Middle District of North Carolina
Press releases recorded for this federal judicial district.
North Carolina Tax Preparer Sentenced to Prison for Conspiring to Defraud the IRSRead the Press Release
WASHINGTON – A North Carolina return preparer was sentenced today to 15 months in prison for conspiring to defraud the IRS.
According to court documents and statements made in court, from 2012 through 2016, Audrey Renetta Odom, of Durham, conspired with Karen Jones and Andrea Pasley to prepare false returns for clients. The returns fraudulently lowered the clients’ tax liabilities or inflated their refunds by claiming false education credits or dependents or by manipulating the clients’ income to qualify for larger earned income tax credits. Odom admitted that some clients were charged up to $2,000 for preparing returns. Based on an analysis of the falsely claimed education credits, the tax loss is over $1.2 million.
Jones pleaded guilty to conspiracy to defraud the IRS on Nov. 5, 2020, and was sentenced to 22 months in prison for her role in the conspiracy. Pasley pleaded guilty to conspiracy to defraud the IRS on May 6 and is scheduled to be sentenced on Oct. 29.
In addition to the term of imprisonment, U.S. District Judge William L. Osteen Jr. ordered Odom to serve three years of supervised release and to pay approximately $1,239,847 in restitution to the United States.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Sandra J. Hairston for the Middle District of North Carolina made the announcement.
IRS-Criminal Investigation investigated the case.
Assistant Chief Todd Ellinwood and Trial Attorney Kavitha Bondada of the Tax Division prosecuted the case.
###
Law Enforcement Officer Charged with Transfer of Firearm to a Felon, Transferee Charged with Felon in PossessionRead the Press Release
GREENSBORO, N.C. –Timothy Jay Norman, age 47, of Browns Summit, NC, and Tommy Lee Hudson, age 33, of Reidsville, NC, were arrested today on criminal firearm charges.
The Criminal Complaints unsealed today allege that Norman, a North Carolina Highway Patrol State Trooper, transferred firearms to Hudson, knowing or having reasonable cause to believe that Hudson is a convicted felon.
The defendants had initial appearances in federal court in Greensboro this afternoon and were detained pending their next scheduled court appearances on July 14 at 3:00 p.m. (Hudson) and 3:45 p.m. (Norman), in Greensboro Courtroom 1A.
Norman is charged with unlawful transfer of a firearm to a prohibited person. If convicted, he faces a maximum penalty of 10 years in prison.
Hudson is charged with felon in possession of a firearm. If convicted, he also faces a maximum penalty of 10 years in prison.
A criminal complaint is merely an allegation, and each defendant is presumed innocent unless and until proven guilty.
The charges were announced by Sandra J. Hairston, Acting United States Attorney for the Middle District of North Carolina. The case has been investigated by the North Carolina State Bureau of Investigation (SBI), the Federal Bureau of Investigation (FBI), and the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF).
###
Guilford County Man Sentenced for Distribution of Child PornographyRead the Press Release
GREENSBORO – A North Carolina man was sentenced on July 1, 2021, to 188 months in prison for distribution of child pornography.
Christian Dean Hall, 35, was indicted in October, 2020, on one count of distribution and attempted distribution of child pornography and one count of possession of images containing child pornography. He later pleaded guilty to one count of distribution of child pornography on December 17, 2020.
According to court documents, in April, 2020, an online covert employee (OCE) encountered Hall after graphic messages were sent in a group chat on the app Kik. After engaging directly with Hall, the OCE asked Hall if he had any child pornography in his collection. In response, Hall sent multiple videos to the OCE containing child pornography. Investigators obtained Hall’s name, email, and address and discovered that he was a Visual Arts teacher at Gate City Charter Academy in Greensboro. Upon execution of a search warrant at Hall’s residence in Greensboro, agents from the Federal Bureau of Investigations discovered hundreds of photos and videos containing child pornography on multiple accounts and devices. After initially denying that he was part of the conversation with the OCE, Hall later admitted sharing graphic content involving minors despite knowing that it was illegal to do so.
This case was investigated by the Federal Bureau of Investigations and the Greensboro Police Department and was prosecuted by Assistant U.S. Attorney Kennedy Gates and Assistant U.S. Attorney Nicole R. Dupre.
The case is part of Project Safe Childhood, a nationwide initiative by the Department of Justice to combat online child sexual exploitation and abuse. The initiative is led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), and focuses on coordinating federal, state, and local resources to better identify and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov
###
NCMEC CyberTipline Report Leads to 19 Year Sentence for Recipient of Child PornographyRead the Press Release
GREENSBORO, N.C. - Gene Legrand Hickman, Jr. of Moore County, age 63, was sentenced today to 228 months in prison for receiving child pornography. Hickman is also subject to lifetime supervision upon release.
According to court documents, in February 2018, Hickman engaged in sexually explicit chats on Instagram with a 15-year-old boy and a second individual purporting to be a 14-year-old boy. During one of the chats, Hickman revealed that he had engaged in sexual activity with a minor boy on multiple occasions. Hickman also favorably discussed the sexual abuse of boys with another Instagram user who claimed to have sexually exploited multiple minors. Facebook, Inc., the owner of Instagram, reported the conduct to the National Center for Missing and Exploited Children (NCMEC). The following month, Facebook, Inc. reported a second Instagram account used by Hickman to NCMEC because it contained a child pornography image depicting an adult male engaging in a sex act with two prepubescent boys. NCMEC issued CyberTipline reports concerning Hickman’s accounts. The reports were routed to the Moore County Sheriff’s Office.
In June 2018, Moore County investigators executed a warrant at Hickman’s residence and recovered four devices that, in total, contained hundreds of child pornography files. Moore County investigators obtained the contents of Hickman’s Instagram accounts from Facebook, Inc. The records revealed additional similar behavior concerning the sexual exploitation of minors and claims by Hickman that he sexually molested multiple minors.
In December 2019, Moore County and North Carolina State Bureau of Investigation investigators executed a second warrant at Hickman’s residence. Investigators found Hickman’s unlocked phone and a manual search of the device revealed that Hickman had used a heavily encrypted messaging application to send and receive child pornography files. Hickman admitted that he engaged in sexual activity with a minor boy on multiple occasions over a period of years. The Federal Bureau of Investigation then adopted the case for further investigation and federal prosecution.
According to its website, NCMEC’s CyberTipline is the nation’s centralized reporting system for the online exploitation of children. The public and electronic service providers can make reports of suspected online enticement of children for sexual acts, child sexual molestation, child sexual abuse material, child sex tourism, child sex trafficking, unsolicited obscene materials sent to a child, misleading domain names, and misleading words or digital images on the internet. https://www.missingkids.org/gethelpnow/cybertipline.
The Moore County Sheriff’s Office and Federal Bureau of Investigation are both members of the North Carolina Internet Crimes Against Children (ICAC) Task Force. The Task Force is led by the North Carolina State Bureau of Investigation (SBI) Computer Crimes Division. https://www.ncsbi.gov/Divisions/Field-Operations/Computer-Crimes. According to the SBI, NCMEC CyberTipline reports have increased dramatically as follows:
Year - NCMEC CyberTipline Reports to North Carolina
- 2016 - 2511
- 2017 - 3258
- 2018 - 4737
- 2019 - 4893
- 2020 - 9308
- 2021 - >11,000*
*Estimated based on reports to date: 5375 as of June 18, 2021.
This case was prosecuted by Assistant United States Attorney Eric L. Iverson. It was brought as part of Project Safe Childhood, a nationwide initiative by the Department of Justice to combat online child sexual exploitation and abuse. Led by United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
###
Acting U.S. Attorney Hairston and AG Stein Announce $330,000 Health Care Fraud Settlement with Triad DoctorRead the Press Release
GREENSBORO, N.C. – Sandra J. Hairston, Acting United States Attorney for the Middle District of North Carolina, and North Carolina Attorney General Josh Stein today announced a $330,000 settlement to resolve allegations that Dr. George Osei-Bonsu, M.D., Palladium Primary Care, P.A., and Premiere Health Care Plus, P.A., of Greensboro and High Point, submitted false claims to Medicaid and Medicare.
“Medicare and Medicaid lay out specific coverage guidelines for diagnostic studies to ensure that taxpayer dollars are only spent on medically necessary exams,” said Acting U.S. Attorney Hairston. “The United States will not allow practitioners to run unnecessary exams at the expense of the American people.”
“Health care providers must be responsible stewards of taxpayer funds,” said Attorney General Josh Stein. “When they cheat the Medicaid program and waste resources, my office will hold them accountable. I’m grateful for Acting U.S. Attorney Hairston’s partnership in prosecuting health care fraud in North Carolina, and I’m pleased that we’ve won back more than $1 million for North Carolina taxpayers through Operation You’ve Got Nerve.”
Between January 2015 and May 2020, the defendants allegedly submitted false or fraudulent claims for nerve conduction studies and arterial studies that were not medically reasonable or necessary, not supported by clinical documentation within the patient records, and not covered by the Medicare and/or North Carolina Medicaid program. As a result, they were reimbursed for funds that they were not entitled to.
The federal and North Carolina False Claims Acts authorize the governments to recover triple the money falsely obtained, plus substantial civil penalties for each false claim submitted. It should be noted that the civil claims resolved by settlement here are allegations only, and that there has been no judicial determination or admission of liability. The investigation and prosecution of this case was the result of a coordinated effort by the United States Attorney’s Office for the Middle District of North Carolina and the Medicaid Investigations Division of the North Carolina Attorney General’s Office.
Today’s settlement is the fourth in Operation You’ve Got Nerve, an ongoing effort by the Attorney General’s Medicaid Investigations Division (MID) to identify and hold accountable providers billing Medicaid fraudulently for nervous system testing. Including today’s settlement, Operation You’ve Got Nerve has won back $1,190,000 for taxpayers.
About the Medicaid Investigations Division (MID)
The Attorney General’s MID investigates and prosecutes health care providers that defraud the Medicaid program, patient abuse of Medicaid recipients, patient abuse of any patient in facilities that receive Medicaid funding, and misappropriation of any patients’ private funds in nursing homes that receive Medicaid funding. To date, the MID has recovered more than $900 million in restitution and penalties for North Carolina. To report Medicaid fraud or patient abuse in North Carolina, call the MID at 919-881-2320.
The MID receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $6,160,252 for Federal fiscal year (FY) 2020. The remaining 25 percent, totaling $2,053,414 for FY 2020, is funded by the State of North Carolina. MID and United States Attorney’s Offices (USAO) frequently collaborate on investigations concerning Medicaid fraud such that MID attorneys are designated as Special Assistant United States Attorneys in the USAOs throughout North Carolina.
The resolutions obtained in this matter were the result of a coordinated effort between the U.S. Attorney’s Office for the Middle District of North Carolina, the U.S. Department of Health and Human Services, Office of Counsel to the Inspector General, and the North Carolina Department of Justice, Medicaid Investigations Division. Assistant U.S. Attorney Rebecca Mayer represented the United States.
###
Stanly County Man Sentenced to Prison for Trafficking FentanylRead the Press Release
GREENSBORO, N.C. - Amaud Jaquane Allen, aka Bookie, of Albemarle, North Carolina, was sentenced today to 132 months in prison for distribution of fentanyl.
According to court documents, Homeland Security Investigations working with local law enforcement executed a controlled purchase of approximately two ounces of fentanyl and a .45 caliber handgun from Amaud Jaquane Allen in November 2019 in Albemarle, North Carolina. Law enforcement officers then conducted an additional buy-bust operation in December 2019 wherein Allen was found in possession of three bags containing approximately 24 grams of fentanyl.
Allen, age 29, was charged with one count of distribution of 40 grams or more of fentanyl, one count of possession with intent to distribute fentanyl, and one count of felon in possession of a firearm. On March 4, 2021, Allen pled guilty to one count of distribution of 40 grams or more of fentanyl. Allen was a convicted felon at the time of these offenses, having been convicted of common law robbery in 2010 and conspiracy to sell a Schedule I controlled substance and two counts of possession with intent to sell or deliver a Schedule I controlled substance in 2017 in the Superior Court of Stanly County. Accordingly, at sentencing, the Court determined that Allen was a Career Offender.
In addition to the term of imprisonment, United States District Judge Catherine C. Eagles ordered Allen to serve four years of supervised release and to pay a $100 special assessment to the United States.
Sandra J. Hairston, Acting United States Attorney for the Middle District of North Carolina, made the announcement. The case was investigated by Homeland Security Investigations along with the federal Bureau of Alcohol, Tobacco, Firearms and Explosives, the Albemarle Police Department, the North Carolina State Bureau of Investigation, and the Stanly County Sheriff’s Office. The case was prosecuted by Assistant U.S. Attorney Craig M. Principe.
###
Durham Gang Member Sentenced to Ten Years in Prison for Possession of Ammunition in Connection with ShootingRead the Press Release
GREENSBORO, N.C. - Shermaine Maurice Hammond of Durham, also known as “Mizzle,” was sentenced today to 120 months in prison for possessing ammunition in connection with a shooting that occurred during a robbery.
According to court documents, the Federal Bureau of Investigation (FBI) Raleigh-Durham Safe Streets Task Force was investigating recent gang activity in Durham, North Carolina when Hammond, age 26, was arrested in April 2020. Hammond was an active member of the Nine Trey Gangster Bloods. On March 15, 2020, officers with the Durham Police Department responded to North Miami Boulevard and found a man with multiple gunshot wounds lying in a parking lot. The victim reported that he had been at an adjacent nightlife establishment and was attacked after getting into a car with a woman.
Investigators reviewed video surveillance footage that showed Hammond inside the establishment and then walking toward the car prior to the incident. After the woman and victim got into the car, the woman drove it to a nearby closed business. Surveillance video from that business showed Hammond pointing a gun at the victim as the victim backed away from Hammond. Investigators recovered eleven spent 9mm cartridges from the location. Additional footage showed the injured and bleeding victim fleeing back to the nightlife establishment over a block away. Hammond returned to the establishment in the car and took the victim’s phone as he tried to use it. Hammond and another man then repeatedly punched the victim before leaving the scene.
Just over two weeks later, members of the FBI Raleigh-Durham Safe Streets Task Force executed a warrant at Hammond’s girlfriend’s apartment. As they entered, Hammond attempted to escape by jumping out of a back window but was apprehended. Hammond admitted to shooting, beating, and robbing a man outside of the nightlife establishment on March 15, 2020, but claimed the man initiated the confrontation. He also confirmed that he was a member of the Nine Trey Gangster Bloods in Durham.
Hammond pleaded guilty to the federal charge on March 22, 2021. He is charged in state court with assault with a deadly weapon and robbery with a dangerous weapon in connection with the March 15, 2020 incident. Those charges are still pending.
Hammond was convicted of felony carrying a concealed gun in February 2015 and was therefore not permitted to possess ammunition.
In addition to the term of imprisonment, United States District Judge Catherine C. Eagles ordered Hammond to serve three years of supervised release.
The case was investigated by members of the Durham Police Department, FBI Raleigh-Durham Safe Streets Task Force, and the Durham County Sheriff’s Office.
Sandra J. Hairston, Acting United States Attorney for the Middle District of North Carolina, made the announcement.
###
Biotech Research Company Ordered to Pay $881,669.69 in Restitution for False Statements in Grant ApplicationsRead the Press Release
GREENSBORO, N.C. – Bio-Adhesive Alliance, Inc. (Bio-Adhesive) was sentenced yesterday in federal court for false statements made in grant applications submitted to the Environmental Protection Agency and the National Science Foundation, announced Acting U.S. Attorney Sandra J. Hairston.
United States District Court Judge Catherine C. Eagles of the Middle District of North Carolina ordered Bio-Adhesive to pay restitution in the amount of $562,500.00 to the National Science Foundation and $319,199.69 to the Environmental Protection Agency a $800 special assessment, and serve five years of a probationary term. The defendant corporation pleaded guilty in March 2021 to two counts of false statements.
According to court records, Bio-Adhesive was founded in February of 2013 by Employee-1, Employee-2, and Employee-3. Employee-1 is the President and Co-Owner of Bio-Adhesive. At the time of founding until the summer of 2019, Employee-1 was an Assistant Professor in the Applied Engineering and Technology Department at North Carolina Agricultural and Technical State University (“A&T”). Employee-2 is a Co-Owner of Bio-Adhesive and, until the summer of 2019, was an Associate Professor in the Civil, Architectural and Environmental Engineering Department, also at A&T. Employee-1 and Employee-2 are married to each other. North Carolina Secretary of State documents list Employee-3 as the Chief Operating Officer of Bio-Adhesive. Until the summer of 2019, Employee-3 was a graduate student at A&T. At all times relevant herein, Employee-3 was pursuing a Master’s Degree in Civil Engineering from A&T and worked as a Graduate Assistant at A&T.
