Western District of North Carolina

CHARLOTTE, N.C. – Today, Chief U.S. District Judge Frank D. Whitney sentenced Lavon Williams, 38, of Jamaica, New York, to 292 months in prison on charges of conspiracy to distribute and to possess with intent to distribute marijuana and conspiracy to commit money laundering, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. In addition to the prison term imposed, Williams was also ordered to serve eight years of supervised release after he is released from prison, and to pay a money judgment of $1.5 million for the value of the marijuana involved in the conspiracy.

 

U.S. Attorney Rose is joined in making today’s announcement by Nick Annan, Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Atlanta and the Carolinas, and Chief Kerr Putney of the Charlotte-Mecklenburg Police Department (CMPD).

 

According to filed documents and court proceedings, from October 2014 to February 2015, Williams transported more than 880 pounds of marijuana and drug proceeds from San Francisco to Charlotte via commercial aircrafts. Court records indicate that, over the course of the conspiracy, Williams flew at least 11 times, and carried approximately 40 pounds of marijuana each trip. Court records show that on February 4, 2015, Williams’ co-conspirator, Thajuan Brown, was arrested at Charlotte Douglas International Airport with 46 pounds of marijuana. Evidence recovered from that investigation linked Williams to the drug trafficking conspiracy. On February 10, 2015, law enforcement arrested Williams with $40,000 in drug proceeds at the San Francisco airport.

 

Two remaining defendants are fugitives wanted by law enforcement. They are: Pierre Buissereth, 35, of New York. and Toccara Quantavia King, 35, of Virginia. Anyone with information about Buissereth or King are asked to contact the Homeland Security Investigations office at 704-679-6140.

 

This prosecution is part of an investigation by the Organized Crime Drug Enforcement Task Force (OCDETF). OCDETF is a joint federal, state and local cooperative approach to combat drug trafficking and is the nation’s primary tool for disrupting and dismantling major drug trafficking organizations, targeting national and regional drug trafficking organizations and coordinating the necessary law enforcement entities and resources to disrupt or dismantle the targeted criminal organization and seize their assets.

 

The investigation was led by HSI and CMPD. Assistant U.S. Attorney Steven R. Kaufman coordinated the investigation and prosecution of this OCDETF operation.

 

 

CHARLOTTE, N.C. – Eighty-three alleged leaders and members of the “United Blood Nation” (UBN or Bloods) have been indicted on federal racketeering conspiracy charges and charges related to murder, attempted murder, violent assault, narcotics distribution, firearms possession and Hobbs Act robbery. A number of defendants are also charged with bank fraud, wire fraud and aggravated identity theft related to financial crimes. A federal grand jury returned the sealed indictment on May 16, 2017, which was unsealed today following this morning’s arrests.

 

In a coordinated operation, more than 600 federal, state and local law enforcement officers executed the arrest warrants this morning in Charlotte, Cleveland County, and eastern North Carolina. Arrests were also made in Florida, South Carolina, New York, and Virginia. Of the 83 defendants charged, ten are not in custody.

 

“This morning’s arrests are the result of a joint law enforcement investigation targeting alleged leaders and members of the Nine Trey Gangsters faction of the UBN. These defendants participated in a racketeering conspiracy, committing multiple violent crimes, including at least six murders and five attempted murders in North Carolina. Today’s law enforcement action delivered a serious blow to the leadership structure throughout the ranks of this criminal organization. And this is only the beginning. The investigation and prosecution of violent gangs is a priority for this office. Our goal is to curb the influence of violent street gangs, to protect the people of this district from gangsters’ criminal activity and to restore our neighborhoods as places where all citizens can live and prosper,” said Jill Westmoreland Rose, United States Attorney for the Western District of North Carolina.

 

"The murders, the assaults, the robberies, the drug deals, each and every crime committed by these ruthless gang members was a blow to the safety of our communities. Innocent families should not suffer because of the violent actions of others. Anyone who tries to fill the criminal void left by today’s arrests should know, the FBI and our law enforcement partners will come after you next,” said John Strong, the Special Agent in Charge of the FBI in North Carolina.

 

“These arrests and collaborative efforts are important in helping to curb the criminal influence and gang activities not only in our communities, but also behind prison walls,” said Secretary Erik A. Hooks of the North Carolina Department of Public Safety. “Gang activity drives a great deal of criminal enterprise, and it takes a cooperative law enforcement effort and a sharing of intelligence across agencies to fight it.”

 

“The Charlotte-Mecklenburg Police Department will continue to work tirelessly to protect our community. These arrests send a clear message to violent offenders that our neighborhoods will not be a safe haven for their illegal activities,” said Chief Kerr Putney of the Charlotte Mecklenburg Police Department.

 

“This investigation is a great example of collaboration between agencies to fight the type of crime that is causing the senseless killing of our young people and destroying families in our communities. The statement made today is simple - violent crime and gang activity will not be tolerated in our communities. We will work with our law enforcement partners to ensure that our citizens are able to live, work and play in the safest environment possible,” said Chief Jeff Ledford of the Shelby Police Department.

 

“Today’s arrests will have a significant impact in Shelby and Cleveland County. The Cleveland County Sheriff’s Office will continue to work hand-in-hand with our law enforcement partners to tackle violent gang activity. But, we all have to do more to prevent young men and women from joining street gangs. Gangs are not just a law enforcement problem, they are a community problem. And prevention is key. We need our faith, civic, and community leaders to join forces with us and help law enforcement combat the gang problem that plagues our communities,” said Sheriff Alan Norman with the Cleveland County Sheriff’s Office.

 

"We value the partnerships with all of our local, state, and federal partners. The success of this investigation is a result of sharing resources and working together,” said Chief Robert Helton of the Gastonia Police Department.

 

As alleged in the indictment, the Bloods were formed in the 1970s in Los Angeles, California, when a group of seven individual street gangs united to form a larger unit. The gang quickly spread to surrounding areas, eventually expanding its influence across the United States. In 1993, a single Bloods entity, the UBN, was created on the east side of Rikers Island Prison. Membership of the UBN is estimated to be between 7,000-15,000 members along the east coast, with ultimate authority for gang decisions still maintained in New York and members currently incarcerated in the New York prison system. The various Bloods’ gangs or “Hoods,” which unified under the UBN, kept their original names. The “Nine Trey Gangsters” is one of the original factions of the UBN, with a large gang presence in North Carolina.

 

The indictment alleges that the gang is governed by 31 rules known as “The 31.” These rules were written by UBN’s founders and are strictly enforced. In addition, the gang maintains a strict hierarchy or chain of command, with each gang member assigned to a specific rank with specific duties and responsibilities. A typical structure for the Nine Trey Gangsters includes the leader of the hood, referred to as the “Godfather,” followed by ranked “Generals,” down through unranked members called “Soldiers” or “Scraps.” Additionally, within the UBN, some females hold unique positions of authority, including that of a “First Lady,” who is often responsible for record keeping, covert communications, and distribution of gang records.

