for the Middle District of North Carolina and is subject to a 30-day public comment period and final court approval.
For more information on the settlement and to read the proposed settlement, visit http://www2.epa.gov/enforcement/duke-energy-corporation-clean-air-act-caa-settlement.
Richmond County Defendants Plead Guilty in Methamphetamine ConspiracyRead the Press Release
GREENSBORO, N.C. – Fifteen defendants from Richmond County pleaded guilty during July 2015 to methamphetamine-related offenses, announced Ripley Rand, United States Attorney for the Middle District of North Carolina. Between the dates of July 6, 2015, and July 13, 2015, these fifteen defendants entered guilty pleas related to their involvement in the manufacture, distribution, and use of methamphetamine in and around Richmond County between 2012 and March of 2015.
Phillip Allen McGee, Thomas Leslie Snead, Jr., Tommy Brantley Jenkins, II, and Christopher Jared Jenkins each pleaded guilty to conspiracy to manufacture methamphetamine, in violation of Title 21, United States Code, Sections 841(a)(1) and 846. Each faces up to 20 years imprisonment, up to a $1 million fine, a supervised release term of at least three years, and a $100 special assessment.
Tracy Alan McDonald, Robert Allen Beck, Tristan Daniel Visingard, Jeffrey John Hodges, Christopher Scott Loftus, Jason Franklin Jacobs, Alex Baxter Odom, Jr., Nickolas Craig Smith, Nanci Brook Byrd, Cayce Leigh Honeycutt, and Taylor Dawn Loftus each pleaded guilty to conspiracy to possess pseudoephedrine with intent to manufacture methamphetamine, in violation of Title 21, United States Code, Section 841(c)(1). Each faces up to 20 years imprisonment, up to a $250,000 fine, a supervised release term of not more than three years, and a $100 special assessment.
Sentencing in these cases is scheduled for October 29, October 30, November 12, and November 19, 2015.
These cases were investigated by the North Carolina State Bureau of Investigation and the Richmond County Sheriff’s Office and are being prosecuted by Assistant United States Attorney Clifton T. Barrett.
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Scotland County, North Carolina, Public Housing Agency and Two Former Employees to Pay over $2.7 Million to Settle Sexual Harassment LawsuitsRead the Press Release
The Justice Department today announced that Southeastern Community and Family Services Inc. (SCFS), a public housing agency that administers the Section 8 voucher program in Scotland County, North Carolina, and two of SCFS’ former employees have agreed to pay more than $2.7 million in monetary damages and civil penalties to settle consolidated Fair Housing Act lawsuits brought by the Justice Department and private plaintiffs. SCFS was formerly known as Four-County Community Services Inc. The suits allege that Wesley, SCFS’s former Section 8 housing coordinator, and Pender, SCFS’s former housing inspector, sexually harassed female voucher program participants and applicants. This represents the largest monetary settlement ever agreed to in a sexual harassment case brought by the Justice Department under the Fair Housing Act.
“It is deeply offensive and illegal to sexually harass women who are seeking housing for themselves and their families,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “This settlement sends a strong message to those who would exploit their positions of power that their egregious conduct will not be tolerated and that the Civil Rights Division will aggressively pursue those who engage in it.”
“The conduct of these defendants was reprehensible, and we are pleased with the outcome in this case,” said U.S. Attorney Ripley Rand of the Middle District of North Carolina. “We will continue to do everything we can to vindicate the rights of those who are subject to sexual harassment and hold accountable those who seek to prey upon others.”
“No one who provides much-needed housing or housing benefits to low-income women has the right to demand sexual favors in exchange for that housing,” said Assistant Secretary Gustavo Velasquez of the Department of Housing and Urban Development (HUD). “It’s wrong and it’s illegal. Today’s settlement reaffirms the Justice Department’s and HUD’s commitment to protecting the rights of women to live safely in their homes, without harassment.”
The department’s complaint, filed in the U.S. District Court for the Middle District of North Carolina, alleges, among other things, that Wesley and Pender subjected voucher program participants and applicants to unwanted sexual comments, sexual touching and other sexual acts, conditioned or offered Section 8 benefits in exchange for sexual acts and took adverse housing actions against those who rebuffed their sexual advances. As alleged in the complaint, Wesley and Pender engaged in this conduct while exercising their authority as employees of SCFS, and SCFS failed to take reasonable preventive or corrective measures. SCFS terminated the employment of Wesley and Pender after the department filed its lawsuit.
The consent decree, which is subject to approval by the U.S. District Court, requires the defendants to pay $2,700,000 in monetary damages to victims of their discriminatory conduct, including fifteen victims who filed a private lawsuit and their attorneys, and any additional individuals who are identified by the United States through a process established in the consent decree. Individuals who believe they were subjected to sexual harassment by Wesley or Pender should contact the Justice Department at 1-800-896-7743, option 94, or e-mail the department at [email protected]. In addition, the defendants must pay $27,500 to the United States as a civil penalty.
The consent decree also prohibits the defendants from engaging in discrimination and requires SCFS to establish a non-discrimination policy and grievance procedure and to hire an independent manager for the Section 8 Voucher program. SCFS officials are required to participate in fair-housing training to prevent such conduct in the future. The decree bars Wesley and Pender from participating in the management of any Section 8 Voucher program and any residential rental properties in the future. The department’s lawsuit began after Legal Aid of North Carolina Inc.’s Fair Housing Project brought the matter to the department’s attention. HUD also referred to the department a complaint against the defendants. The department then conducted an independent investigation and filed suit.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt. Persons who believe that they have experienced unlawful housing discrimination elsewhere can contact the Justice Department at 1-800-896-7743, or e-mail [email protected], or contact the Department of Housing and Urban Development at 1-800-669-9777.
Alamance County Resident Sentenced for Medicaid FraudRead the Press Release
GREENSBORO, N.C. - United States Attorney Ripley Rand of the Middle District of North Carolina announced today that a Tracie Yvette Clay, 46, was sentenced on June 11, 2015, for Medicaid fraud.
Clay was sentenced by Chief United States District Court Judge William L. Osteen, Jr., to 70 months confinement, a special assessment of 300.00, and 3 years supervised release. Clay must also pay $990,099.58 in restitution to the North Carolina Medicaid program.
Clay pleaded guilty on September 2, 2014, to three health care fraud charges in connection with a scheme to defraud the North Carolina State Medicaid program through the fraudulent provision of behavioral health services. The scheme involved NC Behavioral Health and Counseling Services, Inc., a business incorporated by Clay in February, 2011; Clay was the sole incorporator and was listed as "Pres-CEO." The business was established for administrative purposes and would not offer professional services according to the incorporation papers. Clay submitted billings for Medicaid payments to the North Carolina Division of Medical Assistance. Clay also submitted claims for mental health treatment using "clients" who never received services from NC Behavioral and were unaware that someone was using their Medicaid identification numbers.
United States Attorney Rand stated, "Instead of working within the mission of Medicaid to help the poor, the elderly, and the disabled obtain necessary medical services, this defendant defrauded both the victims and the taxpayers. We will continue to work effectively with our partners to hold those who prey upon vulnerable populations accountable, and we will do everything we can to return much needed funding to the program."
The case was investigated by the North Carolina Medicaid Investigations Division and the Internal Revenue Service, Criminal Investigation Division. The case was prosecuted by Assistant United States Attorney Robert M. Hamilton, and Daniel Spillman and Michael Heavner, Special Assistant United States Attorneys/Assistant Attorney Generals of the Medicaid Investigations Division of the North Carolina Attorney General’s Office.
Attachment: 1:14CR261 Factual Basis
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Duke Energy Subsidiaries Plead Guilty and Sentenced to Pay $102 Million for Clean Water Act CrimesRead the Press Release
WASHINGTON – Three subsidiaries of North Carolina-based Duke Energy Corporation, the largest utility in the United States, pleaded guilty today to nine criminal violations of the Clean Water Act at several of its North Carolina facilities and agreed to pay a $68 million criminal fine and spend $34 million on environmental projects and land conservation to benefit rivers and wetlands in North Carolina and Virginia. Four of the charges are the direct result of the massive coal ash spill from the Dan River steam station into the Dan River near Eden, North Carolina, in February 2014. The remaining violations were discovered as the scope of the investigation broadened based on allegations of historical violations at the companies’ other facilities.