The Environmental Protection Agency (EPA) and the National Science Foundation (NSF) are federal agencies that participate in set-aside programs for small businesses, including the Small Business Innovative Research (SBIR) Program and the Small Business Technology Transfer Program (STTR). SBIR supports federal research and development (R&D) with potential for commercialization of the developed product, and STTR expands funding opportunities in the federal innovation R&D arena. The programs require that applicants establish the technical merit, feasibility, and commercial potential of proposed R&D efforts in Phase I. In Phase II, the awarding agency must determine the quality of performance of the small business awardee organization in Phase I and the potential of the proposed project prior to providing further federal support.
Bio-Adhesive applied for and received multiple STTR and SBIR grant awards from NSF and EPA between 2013 and 2016. The awards totaled $1,375,000. Not all of the awarded funds were disbursed: Bio-Adhesive received, in total, $881,669.69 in award funds from NSF and EPA. During this time period, Bio-Adhesive submitted multiple proposals that contained misrepresentations regarding its eligibility to seek SBIR and/or STTR grant awards from NSF and EPA, as well as other material aspects of their project, including employees, budget, and recommenders. For example, on or about July 30, 2015, in an NSF SBIR/Phase II award application, Bio-Adhesive represented that:
- Employee-3 was eligible to be the Principal Investigator (PI) for the project, knowing that he was not;
- A subcontract of $134,058 would be paid to A&T (it was not);
- An individual with the initials S.H. would act as the Chief Technology Officer of Bio-Adhesive, knowing that S.H. had not agreed to assume that role; and
- An individual with the initials W.M. had written a letter in support of Bio-Adhesive’s application, knowing that he had not.
“Applicants that make false representations in order to access government grants are cheating taxpayers and taking resources from honest researchers and businesses,” said Acting United States Attorney Hairston. “We commend NSF-OIG and EPA-OIG for their vigilance and determined investigation of the Bio-Adhesive fraud.”
“The National Science Foundation’s Small Business Innovation Research program provides small businesses with funding to conduct research and development work that will lead to the commercialization of innovative new products and services,” said NSF Inspector General Allison Lerner. “Today’s sentence serves as a reminder that fraud in the SBIR Program will not be tolerated. The NSF Office of Inspector General remains committed to ensuring the integrity of the SBIR program and will actively pursue oversight of these taxpayer funds. I commend the U.S. Attorney’s Office and our investigative partners for their support in this effort.”
“Protecting the integrity of research and development programs funded by the U.S. Environmental Protection Agency is a priority for my office,” said EPA Inspector General Sean W. O’Donnell. “This sentencing follows a joint effort with the National Science Foundation’s Office of Inspector General. The EPA Office of Inspector General is committed to working with its law enforcement partners in bringing to justice individuals who defraud the SBIR and STTR programs.”
The case was investigated by the National Science Foundation Office of Inspector General and the Environmental Protection Agency Office of Inspector General. The case was prosecuted by Assistant United States Attorney JoAnna G. McFadden.
###
Greensboro Physician and Pain Management Practice to Pay $500,000 to Resolve Allegations of Health Care FraudRead the Press Release
GREENSBORO, N.C. – HEAG Pain Management Center, P.A. (HEAG) and its owner, Dr. Kwadwo Gyarteng-Dakwa (Dr. Dakwa), have agreed to pay $500,000.00 to resolve allegations that HEAG and Dr. Dakwa violated the False Claims Act by billing Medicare and Medicaid for medically unnecessary diagnostic testing between January 1, 2011 and October 31, 2016, announced Acting U.S. Attorney Sandra J. Hairston. HEAG and Dr. Dakwa will also enter into an Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General.
The United States alleged that HEAG and Dr. Dakwa knowingly submitted or caused the submission of false claims to Medicare and Medicaid for diagnostic nerve conduction studies. Diagnostic tests must be ordered for a patient to treat a specific illness or injury and must be individualized to the patient’s need. The government alleged that HEAG performed the nerve conduction studies without regard to medical necessity, as these tests were performed prior to any examination by Dr. Dakwa and therefore not tailored to the treatment of the individual patient. In addition, unqualified staff at HEAG frequently performed the nerve conduction studies, despite coverage rules requiring a physician to perform the tests.
“Dr. Dakwa devised a scheme to increase his profits rather than make medical decisions based on individual patient need,” said Acting United States Attorney Sandra Hairston. “We will not tolerate and will continue to search for any fraud that allows individual practitioners to wrongfully profit off taxpayer-funded health care programs.”
The resolutions obtained in this matter were the result of a coordinated effort between the U.S. Attorney’s Office for the Middle District of North Carolina, the U.S. Department of Health and Human Services, Office of Counsel to the Inspector General, and the North Carolina Department of Justice, Medicaid Investigations Division. Assistant U.S. Attorney Rebecca Mayer represented the United States.
The claims resolved by the settlement are allegations only and there has been no determination of liability.
###
North Carolina Risk Consultant Sentenced to Prison for Tax Fraud and Illegally Possessing a FirearmRead the Press Release
GREENSBORO, N.C. - A North Carolina businessman was sentenced today to 36 months in prison for tax fraud and illegal possession of a firearm.
According to court documents and statements made in court, Charles Agee Atkins, of Chapel Hill, controlled and operated several risk consulting businesses, including Financial Engineering & Risk Management LLC, Risk Assessment & Management LLC, and Ram Omni LLC. From 2011 through 2017, Atkins underreported the income that he received from these businesses on his tax returns, causing a tax loss of more than $380,000 to the IRS. Atkins also admitted that he failed to pay more than $420,000 in taxes he owed to the IRS for several prior years. In total Atkins caused a tax loss of more than $800,000 to the IRS.
Atkins also pleaded guilty to being a felon in possession of a firearm. According to court documents, Atkins was convicted of tax fraud in 1988, and during a 2019 search warrant executed on Atkins’s Chapel Hill residence, federal agents found a 12-gauge shotgun, which Atkins could not legally possess because of his prior conviction.
In addition to the term of imprisonment, United States District Judge Catherine C. Eagles ordered Atkins to serve three years of supervised release and to pay approximately $809,115 in restitution to the United States.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Sandra J. Hairston for the Middle District of North Carolina made the announcement.
The IRS-Criminal Investigation is investigating the case.
Assistant U.S. Attorney Tanner Kroeger of the Middle District of North Carolina and Assistant Chief Todd Ellinwood of the Justice Department’s Tax Division are prosecuting the case.
###
North Carolina Tax Preparer Sentenced to Prison for Defrauding IRS and Co-Conspirator Pleads GuiltyRead the Press Release
WASHINGTON – A North Carolina return preparer was sentenced today to 22 months in prison for conspiring to defraud the IRS and one of her co-conspirators pleaded guilty on Wednesday for her role in the scheme.
Karen Marie Jones of Durham, North Carolina, was sentenced today to conspiring to defraud the United States. According to court documents and statements made in court, Jones owned Jones and Stone Taxes, a tax preparation business in Durham. From 2012 through 2017, Jones and two other return preparers at Jones and Stone, Andrea Marie Pasley and Audrey Renetta Odom, conspired to prepare false returns for clients. The returns fraudulently lowered the clients’ tax liabilities or inflated their refunds by claiming false education credits or dependents or by manipulating the clients’ income to qualify for larger earned income tax credits. Under the scheme, some clients were charged up to $3,000 for preparing returns. Based on an analysis of the falsely claimed education credits, the tax loss is approximately $1.2 million.
Pasley pleaded guilty Thursday for her role in the scheme and is scheduled to be sentenced on Aug. 11. She faces a maximum penalty of five years in prison and a period of supervised release, restitution, and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Odom previously pleaded guilty to conspiracy to defraud the IRS in December 2020 and is scheduled to be sentenced in June 2021.
In addition to the term of imprisonment, U.S. District Judge Catherine C. Eagles ordered Jones to serve three years of supervised release and to pay approximately $1,264,493 in restitution to the United States.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Sandra J. Hairston for the Middle District of North Carolina made the announcement.
IRS-Criminal Investigation investigated the case.
Assistant Chief Todd Ellinwood and Trial Attorney Kavitha Bondada of the Tax Division prosecuted the case.
###
North Carolina Man Sentenced for COVID-19 Relief Fraud SchemesRead the Press Release
GREENSBORO – A North Carolina man was sentenced on April 22, 2021, to 63 months in prison for perpetrating three fraud schemes between March and July 2020 connected to the COVID-19 pandemic, through which he defrauded consumers and the federal government’s Economic Injury Disaster Loan program (EIDL), created to assist small business owners during the pandemic.
Brandon Lewis, 35, of Greensboro, pleaded guilty to two counts of wire fraud and one count of making a false statement to the Small Business Administration (SBA) on Aug. 31, 2020.
According to court documents, in March 2020, Lewis created a fake website for orders for pandemic-critical goods, defrauding consumers of hundreds of thousands of dollars. Lewis also created a fake “COVID-19 Relief Fund,” which he used to defraud dozens of small business owners, and submitted approximately 68 fraudulent applications for loans and non-refundable grant “advances” of up to $10,000 through the SBA-EIDL program.
Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division; Acting U.S. Attorney Sandra J. Hairston of the Middle District of North Carolina; Acting Special Agent in Charge Mona Passmore of the IRS Criminal Investigation (IRS-CI); Inspector in Charge Tommy D. Coke of the U.S. Postal Inspection Service (USPIS) Atlanta Division; Special Agent in Charge Amaleka McCall-Brathwaite of the SBA Office of Inspector General’s Eastern Region; and Inspector General J. Russell George of the U.S. Treasury Inspector General for Tax Administration (TIGTA) made the announcement.
This case was investigated by the USPIS, IRS-CI, SBA-OIG, and TIGTA. Trial Attorney David A. Stier, formerly of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Meredith C. Ruggles prosecuted the case with valuable assistance from the Fraud Section’s Victim Assistance Unit.
In light of the large volume of victims, the court set a deadline of July 21, 2021 for issuance of a final order of restitution. Victims may find additional information here: https://www.justice.gov/criminal-vns/case/brandon-lewis, and may contact the Victim Assistance Line toll-free at (888) 549-3945 or by email at [email protected].
###
North Carolina Man Sentenced for COVID-19 Relief Fraud SchemesRead the Press Release
A North Carolina man was sentenced today to 63 months in prison for perpetrating three fraud schemes between March and July 2020 connected to the COVID-19 pandemic, through which he defrauded consumers and the federal government’s Economic Injury Disaster Loan program (EIDL), created to assist small business owners during the pandemic.
Brandon Lewis, 35, of Greensboro, pleaded guilty to two counts of wire fraud and one count of making a false statement to the Small Business Administration (SBA) on Aug. 31, 2020.
According to court documents, in March 2020, Lewis created a fake website for orders for pandemic-critical goods, defrauding consumers of hundreds of thousands of dollars. Lewis also created a fake “COVID-19 Relief Fund,” which he used to defraud dozens of small business owners, and submitted approximately 68 fraudulent applications for loans and non-refundable grant “advances” of up to $10,000 through the SBA-EIDL program.
Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division; Acting U.S. Attorney Sandra J. Hairston of the Middle District of North Carolina; Acting Special Agent in Charge Mona Passmore of the IRS Criminal Investigation (IRS-CI); Inspector in Charge Tommy D. Coke of the U.S. Postal Inspection Service (USPIS) Atlanta Division; Special Agent in Charge Amaleka McCall-Brathwaite of the SBA Office of Inspector General’s Eastern Region; and Inspector General J. Russell George of the U.S. Treasury Inspector General for Tax Administration (TIGTA) made the announcement.
This case was investigated by the USPIS, IRS-CI, SBA-OIG, and TIGTA. Trial Attorney David A. Stier, formerly of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Meredith C. Ruggles prosecuted the case with valuable assistance from the Fraud Section’s Victim Assistance Unit.
In light of the large volume of victims, the court set a deadline of July 21, 2021, for issuance of a final order of restitution. Victims may find additional information here: https://www.justice.gov/criminal-vns/case/brandon-lewis, and may contact the Victim Assistance Line toll-free at (888) 549-3945 or by email at [email protected].
Winston-Salem NC Pain Management Company to Pay $789,292.95 to Resolve Allegations of False Claims for Urine Drug TestingRead the Press Release
GREENSBORO, N.C. - Preferred Pain Management & Spine Care, P.A. (PPM) and its owner, Dr. David Spivey, have agreed to pay $789,292.95 to resolve civil allegations that PPM violated the False Claims Act by billing Medicare, Medicaid, and other federal health care programs for medically unnecessary urine drug testing (UDT) between June 1, 2014 and May 24, 2017, announced Acting U.S. Attorney Sandra J. Hairston.
The United States alleged that PPM knowingly submitted or caused the submission of false claims to federal health care programs for presumptive and definitive UDT, in circumstances where such testing was not medically reasonable or necessary. Presumptive UDT are tests that screen for the presence of drugs, and definitive UDT are tests that identify the concentration of those drugs in a patient’s system. The government alleged that PPM and Spivey automatically ordered both presumptive and definitive UDT for all patients at their monthly visits, without conducting individualized determinations of need or risk profile.
The United States further contended that PPM billed Medicare for specimen validity testing, a quality control process used to analyze a urine specimen to ensure that it has not been diluted or adulterated. Since January 2014, Medicare’s guidance has been explicit that specimen validity testing should not be separately billed to Medicare. The United States asserted that PPM nonetheless submitted claims to Medicare for specimen validity testing throughout 2014 and 2015.
This settlement resolves allegations originally brought in a lawsuit filed by a whistleblower under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery. The whistleblower will receive $118,911.12 as her share of the federal recovery in this case, excluding recovery for allegedly improper specimen validity testing separately identified by the United States. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can also be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
“Our District is committed to ensuring that federally-funded medical procedures are ordered based on each patient’s medical needs and not for the purpose of increasing a provider’s profits,” said Acting United States Attorney Sandra Hairston. “We will continue to identify and pursue providers who submit false claims that lead to unnecessary costs for taxpayer-funded health care programs.”
“It is vital that agencies work together to hold health care providers accountable for the misuse of taxpayer funds,” said Lori A. Ahlstrand, Regional Inspector General for Audit Services at the U.S. Department of Health and Human Services. “With the use of forensic tools, our auditors identified suspicious billing and partnered closely with our Office of Counsel and the United States Attorney’s Office.”
This case was handled by the U.S. Attorney’s Office for the Middle District of North Carolina with assistance from the U.S. Department of Health and Human Services, Office of Counsel to the Inspector General, as well as the North Carolina Attorney General’s Medicaid Investigations Unit, the Office of Personnel Management, Office of Inspector General, and the Department of Veterans Affairs, Office of Inspector General. The United States was represented by Assistant United States Attorney Cassie Crawford.
The lawsuit is captioned United States ex rel. Kovalich v. Preferred Pain Management & Spine Care, P.A. et al., No. 18-CV-44 (M.D.N.C.). The claims settled by this agreement are allegations only, and there has been no determination of liability. The Settlement Agreement is not an admission of liability or wrongdoing by PPM.
###
Sanford Man Sentenced to 10 Years in Prison for Illegal Possession of a FirearmRead the Press Release
GREENSBORO, N.C. - A Lee County resident was sentenced today in federal court in Greensboro for knowingly possessing a firearm after previously being convicted of a felony, announced Acting United States Attorney Sandra J. Hairston of the Middle District of North Carolina.
BRANDON FRANCISCO GAMEZ, age 21, of Sanford, North Carolina, was sentenced to a 120-month term of imprisonment by United States District Judge William L. Osteen, Jr. In addition to prison time, GAMEZ was ordered to serve three years of supervised release and to pay a special assessment of $100.00. GAMEZ pleaded guilty on December 17, 2020, to knowing possession of a Glock .45 caliber pistol after having previously been convicted of a felony offense punishable by imprisonment for more than one year.
Court records show that GAMEZ was arrested during a traffic stop along Washington Avenue in Sanford on October 9, 2019. GAMEZ attempted to flee on foot but was quickly apprehended by the Sanford Police Department. GAMEZ had the gun on his person, along with cocaine base (crack) and oxycodone hydrochloride pills.
According to court records, the Sanford Police Department test-fired the gun in GAMEZ’s possession. The Sanford Police Department compared the shell casings from the test-firing to data stored in the National Integrated Ballistic Information Network (“NIBIN”). NIBIN is a national data program used by federal, state, and local law enforcement to investigate ballistic information contained in spent shell casings. According to the NIBIN analysis in this case, the gun in GAMEZ’s possession on October 9, 2019, was involved in four shootings, including one that occurred on October 8, 2019, the day before the arrest. The four shootings occurred over a three-month period in 2019 in Sanford.