 

The indictment alleges that UBN members represent their gang affiliation with common tattoos, graffiti markings, language, and communication codes, and are identified by wearing the color red. Gang members are also expected to pay gang dues, which are used to support the enterprise, to finance the gang’s criminal activity, and as gifts of respect to incarcerated high-ranking members.

 

According to allegations contained in the indictment, beginning by at least 2009 to present, the defendants were leaders and members of the UBN’s Nine Trey Gangsters. As alleged members of the criminal organization, they engaged in a pattern of racketeering activity, including, but not limited to, murder, attempted murder, assault with a deadly weapon, robbery, narcotics distribution and firearms possession. Additionally, the indictment alleges that certain defendants engaged in the racketeering acts of bank fraud and wire fraud. As alleged in the indictment, the defendants committed these crimes to generate proceeds to pay gang dues, to maintain membership with the gang, to discipline other gang members, and to be promoted within the leadership structure of the gang.

 

According to allegations contained in the 69-count indictment, the defendants communicated regularly with each other and other UBN members to discuss gang business, including the enforcement of gang rules; disciplinary action of UBN members; the identities and punishment of individuals cooperating with law enforcement; the collection of gang dues; and to plan future crimes. The indictment further alleges that the defendants maintained and circulated a collection of firearms, including assault rifles, for the use in criminal activity by gang members.

 

Over the course of the investigation, agents and officers seized, among other evidence: 36 firearms and ammunition, cocaine, crack cocaine, heroin, marijuana, MDMA, prescription pills and other narcotics and drug paraphernalia, counterfeit checks, credit cards and gift cards, and credit card making devices.

 

The 83 defendants charged with one count of Racketeering Influenced Corrupt Organization (RICO) conspiracy are:

 

• Sherman Devante Addison, a/k/a “Ace,” 22, of Shelby.

• Aaron Demitri Alexander, a/k/a “A Dawg,” 24, of Charlotte.

• Montraya Antwain Atkinson, a/k/a “Hardbody,” 30, of Raleigh, N.C.

• Freddrec Deandre Banks, a/k/a “Drec/Banga,” 21, of Shelby.

• James Baxton, a/k/a “Frank White,” 43, incarcerated in New York.

• Bradley Beauchamp, 29, of Fort Lauderdale, Florida.

• Destinee Danyell Blakeney, a/k/a “Lady Rude,” 22, of Morven, N.C.

• Antonio Dontre Brooks, a/k/a “Montana,” 24, of Shelby.

• Antarious Qaushard Byers, a/k/a “Bang,” 23, of Shelby.

• Renaldo Rodregus Camp, a/k/a “Rodeo/Drop,” 39, of Shelby.

• Shakira Monique Campbell, a/k/a “Lady Rage,” 23, of Charlotte.

• Adrian Nayron Coker, a/k/a “Gotti,” 27, of Gastonia, N.C.

• Brandon Khalil Covington, a/k/a “Blokka,” 24, of Charlotte.

• Alex Levi Cox, a/k/a “Quick,” 26, of Myrtle Beach, S.C.

• Marquel Michael Cunningham, 20, incarcerated in North Carolina.

• Richard Diaz, a/k/a “Damu,” 32, of Charlotte.

• James Walter Dowdle, a/k/a “Staxx,” 24, incarcerated in North Carolina.

• John Paul Durant, a/k/a “JP/Glock/Gudda,” 28, of Shelby.

• Cynthia Gilmore, a/k/a “Cynthia Young/Lady Bynt,” 41, of Raleigh.

• Shamon Movair Goins, a/k/a “Rugie,” 26, incarcerated in North Carolina.

• Pedro Gutierrez, a/k/a “Magoo/Light/Inferno,” 44, incarcerated in New York.

• Jalen Raekwon Hackney, a/k/a “Menace,” 19, incarcerated in North Carolina.

• Christopher Dentre Hamrick, a/k/a “Red Dot,” 27, incarcerated in North Carolina.

• Lavaughn Antonio Hanton, a/k/a “Killem/Billy-D,” 33, incarcerated in North Carolina.

• Anthony Oneil Harrison, a/k/a “Ant,” 20, of Charlotte.

• Bianca Kiashie Harrison, a/k/a “Lady Gunz,” 27, of Raleigh.

• Quincy Delone Haynes, a/k/a “Black Montana,” 38, Shelby.

• Delonte Maurice Hicks, a/k/a “BBB Shooter/Black,” 28, of Morven.

• Jasmin Reikeem Hicks, a/k/a “Rude,” 26, of Morven.

• Bobby Earl Hines, a/k/a “Swahili,” 34, incarcerated in North Carolina.

• Raheam Shumar Hopper, a/k/a “Bone,” 23, of Shelby.

• Wesley Javon Howze, a/k/a “Drama,” 21, incarcerated in North Carolina.

• Donl Lequintin Hunsucker, a/k/a “Remy,” 31, of Charlotte.

• Dricko Dashon Huskey, a/k/a “Drizzy,” 25, incarcerated in North Carolina.

• Muhammad John Jackson, a/k/a “Picasso,” 32, of Charlotte.

• Terrence Thomas Johnsom, a/k/a “Sypher,” 40, of Shelby.

• Joe Tarpeh Johnson, a/k/a “JR/Big Pusha/Kutthroat,” 26, of Charlotte.

• Latif Nakia Antoine Johnson, a/k/a “Billy Solo,” 23, of Charlotte, N.C.

• Tonney Horatio Kerbay, a/k/a “Rich Tonney,” 29, of Charlotte.

• Rashad Monte King, a/k/a “Billy Kilo Montana,” 25, of Charlotte.

• Barrington Audley Lattibeaudiere, a/k/a “Bandana/Bobby Seale,” 30, of North Lauderdale, Florida.

• Juan Cruz Leon, a/k/a “Jefe,” 21, of Charlotte.

• Renaire Roshique Lewis, Jr., a/k/a “Banz/Esco,” 22, incarcerated in North Carolina.

• Lamonte Kentrell Lloyd, a/k/a “Murda Mo/Moo,” 23, incarcerated in North Carolina.

• David Matthew Lowe, a/k/a “Gucci,” 26, of Shelby.

• Charles Kenyon Lytle, a/k/a “Kam,” 39, of Charlotte.

• Terry Lavon Maddox, a/k/a “Turbo,” 26, of Shelby.

• Bradon Theodore Manning, a/k/a “Billy B,” 28, of Columbia, S.C.

• Travis Cordell McClain, a/k/a “Fridaay Daa Thuurteenth,” 25, of Charlotte.

• Robert Allen McClinton, a/k/a “Trigga,” 27, incarcerated in North Carolina.

• Isaac Nabah MckIntosh, a/k/a “Mac,” 26, of Charlotte.

• D’Angelo De’Mara McNeil, a/k/a “Dutch,” 26, of Charlotte.

• Christopher Lashon Miller, a/k/a “Dro,” 23, incarcerated in North Carolina.

• Johnny Thomas Mitchell, a/k/a “Joker,” 37, of Shelby.

• Christopher O’Brien Moore, a/k/a “Ratchet,” 22, incarcerated in North Carolina.