Under the plea agreement, both Duke Energy Carolinas and Duke Energy Progress, must certify that they have reserved sufficient assets to meet legal obligations with respect to its coal ash impoundments within North Carolina, obligations estimated to be approximately $3.4 billion.
Officials from the Justice Department’s Environment and Natural Resources Division and the three U.S. Attorney’s Offices in North Carolina, the Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance, EPA’s Office of Inspector General, the Internal Revenue Service (IRS) Criminal Investigations and the North Carolina State Bureau of Investigation (SBI) made the announcement following a plea hearing at the federal courthouse in Greenville, North Carolina today.
“The massive coal ash spill into North Carolina’s Dan River last year was a crime and it was the result of repeated failures by Duke Energy’s subsidiaries to exercise controls over coal ash facilities,” said Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division. “The terms of these three plea agreements will help prevent this kind of environmental disaster from reoccurring in North Carolina and throughout the United States by requiring Duke subsidiaries to follow a rigorous and independently verifiable program to ensure they comply with the law.”
“Duke Energy's crimes reflect a breach of the public trust and a lack of stewardship for the natural resources belonging to all of the citizens of North Carolina,” said U.S. Attorney Thomas G. Walker for the Eastern District of North Carolina. “The massive release at the Dan River coal ash basin revealed criminal misconduct throughout the state – conduct that will no longer be tolerated under the judgment imposed by the court today.”
“Duke’s subsidiaries discharged potentially toxic pollutants that put at risk North Carolina’s water quality and wildlife and today’s outcome ensures they will be held responsible for violating federal environmental requirements,” said Acting U.S. Attorney Jill W. Rose for the Western District of North Carolina. “The defendants will now have to comply with the terms imposed by the court, including paying hefty financial penalties and making significant financial contributions toward improving the quality of impacted waterways, wetlands and our water supply system.”
“Duke’s actions adversely impacted the Dan River ecosystem and caused residents who live near and rely on the water supply much apprehension about the safety of the river,” said Criminal Chief Cliff Barrett for the U.S. Attorney’s Office in the Middle District of North Carolina. “Today’s plea holds Duke accountable for this result and charts a course to remediate the impact of these spills.”
“Over two hundred sixteen million Americans rely on surface water as their source of drinking water,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “Duke Energy put that precious resource at risk in North Carolina as the result of their negligence. Companies that cut corners and contaminate waters on which communities depend, as Duke did here, will be held accountable.”
On Feb. 20, 2015, the three U.S. Attorney’s Offices in North Carolina filed separate criminal bills of information in their respective federal courts, alleging violations of the Clean Water Act at the following Duke facilities: the Dan River steam station (Rockingham County), the Cape Fear steam electric plant (Chatham County), the Asheville steam electric generating plant (Buncombe County), the H.F. Lee steam electric plant (Wayne County) and the Riverbend steam station (Gaston County). The alleged violations included unlawfully failing to maintain equipment at the Dan River and Cape Fear facilities and unlawfully discharging coal ash and/or coal ash wastewater from impoundments at the Dan River, Asheville, Lee and Riverbend facilities.
As part of their plea agreements, Duke Energy Business Services LLC, Duke Energy Carolinas LLC and Duke Energy Progress Inc. will pay a $68 million criminal fine and a total $24 million community service payment to the National Fish and Wildlife Foundation for the benefit of the riparian environment and ecosystems of North Carolina and Virginia. The companies will also provide $10 million to an authorized wetlands mitigation bank for the purchase of wetlands or riparian lands to offset the long-term environmental impacts of its coal ash basins. In addition, they will pay restitution to the federal, state and local governments that responded to the Dan River spill and be placed on a period of supervised probation for five years.
Duke’s subsidiaries operating 18 facilities in five states, including 14 in North Carolina, will also be required to develop and implement nationwide and statewide environmental compliance programs to be monitored by an independent court appointed monitor and be regularly and independently audited. Results of these audits will be made available to the public to ensure compliance with environmental laws and programs. The companies’ compliance will be overseen by a court-appointed monitor who will report findings to the court and the U.S. Probation Office as well as ensuring public access to the information.
Approximately 108 million tons of coal ash are currently held in coal ash basins owned and operated by the defendants in North Carolina. Duke Energy Corporation subsidiaries also operate facilities with coal ash basins in South Carolina, approximately 5.99 million tons of coal ash, Kentucky, approximately 1.5 million tons of coal ash, Indiana, approximately 35.6 million tons of coal ash and Ohio, approximately 5.9 million tons of coal ash.
The companies must also meet the obligations imposed under federal and state law to excavate and close coal ash impoundments at the Asheville, Dan River, Riverbend and Sutton facilities.
Additionally, at the insistence of the United States, the holding company Duke Energy Corporation has guaranteed the payment of the monetary penalties and the performance of the nationwide and statewide environmental compliance plans.
“Duke’s environmental crimes required a special financial review of their actions to which we were proud to join our partners in investigating,” said Special Agent in Charge Thomas J. Holloman, III of the IRS Criminal Investigation. “The considerable fines, formal apologies and massive cleanup initiatives will impact the Duke image and brand, assuring the public that corporations will be held accountable for their gross actions involving the environment, wildlife and the communities of this great state.”
“The SBI worked closely with the Environmental Protection Agency Criminal Investigation Division and the Internal Revenue Service in this matter,” said Acting Director B.W. Collier of the North Carolina SBI. “This type of collaboration is critical to ensuring a thorough and intensive review on cases such as this. The SBI remains committed to the public interest and is prepared to continue assisting the U.S. Attorney’s office.”
The criminal investigation was conducted by the Criminal Investigation Division, Region Four and the Office of Inspector General of EPA, Criminal Investigations of the IRS and North Carolina State Bureau of Investigation with assistance from the Federal Bureau of Investigation and the Department of Defense Criminal Investigative Service.
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Arizona Man Sentenced for Communicating ThreatsRead the Press Release
GREENSBORO, N. C. - An Arizona man was sentenced to 30 months in prison for communicating interstate threats, announced United States Attorney Ripley Rand.
Aaron Jerome Khan, 27, of Tucson, Arizona, pleaded guilty on December 1, 2014, to one count of interstate communication of a threat with intent to injure, an offense punishable by a maximum of 5 years imprisonment. He was sentenced on May 12, 2015, by the Honorable Catherine C. Eagles to 30 months imprisonment followed by 3 years supervised release.
Khan made threatening communications to the victim, a person with whom Khan had had a dating relationship while they both lived in Arizona, by sending numerous e-mail and text messages to the victim between December 2011 and October 2014. After the dating relationship ended, the victim obtained a no-contact order in Arizona and later began attending school in North Carolina. Khan continued to send the victim harassing messages via email and text message, which she first reported to campus security officials on December 9, 2011. Campus security officers contacted Khan to ask him to stop sending the victim messages; Khan said he would do so, but he continued to harass the victim with messages, including threats to kill the victim. In some messages, Khan included images of handguns. After Khan found out that the victim was attending school in North Carolina, he told the victim that that he was coming to North Carolina to see her. Airline records show that Khan flew to Raleigh on October 2, 2014. While traveling to North Carolina, Khan repeatedly texted and emailed the victim of his intention to find her. The victim notified the police, and Khan was arrested on state cyberstalking charges upon his arrival in North Carolina.
“No one deserves to be subjected to this kind of deplorable behavior, and our office will not tolerate violence against intimate partners,” said United States Attorney Rand. “We will continue to work effectively with our federal, state, and local partners to hold abusers accountable for their criminal acts and to help domestic violence victims take their lives back.”