GAMEZ was convicted in 2017 in Lee County Superior Court for discharging a weapon into an occupied property. He was then convicted of being a felon in possession of a firearm in Lee County Superior Court in 2018.
This case resulted from SAFE Lee County, a partnership of criminal justice, service agency, and community stakeholders that have implemented a comprehensive strategy to reduce violence
across Lee County. It is part of Project Safe Neighborhoods (PSN), a data-driven effort led by the U.S. Department of Justice that concentrates prevention, intervention, reentry, investigation, and prosecution efforts on those most prone to violence. SAFE Lee County involves the Lee County District Attorney’s Office, Broadway Police Department, Lee County Sheriff’s Office, Sanford Police Department, NC Department of Public Safety Adult Community Corrections (probation) and Juvenile Justice, researchers from UNC-Greensboro, the U.S. Attorney’s Office for the Middle District of NC, and the community.
The case was investigated by the Sanford Police Department, North Carolina Department of Public Safety Special Operations and Intelligence Unit, and United States Bureau of Alcohol, Tobacco, Firearms, and Explosives. The case was prosecuted by Assistant United States Attorney Tanner L. Kroeger.
###
U.S. Attorney Matt Martin Presents Award to Lexington Police Chief Mark SinkRead the Press Release
LEXINGTON, N.C. - Today, U.S. Attorney Matt Martin, on behalf of the United States Attorney’s Office and other federal law enforcement agencies in the Middle District of North Carolina, presented an award for support of law enforcement and the rule of law to Mark Sink, Chief of the Lexington Police Department.
Chief Sink has actively supported Project Safe Neighborhoods (“PSN”) – the U.S. Department of Justice’s premier anti-violence program – by devoting department personnel to investigation and enforcement of federal firearms law violations, participating in PSN call-ins and gun screenings, and hosting regional PSN meetings at Lexington Police Department facilities. He has also partnered with the U.S. Attorney’s Office on initiatives to decrease domestic violence, rehabilitate criminals to reduce recidivism, and target high-level drug trafficking. Earlier in his career, prior to his service as Chief, Sink served on a federal task force that focused on narcotics trafficking.
“Chief Sink is a consummate professional and excellent partner to all law enforcement agencies,” said U.S. Attorney Martin. “He has been a steadfast advocate for the rule of law and understands the need to collaborate with other agencies to better serve his community. The citizens of Lexington and Davidson County are safer because of Mark Sink. We at the U.S. Attorney’s Office extend our gratitude to him and his team.”
###
Bioventus Agrees to Pay More Than $3.6 Million to Resolve False Claims Act ViolationsRead the Press Release
GREENSBORO, N.C. - Bioventus, LLC, a global medical technology company, has agreed to pay the government $3,609,087.00 to resolve allegations that Bioventus violated the False Claims Act by submitting improperly completed certificates of medical necessity (CMN) for medically unnecessary devices from October 1, 2012 through December 31, 2018, U.S. Attorney Matthew G. T. Martin for the Middle District of North Carolina announced.
This settlement results from a self-disclosure to the Office of Inspector General of the U.S. Department of Health and Human Services (HHS-OIG), which was later transferred to the U.S. Attorney’s Office for the Middle District of North Carolina. Bioventus made the written self-disclosure on November 30, 2018 relating to its Exogen device, an ultrasonic bone growth stimulator. Bioventus disclosed that it had discovered its sales representatives were sometimes completing Section B of the CMN for Exogen devices from October 1, 2012 through September 30, 2018. Medicare requires that Section B of the CMN be completed by the treating physician or the physician’s office. Bioventus completed a review of such claims with improperly completed CMNs to verify the medical records supported the medical necessity of the Exogen devices. Bioventus fully cooperated with the government’s investigation of the self-disclosure.
“Medicare funds must only be appropriately dispensed for medically necessary purposes and to those who comply with all rules and regulations,” said Matthew G.T. Martin, United States Attorney for the Middle District of North Carolina. “We appreciate Bioventus’s disclosure of these issues and hope this matter reminds other Medicare enrollees that they must have internal controls in place to ensure proper compliance with Medicare. Better to catch it and self-disclose than for us to discover it and come calling”
The settlement in this matter was the result of a coordinated effort by the U.S. Attorney’s Office for the Middle District of North Carolina and HHS-OIG.
“Medicare rules on medical necessity are enforced to protect patients and the integrity of this federal health care program,” said Derrick L. Jackson, Special Agent in Charge for HHS-OIG. “We encourage providers to voluntarily disclose evidence of potential fraud, as in this case, to resolve these matters.”
Medicare enrollees may self-disclose evidence of potential fraud to HHS-OIG. The Provider Self-Disclosure Protocol (SDP) provides Medicare enrollees with a framework for disclosing, coordinating, evaluating, and resolving potential instances of fraud involving Federal health care programs.
###
U.S. Attorney Matt Martin to Resign Effective Feb. 28Read the Press Release
GREENSBORO, N.C. - United States Attorney Matthew G.T. Martin today announced that he has resigned his position as head of the United States Attorney’s Office in the Middle District of North Carolina, effective February 28, 2021.
“The last three years have witnessed incredible accomplishments by the team at the U.S. Attorney’s Office,” said U.S. Attorney Martin. “We have reduced violent crime through Project Safe Neighborhoods and focused prosecutions, protected taxpayers through pursuing COVID-19 relief fraud, healthcare fraud, and grant fraud, and strengthened our local law enforcement relationships to better serve our citizens and protect their rights. Now that the new president has asked for my resignation, I will return to private law practice. I thank the Assistant U.S. Attorneys and our staff, as well as every federal, state, and local law enforcement agency serving central North Carolina. We have worked well together. Though I am leaving this role, I look forward to serving our state and nation alongside you in the future.”
A few highlights of the U.S. Attorney’s Office during Martin’s tenure include:
- Joining the effort in combatting gang violence in Durham, including the prosecution of the persons alleged responsible for the murder of Z’yon Person (20CR463) and Hong Zheng (19CR529) and persons involved in the two recent shoot-outs in front of the Durham County courthouse.
- Prosecuting a large drug conspiracy at Appalachian State University, Duke University, and the University of North Carolina at Chapel Hill.
- Maturing a cyber prosecution program that played a leading role in the unprecedented international take-down of the malware known as “Emotet,” which had infected millions of servers and caused billions of dollars in damage internationally, including in the Middle District.
- Protecting the taxpayers and federal grant integrity through grant fraud matters, including a $112 million recovery from Duke University and a $4.5 million recovery from the University of North Carolina at Chapel Hill.
- Expanding Project Safe Neighborhoods, the federal Department of Justice’s premier anti-gun-violence program, to include sites in Alamance, Lee, Orange, Randolph, and Rowan counties, as well as renewed emphasis in existing sites in Cabarrus, Davidson, Greensboro, High Point, Winston-Salem, and Rockingham.
- Hosting the District’s first Re-entry Symposium and numerous re-entry simulations, all designed to share best practices, aid assimilation, and reduce recidivism among inmates returning to society after serving their sentences.
- Integrating the National Integrated Ballistics Information Network (NIBIN) and Crime Gun Intelligence Centers, in partnership with ATF and police departments in Durham, Greensboro, and Winston-Salem to help solve gun crime incidents and get violent criminals off the street.
- Emphasizing prosecution of those who exploit children, resulting in prosecution of 74 defendants from 2018-20 for serious crimes against children.
- Establishing a program under the Fair Housing Act to pursue landlords who sexually harass and prey upon their tenants, who are typically women coming out of difficult situations and trying to make a better life for their children.
- Facilitating unprecedented coordination between federal authorities and industry groups to combat cybercrime and elder fraud and abuse.
First Assistant U.S. Attorney Sandra Hairston will serve as acting U.S. Attorney until Martin’s successor is nominated by the President and confirmed by the Senate.
###
Six Individuals Affiliated with the Oath Keepers Indicted by a Federal Grand Jury for Conspiracy to Obstruct Congress on January 6, 2021Read the Press Release
WASHINGTON – This week, six additional individuals associated with an organization known as the Oath Keepers, some of whose members were among those who forcibly entered the U.S. Capitol on Jan. 6, 2021 were arrested and charged in federal court in the District of Columbia for conspiring to obstruct the U.S. Congress’s certification of the result of the 2020 U.S. Presidential Election, among other charges.
Graydon Young, 54, of Englewood, Florida, was arrested on Monday in Tampa, Florida; Kelly Meggs, 52, and Connie Meggs, 59, both of Dunnellon, Florida, were arrested on Wednesday in Ocala, Florida; Laura Steele, 52, of Thomasville, North Carolina, was arrested on Wednesday in Greensboro, North Carolina; and Sandra Ruth Parker, 62, and Bennie Alvin Parker, 70, both of Morrow, Ohio, were arrested yesterday.
These six individuals were added as co-defendants to a superseding indictment filed today in United States v. Thomas Caldwell, Donovan Crowl, and Jessica Watkins, 21-cr-28-APM. The superseding indictment alleges that Kelly and Connie Meggs, Young, Steele, and Sandra Parker donned paramilitary gear and joined with Watkins and Crowl in a military-style “stack” formation that marched up the center steps on the east side of the U.S. Capitol, breached the door at the top, and then stormed the building. The indictment charges all nine defendants with one count of conspiring to commit an offense against the United States, in violation of Title 18, U.S. Code Section 371, that is, to corruptly obstruct, influence, or impede an official proceeding, in violation of Title 18, U.S. Code Section 1512(c)(2); one count of depredation against federal government property, in violation of Title 18, U.S. Code Section 1361; and unlawful entry, disorderly conduct, or violent conduct in restricted buildings or grounds, in violation of Title 18, U.S. Code Section 1752(a). The indictment also charges Bennie Parker and Caldwell with obstructing the investigation in violation of Title 18, U.S. Code Section 1512(c)(1).
According to the superseding indictment, Kelly Meggs is the self-described leader of the Florida chapter of the Oath Keepers, of which Connie Meggs, Young, and Steele also are alleged to be members. In late December, the indictment alleges, Kelly Meggs wrote in a Facebook message, “Trump said It’s gonna be wild!!!!!!! It’s gonna be wild!!!!!!! He wants us to make it WILD that’s what he’s saying. He called us all to the Capitol and wants us to make it wild!!! Sir Yes Sir!!! Gentlemen we are heading to DC pack your s***!!” He went on to state, “[W]e will have at least 50-100 OK there.” According to the indictment, around the same time, Young allegedly arranged, for himself and others, training by a Florida company that provides firearms and combat training.
The indictment alleges that Sandra and Bennie Parker traveled with Watkins and Crowl from Ohio to Washington, D.C. In the lead-up to the attack on the U.S. Capitol, Bennie Parker allegedly communicated extensively with Watkins about potentially joining her militia and combining forces for the events of January 6.
The superseding indictment alleges that, in making plans for the events of January 6, Kelly Meggs made statements, similar to those made by Watkins and Caldwell, that his group would not need to be armed for the attack on the U.S. Capitol, because there would be a “heavy QRF 10 Min out[.]” The abbreviation “QRF” is alleged to refer to “quick reaction force,” a term used by law enforcement and the military to refer to an armed unit capable of rapidly responding to developing situations, typically to assist allied units in need of such assistance.
The superseding indictment adds charges that, in the aftermath of the attack on the U.S. Capitol, Caldwell and Young tampered with documents or proceedings by unsending and deleting Facebook content.
The case is being prosecuted by the U.S. Attorney’s Office for the District of Columbia and the Counterterrorism Section of the Justice Department's National Security Division with assistance from the U.S. Attorney’s Offices for the Middle District of Florida, the Middle District of North Carolina, and the Southern District of Ohio. The superseding indictment is the result of an ongoing investigation by the FBI’s Washington Field Office, Jacksonville Field Office, Tampa Field Office, Charlotte Field Office, and Cincinnati Field Office.
An indictment is a formal accusation of criminal conduct, not evidence of guilt. A defendant is presumed innocent unless proven guilty.
The FBI is looking for individuals who may have incited or promoted violence of any kind. Anyone with digital material or tips can call 1-800-CALL-FBI (800-225-5324) or submit images or videos at www.tips.fbi.gov.
# # #
U.S. Attorney’s Office Collects More Than $9.9 Million in Civil and Criminal Actions in Fiscal Year 2020Read the Press Release
GREENSBORO, N.C. - United States Attorney Matthew G.T. Martin announced today that the Middle District of North Carolina collected $9,991,198.58 in criminal and civil actions in Fiscal Year 2020. Of this amount, $3,442,905.31 was collected in criminal actions and $6,548,293.27 was collected in civil actions.
The Justice Department collected more than $15.9 billion in civil and criminal actions in fiscal year (FY) 2020 ending Sept. 30, 2020. The $15,988,516,670 in collections in FY 2020 represents more than five times the approximately $3.2 billion appropriated budget for the 94 U.S. Attorneys’ offices and the main litigating divisions of the Justice Department combined in that same period. The total includes all monies collected as a result of Justice Department-led enforcement actions and negotiated civil settlements. It includes more than $13.5 billion in payments made directly to the Justice Department, and more than $2.4 billion in indirect payments made to other federal agencies, states and other designated recipients.
“The federal prosecutors and support staff in our office work hard to protect our citizens, to safeguard precious taxpayer resources, and to collect money owed to crime victims and to the government,” said U.S. Attorney Martin. “Their diligent efforts enable us to seek justice for crime victims every day and hold accountable those who seek to profit from illegal activity.”
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 collected to federal and state victim compensation and victim assistance programs.
###
Two Durham Men Sentenced to Federal PrisonRead the Press Release
GREENSBORO, N.C. – Two men from Durham, North Carolina, were sentenced to federal prison in separate cases this week, announced Matthew G.T. Martin, United States Attorney for the Middle District of North Carolina.
RYAN KENNETH RICHMOND, 25, pleaded guilty on August 11, 2020, to one count of felon in possession of a firearm. On January 28, 2021, United States District Judge Catherine C. Eagles sentenced RICHMOND to 120 months of imprisonment, followed by three years of supervised release.
In a separate case, RASHAAD ALMADD COX, 34, was sentenced by Judge Eagles on January 25, 2021, to 115 months of imprisonment followed by three years of supervised release. COX pleaded guilty on May 7, 2020, to one count of possession with intent to distribute a controlled substance and one count of felon in possession of a firearm.
“The lengthy sentences handed down this week are proof that we mean business when it comes to violent crime,” said U.S. Attorney Matt Martin. “We are working hard with our state and local law enforcement partners to reduce violent crime in Durham, and we will continue to seek the maximum penalties available under law for violent offenders in Durham and other violent crime hotspots.”
RICHMOND was described in filed documents and court proceedings as a Southside Blood gang member associated with the Nine Trey Gangster Bloods in Durham. A feud between this group and the Eight Trey Gangster Crips escalated on December 3, 2019, when multiple members of both groups were calendared to appear in the Superior Court of Durham County. Following an argument at the courthouse, four men, including RICHMOND, got into a stolen silver Hyundai. A dark gray Chrysler 300 stopped next to the Hyundai and began shooting at the Hyundai. The cars then chased each other past the American Tobacco Campus and through downtown Durham, exchanging gunfire. The Hyundai eventually pulled into a parking lot adjacent to a church on Duke Street. Church members, operating a daycare in the building, heard multiple gunshots and saw four men walk away from the vehicle. The Durham Police Department responded and found that the vehicle had been shot multiple times, the windows were shot out, there appeared to be blood in the rear passenger area, and there were numerous spent 9mm and .300 caliber cartridges inside the vehicle. They recovered four firearms from the parking lot.
The courthouse shooting incident led to more violence over the next two days, including drive-by shootings that occurred at the Oxford Manor housing complex and at a convenience store in south Durham.
RICHMOND was arrested on December 9, 2019. Various firearms and ammunition recovered in the investigation were linked to RICHMOND, who was convicted in 2017 of the following felonies: fleeing to elude arrest, possession with intent to distribute marijuana, and maintaining a vehicle to keep or sell a controlled substance.
According to court documents, on June 6, 2019, COX and a passenger were stopped on Tower Boulevard by detectives with the Durham County Sheriff’s Office Anti-Crime/Narcotics Unit. The passenger refused to comply with several directions and warnings, and COX put the car into drive and sped away, nearly hitting the detectives in the process. After a high-speed chase, COX crashed into a tree at a church playground in the Hope Valley neighborhood and he and the passenger fled on foot. Both were apprehended. Detectives found oxycodone and MDMA pills in a discarded fanny pack that matched one COX was seen wearing. The next day, detectives found a 9mm handgun in debris where COX had crashed and fled the vehicle. COX was charged by the state but bonded out of pre-trial custody.