• Myquan Lamar Nelson, a/k/a “Dripz,” 26, of Charlotte.

• Thomas Oliver, a/k/a “T.O., Recon,” 31, incarcerated in North Carolina.

• Kolawole Olalekan Omotosho, a/k/a “Rugged Red,” 19, of Jacksonville, N.C.

• James Bradin Pegues, 30, of Charlotte.

• Deshawn Deonta Peterkin, a/k/a “Proo,” 28, of Morven.

• Laquida Shuntae Poston, a/k/a “Lady Recon,” 25, incarcerated in North Carolina.

• Austin Demontry Potts, a/k/a “Big Tek, B-Tek,” 23, of Charlotte.

• Tyquan Ramont Powell, a/k/a “Savage,” 22, incarcerated in North Carolina.

• Omar Lionel Reed, a/k/a “Omega,” 38, incarcerated in New Mexico.

• Omari Rosero, a/k/a “Uno B,” 40, incarcerated in New York.

• Porsha Talina Rosero, a/k/a “Porsha Talina Gowdy/Lady Uno B,” 34, of Syracuse, New York.

• Kenneth Marquise Ruff, a/k/a “Red Hot,” 26, of Shelby.

• Rashad Sattar, 20, of Fort Lauderdale.

• Alandus Montrell Smith, a/k/a “Kadafia,” 27, incarcerated in North Carolina.

• Anthony Bernard Smith, a/k/a “Redd Lion,” 24, incarcerated in North Carolina.

• Denzel Lamont Spikes, a/k/a “Dinki/Dino,” 24, incarcerated in North Carolina.

• Isaiah Devon Stallworth, a/k/a “Zay/Juice,” 25, of Charlotte.

• Cedric Lexander Surratt, a/k/a “Hollywood/5-Star,” 29, of Charlotte.

• Peatrez Lamar Teaste, a/k/a “P-Wheezy,” 24, of Myrtle Beach.

• Jhad Elijah Thorbourne, a/k/a “Flight,” 23, of Charlotte.

• Lavon Christopher Turner, a/k/a “Hungry,” 27, Charlotte.

• Jesse James Watkins, a/k/a “Showtime,” 33, of Charlotte.

• Quintez Lamar Watkins, a/k/a “Bandana,” 27, incarcerated in North Carolina.

• David Earl Watson, a/k/a “Gunz,” 31, of Jacksonville.

• Twylain Stanley Wilson, a/k/a “5 Alive,” 24, incarcerated in North Carolina.

• Ronald Anthony Wofford, 27, of Charlotte.

• Jonathan Wray, a/k/a “Jon Jon/Yungin,” 26, incarcerated in North Carolina.

• Patrick Devon Wray, a/k/a “Ike, Murda,” 28, of Shelby.

The charges contained in the indictment are allegations. The defendants are presumed innocent unless and until they are proven guilty beyond a reasonable doubt in a court of law.

 

The indictment is the result of a joint investigative effort by the Federal Bureau of Investigation (FBI); the Charlotte Mecklenburg Police Department; the Shelby Police Department; the Cleveland County Sheriff’s Office; the Gastonia Police Department; the North Carolina State Highway Patrol; the Mecklenburg County Sheriff’s Office; the North Carolina Division of Adult Correction and Juvenile Justice; the North Carolina Department of Motor Vehicles; the United States Federal Probation; the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Internal Revenue Service; the United States Postal Inspection Service; the United States Army Criminal Investigation Command; and the New York Department of Corrections and Community Supervision, Office of Special Investigations.

 

U.S. Attorney Rose thanked each of the above law enforcement agencies that took part in the arrests today, along with FBI Albany; FBI Atlanta; FBI Columbia; FBI Knoxville; FBI Miami; FBI Norfolk; FBI Richmond; FBI Washington Field Office; the United States Marshals Service; the North Carolina State Bureau of Investigation; and the Anson County Sheriff’s Office. They also acknowledged the United States Attorney’s Offices in the Eastern District of North Carolina, the United States Attorney’s Office in the Southern District of Florida, and the Broward County Sheriff’s Office in Florida for their invaluable assistance in this case.

 

Assistant U.S. Attorneys Elizabeth Greene and Matthew Warren of the U.S. Attorney’s Office in Charlotte are in charge of the prosecution.

 

This prosecution is part of an extensive investigation by the Organized Crime Drug Enforcement Task Force (OCDETF). OCDETF is a joint federal, state and local cooperative approach to combat drug trafficking and is the nation’s primary tool for disrupting and dismantling major drug trafficking organizations, targeting national and regional level drug trafficking organizations and coordinating the necessary law enforcement entities and resources to disrupt or dismantle the targeted criminal organization and seize their assets.

CHARLOTTE, N.C. – A hazardous waste company, its owner, and two employees were indicted today for illegally abandoning more than 10,000 gallons of liquid hazardous waste and more than five tons of solid hazardous waste in trailers on the company’s property in Charlotte, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.

 

U.S. Attorney Rose is joined in making today’s announcement by Special Agent in Charge Andy Castro, of the U.S. Environmental Protection Agency, Criminal Investigation Division (EPA-CID), Atlanta Area Office; Robert Schurmeier, Director of the North Carolina State Bureau of Investigation (NC SBI).

 

The criminal bill of indictment was returned by a the grand jury on May 17, 2017, charging Parts Cleaning Technology of North Carolina (“PCT”), its owner, David Russ Crandell, of 36, of Novi, Michigan, and two employees, Timothy Michael Connelly, 54, of Concord, N.C. and Vincent Edward Peters, Sr., 51, of York, S.C., with one count of conspiracy to illegally store hazardous waste, one count of illegal storage of hazardous waste without a permit, and one count of illegal storage of hazardous waste in violation of a permit. Connelly and Peters are also each charged with making false official statements to regulators.

 

According to allegations contained in the indictment, PCT, was a business engaged in the collection and transportation of hazardous waste in Charlotte, N.C. From at least as early as in or about 2011, the defendants allegedly stored hazardous waste on unpermitted trailers on PCT’s property at 3114 and 3124 Cullman Avenue, in Charlotte. The indictment alleges that the defendants had ongoing difficulty paying the disposal companies, which were refusing to accept hazardous waste from PCT. As alleged in the indictment, on July 7, 2014, PCT was evicted from the Cullman Avenue facilities, the defendants did not remove the hazardous waste and did not notify anyone that the waste had to be removed.

 

The indictment also alleges that on August 19, 2015, North Carolina State regulators executed a search warrant and located hazardous waste for which 43 customers had paid PCT for disposal. The indictment further alleges that regulators also located hazardous waste in the building located at 3124 Cullman Avenue, which was not permitted to store any hazardous waste. It is also alleged that over the course of the criminal conduct, defendants Connelly and Peters made false official statements to regulators about the contents of the trailers.

 

In 1976, in response to a growing number of hazardous waste sites resulting from unregulated waste disposal activities, Congress enacted the Resource Conservation and Recovery Act (RCRA). RCRA established a strictly-regulated “cradle-to-grave” regulatory program, which governs and tracks hazardous waste from the point of generation until its final disposition.