This case was prosecuted by Assistant United States Attorney Anand P. Ramaswamy and investigated by the Town of Chapel Hill Police Department and by the University of North Carolina Department of Public Safety.
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Rowan County Man Sentenced for Attempting to Aid International Terrorist OrganizationRead the Press Release
GREENSBORO, N.C. - U.S. Attorney Ripley Rand of the Middle District of North Carolina, Assistant Attorney General for National Security John P. Carlin, and Special Agent in Charge John Strong of the FBI’s Charlotte, North Carolina, Division announced today that Donald Ray Morgan of Rowan County, North Carolina, was sentenced to 243 months in federal prison, 3 years supervised release and a $200.00 special assessment for attempting to provide material support to a designated foreign terrorist organization and possession of firearm by a felon.
Donald Ray Morgan, age 44, of Rowan County was sentenced this morning by United States District Court Judge Thomas D. Schroeder. On October 30, 2014, MORGAN pleaded guilty to attempted provision of material support to a foreign terrorist organization and possession of firearm by a felon.
According to court documents, Morgan knowingly attempted beginning in or about January 2014 until on or about August 2, 2014, to provide support and resources, including his own services, to the designated foreign terrorist organization al-Qa’ida in Iraq, also known as Islamic State of Iraq and the Levant (“ISIL”) and the Islamic State of Iraq an al-Sham (“ISIS”). On at least one occasion Morgan unsuccessfully attempted to travel from Lebanon to Syria to join ISIL/ISIS. Morgan also frequently used social media and an interview with an international journalist to express his support for the ISIL/ISIS and violent terrorist activities.
Court documents also reveal that Morgan possessed and later sold an assault rifle in January 2012 after having been convicted of a North Carolina state felony offense in 1997.
Morgan was initially arrested on August 2, 2014, at JFK International Airport in New York, New York, on a federal indictment for possession of a firearm by a felon, a violation of Title 18, United States Code, Sections 922(g)(1) and 924(a)(2).
U.S. Attorney Rand commended the work of the Federal Bureau of Investigation, the Greensboro Resident Agency Joint Terrorism Task Force (Greensboro Police Department, Guilford County Sheriff’s Office, High Point Police Department, and the Winston-Salem Police Department), the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the United States Marshals Service, and United States Customs and Border Protection in bringing MORGAN to justice. Rand added, “We will continue to do everything we can to shine a light on the false allure of violent extremism and protect innocent people from terrorist activity, whether inside or outside the United States.”
“Morgan attempted to travel to Syria in order to provide material support to ISIL,” said Assistant Attorney General Carlin. “The sentence in this case demonstrates that we will continue to bring to justice those who engage in this conduct, and that protecting the nation against these threats remains one of our highest priorities.”
"Donald Ray Morgan proved himself to be a threat to national security. He traveled overseas with intentions to join the violent terrorist group, ISIL in Syria. One of the FBI’s highest priorities is to stop American citizens who support terrorist organizations and ensure they are held accountable for their actions,” said John Strong, Special Agent in Charge of the FBI in North Carolina.
The investigation was conducted by the Federal Bureau of Investigation, Charlotte Division, the Greensboro Resident Agency Joint Terrorism Task Force (JTTF), and the Bureau of Alcohol, Tobacco, Firearms, and Explosives. The Greensboro JTTF includes the following agencies: Federal Bureau of Investigation, Greensboro Police Department, Guilford County Sheriff’s Office, High Point Police Department, and the Winston-Salem Police Department. The prosecution is being handled by Assistant United States Attorney Graham Green with the assistance of Trial Attorney Paul Casey of the Counterterrorism Section of the Justice Department’s National Security Division.
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Randolph County Business, Management Members IndictedRead the Press Release
GREENSBORO, N.C. – A Randolph County business, the company’s current president, and the company’s former president have been indicted for conspiring to import merchandise by means of fraudulent invoices and conspiring to commit international money laundering, announced Ripley Rand, United States Attorney for the Middle District of North Carolina.
Branco Enterprises, Inc., a North Carolina-incorporated business, located in Asheboro, N.C., as well as Chad Franklin Branson and Larry Wayne McKenzie, both of Randolph County, are alleged to have conspired and agreed to defraud the United States by filing false entry documents with United States Customs. The alleged false documents were associated with the importation of foreign-manufactured clothing in an alleged attempt to underpay import duties. The Indictment charges further that the defendants promoted this fraudulent underpayment of import duties by wiring money to Chinese clothing manufacturers. Branson and McKenzie face up to 25 years in federal prison and $750,000 in fines if convicted of both counts. The company faces fines up to $1 million if convicted of both counts.
The case is being investigated by the United States Department of Homeland Security (including Customs and Border Protection and Immigration and Customs Enforcement, Homeland Security Investigations), and the Internal Revenue Service.
An Indictment is not evidence of guilt. All defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
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Four Richmond County People SentencedRead the Press Release
GREENSBORO, N.C. – Four Richmond County people were sentenced on April 22, 2015 according to Ripley Rand , United States Attorney for the Middle District of North Carolina.
The four, Larry Shane King, John Monroe Wilson, Lisa Raines Tingle, and Richard Allen Mabe were sentenced by Senior United States District Court Judge James A. Beaty, Jr. A fifth co-defendant, Michael Anthony Treece will be sentenced on May 15, 2015.
The five were involved manufacture, distribution, and use of methamphetamine since sometime in 2013 until late 2014, in Richmond County, North Carolina.
Larry Shane King, 37, Ellerbe, NC was indicted on November 25, 2014 and pleaded guilty on January 22, 2015 to conspiracy to manufacture quantities of methamphetamine. He was sentenced to 151 months in prison, 3 years supervised release and a $100.00 special assessment.
John Monroe Wilson, 35, Ellerbe, NC was indicted on November 25, 2014 and pleaded guilty on January 22, 2015 to conspiracy to manufacture quantities of methamphetamine. He was sentenced to 144 months in prison, 3 years supervised release and a $100.00 special assessment.
Richard Allen Mabe, 50, Ellerbe, NC was indicted on November 25, 2014 and pleaded guilty on January 22, 2015 to conspiracy to manufacture quantities of methamphetamine. He was sentenced to 51 months in prison, 3 years supervised release and a $100.00 special assessment.
Lisa Raines Tingle, 52, Ellerbe, NC was indicted on November 25, 2014 and pleaded guilty on January 22, 2015 to guilty to conspiracy to possess pseudoephedrine, a list I chemical, knowing and having reasonable cause to believe that it would be used to manufacture methamphetamine Se was sentenced to 48 months in prison, 3 years supervised release and a $100.00 special assessment.
The case was investigated by the Richmond County Sheriff’s Office, North Carolina State Bureau of Investigation and by North Carolina Wildlife Resources Commission. The case was prosecuted by Assistant United States Attorney Clifton Barrett.
Docket Number: 1:14CR454
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Former United States Postal Service Employee IndictedRead the Press Release
GREENSBORO, N.C. – United States Attorney for the Middle District of North Carolina Ripley Rand announced today that a former United States Postal Service employee has been indicted by a federal grand jury for allegedly (1) committing Social Security fraud, (2) committing identity theft, and (3) committing the unauthorized use of an access device to obtain something of value.
The indictment alleges that Joyce Huskey Stanley, age 55, of Reidsville, N.C., falsely used Social Security numbers not assigned to her (two counts), unlawfully used the identification of another (two counts), and used an unauthorized access device with intent to defraud another (one count).
Ms. Stanley was released on a $50,000 unsecured bond.
The case is being investigated by the United States Postal Service – OIG, United States Secret Service and the Rockingham County Sheriff’s Office. The case is being prosecuted by Assistant United States Attorney Frank Chut.