Approximately six weeks later, on July 16, 2019, officers with the North Carolina Department of Public Safety, Probation and Parole (NCPP) conducted a warrantless search and probation check at COX’s residence. COX was then on probation for an April 3, 2019 conviction in the Durham County Superior Court for Elude Arrest Motor Vehicle with Two Aggravating Factors. During the search, officers seized a total of six firearms, twelve magazines (four with extended capacity), and 647 rounds of ammunition.
The RICHMOND case was investigated by the Federal Bureau of Investigation’s Raleigh-Durham Safe Streets Task Force with assistance from the Durham Police Department.
The COX case was investigated by the FBI’s Raleigh-Durham Safe Streets Task Force with assistance from the Durham County Sheriff’s Office and the North Carolina Department of Public Safety, Probation and Parole.
###
Emotet Botnet Disrupted in International Cyber OperationRead the Press Release
WASHINGTON – The Justice Department today announced its participation in a multinational operation involving actions in the United States, Canada, France, Germany, the Netherlands, and the United Kingdom to disrupt and take down the infrastructure of the malware and botnet known as Emotet. Additionally, officials in Lithuania, Sweden, and Ukraine assisted in this major cyber investigative action.
“The Emotet malware and botnet infected hundreds of thousands of computers throughout the United States, including our critical infrastructure, and caused millions of dollars in damage to victims worldwide,” said Acting Deputy Attorney General John Carlin. “Cyber criminals will not escape justice regardless of where they operate. Working with public and private partners around the world we will relentlessly pursue them while using the full arsenal of tools at our disposal to disrupt their threats and prosecute those responsible.”
According to an unsealed search warrant affidavit, Emotet is a family of malware that targets critical industries worldwide, including banking, e commerce, healthcare, academia, government, and technology. Emotet malware primarily infects victim computers through spam email messages containing malicious attachments or hyperlinks. Emails were designed to appear to come from a legitimate source or someone in the recipient’s contact list. Once it has infected a victim computer, Emotet can deliver additional malware to the infected computer, such as ransomware or malware that steals financial credentials. Ransomware, in particular, has increased in scope and severity in the past year, harming businesses, healthcare providers, and government agencies even as the country has struggled to respond to the pandemic.
“The coordinated disruption of Emotet was a great success for the FBI and our international partners,” said FBI Director Christopher Wray. “The FBI utilized sophisticated techniques, our unique legal authorities, and most importantly, our worldwide partnerships to significantly disrupt the malware. The operation is an example of how much we can achieve when we work with our international law enforcement partners to combat the cyber threat. The FBI remains committed, now more than ever, to imposing risk and consequences on cyber criminals to put an end to this type of criminal activity.”
The computers infected with Emotet malware are part of a botnet (i.e., a network of compromised computers), meaning the perpetrators can remotely control all the infected computers in a coordinated manner. The owners and operators of the victim computers are typically unaware of the infection.
“Cybercrime transcends physical and political boundaries and costs U.S. citizens and businesses billions each year,” said U.S. Attorney Matt Martin of the Middle District of North Carolina. “That was certainly true with Emotet. Now, more than ever, international collaboration is an imperative as we employ a technically and legally sophisticated approach to thwart cybercriminals in whatever corner of the globe they are found. This investigation will be a paradigm for effective international law enforcement cooperation directed at global cybercrime, and we applaud the FBI and the international law enforcement partners who contributed to the effort to take down this global threat.”
According to the affidavit, in 2017, for example, the computer network of a school district in the Middle District of North Carolina was infected with the Emotet malware. The Emotet infection caused damage to the school’s computers, including but not limited to the school’s network, which was disabled for approximately two weeks. In addition, the infection caused more than $1.4 million in losses, including but not limited to the cost of virus mitigation services and replacement computers. From 2017 to the present, there have been numerous other victims throughout North Carolina and the United States, to include computer networks of local, state, tribal, and federal governmental units, corporations, and networks related to critical infrastructure.
“The Emotet malware quickly elevated to one of the top cyber threats in the world,” said Special Agent in Charge Robert R. Wells of the FBI Charlotte Field Office. “The strong relationships with international law enforcement partners were critical to the success of this FBI investigation which began with a small North Carolina school system that did the right thing and quickly contacted their local FBI office for help.”
According to the U.S. Cybersecurity & Infrastructure Security Agency (CISA), Emotet infections have cost local, state, tribal, and territorial governments up to $1 million per incident to remediate. More information about the malware, including technical information for organizations about how to mitigate its effects, is available from CISA here: https://us-cert.cisa.gov/ncas/alerts/TA18-201A.
According to the affidavit, foreign law enforcement agents, working in coordination with the FBI, gained lawful access to Emotet servers located overseas and identified the Internet Protocol addresses of approximately 1.6 million computers worldwide that appear to have been infected with Emotet malware between April 1, 2020, and Jan. 17, 2021. Of those, over 45,000 infected computers appear to have been located in the United States.
Foreign law enforcement, working in collaboration with the FBI, replaced Emotet malware on servers located in their jurisdiction with a file created by law enforcement, according to the affidavit. This was done with the intent that computers in the United States and elsewhere that were infected by the Emotet malware would download the law enforcement file during an already-programmed Emotet update. The law enforcement file prevents the administrators of the Emotet botnet from further communicating with infected computers. The law enforcement file does not remediate other malware that was already installed on the infected computer through Emotet; instead, it is designed to prevent additional malware from being installed on the infected computer by untethering the victim computer from the botnet.
The scope of this law enforcement action was limited to the information installed on infected computers by the Emotet operators and did not extend to the information of the owners and users of the computers.
According to the affidavit, in coordination with foreign law enforcement officials, FBI personnel also gained lawful access to an Emotet distribution server located overseas and identified several servers worldwide that were used to distribute the Emotet malware. These servers were typically compromised web servers belonging to what appear to be unknowing third parties. The perpetrators uploaded the Emotet malware to the servers through unauthorized software applications. Victims who clicked on spam email messages containing malicious attachments or hyperlinks would then download the initial Emotet malware file from a distribution server.
In addition, according to the affidavit, FBI personnel notified more than 20 U.S.-based hosting providers that they hosted more than 45 IP addresses that had been compromised by the perpetrators associated with the Emotet malware and botnet. FBI Legal Attachés further notified authorities in more than 50 countries that hosting providers in their respective jurisdictions hosted hundreds of IP addresses that were compromised by Emotet.
The U.S. Attorney’s Office for the Middle District of North Carolina, the FBI Charlotte Division, and the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) conducted the operation in close cooperation with Europol and Eurojust who were an integral part of coordination and messaging, and investigators and prosecutors from several jurisdictions, including the Royal Canadian Mounted Police, France’s National Police and Judicial Court of Paris, Germany’s Federal Criminal Police and General Public Prosecutor’s Office Frankfurt/Main, Lithuanian Criminal Police Bureau, Netherlands National Police and National Public Prosecution Office, Swedish Police Authority, National Police of Ukraine and Office of the Prosecutor General of Ukraine, and the United Kingdom’s National Crime Agency and Crown Prosecution Service. The Justice Department’s Office of International Affairs and the U.S. Department of the Treasury Financial Crimes Enforcement Network (FinCEN) also provided significant assistance. CCIPS Senior Counsel Ryan K.J. Dickey and Assistant U.S. Attorneys Eric Iverson and Anand Ramaswamy of the Middle District of North Carolina led the U.S. efforts.
More information about the operation is available by clicking: Eurojust/Europol. In addition, the Dutch National Police have created the following website to check whether your email address has been compromised by the administrators of Emotet: https://www.politie.nl/emocheck.
In September 2020, FBI Director Christopher Wray announced the FBI’s new strategy for countering cyber threats. The strategy focuses on imposing risk and consequences on cyber adversaries through the FBI’s unique authorities, world-class capabilities, and enduring partnerships. Victims are encouraged to report the incident online with the Internet Crime Complaint Center (IC3) www.ic3.gov. For more information on ransomware prevention, visit: https://www.ic3.gov/Home/Ransomware.
###
Emotet Botnet Disrupted in International Cyber OperationRead the Press Release
The Justice Department today announced its participation in a multinational operation involving actions in the United States, Canada, France, Germany, the Netherlands, and the United Kingdom to disrupt and take down the infrastructure of the malware and botnet known as Emotet. Additionally, officials in Lithuania, Sweden, and Ukraine assisted in this major cyber investigative action.
“The Emotet malware and botnet infected hundreds of thousands of computers throughout the United States, including our critical infrastructure, and caused millions of dollars in damage to victims worldwide,” said Acting Deputy Attorney General John Carlin. “Cyber criminals will not escape justice regardless of where they operate. Working with public and private partners around the world we will relentlessly pursue them while using the full arsenal of tools at our disposal to disrupt their threats and prosecute those responsible.”
According to an unsealed search warrant affidavit, Emotet is a family of malware that targets critical industries worldwide, including banking, e‑commerce, healthcare, academia, government, and technology. Emotet malware primarily infects victim computers through spam email messages containing malicious attachments or hyperlinks. Emails were designed to appear to come from a legitimate source or someone in the recipient’s contact list. Once it has infected a victim computer, Emotet can deliver additional malware to the infected computer, such as ransomware or malware that steals financial credentials. Ransomware, in particular, has increased in scope and severity in the past year, harming businesses, healthcare providers, and government agencies even as the country has struggled to respond to the pandemic.
“The coordinated disruption of Emotet was a great success for the FBI and our international partners,” said FBI Director Christopher Wray. “The FBI utilized sophisticated techniques, our unique legal authorities, and most importantly, our worldwide partnerships to significantly disrupt the malware. The operation is an example of how much we can achieve when we work with our international law enforcement partners to combat the cyber threat. The FBI remains committed, now more than ever, to imposing risk and consequences on cyber criminals to put an end to this type of criminal activity.”
The computers infected with Emotet malware are part of a botnet (i.e., a network of compromised computers), meaning the perpetrators can remotely control all the infected computers in a coordinated manner. The owners and operators of the victim computers are typically unaware of the infection.
“Cybercrime transcends physical and political boundaries and costs U.S. citizens and businesses billions each year,” said U.S. Attorney Matt Martin of the Middle District of North Carolina. “That was certainly true with Emotet. Now, more than ever, international collaboration is an imperative as we employ a technically and legally sophisticated approach to thwart cybercriminals in whatever corner of the globe they are found. This investigation will be a paradigm for effective international law enforcement cooperation directed at global cybercrime, and we applaud the FBI and the international law enforcement partners who contributed to the effort to take down this global threat.”
According to the affidavit, in 2017, for example, the computer network of a school district in the Middle District of North Carolina was infected with the Emotet malware. The Emotet infection caused damage to the school’s computers, including but not limited to the school’s network, which was disabled for approximately two weeks. In addition, the infection caused more than $1.4 million in losses, including but not limited to the cost of virus mitigation services and replacement computers. From 2017 to the present, there have been numerous other victims throughout North Carolina and the United States, to include computer networks of local, state, tribal, and federal governmental units, corporations, and networks related to critical infrastructure.
“The Emotet malware quickly elevated to one of the top cyber threats in the world,” said Special Agent in Charge Robert R. Wells of the FBI Charlotte Field Office. “The strong relationships with international law enforcement partners were critical to the success of this FBI investigation which began with a small North Carolina school system that did the right thing and quickly contacted their local FBI office for help.”
According to the U.S. Cybersecurity & Infrastructure Security Agency (CISA), Emotet infections have cost local, state, tribal, and territorial governments up to $1 million per incident to remediate. More information about the malware, including technical information for organizations about how to mitigate its effects, is available from CISA here: https://us-cert.cisa.gov/ncas/alerts/TA18-201A.
According to the affidavit, foreign law enforcement agents, working in coordination with the FBI, gained lawful access to Emotet servers located overseas and identified the Internet Protocol addresses of approximately 1.6 million computers worldwide that appear to have been infected with Emotet malware between April 1, 2020, and Jan. 17, 2021. Of those, over 45,000 infected computers appear to have been located in the United States.
Foreign law enforcement, working in collaboration with the FBI, replaced Emotet malware on servers located in their jurisdiction with a file created by law enforcement, according to the affidavit. This was done with the intent that computers in the United States and elsewhere that were infected by the Emotet malware would download the law enforcement file during an already-programmed Emotet update. The law enforcement file prevents the administrators of the Emotet botnet from further communicating with infected computers. The law enforcement file does not remediate other malware that was already installed on the infected computer through Emotet; instead, it is designed to prevent additional malware from being installed on the infected computer by untethering the victim computer from the botnet.
The scope of this law enforcement action was limited to the information installed on infected computers by the Emotet operators and did not extend to the information of the owners and users of the computers.
According to the affidavit, in coordination with foreign law enforcement officials, FBI personnel also gained lawful access to an Emotet distribution server located overseas and identified several servers worldwide that were used to distribute the Emotet malware. These servers were typically compromised web servers belonging to what appear to be unknowing third parties. The perpetrators uploaded the Emotet malware to the servers through unauthorized software applications. Victims who clicked on spam email messages containing malicious attachments or hyperlinks would then download the initial Emotet malware file from a distribution server.
In addition, according to the affidavit, FBI personnel notified more than 20 U.S.-based hosting providers that they hosted more than 45 IP addresses that had been compromised by the perpetrators associated with the Emotet malware and botnet. FBI Legal Attachés further notified authorities in more than 50 countries that hosting providers in their respective jurisdictions hosted hundreds of IP addresses that were compromised by Emotet.
The U.S. Attorney’s Office for the Middle District of North Carolina, the FBI Charlotte Division, and the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) conducted the operation in close cooperation with Europol and Eurojust who were an integral part of coordination and messaging, and investigators and prosecutors from several jurisdictions, including the Royal Canadian Mounted Police, France’s National Police and Judicial Court of Paris, Germany’s Federal Criminal Police and General Public Prosecutor’s Office Frankfurt/Main, Lithuanian Criminal Police Bureau, Netherlands National Police and National Public Prosecution Office, Swedish Police Authority, National Police of Ukraine and Office of the Prosecutor General of Ukraine, and the United Kingdom’s National Crime Agency and Crown Prosecution Service. The Justice Department’s Office of International Affairs and the U.S. Department of the Treasury Financial Crimes Enforcement Network (FinCEN) also provided significant assistance. CCIPS Senior Counsel Ryan K.J. Dickey and Assistant U.S. Attorneys Eric Iverson and Anand Ramaswamy of the Middle District of North Carolina led the U.S. efforts.
More information about the operation is available by clicking: Eurojust/Europol. In addition, the Dutch National Police have created the following website to check whether your email address has been compromised by the administrators of Emotet: https://www.politie.nl/emocheck.
In September 2020, FBI Director Christopher Wray announced the FBI’s new strategy for countering cyber threats. The strategy focuses on imposing risk and consequences on cyber adversaries through the FBI’s unique authorities, world-class capabilities, and enduring partnerships. Victims are encouraged to report the incident online with the Internet Crime Complaint Center (IC3) www.ic3.gov. For more information on ransomware prevention, visit: https://www.ic3.gov/Home/Ransomware.
Documents and Resources Related to the Disruption of the Emotet Malware and Botnet
North Carolina Tax Preparer Charged with Conspiracy to Defraud the IRS and Aggravated Identity TheftRead the Press Release
WASHINGTON – A federal grand jury in Durham, North Carolina, returned an indictment yesterday charging a tax preparer with conspiring to defraud the United States, preparing false tax returns, filing a false personal tax return, and committing aggravated identity theft, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Matthew G.T. Martin for the Middle District of North Carolina.
According to the indictment, Andrea Marie Pasley worked at Jones and Stone Taxes, a tax preparation business in Durham, North Carolina. From 2012 through 2017, Pasley allegedly conspired to fraudulently inflate client refunds by claiming, among other things, false deductions to which the clients were not entitled. The false items purportedly included fabricated education expenses and dependents. The indictment further alleges that Pasley filed a false tax return and committed aggravated identity theft when she claimed a false dependent on her own 2015 personal return.
If convicted, Pasley faces a maximum sentence of five years in prison on the conspiracy charge, and a statutory mandatory sentence of two years on the aggravated identity theft charge. The defendant additionally faces a maximum sentence of three years in prison on each count of filing a false tax return and aiding and assisting in the preparation of a false tax return. The defendant also faces a period of supervised release, restitution, and monetary penalties.
An indictment or information merely alleges that crimes have been committed. The defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Martin commended special agents of IRS-Criminal Investigation who conducted the investigation, and Assistant Chief Todd Ellinwood and Trial Attorney Kavitha Bondada of the Tax Division, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
###
North Carolina Tax Preparer Charged with Conspiracy to Defraud the IRS and Aggravated Identity TheftRead the Press Release
A federal grand jury in Durham, North Carolina, returned an indictment yesterday charging a tax preparer with conspiring to defraud the United States, preparing false tax returns, filing a false personal tax return, and committing aggravated identity theft, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Matthew G.T. Martin for the Middle District of North Carolina.