The object of RCRA includes, among other things, protection of human health and the environment through stringent regulation of the generation, transportation, storage, treatment and disposal of hazardous waste.

 

The conspiracy charge carries a maximum sentence of five years of imprisonment and a fine of $250,000. The RCRA violations carry a maximum sentence of five years of imprisonment and a fine of $50,000 per day of violation. The false official statements charges carry a maximum sentence of five years of imprisonment and a fine of $250,000.

 

The details contained in this indictment are allegations. The Defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

 

In making today’s announcement U.S. Attorney Rose thanked the EPA-CID and NC SBI for leading the investigation. Assistant U.S. Attorney Steven R. Kaufman, of the U.S. Attorney’s Office in Charlotte, is in charge of the prosecution.

 

 

 

CHARLOTTE, N.C. –Christopher Bryan Roach, 34, of Charlotte, was sentenced today to 95 months in prison for his involvement in a bank fraud and identity theft scheme, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Chief U.S. District Judge Robert J. Conrad, Jr. also sentenced Roach to two years of supervised release.

 

According to today’s sentencing hearing and documents filed in the case, from December 2010 to January 2017, Roach and others used the stolen social security numbers and dates of birth of identity theft victims to take over the victims’ already existing credit card accounts and to open new accounts at stores such as Best Buy and Sam’s Club. Roach and others then used the accounts to purchase items, which resulted in losses in excess of $263,000. According to the indictment, Roach obtained some of the identity theft victims’ information by buying that information from an employee of a medical practice.

 

Roach pleaded guilty in January 2017 to one count of aggravated identity theft and one count of conspiracy to commit bank fraud. According to statements made at today’s hearing, Roach continued to engage in fraudulent activity, including identity theft, after he entered his guilty plea by providing a co-conspirator with the stolen personal information of an identity theft victim in order to buy iPhones.

 

Roach will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.

 

In a related case, co-defendant Kendell Bowden pleaded guilty on March 28, 2017, to one count of conspiracy to commit bank fraud and two counts of aggravated identity theft and is awaiting sentencing.

 

In making today’s announcement, U.S. Attorney Rose thanked the U.S. Postal Inspection Service in Charlotte, the United States Secret Service’s Charlotte Field Office, and the Charlotte Mecklenburg Police Department, and noted that the case is the result of the Charlotte Financial Crimes Task Force (CFCTF). The task force was formed in early 2016 by the U.S. Postal Inspection Service and currently comprises over 25 local, state and federal law enforcement agencies located in the Western District of North Carolina. The goal of the taskforce is to focus on the identification and development of financial fraud investigations in the Charlotte area. Based on crime trends in the area, the task force began to focus its efforts on violent offenders with lengthy criminal histories who are committing fraud.

 

Assistant U.S. Attorney Kimlani Ford, of the U.S. Attorney’s Office in Charlotte, prosecuted the case.

 

CHARLOTTE, N.C. – A South Carolina man was arrested today on bank, wire, and mail fraud charges in connection with a “synthetic identity” fraud scheme that defrauded financial institutions of more than $340,000, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. The criminal bill of indictment against Charles Whitlock, Jr., 50, of Rock Hill, S.C. was returned by a federal grand jury on April 20, 2017, and was unsealed today following the defendant’s court appearance.

 

David M. McGinnis, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS) and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, join U.S. Attorney Rose in making today’s announcement.

According to allegations contained in the indictment, from least in or about December 2013, through in or about April 2017, Whitlock engaged in mail fraud, wire fraud and bank fraud by executing a synthetic identity fraud scheme, through which he fraudulently obtained more than $340,000 from one or more financial institutions. According to the indictment, a synthetic identity is a fictitious identity created with a combination of real and fabricated information about people, or sometimes entirely fictitious information about people, including names, social security numbers (SSN), dates of birth (DOB), addresses and telephone and cell phone numbers. As alleged in the indictment, Whitlock submitted more than 750 new credit card applications to financial institutions via the Internet and by telephone, using synthetic identity information. The credit cards issued by financial institutions in connection to Whitlock’s synthetic identity fraud scheme had credit limits ranging from $100 to more than $500.

 

The indictment alleges that in some instances, Whitlock used “pollinated synthetic identities” when he submitted new credit card applications containing synthetic identity information to financial institutions. Pollinated synthetic identity means a synthetic identity is added as an authorized user of an existing credit card account. This enables fraudsters to inherit the credit history of the existing credit card account holder, and makes it easier to get multiple new credit card accounts and higher credit limits. As alleged in the indictment, Whitlock was able to obtain multiple new credit cards in the names of synthetic identities, and to obtain higher credit limits for new credit cards issued under the names, SSNs and DOBs of synthetic identities.

 

The indictment further alleges that, in order to evade the financial institutions’ new credit card fraud detection systems, Whitlock filled out the false and fraudulent applications using hundreds of addresses, including addresses of residences located within the Western District of North Carolina. The indictment alleges that Whitlock also used the online U.S. mail forwarding services of the United States Postal Service to divert fraudulently-obtained credit cards mailed by financial institutions to mailing addresses controlled or accessible to Whitlock.

 

The indictment alleges that Whitlock used the fraudulently-obtained credit cards to obtain money, goods and services through electronic payments at point-of-sale (POS) terminals; money from automated teller machines (ATMs); and to obtain money through one or more online merchants controlled by or accessible by the defendant.

 

Whitlock had his initial appearance today before U.S. Magistrate Judge David Keesler and is currently detained pending his detention hearing scheduled for Thursday, May 11, at 2:00 p.m.

1. penalty for the bank fraud charges carries a maximum penalty of 30 years in prison and a maximum $1 million fine. wire fraud and mail fraud charges each carry a maximum penalty of 20 years in prison and a maximum $250,000 fine.

The charges contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The investigation was led by USPIS and the FBI. Assistant U.S. Attorney Thomas O’Malley, of the U.S. Attorney’s office in Charlotte, is prosecuting the case.

 

ASHEVILLE, N.C. – Yesterday, U.S. District Court Judge Max O. Cogburn, Jr. sentenced a Tampa, Florida man to 192 months in prison on production of child pornography charges, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Judge Cogburn also ordered Richard Spencer Flynn, 41, to serve a lifetime of supervised release and to register as a sex offender after he is released from prison. Flynn pleaded guilty in December 2016 to one count of production of child pornography.

 

John A. Strong, Special Agent in Charge of the FBI in North Carolina, and Sheriff Van Duncan of the Buncombe County Sheriff’s Office join U.S. Attorney Rose in making today’s announcement.

 

“Flynn was a predator lurking on the Internet who targeted a child for his deviant sexual purposes. His conduct was reprehensible and for that, he will deservedly serve time in federal prison,” said U.S. Attorney Rose.

 

According to filed court documents and yesterday’s sentencing hearing, beginning in or about March 2015 and continuing through March 2016, Flynn traveled to North Carolina to meet with a 15-year-old female he met via the Internet and other electronic means to engage in illicit sexual conduct. Court documents also show that Flynn produced numerous images of child pornography of his victim.