An Indictment is not evidence of guilt. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Justice Department Sues Scotland County, North Carolina, Public Housing Agency and Two Employees for Sexual HarassmentRead the Press Release
WASHINGTON – The Justice Department today filed a lawsuit against Southeastern Community and Family Services, Inc. (formerly Four-County Community Services, Inc.), a public housing agency that administers the Section 8 voucher program in Scotland County, North Carolina, along with two of its employees John Wesley and Eric Pender. The lawsuit alleges that Wesley, the Section 8 housing coordinator, and Pender, the housing inspector, have sexually harassed female voucher program participants and applicants, in violation of the Fair Housing Act.
The complaint, filed in the U.S. District Court for the Middle District of North Carolina, alleges, among other things, that Wesley and Pender have subjected voucher program participants and applicants to unwanted sexual comments, sexual touching and other sexual acts, conditioned or offered Section 8 benefits in exchange for sexual acts and took adverse housing actions against those who rebuffed their sexual advances. As alleged in the complaint, Pender and Wesley have engaged in this conduct while exercising their authority as employees of Southeastern Community and Family Services (SCFS), and SCFS has failed to take reasonable preventive or corrective measures.
“No one, including those who seek public assistance for housing benefits, should be subjected to sexual harassment, particularly by the very people tasked with providing critical assistance,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division. “The Justice Department will continue its vigorous enforcement of the Fair Housing Act against those who abuse their power and authority.”
“To invade the safety and security of someone’s home with sexually harassing and other abhorrent behavior will not be tolerated,” said U.S. Attorney Ripley Rand for the Middle District of North Carolina. “The goal of this lawsuit is to vindicate the rights of those subjected to the types of shameful conduct alleged in the Complaint – conduct that is a violation both of federal law and of basic human decency.”
The suit seeks monetary damages to compensate victims, civil penalties, and a court order barring future discrimination and requiring additional preventive measures.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt. Individuals who believe that they may have been victims of housing discrimination by Southeastern Community and Family Services, John Wesley, or Eric Pender or have other information about this matter can contact the Justice Department at 1-800-896-7743, mailbox 94, or e-mail the Justice Department at [email protected]. Persons who believe that they have experienced unlawful housing discrimination elsewhere can contact the Justice Department at 1-800-896-7743, or e-mail [email protected], or contact the Department of Housing and Urban Development at 1-800-669-9777.
The complaint is an allegation of unlawful conduct. The allegations must be proven in federal court.
Twenty-eight Alamance County and Two Guilford County Residents IndictedRead the Press Release
GREENSBORO, N.C. – Twenty-seven men and three women have been indicted by a federal grand jury in Greensboro, North Carolina on charges of drug trafficking and illegal weapons possession, announced Ripley Rand, United States Attorney for the Middle District of North Carolina. The defendants reside in Alamance and Guilford Counties.
The fifteen indictments allege violations under Title 21, United States Code, Sections 846, 841(a)(1) and 843(b), and Title 18, United States Code, Sections 922(g)(1) and 924(c)(1)(A)(i), to include: conspiracy to distribute cocaine base and marihuana, the distribution of cocaine hydrochloride, cocaine base and marihuana, the use of communications facilities to facilitate the conspiracy to distribute marihuana, possession of firearms in furtherance of drug trafficking activity and possession of firearms by convicted felons.
Indicted and in custody are:
Dennis Ray Bass, 32
Lashaun Christopher Bolton, 23
Jamar Levelle Bradley, 23
Kelly Denise Bradley, 30
Debra Edmunds Brown, 49
William Earl Brown, Jr., 29
Mandrell Edward Davis, 24
Walter Lewis Ferguson, 40
Joshua Gant, Jr., 31
Jesse Nicholas Gowing, 27
Derek Leon Hinton, 29
Brandon Tremayne Holman, 30
Harry Deangelo Lea, 25
Laquan Gavanete Love, 21
Vondrell Xavier Majette, 26
Danny Lee McCollum, 30
Tyler Corda McGee, 21
Bradley Lee McNeil, 27
Bobby Deshaun Page, 30
Terrance Romeck Page, 33
Michael Brian Poteat, 31
Anthony Mandrell Rogers, 28
Richard Lamar Ruffin, 34
Donte Luther Williamson, 24
Indicted, but not yet in custody are:
Brittney Michelle Brown, 27
Stanley Curtis Gillom, 29
Grayland Duran Graves, 37
Travis Dewayne Jeffries, 27
Thomas Delawrence Leath, 45
Kendrick Eugene Sellars, 26
The cases were investigated by the Alamance County Sheriff’s Office, Burlington Police Department, Graham Police Department, Federal Bureau of Investigation (FBI), and the FBI Safe Streets Task Force, which includes the Eden Police Department, Greensboro Police Department, Guilford County Sheriff’s Office, High Point Police Department, and the Winston-Salem Police Department, Bureau of Alcohol, Tobacco, Firearms and Explosives, United States Drug Enforcement Administration, and the United States Marshal’s Service.
The charges contained in the indictments are allegations. The defendants are presumed innocent unless and until each is proven guilty beyond a reasonable doubt in a court of law.
Middle District of North Carolina U.S. Attorney’s Office Collects $1,663,637.55 in Civil and Criminal Actions for U.S. Taxpayers in Fiscal Year 2014Read the Press Release
GREENSBORO, N.C. – U.S. Attorney Ripley Rand announced today that the Middle District of North Carolina collected $1,663,637.55 in criminal and civil actions in Fiscal Year 2014. Of this amount, $1,412,194.72 was collected in criminal actions and $251,422.83 was collected in civil actions.
Attorney General Eric Holder announced on November 19, 2014, that the Justice Department collected $24.7 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2014. The more than $24 billion in collections in FY 2014 represents nearly eight and a half times the appropriated $2.91 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.
“Every day, the Justice Department’s federal prosecutors and trial attorneys work hard to protect our citizens, to safeguard precious taxpayer resources, and to provide a valuable return on investment to the American people,” said Attorney General Holder. “Their diligent efforts are enabling us to achieve justice and recoup losses in virtually every sector of the U.S. economy. And this result shows the fruits of the Justice Department’s tireless work in enforcing federal laws; in protecting the American people from violent crime, national security threats, discrimination, exploitation, and abuse; and in holding financial institutions accountable for their roles in causing the 2008 financial crisis.”
The U.S. Attorney’s Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
The U.S. Attorney’s Office in the Middle District of North Carolina, working with partner agencies and divisions, also collected $2,457,822.00 in asset forfeiture actions during FY 2014. Forfeited assets deposited into the Department of Justice Asset Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
North Carolina Man Pleads Guilty to Attempting to Aid International Terrorist OrganizationRead the Press Release
GREENSBORO, N.C. – John Carlin, Assistant Attorney General for National Security, Ripley Rand, United States Attorney for the Middle District of North Carolina and John Strong, Special Agent in Charge of the FBI in North Carolina announced today that Donald Ray Morgan pleaded guilty to attempting to provide material support to a designated foreign terrorist organization and possession of firearm by a felon.
Morgan, 44, of Rowan County, North Carolina, pleaded guilty this morning before United States District Court Judge Thomas D. Schroeder. Morgan was charged on Oct. 30, 2014, in a bill of information with attempted provision of material support to a foreign terrorist organization. The offense is punishable by a maximum of fifteen years imprisonment and a $250,000 fine.
“Today’s plea represents our continued commitment to confronting those who attempt to travel abroad to support terrorist organizations,” said Carlin. “Preventing individuals from joining ISIL and holding accountable those who attempt to provide material support to the terrorist organization remains one of our highest priorities.”
"Today's plea is a sad reminder that those who wish to aid foreign terrorist organizations can come from any community and from any background," stated Rand. "We will continue to do everything we can to work effectively with our law enforcement partners and protect innocent people from terrorist activity, whether here in the United States or abroad."
"Donald Ray Morgan proved himself to be a threat to national security,” said Strong. “He traveled overseas with intentions to join the violent terrorist group, ISIL in Syria. American citizens who support terrorist organizations must be held accountable for their actions.