According to the indictment, Andrea Marie Pasley worked at Jones and Stone Taxes, a tax preparation business in Durham, North Carolina. From 2012 through 2017, Pasley allegedly conspired to fraudulently inflate client refunds by claiming, among other things, false deductions to which the clients were not entitled. The false items purportedly included fabricated education expenses and dependents. The indictment further alleges that Pasley filed a false tax return and committed aggravated identity theft when she claimed a false dependent on her own 2015 personal return.
If convicted, Pasley faces a maximum sentence of five years in prison on the conspiracy charge, and a statutory mandatory sentence of two years on the aggravated identity theft charge. The defendant additionally faces a maximum sentence of three years in prison on each count of filing a false tax return and aiding and assisting in the preparation of a false tax return. The defendant also faces a period of supervised release, restitution, and monetary penalties.
An indictment or information merely alleges that crimes have been committed. The defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Martin commended special agents of IRS-Criminal Investigation who conducted the investigation, and Assistant Chief Todd Ellinwood and Trial Attorney Kavitha Bondada of the Tax Division, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Chapel Hill Man Pleads Guilty in Elder Fraud Home Repair SchemeRead the Press Release
Greensboro, N.C. – Matthew G.T. Martin, United States Attorney for the Middle District of North Carolina, announced today that JORGE ALBERTO GARCIA, also known as “Alberto Garcia” and “Roberto Garcia”, pled guilty to a Bill of Information charging one count of conspiracy to commit wire fraud, that is, a scheme and artifice to defraud and to obtain money and property by means of materially false and fraudulent pretenses, representations and promises, in a home repair scheme, as well as two counts of failure to file income tax returns.
“We will not tolerate elder fraud. It is despicable conduct,” said U.S. Attorney Martin. “I commend the FBI, IRS Criminal Investigations Division, and the local law enforcement agencies involved in his investigation who helped stop this abuse and bring about today’s plea.”
The Information alleges that from on or about September 2015 to and including April 2020, GARCIA approached elderly, retired individuals at their private residences in Durham, Orange, and Chatham Counties, offering home improvement services using the business names “J&J Home Improvement” and “JH Home Improvements, Inc.” Many of these victims had physical or mental infirmities. GARCIA—who never had a state general contractor’s license—would offer to perform home improvement projects and these elderly individuals would, in turn, pay him prior to the completion of any construction work via personal checks, credit cards, or withdrawals from investment accounts. GARCIA would often direct that these individuals leave the “to” line of the check blank (which would later be completed in the name of his wife), or issue the check directly to his wife, who, in turn, deposited the checks into personal accounts in her name or that of her business, La Cacerola. GARCIA’s wife would then withdraw the money in cash and/or issue a cashier’s check made out to GARCIA. GARCIA and his wife would also take the checks to the elderly individual’s bank or their bank and cash the checks without depositing the funds into their bank accounts.
Filed documents further state GARCIA would develop personal relationships with these elderly individuals, calling them “Momma” and “Poppa,” and encourage them to solicit their neighbors to engage his services in home improvement projects for their residences, as well. GARCIA also solicited loans from some of the elderly individuals for whom he had already contracted to perform home improvement projects, separate and apart from those projects. In at least one instance, he received a check from a victim for such a loan and returned to that victim’s home later that same day to request the loan again. The victim, not remembering that he had written the first check, issued yet another check for the same amount to GARCIA.
However, GARCIA would not complete the contracted home improvement projects, nor would he repay any loans in full. When the contracting individual, a concerned relative of that person, or a local law enforcement officer confronted GARCIA about the payments, GARCIA would respond in the following ways: a) GARCIA would promise to send workers to complete the project but never fully complete the project; b) GARCIA or his wife would return a small percentage of the monies paid for the project; and/or c) GARCIA or his wife would write a personal check to the contracting individual that would be returned by the issuing bank as lacking sufficient funds. On more than one instance, GARCIA urged the victim not to contact the authorities about the unfinished work.
Review of records from bank accounts known to be controlled by GARCIA and/or his wife for the time period spanning May 2014 through November 2019 indicates that, as a result of the above-described scheme to defraud, GARCIA obtained a total of approximately $3,258,511.48 belonging to multiple victims.
Further, as reflected in the factual basis filed in support of GARCIA’s guilty plea, GARCIA and his wife have filed no federal income taxes since 2007, either personally or for their respective businesses. For the tax years 2014, 2015, 2016, 2017, and 2018, GARCIA and his wife had a joint income totaling $3,242,130.00. In calendar years 2017 and 2018, GARCIA had and received gross income exceeding the amount required to file an income tax return with the Internal Revenue Service; GARCIA knew this and willfully failed to file a return.
“Jorge Garcia targeted and systematically ripped off more than a hundred elderly victims without a second thought. These types of crimes will not be tolerated. Justice was served today, and the FBI hopes his federal prison sentence provides some comfort and a sense of security to the victims,” said Robert R. Wells, Special Agent in Charge of the Federal Bureau of Investigation in North Carolina.
“Today’s admission of guilt by Mr. Garcia is an example of how the justice system will succeed in holding criminals accountable for their actions,” said Special Agent in Charge Matthew D. Line of the Internal Revenue Service, Criminal Investigations. “Mr. Garcia, motivated by pure greed, not only preyed on the elderly and vulnerable, but also
cheated the entire American public by failing to pay into the tax system; as a result, he now faces a prison sentence for his crimes.”
The terms of the plea agreement call for GARCIA to serve a sentence of 84 months of imprisonment. The Court can choose to reject this disposition at sentencing, in which case the matter would go to trial. The charges in the Information carry a maximum of twenty-two years of imprisonment, a term of supervised release of not more than three years, a fine not to exceed $300,000 or not more than the gross gain or loss, and a mandatory special assessment of $150.
Sentencing is scheduled to take place on June 15, 2021 at 9:00 am in Winston-Salem Courtroom Number Four before the Honorable Loretta C. Biggs.
The case was investigated by the Federal Bureau of Investigation (in coordination with the Durham Police Department, Chatham County Sheriff’s Office, Chapel Hill Police Department, Carrboro Police Department, and Cary Police Department) and the Internal Revenue Service – Criminal Investigations. The case was prosecuted by Assistant United States Attorney JoAnna G. McFadden.
###
Surry County Man Sentenced to 20 Years in Prison for Transportation of Child PornographyRead the Press Release
GREENSBORO, N.C. – A Mount Airy, N.C., man who sent a child pornography video to an individual he believed to be a 13-year-old girl was sentenced to 20 years in prison today, announced Matthew G.T. Martin, United States Attorney for the Middle District of North Carolina.
WALTER CLIFTON WOOD, 44, pleaded guilty on May 12, 2020, to transportation of child pornography. He was sentenced today by United States District Judge Catherine C. Eagles to 240 months of imprisonment followed by 15 years of supervised release.
Beginning in May 2018, WOOD chatted online with an individual purporting to be a 13-year-old girl, but who was actually an undercover detective with the Alamance County Sheriff’s Office. WOOD repeatedly directed the conversation to topics of a sexual nature and encouraged the purported 13-year-old to engage in sex acts. Twice during the communication, once in May and again in July 2018, WOOD sent a video depicting an adult engaging in a sex act with a twelve-year-old girl. WOOD was arrested on July 27, 2018 in Surry County and has been in custody since.
When investigators with Homeland Security Investigations reviewed WOOD’s phones they discovered over 75 child pornography images and videos. They also learned that WOOD had engaged in an extended and sexually inappropriate online relationship with an actual minor from approximately May 2014 to June 2015.
This case was investigated by the Alamance County Sheriff’s Office with support from Homeland Security Investigations (HSI) and the Surry County Sheriff’s Office. All are members of the North Carolina Internet Crimes Against Children (ICAC) Task Force.
The referenced Alamance County Sheriff’s Office undercover operation resulted in eighteen arrests and, to date, thirteen convictions in state and federal courts. Former Alamance County Sheriff’s Office ICAC investigator Zachary M. Neefe developed and executed the operation. During its course, he was assisted by HSI Special Agent Cory E. Brant, Special Agent Jessie G. Foster, and Computer Forensic Analyst Mark Vincenc.
Three other cases resulting from the operation were prosecuted in the Middle District of North Carolina:
JOSEPH DANIEL ORAN - https://www.justice.gov/usao-mdnc/pr/garner-man-sentenced-30-years-prison-attempted-enticement-minor-and-possession-child
I. JEFFREY BRANDEIS - https://www.justice.gov/usao-mdnc/pr/durham-man-caught-alamance-county-child-exploitation-operation-sentenced-10-years
ADRIAN RODRIGUEZ - https://www.justice.gov/usao-mdnc/pr/two-men-sentenced-separate-incidents-attempting-sexually-exploit-minors-online
These cases were brought as part of Project Safe Childhood, a nationwide initiative by the Department of Justice to combat online child sexual exploitation and abuse and prosecuted by Assistant United States Attorney Eric L. Iverson. Led by United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
###
73-Year-Old Fayetteville Man Sentenced to 5 Years of Probation for Obtaining Almost $1M in VA Benefits Through FraudRead the Press Release
WINSTON-SALEM, N.C. – A man who pleaded guilty to obtaining healthcare benefits from the Department of Veterans Affairs through fraud was sentenced yesterday, announced Matthew G.T. Martin, United States Attorney for the Middle District of North Carolina.
WILLIE DOSHER CAIN, 73, of Fayetteville, North Carolina, pleaded guilty on June 17, 2020, to one count of embezzlement. On January 5, 2021, United States District Judge Thomas D. Schroeder sentenced CAIN to five years of probation and ordered him to perform 250 hours of community service. Judge Schroeder cited the ongoing Covid-19 pandemic and the defendant’s age and prior military service as factors in determining the sentence. CAIN was also ordered to pay $903,668.08 in restitution and a forfeiture money judgment in the amount of $150,000, and forfeited $155,041.30 in cash, a modified 2018 Toyota Sienna van, and a mobility scooter. In a related civil forfeiture action, CAIN forfeited a Carolina Beach condominium.
According to documents filed with the court, CAIN, a US Army and Fayetteville Police Department veteran, represented to the VA that as a result of shrapnel wounds sustained in Vietnam in 1965, he had suffered the loss of use of both legs, as well as loss of bowel and bladder control, that he was unable to perform daily activities such as dressing and bathing without assistance, and that he was dependent on a wheelchair or motorized scooter for mobility. Filed documents further state, however, that CAIN in fact maintained an active lifestyle throughout this time, including working as a firearms and concealed carry instructor, enjoying beach activities, playing basketball, dancing, and attending social events. He also bought a condominium at Carolina Beach on the third floor of a building which had no elevator. The investigation revealed that as a result of his false claims, CAIN received hundreds of thousands of dollars of VA benefits to which he was not entitled, in the form of direct payments for aid and attendance, modifications to his home, and the purchase and adaptation of vehicles.
This case was investigated by the Veterans Affairs – Office of the Inspector General. It was prosecuted by Assistant United States Attorneys Frank J. Chut and Meredith Ruggles.
###
DEA Investigation in Chapel Hill Area Uncovers Large-Scale Drug RingRead the Press Release
GREENSBORO, N.C. – Twenty-one people face federal charges as a result of a lengthy investigation into the sale of narcotics on or near college campuses in North Carolina. The drug trafficking investigation, conducted by a United States Drug Enforcement Administration (DEA) task force and the Orange County Sheriff’s Office, revealed drug activity involving members of several fraternal organizations at universities in the state. Matthew G.T. Martin, United States Attorney for the Middle District of North Carolina, Robert J. Murphy, Special Agent in Charge of the Atlanta Field Division of the DEA, and Charles S. Blackwood, Sheriff of Orange County, North Carolina, held a press conference today to discuss the investigation.
While working a drug case several years ago, the Orange County Sheriff’s Office received information about the sale of illegal drugs on the campus of the University of North Carolina at Chapel Hill (UNC). In November 2018, agents and officers assigned to the DEA’s Raleigh District Office initiated an investigation into the distribution of cocaine hydrochloride and other illegal drugs in the Chapel Hill area. It became clear early in the investigation that illegal drug distribution occurred at or near some UNC fraternal organization properties. Court filings to date specifically allege illegal drug activity involving the UNC chapters of Phi Gamma Delta, Kappa Sigma, and Beta Theta Pi occurring between 2017 and the spring of 2020.
Over the course of several years, the drug ring funneled over a thousand pounds of marijuana, several hundred kilograms of cocaine, and significant quantities of other drugs into these college campuses. Estimates of the total drug proceeds are not presently available, but they exceeded 1.5 million dollars.
According to documents filed in court, investigators utilized information from cooperating sources and cooperating defendants, and investigative methods such as controlled purchases, undercover purchases, financial investigation, surveillance, and analysis of electronic devices. Ultimately, investigators discovered that individuals were shipping cocaine from California via the U.S. Postal Service (USPS) and transporting marihuana by motor vehicle. Involved parties shipped bulk cash proceeds from illegal drug transactions through the USPS. Other proceeds, estimated to be approximately 1.3 million dollars, transferred hands through financial institutions utilizing money orders, Western Union, and mobile payment applications.
One primary supplier was the first person charged as a result of the investigation, FRANCISCO JAVIER OCHOA, JR., age 27, of Turlock, CA, who was indicted in November 2019 for conspiracy to distribute 5 kilograms or more of cocaine and conspiracy to distribute 100 kilograms or more of marijuana. According to documents filed in court, from March 2017 until March 22, 2019, OCHOA supplied approximately 200 pounds of marihuana and two kilograms of cocaine weekly to a cooperating defendant in Orange County. Law enforcement operations at locations associated with the subject in Carrboro and Hillsborough resulted in seizure of 148.75 pounds of marihuana, 442 grams of cocaine, 189 Xanax pills, steroids, human growth hormone, other narcotics, and approximately $27,775.00 in U.S. currency. The investigation revealed that payment for drugs was made using Venmo and by sending cash through the U.S. mail. OCHOA pleaded guilty to the indictment On November 24, 2020, he was sentenced to 73 months imprisonment, 5 years of supervised release, and ordered to pay a $250,000 forfeiture judgment.
The distribution of hard drugs was pervasive in and around certain fraternities. Illustrations of the type of activity, taken from court documents, include:
A cooperating defendant (CD2) described regularly supplying cocaine to “Chase” (later identified as defendant Charles Poindexter), who sold only to fraternity members. CD2 said he felt safe doing so because most transactions took place at the Phi Gamma Delta fraternity house behind closed doors. CD2 also stated that most drug transactions occurred around fraternity events, and bigger events required larger amounts of narcotics. In an interview, Poindexter admitted to purchasing cocaine, marihuana, and “molly” (MDMA) from CD2, and stated that all 22 members of his fraternity pledge class “went in” to purchase an ounce of cocaine for spring break in his sophomore year.
Another cooperating defendant (CD1) identified CD2 as his source for marihuana, Xanax, and cocaine, which CD1 distributed at the Kappa Sigma fraternity house to Kappa Sigma members, associates, and members of other fraternities. CD1 also told investigators that defendant David Bayha was selling marihuana from his room at the Kappa Sigma house, and that Bayha posted marihuana prices to the UNC Kappa Sigma GroupMe thread. In May 2020, an undercover investigator purchased 1/8-ounce of marihuana for $35 from Bayha outside the Kappa Sigma house. Another cooperator (CD5) was introduced to members of the Kappa Sigma fraternity by a friend and attended functions at the Kappa Sigma house. CD5 told investigators s/he witnessed “habitual” drug use there.
Cooperating sources of information and cooperating defendants also identified JASON SHUANG XU as a subordinate drug distributor to CD2. XU obtained one-half ounce quantities of cocaine hydrochloride (cocaine) from CD2 every two weeks during the school semesters at UNC-Chapel Hill in 2017 and 2018. CD2 utilized XU as an intermediary for the distribution of cocaine, psilocybin (mushrooms), and alprazolam (Xanax) at the Kappa Sigma Fraternity. XU is a member of this fraternity, and he provided illegal drugs to other fraternity members for distribution. A search of XU’s iCloud account revealed text messaging threads with CD2 and others, as well as photographs of cocaine, marihuana, marihuana use, and cocaine use.
Cooperating sources and cooperating defendants identified AMBER JANNA JOHNSON as a subordinate cocaine distributor to CD2. JOHNSON began supplying a cooperating source (CS) with one-half ounce quantities of cocaine every six (6) weeks from 2016 until 2018. JOHNSON introduced the CS to CD2 in 2018. The CS began obtaining one-ounce quantities of cocaine from CD1. In 2019, JOHNSON introduced the CS to a second cocaine supplier who provided cocaine to the CS until the spring of 2020. CD2 advised the DEA that JOHNSON, a student at Duke University, distributed cocaine to students at Duke and to fraternity members from UNC-Chapel Hill. CD2 supplied JOHNSON with ounce-quantities of cocaine for distribution on both campuses. It appears JOHNSON obtained and distributed at least 200 grams, but less than 300 grams of cocaine, from August 2017 through March 2019.