 

In announcing today’s sentence Judge Cogburn said, “This is a serious crime with a serious punishment.”

 

Flynn has been in custody since September 29, 2016. He will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentencings are served without the possibility of parole.

 

The FBI and the Buncombe County Sheriff’s Office led the investigation. The U.S. Attorney’s Office in Asheville prosecuted the case.

 

CHARLOTTE, N.C. – Today, a criminal indictment was unsealed in federal court, charging Robert M. Boston, 53, and Robert S. LaBarge, 50, both of Hickory, N.C., with conspiracy relating to a fraud totaling at least $25 million, to include wire fraud, securities fraud, bank fraud, and money laundering, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.

 

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, joins U.S. Attorney Rose in making today’s announcement.

 

According to allegations contained in the indictment, Boston and LaBarge defrauded franchisees, investors, and lenders of their company, Zloop. The indictment alleges that, through their fraud, the defendants obtained millions of dollars, much of which was spent on expensive personal real estate, a private plane, and the racing career of Boston’s son.

 

The indictment alleges that Boston and LaBarge founded Zloop, an electronic waste recycling firm, in 2012 and began marketing Zloop franchises in or about July 2012. Federal law requires potential franchisors, like Zloop, to disclose certain litigation and bankruptcy matters in a franchise disclosure document. As alleged in the indictment, Zloop franchise disclosure documents omitted required information, including that Boston’s former company had filed bankruptcy, that Boston had filed personal bankruptcy, and that Boston had been held liable in an action alleging that he had knowingly submitted false financial documentation to obtain a $2.9 million line of credit.

 

The indictment further alleges that, beginning in or about December 2012, Boston and LaBarge caused Zloop to raise money through the sale of equity. To sell equity in the company, the indictment alleges that Boston and LaBarge caused a misleading private placement memo (“PPM”) to be sent to investors who ultimately invested approximately $2.5 million in Zloop. According to the indictment, the PPM contained material half-truths and omissions, including the omission of the litigation and bankruptcy history of Boston, and the fact that Boston and LaBarge had already caused Zloop to spend more than $1.5 million on their personal real estate.

 

When Zloop investors sought the return of their money in or about the middle of 2013, the indictment alleges that Zloop sought to repay them with a loan from an individual identified as Victim 1. In doing so, Boston allegedly induced Victim 1 to provide a $3 million loan by offering to file a lien on Zloop’s equipment for Victim 1’s benefit. Instead, after Victim 1 provided the loan used to repay Zloop’s other investors, LaBarge allegedly sent a fraudulent financing statement that purportedly was filed with the North Carolina Secretary of State.

 

The indictment also alleges that, after receiving the fraudulent UCC financing statement, Victim 1 agreed to secure a multi-million line of credit from Patriot Bank, a federally insured financial institution. After Boston and LaBarge caused Zloop to draw approximately $3.5 million from the Patriot Bank line of credit, the indictment alleges that they promptly spent hundreds of thousands of dollars on, among other things, a private plane, a new Corvette, and a new Grand Cherokee. After Zloop subsequently drew an additional $1.3 million from the credit card line, the indictment alleges that more than $500,000 was spent on racing-related expenditures and approximately $79,808 on a suite at a professional football stadium.

 

The indictment charges Boston and LaBarge each with one count of conspiracy to commit wire and bank fraud; one count of wire fraud; one count of securities fraud; one count of bank fraud; and one count of money-laundering conspiracy. LaBarge is also charged with false writing in connection with an FBI investigation.

 

The defendants appeared today in the United States District Court in Charlotte. The conspiracy charge and bank fraud charge each carry a maximum prison term of 30 years. The wire fraud charge and the securities fraud charge each carry a maximum prison term of 20 years. The maximum penalty for the money-laundering conspiracy charge is 10 years in prison, and the maximum prison term for false writing is five years in years in prison.

 

All the charges contained in the indictment are allegations. The defendants are presumed innocent until proven guilty beyond reasonable doubt in a court of law.

 

The FBI led the investigation. Assistant U.S. Attorneys Taylor J. Phillips and Daniel Ryan, of the U.S. Attorney’s Office in Charlotte, are in charge of the prosecution.

 

CHARLOTTE, N.C. - U.S. Attorney Jill Westmoreland Rose announced today that Piedmont Pathology in Hickory, N.C., has agreed to pay the United States $601,000 to settle allegations that it violated the False Claims Act by submitting false claims to Medicare and Medicaid for medically unnecessary procedures.

 

U.S. Attorney Rose is joined in making today’s announcement by Derrick L. Jackson, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General for the region including North Carolina.

 

“Government healthcare programs serve a vital role in providing necessary services to the citizens of our district,” said U.S. Attorney Rose. “This office is dedicated to ensuring that money is spent wisely on medically necessary services that benefit healthcare consumers as opposed to profiting the bottom line of healthcare providers.”

 

“Patients should be able to trust that their health care providers only provide medically necessary services,” said Special Agent in Charge Jackson. “Working in close coordination with the U.S. Attorney’s Office, we will continue to pursue health care companies that threaten the integrity of federal health care programs.”

 

The allegations arose from a lawsuit filed by a whistleblower, Dr. Kim Geisinger (the Relator), under the qui tam provisions of the False Claims Act. Relator Dr. Geisinger is a pathologist who formerly worked for Piedmont Pathology. Under the False Claims Act, private citizens can bring suit on behalf of the government for false claims and share in any recovery. The case is investigated by the United States, which can choose to take over the case or allow the Relator to pursue the case. Relator Dr. Geisinger will receive approximately $120,200 from the recovery announced today.

 

According to court documents, pathology practices apply stains to specimens to allow pathologists to identify abnormalities in the tissue. These stains include a routine hemotoxylin and eosin (H&E) stain and other special stains for various purposes. Among other things, the complaint alleges that a pathologist should review the specimen with the routine H&E stain before any special stain is used on the specimen. Special stains are billed separately to government healthcare programs. The government considers the use of special stains before the analysis of the routine H&E stained specimen to be medically unnecessary. In November 2016, the United States intervened in the case, pursuing claims that Piedmont Pathology lacked medical necessity for the special stains conducted on certain gastric biopsies before a pathologist reviewed the routine H&E stained specimen.

 

In making today’s announcement U.S. Attorney Rose thanked HHS-OIG for their coordination with the U.S. Attorney’s Office in investigating this case. The settlement was negotiated by Assistant U.S. Attorney Jonathan Ferry, of the U.S. Attorney’s Office in Charlotte.

 

The case is captioned United States of America ex rel. Geisinger v. Piedmont Pathology Associates, Inc. and Piedmont Pathology, Professional Corporation, Case No. 5:14-CV-121. The claims settled by the lawsuit are allegations only and there has been no determination of liability.