According to court documents, Morgan knowingly attempted to provide support and resources beginning in January 2014 until on or about Aug. 2, 2014, including his own services, to al-Qa’ida in Iraq, also known as Islamic State of Iraq and the Levant (ISIL) and the Islamic State of Iraq and al-Sham (ISIS), a designated foreign terrorist organization. On at least one occasion Morgan unsuccessfully attempted to travel from Lebanon to Syria to join ISIL/ISIS. Morgan also frequently used social media and an interview with an American journalist to express his support for ISIL/ISIS and violent terrorist activities.
Morgan was initially arrested on Aug. 2, 2014, at JFK International Airport in New York City on a federal indictment for possession of a firearm by a felon. The firearm offense occurred in January 2012. Possession of a firearm by a felon is punishable by a maximum of ten years imprisonment a $250,000 fine.
Sentencing is set for Feb. 18, 2015.
The investigation was conducted by the Federal Bureau of Investigation, Charlotte Division, and Resident Agency Joint Terrorism Task Force (JTTF). The Greensboro JTTF consists of the following agencies: Federal Bureau of Investigation, Greensboro Police Department, Guilford County Sheriff’s Office, High Point Police Department and the Winston-Salem Police Department. The prosecution is being handled by Assistant United States Attorney Graham Green with the assistance of the Counterterrorism Section of the Justice Department’s National Security Division.
Seven Middle District Men IndictedRead the Press Release
GREENSBORO, N.C. – Six Chatham County men and an Alamance County man were indicted by a federal grand jury for drug trafficking, announced Ripley Rand, Unites States Attorney for the Middle District of North Carolina. The seven people are currently in custody.
The indictment alleges that beginning in or about 2009 and continuing up to September 2014, the defendants did conspire to unlawfully distribute cocaine hydrochloride and methamphetamine. The investigation culminated on October 10, 2014 when the defendants were arrested. Six kilograms of cocaine hydrochloride and over $100.000.00 in cash were also seized at that time. The government has also begun asset forfeitures proceedings on more than ten acres of property located in Siler City.
Indicted were:
Abel Espinoza Garcia, 25, Siler City NC
Valentin Gorostieta Hernandez, 30, Siler City NC
Mauro Gorostieta Hernandez 22, Siler City NC
Kevin Ocampo, 19, Siler City NC
Antonio Ocampo, 42, Siler City NC
Constantino Alavarez Santanna, 37, Siler City NC
Craig Leevon McMasters, 42, Mebane NC
Chief Gary Tyson of the Siler City Police Department remarked, “I am very proud of my officers that work on this case. We had great collaboration between the different agencies involved. Our Town and surrounding areas are safer because of this effort. I hope the partnerships that were forged while working this case will lead to future operations that we can work together in a collaborative manner.”
Sheriff Richard Webster of Chatham County added: “The use of illegal drugs has always been an issue for law enforcement nationwide. By working together at local, state and federal levels, greater things can be accomplished to make Chatham County a safer community to live. This was certainly proven with this collaboration effort.”
The case was investigated by the Chatham County Sheriff’s Office, Randolph County Sheriff’s Office, Siler City Police Department, North Carolina State Bureau of Investigation, the United States Drug Enforcement Administration, and the Internal Revenue Service, Criminal Investigations Division.
The charges contained in the indictment are allegations. The defendants are presumed innocent unless and until he is proven guilty beyond a reasonable doubt in a court of law.
Former Rowan County Resident Found Guilty of Federal Fraud ChargesRead the Press Release
GREENSBORO, N.C. – Sandy Wade Parsons was found guilty of forty-three federal fraud charges, announced Ripley Rand, United States Attorney for the Middle District of North Carolina. He will be sentenced by United States District Judge Thomas D. Schroeder in Winston-Salem on February 18, 2015.
Sandy Parsons, 40, was found guilty of one count of conspiracy to defraud the government, which carries a maximum sentence of five years in prison and a $250,000 fine; one count of aggravated identity theft, which carries a mandatory sentence of two years, consecutive to any other sentence, and a $250,000 fine; one count of false statement to a government agency, which carries a maximum sentence of two years in prison and a $250,000 fine; twenty counts of theft of government funds which carries a maximum sentence of five years in prison and a $250,000 fine; and twenty counts of mail fraud which carries a maximum sentence of twenty years in prison and a $250,000 fine.
Casey Stone Parsons, Sandy Parsons's co-defendant, pleaded guilty on October 1, 2014. Her sentencing is scheduled for February 10, 2015.
The Casey and Sandy Parsons case was investigated by the Rowan County Sheriff’s Office, the Federal Bureau of Investigation, Internal Revenue Service, Criminal Investigations, and the Social Security Administration. The Casey Parsons and Sandy Parsons cases are being prosecuted by Assistant United States Attorney Anand Ramaswamy.
Durham Public School Employee Pleads Guilty to Federal Student Aid FraudRead the Press Release
WINSTON-SALEM, N.C. – Jasmine Crossland, of Durham, NC, pleaded guilty in federal court on October 9, 2014, to making false statements on student financial aid applications. Crossland is currently employed as a Teacher's Assistant in the Durham Public School System.
Ripley Rand, United States Attorney for the Middle District of North Carolina, and Mark A. Smith, Special Agent in Charge of the U.S. Department of Education Office of Inspector General’s Technology Crimes Division, made the announcement after the pleas were accepted by United States District Judge Thomas D. Schroeder.
Jasmine Crossland’s sentencing is scheduled for February 17, 2015. Jasmine Crossland faces a maximum penalty of 5 years in prison, a fine of up to $250,000, and full payment of restitution.
Jasmine Crossland's guilty plea in this matter is an admission of the facts contained in the Criminal Information by which she was indicted. The Factual Basis of the Indictment states Jasmine Crossland attended North Carolina Central University (NCCU) as a student from 2007 to 2012. During that period, Jasmine Crossland was awarded $67,405 in U.S. Federal Education grants or loans, and $54,388 in tuition grants from the D.C. Office of the State Superintendent of Education, Government of the District of Columbia (“OSSE”) that were used to pay costs associated with attending NCCU. Over $39,000 of the grant money was refunded directly to Jasmine Crossland by NCCU. For each year Jasmine Crossland attended NCCU between 2008 and 2012, she filed a Free Application for Federal Student Aid (FAFSA) with the U.S. Department of Education and reported that her mother, Donnica Crossland, had no income. During that same period, Jasmine Crossland filed applications for education grants with the D.C. OSSE, and in those applications stated Donnica Crossland was not employed and received no income. Jasmine Crossland also submitted a Federal Student Aid Verification worksheet containing false information to NCCU and provided additional false documents in support of the worksheet, including fraudulent copies of an IRS Form 1040 that she purported to be signed by her father. When interviewed by federal agents concerning this matter, Jasmine Crossland provided a sworn written affidavit denying any fraudulent activity.
To help obtain OSSE grants for Jasmine Crossland’s use at NCCU, and to help obtain OSSE grants for Jasmine Crossland’s sister for use at a Virginia college, Donnica Crossland affirmed and signed applications on five separate occasions falsely stating that she was not employed and received no income. For each year during the period from December 2006 through December 2012, however, Donnica Crossland received substantial income, earning a total of $521,819 from her employment with the U.S. Department of Transportation. On September 18, 2014, Donnica Crossland pled guilty in Richmond, VA, to making false statements to federal agents in connection with an investigation of student aid fraud. In total, the Crossland family fraudulently obtained $234,981 from the U.S. Department of Education and OSSE.
In 2013, the U.S. Department of Education’s Office of the Inspector General commenced an investigation of the Crosslands’ aid applications and supporting documents. On July 30, 2013, Department of Education Inspector General agents interviewed Donnica Crossland. During the interview, Donnica Crossland attempted to conceal her involvement by knowingly and falsely stating that she had filled out some of Jasmine Crossland’s paperwork during the summer prior to her first year of college, but had nothing to do with their financial aid applications thereafter. On November 7, 2013, Department of Education Inspector General agents again interviewed Donnica Crossland. During the interview, Donnica Crossland attempted to conceal her involvement by knowingly and falsely stating that she had no knowledge of any of the financial assistance applications submitted by Jasmine Crossland after 2007.