CD2 identified JASON BLAKE NITSOS as a subordinate cocaine distributor, and advised that NITSOS sold the cocaine to members of the Eta Chapter of the Beta Theta Pi Fraternity at UNC-Chapel Hill. Between October 2017 and March 2019, NITSOS paid CD2 approximately $15,000.00 for cocaine in 32 Venmo transactions. Fifteen of the transactions occurred over the Internet Protocol address located at the Beta Theta Pi fraternity house on the campus of UNC-Chapel Hill.
Court documents also link the trafficking of controlled substances to other college towns. In the summer of 2020, a cooperating defendant (CD) identified an Appalachian State University (ASU) student and member of the Delta Chi fraternity member in Boone as a known distributor of controlled substances to ASU students. In August 2020, the subject of CD’s allegations, Kyle Beckner, sold 1,000 dosage units of LSD to CD for $3,000 in the parking lot of a Chapel Hill restaurant. In October 2019, investigators made a controlled purchase of one ounce of cocaine from another ASU student, Devin McDonald, after McDonald was identified by a cooperating source as someone who distributed cocaine to other ASU students. Other defendants charged as a result of the investigation lived in Charlotte and Wilmington.
“No one is above the law, including college students and fraternity members at elite universities. This serious drug trafficking is destructive and reckless, and many lives have been ruined,” said U.S. Attorney Martin. “This investigation reveals that the fraternity culture at these universities is dangerous. University administrators and national chapters cannot turn a blind eye to the impact on these students and the environment on their respective college campuses. The drug culture feeds many other problems on campus and in our society. University administrators must take a stand and put a stop to it.”
“College communities should be a safe haven for young adults to obtain a higher education, not a place where illegal drugs are easily accessible,” said DEA SAC Murphy. “These fraternity members’ drug trafficking crimes contributed to a toxic and dangerous environment on these college campuses. The arrest of these drug traffickers makes these college campuses and their respective communities safer. DEA and its law enforcement partners will continue to strive to ensure these college campuses remain a safe environment charged with educating the best and brightest so they may become future leaders of our country. These arrests are a shining example how success can be achieved through spirited law enforcement cooperation.”
Between July and December, 2020, twenty additional defendants have been charged.
In an indictment returned on July 27, 2020, the grand jury charged the following defendants with conspiracy to distribute cocaine and conspiracy to distribute marijuana:
- ANDREW BOYLAN GADDY, age 24, of Carrboro, NC;
- TRAVIS MICHAEL EVANS, age 27, of Hillsborough, NC;
- DANE LAMBERT SIMON, age 23, of Durham, NC;
- BRIANHA NICOLE HASKELL, age 24, of Hillsborough, NC; and
- MARIELA ZAVALA MENDOZA, aka Maria Ochoa, age 25, of Turlock, CA.
In other indictments returned in July, October, and December, 2020, the grand jury charged each of the following defendants with conspiracy to distribute cocaine:
- ZACHRE CHASEN ABERCROMBIE, age 27, of Charlotte, NC;
- AMBER JANA JOHNSON, age 24, of Carrboro, NC;
- JOHN FREDERICK HOLLOWAY, age 23, of Carrboro, NC;
- DEVIN JAMES McDONALD, age 23, of Kill Devil Hills, NC;
- JASON BLAKE NITSOS, age 24, of Greensboro, NC;
- DEVON ANTHONY PICKERING, age 35, of Charlotte, NC;
- EDISON TORRES ROBLES, aka Fransisco Gallego Mandez Rodriguez, age 26, of Durham, NC; and
- JASON SHUANG XU, age 23, of Apex, NC.
Seven additional defendants were individually charged in October and December, 2020, with a variety of offenses:
- CHANDLER DAVID ANDERSON, age 27, of Wilmington, NC, faces charges of conspiracy to distribute cocaine and marihuana.
- DAVIS LINDSEY BAYHA, age 21, of Chapel Hill, NC, faces charges of conspiracy to distribute marihuana; use of a communication facility to facilitate a drug felony; and distribution of a controlled substance within 1000 feet of a public or private college or university.
- KYLE PARRISH BECKNER, age 22, of Boone, NC, is charged with distribution of LSD and use of a communication facility to facilitate a drug felony.
- BERNARD ALEKSANDER BUKOWSKI, age 24, of Raleigh, NC, faces one count of conspiracy to distribute cocaine and one count of possession with intent to distribute cocaine.
- CHARLES CLEVEAU POINDEXTER aka Chase Poindexter, age 23, and JACKSON ALEXANDER NORRIS, age 22, of Chapel Hill, NC, are each charged with conspiracy to distribute cocaine; use of a communication facility to facilitate a drug felony; and distribution of a controlled substance within 1000 feet of a public or private college or university.
- CHRISTOPHER ANTONIO REYES, age 26, of Greensboro, NC, is charged with conspiracy to distribute 100 kilograms or more of marihuana.
The defendants indicted for conspiracy to distribute cocaine and conspiracy to distribute marijuana face terms of imprisonment ranging from not less than 10 years and not more than life, not less than 5 years and not more than 40 years, and not more than 20 years, with fines of up to $10,000,000, $5,000,000, $1,000,000, respectively, or both, and terms of supervised release of at least 3 to 5 years, or more. The other charges carry lesser terms of imprisonment, fines, or both, and supervised release.
The charges are merely allegations, and each defendant is presumed innocent unless and until proven guilty.
Orange County Sheriff Charles Blackwood said, “I am proud of the work my deputy did on this task force, and I am thankful for our partnership with the DEA. Task forces such as this provide our Sheriff’s Office with the resources and equipment needed to conduct these protracted cases and achieve the type of results seen in this case. The amount of illegal narcotics being sold and used in this case was not only astonishing; it also reflected a very serious public health crisis. We worked this case in an effort to save lives. We also wanted to protect the honor and integrity of the University of North Carolina and other institutions of higher learning. This investigation and the prosecution of those involved in the drug trade on university campuses should send a clear message that such activities will not be tolerated.”
In addition to OCHOA, the following defendants pleaded guilty to one or more charges against them and are scheduled to be sentenced in 2021:
GADDY – sentencing 3/24/21
EVANS – sentencing 2/17/21
SIMON – sentencing 3/24/21
HASKELL – sentencing 3/30/21
PICKERING – sentencing 2/20/21
NITSOS – sentencing 3/19/21
XU – sentencing 3/19/21
The case is being investigated by the Orange County Sheriff’s Office and the U.S. Drug Enforcement Administration (DEA). Law enforcement partners in Orange County and on UNC’s campus provided assistance during the investigation.
The investigation continues, and more charges are possible. Anyone with additional information is asked to call the DEA Raleigh District Office at 919-790-3004.
This other law enforcement activity is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.
###
Durham Man Sentenced to 12-1/2 Years in Prison in Child Pornography CaseRead the Press Release
GREENSBORO, N.C. – A man who pleaded guilty to transportation of child pornography was sentenced Friday, December 4, 2020, announced Matthew G.T. Martin, United States Attorney for the Middle District of North Carolina.
PHILIP STEPHEN STALLINGS, 41, of Durham, North Carolina, pleaded guilty on June 9, 2020, to one count of transportation of child pornography. He was sentenced by United States District Judge William L. Osteen, Jr. to 150 months of imprisonment followed by 15 years of supervised release. He was ordered to pay a total of $17,000 in restitution to five victims.
In December 2018, special agents with Homeland Security Investigations (HSI) became aware that an individual was using a popular mobile messaging application to share child pornography. They ultimately identified the perpetrator as STALLINGS. On June 19, 2019, HSI special agents and investigators with the Durham County Sheriff’s Office executed a search warrant at STALLINGS’ Durham residence. They recovered three electronic devices and identified a cloud storage account that contained child pornography. File created-on dates indicated that STALLINGS had possessed many of the files for approximately three years or more.
This case was investigated by Homeland Security Investigations (HSI) with the assistance of the Durham County Sheriff’s Office. It was prosecuted by Assistant United States Attorney Eric L. Iverson and brought as part of Project Safe Childhood, a nationwide initiative by the Department of Justice to combat online child sexual exploitation and abuse. Led by United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
###
North Carolina Return Preparers Plead Guilty to Conspiring to Defraud the IRSRead the Press Release
WASHINGTON – Two Durham, North Carolina, return preparers pleaded guilty to conspiring to defraud the United States, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Department of Justice’s Tax Division and U.S. Attorney Matthew G.T. Martin of the Middle District of North Carolina.
According to court documents, Karen Marie Jones owned Jones and Stone Taxes, a tax preparation business in Durham. From 2012 through 2016, Jones and another return preparer at Jones and Stone, Audrey Renetta Odom, conspired to falsify tax returns by fabricating education expenses, among other items, in an effort to inflate refunds paid to their clients by the IRS. The co-conspirators charged some clients up to $2,000 for preparing each return. In total, the defendants caused a tax loss to the IRS of more than $1.2 million.
Odom pleaded guilty on Dec. 2, 2020, and U.S. District Judge William L. Osteen, Jr. has scheduled a sentencing for Feb. 19, 2021. Previously, Jones pleaded guilty on Nov. 5, 2020, and U.S. District Judge Catherine C. Eagles has scheduled a sentencing for Feb. 25, 2021. Jones and Odom each face a maximum sentence of five years in prison for conspiracy. The defendants also face a period of supervised release, restitution, and monetary penalties.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Martin commended special agents of IRS-Criminal Investigation who conducted the investigation, and Assistant Chief Todd Ellinwood and Trial Attorney Kavitha Bondada of the Tax Division, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
###
North Carolina Return Preparers Plead Guilty to Conspiring to Defraud the IRSRead the Press Release
Two Durham, North Carolina, return preparers pleaded guilty to conspiring to defraud the United States, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Department of Justice’s Tax Division and U.S. Attorney Matthew G.T. Martin of the Middle District of North Carolina.
According to court documents, Karen Marie Jones owned Jones and Stone Taxes, a tax preparation business in Durham. From 2012 through 2016, Jones and another return preparer at Jones and Stone, Audrey Renetta Odom, conspired to falsify tax returns by fabricating education expenses, among other items, in an effort to inflate refunds paid to their clients by the IRS. The co-conspirators charged some clients up to $2,000 for preparing each return. In total, the defendants caused a tax loss to the IRS of more than $1.2 million.
Odom pleaded guilty on Dec. 2, 2020, and U.S. District Judge William L. Osteen Jr. has scheduled a sentencing for Feb. 19, 2021. Previously, Jones pleaded guilty on Nov. 5, 2020, and U.S. District Judge Catherine C. Eagles has scheduled a sentencing for Feb. 25, 2021. Jones and Odom each face a maximum sentence of five years in prison for conspiracy. The defendants also face a period of supervised release, restitution, and monetary penalties.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Martin commended special agents of IRS-Criminal Investigation who conducted the investigation, and Assistant Chief Todd Ellinwood and Trial Attorney Kavitha Bondada of the Tax Division, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Former Investment Manager Charged in Scheme to Defraud Life Insurance CompanyRead the Press Release
WASHINGTON – A former investment manager was charged in an indictment unsealed today for his alleged participation in a scheme to defraud a North Carolina-based life insurance company out of over $34 million.
Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, U.S. Attorney Matthew G.T. Martin of the Middle District of North Carolina, and Inspector in Charge Delany De Leon-Colon of the U.S. Postal Inspection Service (USPIS) Criminal Investigations Group made the announcement.
Bradley Reifler, 61, of Milbrook, New York, was charged with four counts of wire fraud and one count of perjury in the U.S. District Court for the Middle District of North Carolina. The defendant was arrested this morning and will appear today before U.S. Magistrate Judge Katherine H. Parker in the Southern District of New York.
The indictment alleges that the defendant, CEO and founder of Forefront Capital Holdings, engaged in a scheme to enrich himself and his business entities by defrauding a life insurance company out of assets held in trust for the potential payment of life insurance claims.
As alleged in the indictment, the defendant served as an investment advisor for over $34 million in assets belonging to the life insurance company. Rather than investing the $34 million in permissible investments, the defendant invested funds in high-risk, “junk”, or self-dealing investments and otherwise diverted funds for his personal and business use. The indictment further alleges that after a 2016 audit of the trust assets raised concerns about investments made by the defendant, the defendant concealed the fraud by falsifying and causing others to falsify supporting documentation, including valuations, promissory notes, and agreements, purporting to underly investments made with the trust assets.
The indictment also alleges that the defendant submitted a false declaration in connection with a civil suit brought by the life insurance company, falsely swearing, under penalty of perjury, that all investments had been approved and that all of the funds had been invested in debt instruments. As a result of the defendant’s scheme, the life insurance company was only able to recoup a portion of the approximately $34 million that it entrusted to the defendant, was unable to pay out on claims by its beneficiaries, and was placed in rehabilitation.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by USPIS. Trial Attorneys Michelle Pascucci, Drew Bradylyons, and Jessee Alexander-Hoeppner of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Meredith Ruggles of the Middle District of North Carolina are prosecuting the case.
The Criminal Division’s Fraud Section plays a pivotal role in the Department of Justice’s fight against white collar crime around the country.
###
Former Investment Manager Charged in Scheme to Defraud Life Insurance CompanyRead the Press Release
A former investment manager was charged in an indictment unsealed today for his alleged participation in a scheme to defraud a North Carolina-based life insurance company out of over $34 million.
Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, U.S. Attorney Matthew G.T. Martin of the Middle District of North Carolina, and Inspector in Charge Delany De Leon-Colon of the U.S. Postal Inspection Service (USPIS) Criminal Investigations Group made the announcement.
Bradley Reifler, 61, of Milbrook, New York, was charged with four counts of wire fraud and one count of perjury in the U.S. District Court for the Middle District of North Carolina. The defendant was arrested this morning and will appear today before U.S. Magistrate Judge Katherine H. Parker in the Southern District of New York.
The indictment alleges that the defendant, CEO and founder of Forefront Capital Holdings, engaged in a scheme to enrich himself and his business entities by defrauding a life insurance company out of assets held in trust for the potential payment of life insurance claims.
As alleged in the indictment, the defendant served as an investment advisor for over $34 million in assets belonging to the life insurance company. Rather than investing the $34 million in permissible investments, the defendant invested funds in high-risk, “junk”, or self-dealing investments and otherwise diverted funds for his personal and business use. The indictment further alleges that after a 2016 audit of the trust assets raised concerns about investments made by the defendant, the defendant concealed the fraud by falsifying and causing others to falsify supporting documentation, including valuations, promissory notes, and agreements, purporting to underly investments made with the trust assets.
The indictment also alleges that the defendant submitted a false declaration in connection with a civil suit brought by the life insurance company, falsely swearing, under penalty of perjury, that all investments had been approved and that all of the funds had been invested in debt instruments. As a result of the defendant’s scheme, the life insurance company was only able to recoup a portion of the approximately $34 million that it entrusted to the defendant, was unable to pay out on claims by its beneficiaries, and was placed in rehabilitation.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by USPIS. Trial Attorneys Michelle Pascucci, Drew Bradylyons, and Jessee Alexander-Hoeppner of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Meredith Ruggles of the Middle District of North Carolina are prosecuting the case.
The Criminal Division’s Fraud Section plays a pivotal role in the Department of Justice’s fight against white collar crime around the country.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Stanly County Opioid Distributor Sentenced to 25 Years in PrisonRead the Press Release
WINSTON-SALEM, N.C. – An Albemarle man was sentenced to federal prison Tuesday for charges involving heroin and fentanyl distribution, announced Matthew G.T. Martin, United States Attorney for the Middle District of North Carolina.
ZANNIE JAY LOTHARP, 35, was found guilty by a jury on March 11, 2020, of one count of conspiracy to distribute heroin and fentanyl, and one count of possession with intent to distribute heroin. On November 19, 2020, LOTHARP was sentenced by United States District Judge Thomas D. Schroeder to a total of 300 months of imprisonment, followed by 3 years of supervised release.
Evidence introduced at trial showed that LOTHARP and another person used two Stanly County residences on the same street for opioid distribution activity. The narcotics were kept at one house and sold from another house on Washington Lane in Albemarle. After a state search warrant was executed on October 19, 2018, for both Washington Lane locations, LOTHARP was arrested by state authorities but released on bond. Following his release, LOTHARP again sold heroin on January 15, 2019.
“This sentence sends a clear message: dealing opioids does not pay. We are working hard to address the opioid epidemic,” said U.S. Attorney Matt Martin. “Stanly County is now a safer place, thanks to the fine work of the law enforcement and prosecutors involved in this case.”