 

ASHEVILLE, N.C. – U.S. Attorney Jill Westmoreland Rose announced today that the federal court in the Western District of North Carolina has ordered the final forfeiture of a Henderson County residence used in the illegal distribution of oxycodone and other narcotics. The forfeiture of the residence to the United States is the result of the collaborative efforts of the Henderson County Sherriff’s Office, the United States Drug Enforcement Administration (DEA) and the U.S. Attorney’s Office.

 

The case against the residence arose out of a civil complaint for forfeiture filed by the United States in February 2015 (Docket No. 1:15-cv-23). The United States’ forfeiture lawsuit was brought pursuant to 21 U.S.C. § 881, which, under certain circumstances, allows for forfeiture of property which is proceeds of or used to commit or facilitate the commission of felony drug offenses. In its civil complaint, the United States alleged that the property located at 318 Jody Street, in East Flat Rock, N.C. (“the Jody Street Property”), facilitated and was proceeds of narcotics offenses by Harvey Franklin Hunt, Vivian Hunt, and Dorothy Hunt.

 

The civil complaint detailed narcotics offenses dating back to 2012. Specifically, the civil complaint alleged illegal sales of oxycodone from the property, and also the recovery of large amounts of cash, digital scales, marijuana, alprazolam, and methamphetamine from the residence. Finally, the civil complaint alleged multiple state controlled substances convictions against Harvey Hunt, Vivian Hunt, and Dorothy Hunt.

 

Ultimately, the civil forfeiture case was stayed pending the resolution of state criminal charges against the Hunts based on the continuing drug activity. In 2016, after the successful resolution of the state cases and the conviction of the Hunts, the federal court lifted the stay. The United States ultimately obtained agreement from Harvey and Vivian Hunt, the owners of the Jody Street Property, to their eviction from and final forfeiture of the property. The default judgment and final order entered this month by the federal court enables the United States to evict the Hunts and sell the property.

 

In making today’s announcement, the U.S. Attorney’s Office commended the coordination and collaborative work of the DEA, the Henderson County Sherriff’s Office, and the Henderson County Drug Task Force.

 

Assistant United States Attorney Benjamin Bain-Creed, of the U. S. Attorney’s Office in Charlotte, handled the civil proceedings.

 

CHARLOTE, N.C. – U.S. Attorney Jill Westmoreland Rose announced today that Jamell Lamon Cureton, 24, and Malcolm Jarrel Hartley, 23, were both sentenced to life in prison without parole in connection to the 2014 double-murder of Douglas and Deborah London in Lake Wylie, S.C., and related charges. Cureton was also sentenced to life in prison for the 2013 murder of Kwamne Donqurius Clyburn in Charlotte. U.S. District Judge Max O. Cogburn, Jr. presided over today’s sentencing hearings.

 

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division; Chief Kerr Putney of the Charlotte-Mecklenburg Police Department; and Sheriff Kevin R. Tolson of the York County Sheriff’s Office in South Carolina join U.S. Attorney Rose in making today’s announcement.

 

“Today, the Court handed down life sentences to Cureton and Hartley for the murders of three innocent people whose families are still dealing with the loss of their loved ones. May these sentences bring some sense of peace for those grieving families,” said U.S. Attorney Rose. “Our message to these violent gangs: We are resolute, we are prepared and we will ensure you are punished mightily for gang violence and community intimidation.”

 

According to previous court filings, admissions contained in filed plea documents and today’s sentencing hearings:

 

Beginning at least in or about 2012, Cureton, Hartley and their co-defendants were members of the United Blood Nation gang (UBN or Bloods) in Charlotte. As UBN members, the defendants carried out violent acts for the purpose of protecting and furthering the gang’s power. Court documents show that the defendants operated according to a common set of Bloods’ rules and participated regularly in gang meetings to discuss, among other things, the commission of crimes, including robbery and murder.

 

Cureton, a.k.a. “Assassin” and “Murda Mel,” is a member of the Charlotte-area UBN and holds the rank of 5-Star General. As early as 2007, Cureton reported his affiliation with the UBN as a Valentine Blood. Law enforcement seized Cureton’s UBN “Book of Knowledge,” wherein he was identified as a 3-Star General and has since been promoted to a 5-Star General. As a 5-Star General, Cureton commanded the gang’s activities in the area. Hartley, a.k.a. “Silent” and “Bloody Silent,” is also a member of the Charlotte-area Valentine Blood set of the UBN. Hartley was “ranked up,” or “promoted,” to a 2-Star General, following the murders of Douglas and Deborah London.

 

On or about May 25, 2014, Cureton, Nana Yaw Adoma and David Lee Fudge robbed “The Mattress Warehouse” store, owned by the victims, Douglas and Deborah London, in Pineville, N.C. Federal charges were subsequently filed against Cureton, Adoma and Fudge in connection with the robbery. In the months that followed, Cureton communicated with Hartley and other UBN gang members and associates, including co-defendants Daquan Lamar Everrett, Randall Avery Hankins, II, Nehemijel Maurice Houston, Briana Shakeyah Johnson, Ibn Rashaan Kornegay, Centrilla Shardon Leach, and Rahkeem Lee McDonald to plan the murders of Douglas and Deborah London. In a letter Cureton sent from prison, Cureton explained that he ordered the murder of Douglas London because the victim was going to testify against him in court, and described Deborah London as “collateral damage.” The gang’s leadership authorized Hartley to proceed with the murder, and on or about October 23, 2014, Johnson drove Hartley to South Carolina, where Hartley shot and killed Douglas and Deborah London at their home.

 

Following the Londons’ murders, UBN leadership directed the gang members to “lay low” and to avoid contact with law enforcement. Cureton also told Hartley that from that point forward the topic of the victims’ murders was forbidden to be discussed and authorized action against any person who talked about it.

 

In addition, on August 22, 2013, Cureton, Adoma and Akheem McDonald murdered Kwamne Donqurius Clyburn, after luring him to Pressley Road Neighborhood Park, in Charlotte. Cureton admitted in court papers that the three gang members murdered Clyburn because they suspected that Clyburn was “false claiming” (falsely claiming to be a Bloods member), and because Clyburn failed a “DNA check,” meaning that they could not verify Clyburn’s claim to be a Blood.

 

In September 2016, Cureton pleaded guilty to a total of 10 criminal counts: two counts of murder in aid of racketeering for the deaths of Douglas and Deborah London; two counts of use and carry of a firearm in relation to a crime of violence and possession of a firearm in furtherance of a crime of violence resulting in the deaths of Douglas and Deborah London; one count of racketeering conspiracy; one count of Hobbs Act robbery; one count of assault with a dangerous weapon in aid of racketeering activity; one count of use or carry of a firearm in relation to a crime of violence and possession of a firearm in furtherance of a crime of violence; one count of murder in aid of racketeering for the death of Kwamne Donqurius Clyburn; and one count of use and carry of a firearm in relation to a crime of violence and possession of a firearm in furtherance of a crime of violence resulting in the death of Kwamne Donqurius Clyburn.