This case was investigated by the U.S. Department of Education’s Office of the Inspector General. Assistant U.S. Attorney Stephen Inman is prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Middle District of North Carolina. Related court documents and information may be found on the website of the District Court for the Middle District of North Carolina or on PACER by searching for Case No. 1:14-CR-381.
November 2014 ElectionsRead the Press Release
GREENSBORO, N.C. – Middle District of North Carolina United States Attorney Ripley Rand announced today that Assistant United States Attorney Robert M. Hamilton will lead the efforts of the United States Attorney’s Office in connection with the Justice Department=s nationwide Election Day Program for the upcoming November 4, 2014, general elections. AUSA Hamilton has been appointed to serve as the Election Officer for the Middle District of North Carolina. In this capacity, AUSA Hamilton is responsible for overseeing the District=s handling of allegations of election fraud and voting rights abuses, as well as working in consultation with the Justice Department as to these allegations.
United States Attorney Ripley Rand said, "Every citizen must be able to vote without fear of interference or discrimination. Every citizen’s vote must be counted without fear that it will be stolen because of fraud. The Department of Justice will act promptly and aggressively to protect the integrity of the election process."
The Department of Justice has an important role in deterring election fraud and discrimination at the polls, and combating these violations whenever and wherever they occur. The Department’s long-standing Election Day Program furthers these goals, and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open on Election Day.
Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input. It also contains special protections for the rights of voters and provides that they can vote free from acts that intimidate or harass them. For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are efforts to uncover illegal voting may violate federal voting rights law. Furthermore, federal law protects the right of voters to mark their own ballots or to be assisted in voting by a person of their choice.
Voting is the cornerstone of American democracy. We all must ensure that those who are entitled to vote exercise their rights if they choose, and that those who seek to corrupt the voting process are brought to justice. With respect to complaints of election fraud or voting rights abuses, United States Attorney Ripley Rand stated that AUSA Robert M. Hamilton will be on duty in the Middle District of North Carolina while the polls are open. AUSA Hamilton and the United States Attorney’s Office will ensure that such complaints are directed to the appropriate authorities. AUSA Hamilton can be reached by the public at the following telephone number: 336-333-5351.
Furthermore, the Federal Bureau of Investigation [FBI] will have Special Agents available in each field office and resident agency throughout the country to receive allegations of election fraud and other election abuses on Election Day. The local FBI field office can be reached by the public at 336-855-7770.
Complaints about possible violations of the federal voting rights laws can be made directly to the Civil Rights Division’s Voting Section in Washington by phone at 1-800-253-3931 or (202) 307-2767, by fax at (202) 307-3961, by email to [email protected] or by complaint form at http://www.justice.gov/crt/complaint/votintake/index.php.
United States Attorney Ripley Rand said, “Ensuring that our elections are free and fair depends in large part on the cooperation of the public. If you have specific information about voters being harassed or discriminated against, voter fraud, or other voting irregularities, please make that information available immediately to our Office, the FBI, or the Department of Justice’s Civil Rights Division.”
Owner of Tax Return Preparation Franchise and Health Provider Business Sentenced to Prison for Tax Fraud, Healthcare Fraud and Money LaunderingRead the Press Release
WASHINGTON – A man formerly of Raleigh, North Carolina, and now of Miami, was sentenced today to serve 135 months in prison for tax fraud, healthcare fraud and money laundering crimes in two separate cases in federal court, announced Deputy Assistant Attorney General Ronald A. Cimino of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand for the Middle District of North Carolina.
Claude Arthur Verbal II was also ordered to serve three years of supervised release following his prison term, to pay restitution of $4,078,584 to the Internal Revenue Service (IRS) and to pay $2,382,378 to the North Carolina Department of Health and Human Services. On April 9, Verbal pleaded guilty to one count of conspiracy to defraud the United States, one count of aiding and assisting the preparation of false tax returns, one count of healthcare fraud and one count of money laundering.
“Mr. Verbal’s sentence sends a clear message to those who operate fraudulent tax return businesses,” said Deputy Assistant Attorney General Ronald A. Cimino of the department’s Tax Division. “The Justice Department will continue to prosecute and seek just punishment against those who prepare fraudulent tax returns.”
The Tax Case
Verbal was the owner of Nothing But Taxes (NBT), a tax return preparation franchise with 10 branches throughout the state of North Carolina that operated from 2005 to at least 2012. Verbal personally prepared false tax returns for clients of NBT and taught and encouraged his employees to do so as well. Verbal and NBT employees frequently offered clients a dramatically larger tax refund if the client agreed to make a cash payment to their tax preparer. These cash payments were over and above the flat return preparation fee that NBT charged every client, whether or not their return was falsified.
From 2005 to 2007, Verbal personally prepared dozens of false tax returns on a computer at NBT’s location on Fayetteville Street in Durham, North Carolina. One such return was a 2006 tax return for an NBT client that falsely reported the client had a Schedule C business and a dependent, which Verbal knowingly prepared and electronically filed with the IRS.
The most common types of falsifications at NBT were false dependents, false Schedule C businesses, false tip income, false Earned Income Tax Credits and false education credits. Verbal falsified returns using these items and taught his managers and line employees how to do so as well. Verbal and many of his employees facilitated the purchase and sale of false dependents at NBT by purchasing the names, dates of birth and social security numbers of individuals from the community for use as false dependents on other clients’ tax returns.
“Mr. Verbal’s fraudulent schemes victimized taxpayers in multiple ways, damaged the Medicaid program and the many patients who rely on it,” said U.S. Attorney Ripley Rand for the Middle District of North Carolina. “We will continue to work with law enforcement and the victimized agencies to shut down these types of fraud schemes, hold the fraudsters accountable, and return the ill-gotten gains to the programs for which they were intended.”
In November 2010, one of Verbal’s employees informed a U.S. probation officer of the fraudulent practices at NBT’s location on Fayetteville Street. The probation officer informed Verbal of this fraud and he falsely denied knowledge of it. Afterward, Verbal took steps to keep the profitable Fayetteville Street location open and to continue operating as usual, but to also further distance himself from the fraudulent practices. In order to do this, Verbal transferred the electronic filing privileges for that NBT branch to a nominee. Verbal and others jointly persuaded a relative of Verbal who allowed Verbal to use their name to apply for new electronic filing privileges for the Fayetteville Street location. In exchange, Verbal and his wife paid the relative $10,000, and the relative had no role in operating NBT, no professional tax experience and no knowledge of the fraud that was occurring at NBT.
Later, in 2012, the IRS shut down electronic filing privileges at all 10 NBT branches due to persistent fraud. Verbal re-applied for electronic filing privileges twice for all NBT locations, first in the name of the relative and, when that attempt failed, in the name of another relative who had no knowledge of NBT’s business.
The Healthcare Fraud Case
According to court documents, Verbal was the owner and operator of Infinite Wellness Concepts (IWC), a Medicaid behavioral health provider with locations in Burlington, Durham and Greensboro, North Carolina. IWC was contracted to provide group therapy, intensive in-home services, and enhanced mental health and substance abuse services. Verbal acquired at least $1 million in fraudulently obtained funds from the Medicaid program. The fraudulent activities included:
• changing diagnosis codes so that codes with higher reimbursement rates could be billed;
• falsely inflating the number of clients treated during group therapy;
• billing for services not rendered and submitting false treatment notes in support of the services not rendered using forged signatures from counselors and therapists;
• unqualified personnel conducting therapy; and
• creating fraudulent clinical assessments and creating clinical assessments prepared and signed by unqualified preparers.
Verbal used the proceeds of the tax and healthcare fraud schemes to make extensive purchases of luxury cars, homes and jewelry. The money laundering charge to which Verbal pleaded guilty relates to the purchase of a $52,000 diamond ring with the proceeds of healthcare fraud.