A co-defendant, Shonteya Christina Harris, age 34, from Albemarle, North Carolina, pleaded guilty to conspiracy to distribute heroin and fentanyl and was sentenced on October 19, 2020, to 40 months imprisonment and a three year term of supervised release.
This case was investigated by the Albemarle Police Department, Stanly County Sheriff's Office, Oakboro Police Department, the North Carolina State Bureau of Investigation, and the Department of Homeland Security. The case was prosecuted by Assistant United States Attorneys Nicole R. DuPré and Tanner Kroeger for the Middle District of North Carolina.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
###
North Carolina Couple Indicted for Failing to Pay Employment Taxes and Failure to File Tax ReturnsRead the Press Release
WASHINGTON – A federal grand jury in Greensboro, North Carolina, returned an indictment today, charging a North Carolina couple with federal employment tax and individual income tax violations, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Matthew G.T. Martin for the Middle District of North Carolina.
As alleged in the indictment, from 1992 through the present, James Rice was an orthopedic surgeon who owned and operated an orthopedic practice that the indictment refers to as “Sandhills Orthopaedic.” The indictment further alleges that his wife, Susan Rice, worked at Sandhills Orthopaedic and handled the administrative operations, including payroll and employment tax obligations. Susan Rice also purportedly owned and operated a truffle business.
The Rices have been charged with a variety of tax offenses, including conspiring to not pay any taxes on their business and personal income and to defraud the United States by failing to pay employment taxes owed by Sandhills Orthopaedic. Between 2007 and 2014, the Rices allegedly withheld employment taxes from Sandhills Orthopaedic’s employees, but failed to pay over approximately $580,000 in social security and other tax withholdings to the IRS. The indictment also alleges that the Rices did not file individual income tax returns for the 2014 through 2016 tax years, despite earning gross income in excess of the filing threshold, and that James Rice did not file corporate tax returns for an entity over which he was president for the 2014 through 2017 tax years.
If convicted, the Rices face a statutory maximum sentence of five years in prison and a $250,000 fine for each conspiracy, tax evasion, and employment tax count. They also face one year in prison for each of the charges relating to failing to file individual and corporate tax returns. They are also subject to additional monetary penalties, supervised release, and restitution.
An indictment merely alleges that crimes have been committed. The defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Martin commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Alexander Effendi and Michael Jones of the Tax Division, 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 Couple Indicted for Failing to Pay Employment Taxes and Failure to File Tax ReturnsRead the Press Release
A federal grand jury in Greensboro, North Carolina, returned an indictment today, charging a North Carolina couple with federal employment tax and individual income tax violations, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Matthew G.T. Martin for the Middle District of North Carolina.
As alleged in the indictment, from 1992 through the present, James Rice was an orthopedic surgeon who owned and operated an orthopedic practice that the indictment refers to as “Sandhills Orthopaedic.” The indictment further alleges that his wife, Susan Rice, worked at Sandhills Orthopaedic and handled the administrative operations, including payroll and employment tax obligations. Susan Rice also purportedly owned and operated a truffle business.
The Rices have been charged with a variety of tax offenses, including conspiring to not pay any taxes on their business and personal income and to defraud the United States by failing to pay employment taxes owed by Sandhills Orthopaedic. Between 2007 and 2014, the Rices allegedly withheld employment taxes from Sandhills Orthopaedic’s employees, but failed to pay over approximately $580,000 in social security and other tax withholdings to the IRS. The indictment also alleges that the Rices did not file individual income tax returns for the 2014 through 2016 tax years, despite earning gross income in excess of the filing threshold, and that James Rice did not file corporate tax returns for an entity over which he was president for the 2014 through 2017 tax years.
If convicted, the Rices face a statutory maximum sentence of five years in prison and a $250,000 fine for each conspiracy, tax evasion, and employment tax count. They also face one year in prison for each of the charges relating to failing to file individual and corporate tax returns. They are also subject to additional monetary penalties, supervised release, and restitution.
An indictment merely alleges that crimes have been committed. The defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Martin commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Alexander Effendi and Michael Jones of the Tax Division, who are prosecuting this case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Man Charged with Federal Firearm Violations in Connection with Multiple Gun Purchases in GreensboroRead the Press Release
GREENSBORO, N.C. – Matthew G.T. Martin, United States Attorney for the Middle District of North Carolina, announced today that DANNY LEE MOCK, JR. was charged in a 10-count indictment with violations of federal firearms laws at Title 18, United States Code, Sections 922(a)(6) and 924(a)(1)(A).
The Indictment alleges that on five occasions between September 24, 2019, and December 14, 2019, MOCK, JR., age 30, of High Point, NC, made false representations in connection with the purchase of firearms from federally licensed firearm dealers in Greensboro. For each purchase, MOCK, JR. knowingly identified himself as the actual transferee/purchaser of the firearm and executed ATF Form 4473, Firearms Transaction Record, in which he affirmatively stated that he was the actual transferee/buyer, when in fact he was purchasing the firearms for other people.
“Federal gun laws preserve our right to bear arms by keeping firearms out of the wrong hands,” said U.S. Attorney Martin. “We will aggressively prosecute these so-called ‘lie and buy’ cases, in which someone claims to be the buyer in order to conceal the identity of the real purchaser, who is generally someone prohibited by law from having a firearm.”
If convicted under any of the five counts alleging violations of Title 18, United States Code, Sections 922(a)(6), MOCK, JR. may be sentenced to imprisonment for not more than 10 years, a fine not to exceed $250,000.00, or both, and 3 years of supervised release. If convicted under any of the five counts alleging violations of Title 18, United States Code, Sections 924(a)(1)(A), MOCK, JR. may be sentenced to imprisonment for not more than 5 years, a fine not to exceed $250,000.00, or both, and not more than 1 year of supervised release.
An indictment is merely an allegation, and each defendant is presumed innocent unless and until proven guilty.
The case has been investigated by the Guilford County Sheriff’s Office and the Federal Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF).
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
###
Garner Man Sentenced to 30 Years in Prison for Attempted Enticement of a Minor and Possession of Child PornographyRead the Press Release
GREENSBORO, N.C. – A Garner, N.C., man who traveled to Alamance County to have sex with what he believed to be a 13-year-old girl was sentenced to 30 years in prison today, announced Matthew G.T. Martin, United States Attorney for the Middle District of North Carolina.
JOSEPH DANIEL ORAN, 34, pleaded guilty on May 7, 2020 for attempted enticement of a minor and possession of child pornography. He was sentenced today by United States District Judge Catherine C. Eagles to 360 months of imprisonment followed by 20 years of supervised release. Judge Eagles sentenced ORAN to 360 months for attempted enticement of a minor, and 240 months for possession of child pornography, with those sentences running concurrently.
At the time he committed the Alamance County offenses, ORAN was already a registered sex offender following his 2011 Wake County, N.C., conviction for solicitation of a child by computer and indecent liberties with a minor.
Beginning in September 2017, Oran began chatting online with an individual purporting to be a 13-year-old girl, but who was actually an undercover detective with the Alamance County Sheriff’s Office. ORAN exchanged more than two thousand text messages with the undercover detective over several weeks. ORAN repeatedly directed the conversation to topics of a sexual nature and expressed his desire to engage in sexual acts with the person he believed to be a 13-year-old girl. He also offered to send child pornography, texting, “Yeah like other people make it like other adults make it with kids and then they send it to people…It's against the law but they make it.” ORAN was arrested on October 31, 2017 after he traveled to a residence in Alamance County for the purpose of engaging in indecent liberties with a minor. Investigators subsequently identified a cloud storage account possessed by ORAN that contained child pornography.
This case was investigated by the Alamance County Sheriff’s Office with support from Homeland Security Investigations (HSI). Both are members of the North Carolina Internet Crimes
Against Children (ICAC) Task Force. The ongoing Alamance County Sheriff’s Office undercover operation has resulted in multiple arrests and convictions, including I. JEFFREY BRANDEIS (https://www.justice.gov/usao-mdnc/pr/durham-man-caught-alamance-county-child-exploitation-operation-sentenced-10-years) and ADRIAN RODRIGUEZ (https://www.justice.gov/usao-mdnc/pr/two-men-sentenced-separate-incidents-attempting-sexually-exploit-minors-online).
This case was brought as part of Project Safe Childhood, a nationwide initiative by the Department of Justice to combat online child sexual exploitation and abuse, and prosecuted by Assistant United States Attorneys Eric L. Iverson and Whitney N. Shaffer. Led by United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
###
DOJ Establishes Local Contacts for November 2020 ElectionRead the Press Release
GREENSBORO, N.C. – United States Attorney Matthew G.T. Martin announced today that Assistant United States Attorney (AUSA) JoAnna McFadden 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 concerns in consultation with Justice Department Headquarters in Washington.
“Fair and trustworthy elections are the cornerstone of our constitutional democracy. Every citizen must be able to vote without interference or discrimination, and to have that vote counted,” said United States Attorney Martin. “The Department of Justice will act promptly and appropriately to protect the integrity of the election process, but we need public involvement to ensure that elections are both free and fair. If you have specific information about election fraud, discrimination, or interference with voting, please call the U.S. Attorney’s Office or the FBI immediately.”
In order to respond to complaints of election fraud or voting rights concerns during the voting period that ends on November 3, 2020, and to ensure that such complaints are directed to the appropriate authorities, AUSA/DEO McFadden will be on duty in this District while the polls are open. She can be reached by the public at (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 office can be reached by the public at (704) 672-6800 and callers should ask to speak with the Election Crimes Coordinator.
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 during the early voting period and 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 also protects the right of voters to mark their own ballot or to be assisted in voting by a person of their choice (where voters need assistance because of disability or illiteracy).
Complaints about possible violations of the federal voting rights laws also can be made directly to the Civil Rights Division in Washington, DC by phone at 800-253-3931 or by complaint form at https://civilrights.justice.gov/.
Please note, however, in the case of a crime of violence or intimidation, citizens should call 911 immediately and before contacting federal authorities. State and local police have primary jurisdiction over polling places, and almost always have faster reaction capacity in an emergency.
###
DOJ Charges More Than 14,200 Defendants with Firearms-Related Crimes in FY20Read the Press Release
GREENSBORO, N.C. – Today, the Department of Justice announced it has charged more than 14,200 defendants with firearms-related crimes during Fiscal Year (FY) 2020, despite the challenges of COVID 19 and its impact on the criminal justice process. These cases have been a Department priority since November 2019 when Attorney General William P. Barr announced his commitment to investigating, prosecuting, and combatting gun crimes as a critical part of the Department’s anti-violent crime strategy. These firearms-related charges are the result of the critical law enforcement partnership between United States Attorneys’ Offices and the Bureau of Alcohol, Tobacco, Firearms and Explosives, led by Acting Director Regina Lombardo, who has made firearms-related investigations a priority.
“The number one priority of government is to keep its citizens safe,” said Attorney General Barr. “By preventing firearms from falling into the hands of individuals who are prohibited from having them, we can stop violent crime before it happens. Violating federal firearms laws is a serious crime and offenders face serious consequences. The Department of Justice is committed to investigating and prosecuting individuals who illegally buy, sell, use, or possess firearms. Reducing gun violence requires a coordinated effort, and we could not have charged more than 14,000 individuals with firearms-related crimes without the hard work of the dedicated law enforcement professionals at the ATF, our U.S. Attorneys’ Offices across the country, and especially all of our state and local law enforcement partners.”
“Protecting the public from violent crime involving firearms is at the core of ATF’s mission,” commented ATF Acting Director Regina Lombardo. “Every day the men and women of ATF pursue and investigate those who use firearms to commit violent crimes in our communities, many of whom are prohibited from possessing firearms from previous convictions. ATF, in collaboration with the U.S. Attorneys’ Offices across the nation, is committed to bringing these offenders to justice for their egregious and violent criminal acts.”
“We are committed to combatting violent crime and increasing the safety of the citizens in every neighborhood of the Middle District,” said United States Attorney
Martin. “Our office prosecuted 258 firearm cases in the last 12 months. These cases involve ‘impact’ defendants, many of whom have a history of violent crime or affiliation with a violent group. Our violent crime partnership with local law enforcement through Project Safe Neighborhoods and Project Guardian is strong. The message is simple: break federal gun laws in this district, and you will get federal time.”
Under federal law, it is illegal to possess a firearm if you fall into one of nine prohibited categories including being a felon, illegal alien, or unlawful user of a controlled substance. Further, it is unlawful to possess a firearm in furtherance of a drug trafficking offense or violent crime. It is also illegal to purchase – or even to attempt to illegally purchase - firearms if the buyer is a prohibited person or illegally purchasing a firearm on behalf of others. Lying on ATF Form 4473, which is used to lawfully purchase a firearm, is also a federal offense. The Department is committed to prosecuting these firearms offenses as well as using all modern technologies available to law enforcement such as the National Integrated Ballistic Information Network, known as NIBIN, to promote gun crime intelligence. Keeping illegal firearms out of the hands of violent criminals will continue to be a priority of the Department of Justice and we will use all appropriate, available means to keep the law abiding people of this country safe from gun crime.
For more information on the lawful purchasing of firearms, please see: https://www.atf.gov/qa-category/atf-form-4473.
###
Durham Men Convicted of Carjacking and Firearm OffensesRead the Press Release
GREENSBORO, N.C. - On Thursday, October 8, 2020, a jury in federal court found a Durham resident guilty on three felony charges relating to a violent carjacking, announced United States Attorney Matthew G.T. Martin of the Middle District of North Carolina.
Following a three day trial in Greensboro, the jury found KENNETH JEROME WILEY, age 37, guilty of carjacking, brandishing a firearm during the carjacking, and felon in possession of a firearm.
“We are committed to pursuing violent gun criminals in Durham. This case is yet another example. The lesson is simple: breaking federal gun laws does not end well,” said United States Attorney Martin. “I thank the Durham County Sheriff’s Office and the FBI for their excellent investigation of this case.”
Evidence presented at trial showed that on February 5, 2020, at around 10:45 p.m., WILEY and another man approached the victim at a Bank of America ATM at 2 Park Drive in Research Triangle Park. The victim was sitting in a 2005 Mercedes sedan when WILEY and the other man, both brandishing Glock semi-automatic pistols with extended magazines, threatened the man by pointing the guns at his head and forced the victim out of the Mercedes. WILEY then drove off in the Mercedes, while the other gunman and another assailant, JORDAN HART, drove off in a burgundy Kia Sorrento. On February 27, 2020, law enforcement executed a search warrant at WILEY’s residence on Troy Street in Durham. Police located WILEY in his bedroom holding a Glock model 26 9mm handgun with an extended magazine. The firearm was loaded with 33 rounds of ammunition, including one round in the chamber. WILEY later admitted to law enforcement that he possessed the firearm.
HART, age 26, also from Durham, NC, pleaded guilty to one count of carjacking on October 5, 2020.
Sentencing for both defendants is scheduled for February 8, 2021, in Greensboro before United States District Judge Catherine C. Eagles. With regard to the carjacking offense, each defendant faces a maximum sentence of 15 years in prison, a fine of up to
$250,000, or both, and a term of not more than three years of supervised release. With regards to the brandishing a firearm offense, WILEY faces a sentence of not less than seven years in prison, consecutive to any other sentence imposed, a fine of up to $250,000, or both, and a term of up to five years of supervised release. For being a felon in possession of a firearm, WILEY faces a sentence of up to ten years, a fine of up to $250,000, or both, and up to three years of supervised release.
The case was investigated by the Federal Bureau of Investigation and the Durham County Sheriff’s Office. The case was prosecuted by Assistant United States Attorneys Ashley Waid and Stephen Inman.
###
Owner of North Carolina Temporary Staffing Firms Sentenced to Prison for Employment Tax FraudRead the Press Release
WASHINGTON – A Greensboro, North Carolina, business owner was sentenced to 42 months in prison yesterday for failing to pay employment taxes, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Matthew G.T. Martin for the Middle District of North Carolina.
According to documents and information provided to the court, Rebecca Adams, 57, and her daughter Elizabeth Wood, 40, operated temporary staffing businesses in Greensboro under the names A & R Staffing Solutions Inc., Wood Executive Services Inc., and Adams Staffing Enterprises Inc. Adams and her daughter withheld federal and state taxes from employees’ paychecks, but did not pay those taxes to the IRS. In 2015, Wood pleaded guilty to embezzling employee tax withholdings that were due to the state and was sentenced to prison. During Wood’s period of incarceration for the state payroll tax fraud, Adams continued to withhold taxes from employees’ paychecks, but did not pay those taxes over to the IRS. Adams also did not file with the IRS a required quarterly payroll tax return.