 

Hartley pleaded guilty to a total of five counts: two counts of murder in aid of racketeering for the deaths of Douglas and Deborah London; two counts of use and carry of a firearm in relation to a crime of violence and possession of a firearm in furtherance of a crime of violence resulting in the deaths of Douglas and Deborah London; and one count racketeering conspiracy.

 

Cureton and Hartley’s co-defendants, Fudge, Everett, Kornegay, Leach, Johnson, Houston and Rahkeem Lee McDonald previously pleaded guilty to federal charges in connection with this prosecution. Sentencing dates for those defendants have not been set.

 

Three additional defendants, Adoma, Hankins and Ahkeem McDonald currently each face racketeering conspiracy charges. Ahkeem McDonald and Adoma are also charged with murder in aid of racketeering and use and carry of a firearm during and in relation to a crime of violence and possession of a firearm in furtherance of a crime of violence resulting in the death of Kwamne Donqurius Clyburn. Adoma is also charged with Hobbs Act Robbery, assault with a dangerous weapon in aid of racketeering activity and use or carry of a firearm in relation to a crime of violence and possession of a firearm in furtherance of a crime of violence for his role in the mattress store robbery. Randall Hankins is also charged with two counts of murder in aid of racketeering and two counts of use and carry of a firearm during and in relation to a crime of violence and possession of a firearm in furtherance of a crime of violence resulting in the deaths of Douglas and Deborah London.

 

The investigation was led by the FBI with the invaluable assistance of CMPD and the York County Sheriff’s Office. In making today’s announcement U.S. Attorney Rose also thanked York County Solicitor Kevin Brackett for his support and assistance throughout the investigation and prosecution of this case.

 

Assistant U.S. Attorneys Elizabeth Greene and Don Gast are prosecuting the case.

CHARLOTTE, N.C. – Troy Barnes, 53, of Riverview, Michigan, was sentenced today to 33 months in prison for operating a multi-million dollar Internet Ponzi scheme that defrauded more than 10,000 investor victims worldwide, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Barnes was also ordered to spend three years under court supervision after he is released from prison. Furthermore, Barnes was ordered to forfeit $4.7 million and to pay $302,297 in restitution to victims.

 

Barnes’ conspirator, Kristine Louise Johnson of Aurora, Colorado, was sentenced previously to 21 months in prison for her role in the scheme.

 

Michael Rolin, Special Agent in Charge of the United States Secret Service, Charlotte Field Office, joins U.S. Attorney Rose in making today’s announcement.

 

According to filed court documents and today’s sentencing hearing, Barnes was the owner of “Work with Troy Barnes, Inc.” (WWTB), which did business over the Internet under the name of “The Active Community” (TAC). Barnes was the President and Marketing Director of WWTB responsible for promoting the online scheme. Johnson served as TAC’s Chief Financial Officer, and managed TAC’s day-to-day operations, including the company’s bank accounts.

 

Filed court documents indicate from about April 2014 to February 2015, Barnes induced victims to invest money in TAC, claiming “Achieve is the answer to all of our prayers…” and falsely promising investors would receive a bogus 700% return on their investment. According to the indictment to which he pleaded guilty, Barnes also told his victims they could make as much money as they wanted claiming the investment was “never-ending,” when, in fact, TAC operated solely as a pyramid scheme and initial investors were paid with later victims’ money. According to the criminal information to which she pleaded guilty, Johnson told victims that TAC was not a pyramid scheme when, in truth and in fact, TAC operated solely as a pyramid scheme.

 

According to court filings, as the scheme grew in size and scope, Barnes and Johnson concealed the true nature of the scheme through multiple misrepresentations. According to court records, when the conspirators became concerned that the use of the term “investment” would draw scrutiny from regulators, they instructed victim-investors, “We ARE NOT an INVESTMENT program, please don’t use that term when you speak or post about our re-purchase strategy.” Even when TAC was unable to operate because their payment processor concluded that TAC was indeed operating a Ponzi scheme and ceased doing business with the company, Barnes and Johnson lied to victims, falsely stating that, “The only reason that [TAC] is not paying out today is that our processor can’t handle the volume of money we are paying our members.”

 

According to court records, in order to sustain the scheme, Barnes and Johnson encouraged investors to “re-purchase” positions in the matrix, thereby reducing the amount of money needed to pay out to early investors and enabling the fraudsters to prolong the scheme. As indicated in court documents, the investment scheme began to crumble when payment processors stopped processing the Ponzi payments to victim-investors. By the time the scheme collapsed in February 2015, the conspirators had defrauded over 10,000 investors in the Charlotte area and worldwide. According to court records, over the course of the scheme, Barnes used over $140,000 of the victims’ money for his own enrichment and Johnson misappropriated over $200,000 for her own personal use.

 

Barnes will be ordered to the Federal Bureau of Prisons to begin serving his sentence upon designation of a federal facility. All federal sentences are served without the possibility of parole.

 

The U.S. Secret Service led the investigation. In making today’s announcement, U.S. Attorney Rose thanked the Denver Regional Office of the U.S. Securities and Exchange Commission for its assistance with the case.

 

Assistant U.S. Attorneys Corey F. Ellis, Daniel Ryan, and Taylor J. Phillips, of the U.S. Attorney’s Office in Charlotte prosecuted the case.

CHARLOTTE, N.C. –Jahnoy Davis, 25, of Charlotte, was sentenced today to 24 months in prison for his involvement in a Jamaican-based lottery fraud scheme, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Chief U.S. District Judge Frank D. Whitney also sentenced Davis to two years of supervised release and ordered the defendant to pay $216,619 as restitution to 12 victims.

 

According to today’s sentencing hearing and documents filed in the case, from January 2015 to March 2016, Davis was part of a Jamaican-based lottery fraud scheme. Court records show that co-conspirators operating in call centers in Jamaica and elsewhere contacted victims and falsely told them they were the winners of sweepstakes and other prizes. These victims were usually elderly and located throughout the United States. According to court records, the co-conspirators told the victims that they needed to pay various fees in order to claim the prizes and directed the victims to mail cash to co-conspirators, including to Davis.

 

Court records indicate that the cash frequently was concealed in a magazine inside the postal package. Davis recruited a number of individuals to receive packages and conspired with a U.S. Postal employee to divert packages from that employee’s route. For example, in or about August and September 2015, a victim identified as “W.R.” was contacted by the co-conspirators and informed that he was the winner of a $7.5 million sweepstakes prize. The victim was told that in order to claim the prize, he needed to pay fees in advance. On at least seven occasions, the victim mailed cash via the U.S. mail to various addresses within Charlotte, as instructed by the co-conspirators. The victim was never awarded the $7.5 million “prize.”

 

Court records indicate that, generally, once Davis received the mailed cash from the sweepstakes victims, he would wire the money in small increments to co-conspirators in Jamaica. In order to conceal the nature of the proceeds, as well as the owner of the proceeds, Davis would also recruit other individuals to send the cash to Jamaica in their names. Davis lied to those individuals about the source of the cash and the purpose of the transfers. According to court records, Davis defrauded at least 12 victims between $250,000 and $500,000.

 

Davis pleaded guilty in January 2017 to one count of money laundering conspiracy. He will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.