“It is both despicable and illegal when scammers like Claude Verbal cheat the Medicaid program and its beneficiaries by billing for badly needed services for poor and mentally ill patients – services that were never actually provided or were provided by unqualified staff -- just so that Verbal could build a $700K+ bank account and go on a diamond-encrusted shopping spree with the ill-gotten money,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG), Atlanta Regional Office. “Verbal’s audacious, greed-fueled fraud cheated both taxpayers and needy patients; now, thanks to our hard working investigators and our law enforcement partners, Verbal will pay dearly for his reprehensible crimes.”
“Today’s sentence is the strongest type of affirmation that criminals such as Mr. Verbal, who commit tax fraud and engage in other criminal activities, will be forced to bear the consequences of their actions,” said Special Agent in Charge Thomas J. Holloman for IRS-Criminal Investigation. “We, along with our law enforcement partners are committed to working together in bringing individuals such as Mr. Verbal to justice.”
In the course of the healthcare fraud investigation, law enforcement authorities seized $765,917 from bank accounts controlled by Verbal, a 2011 Toyota Camry and four pieces of diamond jewelry, including a 7-carat diamond ring. The United States initiated a civil forfeiture action alleging the properties constituted proceeds traceable to the healthcare fraud and on Sept. 19, 2013, U.S. District Judge Catherine C. Eagles entered an order forfeiting the property to the government.
The tax case against Verbal was investigated by agents of IRS - Criminal Investigation and was prosecuted by Assistant U.S. Attorney Frank Chut for the Middle District of North Carolina and Trial Attorney Jonathan Marx of the Tax Division. The healthcare fraud case against Verbal was investigated by agents of HHS-OIG, the North Carolina State Bureau of Investigations, the North Carolina Department of Justice’s Medicaid Investigations Division and IRS – Criminal Investigation, and was prosecuted by Assistant U.S. Attorney Robert Hamilton for the Middle District of North Carolina.
Medicaid Provider Pleads to Federal Fraud ChargesRead the Press Release
GREENSBORO, N.C. – A Timberlake, North Carolina, woman pleaded guilty to health care fraud and money laundering, announced United States Attorney Ripley Rand of the Middle District of North Carolina.
Tracie Yvette Clay, 46, of Timberlake, North Carolina, pleaded guilty in federal court in Greensboro before Chief United States District Court Judge William L. Osteen, Jr., to felony charges of health care fraud and money laundering.
Clay operated a mental health business called NC Behavioral Health and Counseling Services, Inc., which allegedly provided mental health assessments and treatment to Medicaid clients. The business had offices in both Durham and Fayetteville, North Carolina. Documents filed at the time of the guilty plea indicated that Clay used the Medicaid identification numbers of individuals who did not know Clay or anything about her company and did not know how Clay obtained their Medicaid identification numbers. Court documents indicate that the loss to the Medicaid program as a result of Clay’s fraud is approximately $1,000,000 (one million dollars).
The defendant faces a maximum penalty of ten years confinement. The plea agreement requires Clay to make restitution to the Medicaid program. Sentencing will occur in Greensboro on December 11, 2014.
The case was investigated by the Medicaid Investigations Division of the North Carolina Attorney General’s Office and agents with IRS - Criminal Investigation Division. The case is being prosecuted by Assistant United States Attorney Robert M. Hamilton and Special Assistant United States Attorneys Michael Heavner and Daniel Spillman of the Medicaid Investigations Division of the North Carolina Attorney General’s Office.
North Carolina Woman Sentenced for Role in Widespread Tax Return and Identity Fraud ConspiracyRead the Press Release
WASHINGTON, DC – The Justice Department and the Internal Revenue Service (IRS) announced that a Durham, North Carolina, woman was sentenced today to serve 30 months in federal prison for conspiring to defraud the IRS.
Tasha Renee Smith was sentenced in Greensboro, North Carolina, by U.S. District Judge Catherine Eagles, who ordered her to serve three years of supervised release and to pay restitution to the IRS in the amount of $375,578. Smith pleaded guilty on April 8 to the conspiracy charge.
According to court documents, Smith was employed by Nothing But Taxes (NBT), a tax return preparation business with branches throughout North Carolina, for parts of the filing seasons for tax years 2005, 2006 and 2007. While working at NBT’s Durham location, Smith intentionally falsified tax returns for many clients. Common techniques she employed include the addition of false dependents to tax returns and inflating the Earned Income Tax Credit for low-income clients by adding additional, fictitious income.
According to court documents, during her second and third seasons preparing returns at NBT, Smith made extensive efforts to solicit and purchase the names, dates of birth and social security numbers of individuals in the community. Smith used the identities she purchased as false dependents on returns she prepared at NBT later that tax year. Smith charged clients a side cash payment in exchange for a false dependent, in addition to the flat return preparation fee charged by NBT.
According to court documents, during the 2008 tax filing season, Smith and two business partners opened their own tax return preparation business, Tax Wizards, with branches in Durham and Roxboro, North Carolina. Smith owned and operated the business, and hired her own return preparers. Like NBT, Tax Wizards became a center of tax fraud. Smith encouraged return preparers she hired at Tax Wizards to keep any falsifications on tax returns they prepared modest, in the $1,200 to $1,500 range, to avoid IRS scrutiny. Smith knew that return preparers she employed at Tax Wizards were falsifying returns for clients because she had cautioned the return preparers to keep any falsifications modest and because she witnessed some falsifications occur on the premises. Smith intentionally tried to avoid being physically present at Tax Wizards, in part to avoid the hassle of day-to-day management, but also because she did not want to be present while she knew fraud was occurring.
Court documents state that Smith and another person opened a tax return preparation business during the 2009 tax filing season called Keystone Tax Services, also in Durham. Keystone also became a hotbed of tax fraud. Smith also intentionally tried to avoid being physically present at Keystone for the same reasons as with Tax Wizards. Around April 2011, Smith closed down Tax Wizards and Keystone. Smith became aware that return preparers at her businesses were falsifying returns by creating fictitious Form W-2’s ostensibly issued by non-existent businesses. The falsification was so rampant and involved so much money that Smith feared IRS detection, so she shuttered Tax Wizards and Keystone.
According to court documents, during filing season for tax year 2011, in January to April 2012, Smith and other investors opened a business called Tax Solutions. Tax Solutions had four branches throughout North Carolina, specifically, in Roxboro, Durham, Burlington and Kinston. Smith was hired in exchange for a share of the business’s profits and was charged with hiring managers for the various Tax Solutions branches. She hired at least one manager whom she knew to be complicit in the fraudulent practices at Tax Wizards and Keystone. Return preparers at Tax Solutions also falsified numerous tax returns for their clients.
The case against Smith was investigated by Special Agents of IRS-Criminal Investigation. It was prosecuted by Assistant U.S. Attorney Frank Chut for the Middle District of North Carolina and Trial Attorney Jonathan Marx of the Justice Department’s Tax Division.
Husband and Wife Arrested on Federal Fraud ChargesRead the Press Release
GREENSBORO, N.C. – Sandy and Casey Parsons were arrested today on a federal criminal indictment charging them with fraud, announced Ripley Rand, United States Attorney for the Middle District of North Carolina. The 76-count criminal indictment was unsealed today following the couple’s arrest by FBI and IRS-CI agents in Fayetteville, N.C.
The indictment alleges that, from February 2010 to August 2013, Sandy Parsons, 40, and Casey Parsons, 39, committed tax fraud, mail fraud, theft of government funds, and identity theft, and engaged in a conspiracy to defraud the government. The indictment alleges that the Parsons received government funded adoption assistance, Medicaid, Social Security, and Food and Nutrition Services benefits for a dependent that did not live with them and used the mail to commit the fraud. The indictment also alleges that Casey Parsons fraudulently used the identities of other persons as dependents and used other false information when preparing federal tax returns.
Sandy and Casey Parsons are charged with one count of conspiracy to defraud the government, which carries a maximum sentence of five years in prison and a $250,000 fine; twenty counts of theft of government funds, each of which carries a maximum sentence of five years in prison and a $250,000 fine; and twenty counts of mail fraud, each of which carries a maximum sentence of twenty years in prison and a $250,000 fine.