In addition to the term of imprisonment, U.S. District Judge N. Carlton Tilley Jr., ordered Adams to serve three years of supervised release and to pay approximately $2,222,834 in restitution to the United States.
On June 25, 2020, Wood was sentenced to 18 months in prison for failing to pay over employment taxes, and ordered to pay approximately $2,338,766 in restitution to the United States.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Martin thanked special agents of IRS-Criminal Investigation, who conducted the investigation, and Trial Attorney Kevin Schneider of the Tax Division and Assistant U.S. Attorney Frank Chut, who prosecuted the case.
###
Owner of North Carolina Temporary Staffing Firms Sentenced to Prison for Employment Tax FraudRead the Press Release
A Greensboro, North Carolina, business owner was sentenced to 42 months in prison yesterday for failing to pay employment taxes, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Matthew G.T. Martin for the Middle District of North Carolina.
According to documents and information provided to the court, Rebecca Adams, 57, and her daughter Elizabeth Wood, 40, operated a temporary staffing businesses in Greensboro under the names A & R Staffing Solutions Inc., Wood Executive Services Inc., and Adams Staffing Enterprises Inc. Adams and her daughter withheld federal and state taxes from employees’ paychecks, but did not pay those taxes to the IRS. In 2015, Wood pleaded guilty to embezzling employee tax withholdings that were due to the state and was sentenced to prison. During Wood’s period of incarceration for the state payroll tax fraud, Adams continued to withhold taxes from employees’ paychecks, but did not pay those taxes over to the IRS. Adams also did not file with the IRS a required quarterly payroll tax return.
In addition to the term of imprisonment, U.S. District Judge N. Carlton Tilley Jr., ordered Adams to serve three years of supervised release and to pay approximately $2,222,834 in restitution to the United States.
On June 25, 2020, Wood was sentenced to 18 months in prison for failing to pay over employment taxes, and ordered to pay approximately $2,338,766 in restitution to the United States.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Martin thanked special agents of IRS-Criminal Investigation, who conducted the investigation, and Trial Attorney Kevin Schneider of the Tax Division and Assistant U.S. Attorney Frank Chut, who prosecuted the case.
U.S. Attorney Matt Martin Announces $5,169,303 to Improve Services for Crime VictimsRead the Press Release
GREENSBORO, NC. -- U.S. Attorney Matthew G.T. Martin today announced $5,169,303 in Department of Justice grants to improve services for crime victims in the Middle District of North Carolina. The grants, awarded by the Department’s Office of Justice Programs, are part of over $144 million distributed to enhance the district's response to victims of crime throughout the United States.
“The Department of Justice is steadfast in its commitment to protecting public safety and bringing justice to those who have been victimized,” said Attorney General William P. Barr. “The investments we are making today will support service providers as they work to secure the legal rights of victims and put survivors of criminal acts on the road to recovery.”
The awards made to organizations in the Middle District of North Carolina will advance the use of technology, improve community preparedness and law enforcement training and provide emergency and transitional shelter to assist victims of crime. Programs will also support victims of child abuse and fund research projects related to perpetrators and victims of elder abuse. Approximately $64.3 million was awarded under Office for Victims of Crime grant programs; over $54.1 million was awarded under Office of Juvenile Justice and Delinquency Prevention programs; over $19.9 million was awarded under Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking grant programs; and nearly $5.7 million was awarded under two National Institute of Justice grant programs.
“Protecting victims is at the core of our mission. It is why many of us enter law enforcement,” said U.S. Attorney Martin. “These grants will fund programming to assist victims in the Middle District, and research that will positively impact victim services on a national scale.”
“As lockdowns and lawlessness fuel crime in America’s homes and communities, more people are vulnerable to victimization and those who have been victimized face new hurdles,” said OJP Principal Deputy Assistant Attorney General Katharine T. Sullivan. “The Office of Justice Programs is committed to giving our victim service partners the tools they need to better serve their clients and protect victims’ rights.”
The following organizations in the Middle District received funding:
• Research Triangle Institute -- $1,499,583 (Advancing the Use of Technology to Assist Victims of Crime program)
• Research Triangle Institute -- $1,199,707 (Addressing Female Genital Mutilation and Cutting program)
• City of Salisbury -- $270,000 (Law Enforcement-Based Victim Specialist program)
• Kellin Foundation -- $699,994 (Enhancing Community Responses to America's Drug Crisis: Serving Our Youngest Crime Victim’s program)
• Research Triangle Institute -- $804,300 (Research and Evaluation of Victims of Crime program)
• Research Triangle Institute -- $695,719 (Research and Evaluation of Victims of Crime program)
More information about OJP and its components can be found at www.ojp.gov.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
# # #
Winston-Salem Man Suspected in Drive-by Shooting is Sentenced to 108 Months for Gun CrimeRead the Press Release
GREENSBORO, N.C. - A Winston-Salem man was sentenced today by United States District Court Judge William L. Osteen, Jr., to 108 months in prison and three years of supervised release for a firearm offense, announced United States Attorney Matthew G.T. Martin of the Middle District of North Carolina.
SHAMMOHD JAMEIL BALLAH, age 22, was charged with possession of a firearm by a felon. He pleaded guilty to the charge on June 3, 2020.
According to court documents, on November 4, 2019, Winston-Salem Police Department (WSPD) officers investigating a report of a drive-by shooting at a residence on Bethabara Road found shell casings strewn about the ground in front of the property, as well as numerous holes on the exterior of the residence. Eleven spent shell casings - eight 7.62mm and three 9mm - were located at the scene. Based on witness interviews, BALLAH was developed as a suspect. BALLAH was on state probation at the time and court-ordered GPS monitoring location data placed him in the area of the shooting at the time it occurred. WSPD officers tracked BALLAH to his apartment complex the following day and found him outside in a vehicle which contained a Cugir pistol, model Micro Draco, 7.62x39mm caliber. BALLAH was previously convicted of Possession of a Stolen Firearm with an offense date of January 17, 2016, and was sentenced to 6-17 months.
Another 22-year-old from Winston-Salem, DARRIAN SYLVESTER SCOTT, JR., was sentenced earlier this week on a charge of felon in possession of a firearm. SCOTT, JR. was sentenced on September 29, 2020, to 92 months in prison by United States District Court Judge Catherine C. Eagles.
“We will continue to support our federal and local law enforcement partners and aggressively prosecute gun crime,” said U.S. Attorney Matt Martin. “Every neighborhood should be safe from gun violence.”
The BALLAH case was investigated by the FBI Safe Streets Task Force and the Winston-Salem Police Department. The SCOTT case was investigated by WSPD and the ATF.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
###
22-Year Old Felon-In-Possession Sentenced to 92 MonthsRead the Press Release
GREENSBORO, N.C. – A Winston-Salem man was sentenced on September 29, 2020, by United States District Court Judge Catherine C. Eagles to 92 months in prison and three years of supervised release for a firearm offense, announced United States Attorney Matthew G.T. Martin of the Middle District of North Carolina.
DARRIAN SYLVESTER SCOTT, JR., age 22, was charged with possession of a firearm by a felon. He pleaded guilty to the charge on May 15, 2020.
According to court documents, on January 7, 2020, Winston-Salem Police Department (WSPD) officers conducting routine patrol in an unmarked police vehicle in the area of Piedmont Circle initiated a traffic stop on a vehicle driven by SCOTT, JR. He tried to flee, first driving the car over a curb and through grass toward apartment buildings. He then got out of the vehicle while it was still moving and fled on foot. The car continued in drive until it struck an apartment building on East Twenty-Ninth Street. WSPD officers chased and apprehended SCOTT, JR., then returned to the vehicle where they observed a firearm in plain view wedged between the driver’s seat and middle console. The firearm – a Glock, model 22, 40 caliber, with an extended magazine -- was loaded with 24 rounds of .40 caliber ammunition. SCOTT, JR. was previously convicted of Common Law Robbery with an offense date of 10/09/2016, and given an active sentence of 10-21 months. SCOTT, JR. was also convicted of Possession of a Stolen Motor Vehicle with an offense date of 08/28/2017, and given an active sentence of 11-23 months.
“We will continue to join with our local law enforcement partners to aggressively investigate and prosecute gun crime,” said U.S. Attorney Matt Martin. “I commend the Winston- Salem Police Department and ATF for excellent work in this case.”
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
###
Wake County Man Sentenced to Ten Years in Federal PrisonRead the Press Release
GREENSBORO, N.C. - A Cary man was sentenced today in federal court in Greensboro for distributing heroin to a Durham resident who later died of an overdose, announced United States Attorney Matthew G.T. Martin of the Middle District of North Carolina.
The Honorable William L. Osteen, Jr., sentenced Kane Conrad GRAVES, 30, of Cary, North Carolina, to a 120 month term of imprisonment on charges of distributing heroin. In addition, GRAVES was ordered to serve three years of supervised release after completing his sentence. GRAVES pleaded guilty in June 2020.
According to court documents, in August 2017, an overdose victim was found deceased in a Durham apartment. An autopsy was later performed and the Medical Examiner determined that the victim died of “acute heroin and alcohol intoxication.” Investigators reviewed surveillance footage from the apartment complex which showed the victim letting a male, later identified as GRAVES, into the building. Investigators also obtained text messages from the victim’s cell phone, which indicated the victim sent a Facebook message seeking “pills.” GRAVES responded that he could ask around for pills but he currently had “dog food on deck.” (“Dog food” is a street name for heroin). The text messages between the two continued up to the point that GRAVES arrived at the apartment. The text messages further show that victim arranged and paid for an Uber driver to pick up GRAVES in Apex and transport him to Durham.
GRAVES was later interviewed and admitted that the victim did contact him a few months before her death for the purpose of obtaining controlled substances. He further admitted to taking an Uber from Cary to the victim’s apartment on the night of the death, but claimed he did not bring any drugs.
U.S. Attorney Martin commends the work of the Durham County Sheriff’s Office and the Federal Bureau of Investigation, which investigated the case, Assistant Attorney General Benjamin Zellinger of the North Carolina Attorney General’s Office, and Assistant United States Attorney Michael A. DeFranco.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
###
Brother-Sister Duo Sentenced in Fraud CaseRead the Press Release
GREENSBORO, N.C. B Two siblings were sentenced in federal court for making false claims against the United States, making false statements to a bank, and aggravated identity theft, announced United States Attorney Matthew G.T. Martin of the Middle District of North Carolina.
JAMES ERNEST GANDY, JR., age 36, of Dunn, NC, was sentenced by United States District Court Judge Catherine C. Eagles in Greensboro on Friday, September 18, 2020, to 51 months in prison and three years of supervised release. The Court also ordered JAMES GANDY to pay $129,017 in restitution, and a forfeiture money judgment in the amount of $62,088.19.
JAMIE VICTORIOUS GANDY, age 40, of Winston-Salem, NC, was sentenced today by Judge Eagles to 39 months in prison and three years of supervised release. The Court also ordered JAMIE GANDY to pay $139,254 in restitution, and a forfeiture money judgment in the amount of $62,088.19.
“Every taxpayer depends on the integrity of the tax system and the United States Attorney’s Office is committed to prosecuting tax fraud,” said United States Attorney Matt Martin. “I commend IRS-Criminal Investigation for uncovering and investigating this tax fraud scheme.”
“These defendants thought they had a clever scheme to thwart the IRS and steal from American taxpayers,” said Matthew D. Line, IRS Criminal Investigation Special Agent in Charge. “IRS-Criminal Investigation will continue to vigorously pursue those who unjustly enrich themselves by preparing false claims for refunds.”
According to court documents, JAMIE GANDY worked as a supervisor at the Liberty Tax Services franchise store in Lexington, North Carolina. In this role, she both prepared returns and reviewed returns prepared by others. One of the services the Liberty Tax Store provided to customers was rapid refund loan products from Republic Bank and Trust Company (“Republic”). A customer could apply for a repaid refund loan, by which Republic would provide the refund to the customer in a short time period and then collect loan payment from the tax customer’s refund. Up to $1,300 of the repaid refund loan could be loaded onto a NetSpend card which would allow the customer quick access to cash from the refund loan. After JAMIE GANDY began to work as supervisor at the Liberty Tax Store, her brother, JAMES GANDY, began to appear at the Lexington Liberty Tax Store, purportedly to visit his sister. JAMES GANDY operated a business in Dunn, North Carolina providing shipping pallets.
The operator of the Lexington Liberty Tax Store focused on business development and relied on JAMIE GANDY and other preparers to prepare and file returns. After receiving complaints from customers that they had not received their tax refunds and observing other indicia of fraud, a company audit revealed that numerous fraudulent returns had been filed at the Lexington Liberty Tax Store, usually under the name of JAMIE GANDY.
Many of the fraudulent returns were filed without the taxpayer’s authority or knowledge. Some of these returns were filed in the name of employees of JAMES GANDY’s pallet business without their knowledge or consent. In these cases, the W-2 forms attached to the returns had been falsified to enlarge the taxpayer’s income. Other people sold their personal identifying information to JAMES GANDY in Dunn or in Greensboro. They were also unaware that returns had been filed in their names. For most of the fraudulent returns, JAMES GANDY provided the identifying information of the victims to JAMIE GANDY at the Lexington Liberty Tax Store. JAMIE GANDY then prepared and filed the false return. She then applied for a repaid refund loan from Republic in the name of the purported taxpayer, making use of the false tax return to induce Republic to load the initial repaid refund loan onto a NetSpend card. JAMES GANDY and JAMIE GANDY then used the NetSpend cards to convert the fraudulently obtained loan proceeds. For example, in one case JAMES GANDY used a NetSpend card from a fraudulent return filing to purchase a deluxe trampoline party for his family, followed by an overnight stay at the Grandover Resort in Greensboro.
The case was investigated by Internal Revenue Service-Criminal Investigation, and Assistant U.S. Attorney Frank J. Chut, Jr., prosecuted the case.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
###
Kernersville Man Who Tried to Shoot a State Trooper Sentenced to 30 Years on Federal Drug and Gun ChargesRead the Press Release
GREENSBORO, N.C. - A man formerly from Kernersville was sentenced today in federal court for drug and firearm offenses, announced United States Attorney Matthew G.T. Martin of the Middle District of North Carolina.
TYLER LLOYD GRANTZ, age 21, was charged with possession of a stolen firearm, possession with intent to distribute cocaine, possession with intent to distribute oxycodone, and carry/use, by discharging, firearms during and in relation to a drug trafficking crime. He was convicted of all charges on February 12, 2020, after a three day jury trial.
GRANTZ was sentenced by United States District Court Judge William L. Osteen, Jr., in Greensboro. GRANTZ was sentenced to 240 months in prison as to Counts One through Three, to run concurrently with one another, and 120 months as to Count Four, to run consecutively thereto, for an aggregate sentence of 360 months. He was sentenced to 3 years of supervised release as to Counts One through Three and five years of supervised release as to Count Four.
According to evidence presented at the trial, at approximately 2:09 am on March 5, 2019, GRANTZ was speeding down Interstate 40 eastbound at 100 mph in a stolen GMC Acadia when a trooper with the North Carolina State Highway Patrol attempted to pull him over. GRANTZ, while driving, fired multiple rounds from a stolen Glock .40 caliber handgun at the trooper’s car. GRANTZ then pulled over at the New Hope Church Road exit in Orange County and crashed his car along the wood line. As the trooper approached GRANTZ’s car, GRANTZ fired multiple rounds at him with a Draco Arms AK-style 7.62x39mm pistol grip assault rifle and then ran into the woods. Law enforcement searched the GMC Acadia and found the stolen Glock .40 caliber handgun, a hard hat bearing GRANTZ’s name, and a cell phone bearing his DNA and containing pictures of him, as well as text messages discussing drug sales. Law enforcement also found multiple .40 caliber shell casings along Interstate 40 and multiple 7.62x39mm shell casings at the crash site.
After a multiple hour manhunt, law enforcement arrested GRANTZ a few miles from the crash site. GRANTZ had the Draco Arms assault rifle and distribution quantities of cocaine hydrochloride and oxycodone with him, as well as multiple other controlled substances, a large amount of cash, drug packaging materials, and digital scales. A forensic scientist confirmed that recovered shell casings matched the two firearms.
“Let the 30 year sentence in this case put violent drug dealers on notice. If you are using guns to help your drug business and if you shoot at a cop, you will suffer serious federal consequences,” said U.S. Attorney Matt Martin. “I commend the FBI, Orange County Sheriff, NC State Highway Patrol, and Chapel Hill Police Department for excellent work in this case.”
The case was investigated by the Federal Bureau of Investigation and the Orange County Sheriff’s Office with assistance from the North Carolina State Highway Patrol and the Chapel Hill Police Department. Assistant U.S. Attorney JoAnna G. McFadden prosecuted the case.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
###