The indictment also charges Sandy Parsons with one count of aggravated identity theft, which carries a mandatory sentence of two years, consecutive to any other sentence, and a $250,000 fine; and one count of false statement to a government agency, which carries a maximum sentence of two years in prison and a $250,000 fine.
Casey Parsons is also charged with one count of false pretense in a health care matter, which carries a maximum sentence of five years in prison and a $250,000 fine; two counts of Social Security fraud, each of which carries a maximum sentence of five years in prison and a $250,000 fine; fifteen counts of aggravated identity theft, each of which carries a mandatory sentence of two years, consecutive to any other sentence, and a $250,000 fine; two counts of false statement to a government agency, each of which carries a maximum sentence of five years in prison and a $250,000 fine; six counts of aiding in the preparation of a false tax return, each of which carries a maximum sentence of three years in prison and a $250,000 fine; six counts of 2 wire fraud, each of which carries a maximum sentence of twenty years in prison and a $250,000 fine; and one count of making false claim against the government, which carries a maximum sentence of five years in prison and a $250,000 fine.
Sandy and Casey Parsons are scheduled to have their initial appearance at 2:30 p.m. today in U.S. District Court in Winston-Salem.
The case was investigated by the Rowan County Sheriff’s Office, the Federal Bureau of Investigation, and Internal Revenue Service, Criminal Investigations. The case is being prosecuted by Assistant United States Attorney Anand Ramaswamy.
The charges contained in the indictment are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Randolph County Resident Sentenced for Government Energy Saving Program FraudRead the Press Release
GREENSBORO, N.C. – United States Attorney Ripley Rand of the Middle District of North Carolina announced today that Lisa Turner Wright, 51, of Franklinville, North Carolina, was sentenced to a 12 month prison term by the Honorable Catherine C. Eagles in federal court in Greensboro, North Carolina, on June 30, 2014.
Wright pleaded guilty to conspiring with Tiffanie Annette Wilson in a scheme to defraud a federally funded program designed to help low income North Carolinians save energy and reduce utility costs by making homes more energy efficient. Wilson was the weatherization director for Regional Consolidated Services (RCS), a nonprofit organization in Asheboro, North Carolina, which administered the energy program. Wilson awarded RCS contracts under the program to Wright’s company, New Age Concepts (NAC), and Wright paid money to Wilson once RCS paid program funds to NAC.
Lisa Turner Wright was also ordered to pay restitution of $324,651 and to serve three years of supervised release after completing her sentence. Tiffanie Annette Wilson, 39, of Randleman, North Carolina, was previously sentenced on March 11, 2014, to 24 months imprisonment for her involvement in the scheme.
The case was investigated by the Federal Bureau of Investigation, the Department of Energy/Office of Inspector General, and the State Bureau of Investigation. This case was prosecuted by Assistant United States Attorney Robert M. Hamilton.
Man Sentenced for Identity TheftRead the Press Release
GREENSBORO, N.C. – A Myrtle Beach, South Carolina, man was sentenced to 23 months of imprisonment for fraudulently obtaining Treasury checks and aggravated identity theft, announced United States Attorney Ripley Rand.
Senior United States District Judge N. Carlton Tilley, Jr., sentenced Herber Alexsander Gonzales-Escobar, 24, to 23 months in prison. Gonzales-Escobar was also ordered to pay a $200.00 special assessment, and will be deported back to Honduras. Gonzales-Escobar had pleaded guilty to fraudulently obtaining Treasury checks and aggravated identity theft on November 7, 2013.
On July 29, 2013, Gonzales-Escobar was operating a motor vehicle near Pinnacle, North Carolina, when he was stopped by a North Carolina Highway Patrol trooper. During the stop, the trooper discovered four United States Treasury checks made out to four different individuals. Along with the checks were identifying documents specific to each individual’s name as listed on the Treasury checks.
The case was investigated by the North Carolina Highway Patrol, Internal Revenue Service - Criminal Investigation Division, and the United States Secret Service, and prosecuted by Assistant United States Attorney Frank Chut.
Durham Man Sentenced for Child PornographyRead the Press Release
GREENSBORO, N.C. – A Durham, North Carolina, man has been sentenced for his involvement with child pornography, announced United States Attorney Ripley Rand.
On June 5, 2014, William Lee Ebenstein, age 57, was sentenced to 144 months in prison, 10 years of supervised release, a $10,000.00 fine, and a $100.00 special assessment for receiving child pornography. Court documents revealed that Ebenstein used the Internet to receive child pornography. United States District Judge Catherine C. Eagles imposed the sentence.
The case was investigated by the Duke University Police Department, Durham Police Department and the Federal Bureau of Investigation, and was prosecuted by Assistant United States Attorney Anand Ramaswamy.
California Man Sentenced for Cash SmugglingRead the Press Release
GREENSBORO, N.C. –A California man was sentenced to 50 months in prison for bulk cash smuggling, announced United States Attorney Ripley Rand.
Adolfo Pulido, age 55, pled guilty on January 3, 2014, and was sentenced on May 13, 2014. Chief United States District Judge William L. Osteen, Jr., sentenced Pulido to a total of 50 months in federal prison, followed by three years of supervised release. A special assessment of $100 was also imposed.
Pulido traveled to Asheboro, North Carolina, with the intent to transport over $1.5 million in cash back to California and then to Mexico without reporting the movement of the cash across the Mexican border as required by federal law. Cash in the amount of $1,567,576.00 was seized from Pulido during the investigation.
The case was investigated by the Asheboro Police Department, Randolph County Sheriff’s Office, Buncombe County Sheriff’s Office, Henderson County Sheriff’s Office, U. S. Drug Enforcement Administration and the Internal Revenue Service. The case was prosecuted by Assistant United States Attorney Sandra Hairston.
Kannapolis Couple Sentenced on Child Pornography ChargesRead the Press Release
GREENSBORO, N.C. –A Kannapolis, North Carolina, couple have been sentenced for their involvement with child pornography, announced United States Attorney Ripley Rand.
On May 13, 2014, Steven Anthony Webb, age 42, was sentenced to 120 months incarceration and 15 years supervised probation for accessing child pornography with the intent to view it. On May 14, 2014, Tracy Ann Webb, age 38, was sentenced to 36 months in prison and 1 year supervised release for misprision of a felony. Chief United States District Judge William L. Osteen, Jr., was the sentencing judge in both cases. Steven Webb is a former City of Kannapolis police officer.
The case was investigated by the Cabarrus County Sheriff’s Office and the Federal Bureau of Investigation, and was prosecuted by Assistant United States Attorney Anand Ramaswamy.
Davidson County Woman Sentenced for Filing False Tax Return and Aggravated Identity TheftRead the Press Release
GREENSBORO, N.C. – A Davidson County woman was sentenced to 39 months in prison for filing a false tax return and aggravated identity theft, announced United States Attorney Ripley Rand.
Veronica Levonne Jones, age 40, of Lexington, North Carolina pled guilty on December 2, 2013 and was sentenced on May 13, 2014. Chief United States District Judge William L. Osteen, Jr., sentenced Jones to a total of 39 months in federal prison, ordered her to pay $199,000 in restitution, and imposed one year of supervised released after she leaves prison.
Jones operated Tax Refund Solutions (TRS) in Lexington, North Carolina. During the operation of that business, Jones knowingly falsified her income and used the name and social security of another person on her tax return.
"During tax filing season, return preparers and taxpayers should be aware of the serious consequences facing those who aid or assist in the filing of fraudulent tax returns," said Acting Special Agent in Charge Daniel D. Burget, IRS-Criminal Investigation. "Those who fly in the face of the tax laws face investigation, prosecution, and if convicted, significant prison sentences and substantial fines."
The case was investigated by the Internal Revenue Service-Criminal Investigations and prosecuted by Assistant United States Attorney Stephen Inman.