 

On April 3, 2017, Antonio Terrell Brown, a former Charlotte-area mail carrier, pleaded guilty to mail theft charges for his involvement the conspiracy. He is currently awaiting sentencing.

 

In making today’s announcement, U.S. Attorney Rose thanked the U.S. Postal Inspection Service in Charlotte, under the direction of Inspector in Charge David M. McGinnis, and the U.S. Postal Service, Office of Inspector General, under the direction of Area Special Agent in Charge Paul L. Bowman, for leading the investigation into Davis.

 

Assistant U.S. Attorney Kelli Ferry, of the U.S. Attorney’s Office in Charlotte, is prosecuting the case.

Six additional individuals were charged in an indictment unsealed today for their roles in a $2.5 million high-yield investment fraud scheme, announced Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division and U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina.

Ludmilda O. Stencil, 46, of Charlotte, North Carolina; Martin Delainie Lewis, 50, of Frisco, Texas; Nicholas Fleming, 63, of Northridge, California; Michael Allen Duke, 48, of Richardson, Texas; Paula Sacccomanno, 59, and Dennis Swerdlen, 61, both of Boca Raton, Florida, were charged with one count of conspiracy to commit wire fraud and mail fraud, 14 counts of mail fraud and 14 counts of wire fraud in a superseding indictment returned on April 19, 2017, in the Western District of North Carolina. Ludmilda Stencil, Lewis and Duke also were each charged with five counts of money laundering.

This superseding indictment also includes previously charged co-defendants Robert Leslie Stencil, Daniel Thomas Broyles Sr. and Kristian F. Sierp. Sierp was previously arrested in Fort Lauderdale, Florida, on separate charges and has been detained pending trial. A trial date has not been set. Defendants Ludmilda Stencil, Martin Delainie Lewis, Nicholas Fleming, Paula Saccomanno and Denis Swerdlen have all been arrested. Michael Allen Duke remains a fugitive.

The indictment alleges that since January 2012, Leslie Stencil, Broyles, Sierp, Ludmilda Stencil, Lewis, Fleming, Duke, Saccomanno and Swerdlen worked to sell stock in Niyato Industries Inc., a Nevada corporation that Robert Stencil owned and operated from Charlotte. Through various publications and sales pitches, the defendants allegedly marketed Niyato as a manufacturer of compressed natural gas (CNG) automobiles and a distributor of CNG fuel that had patented technology, valuable contracts and high-profile executives. According to the indictment, the defendants also sold investors on a promise that Niyato was planning an imminent stock IPO that would reap pre-IPO investors a tenfold return on their investments.

Leslie Stencil, Broyles, Sierp, Ludmilda Stencil, Lewis, Fleming, Duke, Saccomanno and Swerdlen are alleged to have known that, in reality, Niyato had no facilities, products, patents or plans for an imminent IPO, but rather was merely a vehicle for inducing investor funds. Broyles, Sierp, Lewis, Fleming, Duke, Saccomanno and Swerdlen allegedly directed investors to mail or wire funds to Leslie and Ludmilda Stencil, who then allegedly paid half the funds to the investment salespersons and kept the remainder for personal expenses. In addition, Broyles, Sierp, Lewis, Fleming, Duke, Saccomanno and Swerdlen are alleged to have used high-pressure sales tactics to encourage investments from their victims, many of whom were elderly. According to the superseding indictment, Sierp, Lewis, Fleming and Duke operated under fake names while marketing Niyato stock subscriptions.

According to the superseding indictment, Leslie Stencil, Broyles, Sierp, Ludmilda Stencil, Lewis, Fleming, Duke, Saccomanno, Swerdlen and their co-conspirators were responsible for causing at least $2.5 million in losses to more than 140 U.S. citizens and businesses.

The charges and allegations contained in an indictment are merely accusations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The U.S. Postal Inspection Service and Internal Revenue Service-Criminal Investigation are investigating this case, which was supervised by the Criminal Division’s Fraud Section. Fraud Section Trial Attorneys William Bowne, Gustav Eyler and Christopher Fenton are prosecuting the case.

CHARLOTTE, N.C. – A Charlotte man, his wife, and his mother are facing federal charges for engaging in a conspiracy to sex traffic three minor victims and related charges, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. A federal grand jury returned the eight count indictment on April 20, 2017, charging Zerrell Ross Fuentes, 22, Brianna Leshay Wright, a.k.a. Brianna Fuentes, 24, and Tanya Marie Fuentes, 53, all of Charlotte, with one count of sex trafficking conspiracy, two counts of sex trafficking of a minor, and three counts of transportation of a minor to engage in prostitution. Brianna Wright and Tanya Fuentes are also charged with one additional count of sex trafficking of a minor.

 

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, Nick Annan, Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Georgia and the Carolinas, and Chief Kerr Putney of the Charlotte Mecklenburg Police Department join U.S. Attorney Rose in making today’s announcement.

 

The federal indictment alleges that between April 28, 2016 and May 8, 2016, the three defendants conspired with each other to recruit, entice, harbor, transport, provide and obtain by any means three minors, for the purpose of engaging in commercial sex act. The indictment also alleges that the minors were transported across state lines for the purposes of prostitution.

 

Specifically, the indictment alleges that Zerrell Fuentes, while in jail, used a telephone to recruit three minor victims living in Charlotte to engage in commercial sex acts for his benefit, knowing the minor victims were not yet 18 years of age. The indictment further alleges that Zerrell Fuentes used the telephone to arrange for the minor victims’ transportation from Charlotte to Myrtle Beach to engage in commercial sex acts for his benefit. Specifically, according to allegations contained in the indictment, the proceeds from the conspiracy would be used to pay Zerrell Fuentes’ bond so he could get out of jail.

 

According to the indictment, Brianna Wright, accompanied by Tanya Fuentes, transported the minor victims from Charotte to Myrtle Beach by car, so the minor victims could engage in commercial sex acts. While in Myrtle Beach, Tanya Fuentes paid for lodging for the two adult women and the minor victims. The indictment also alleges that Brianna Wright facilitated the placement of advertisements on the Internet, advertising the minor victims for commercial sex acts. She also provided her own telephone number on the ads, as a means of communication to arrange “dates” between the minor victims and customers, where the minor victims would be caused to engage in commercial sex acts. Brianna Wright also transported the minor victims to and from the arranged prostitution “dates.”

 

Zerrell Fuentes is currently in custody on a federal firearms violation and will appear in court on the sex trafficking charges. Brianna Wright and Tanya Fuentes will have their court appearances this morning before U.S. Magistrate Judge David Cayer.

The penalty for each of the eight sex trafficking related offenses is a mandatory minimum of 10 years and a maximum of life in prison and a $250,000 fine. Zerrell Fuentes is also facing a maximum penalty of up to 10 years in prison and a $250,000 fine for the unrelated firearms offense.

The charges contained in the indictment are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The investigation was handled by the FBI, HSI and CMPD. Assistant U.S. Attorney Kimlani Ford, of the U.S. Attorney’s office in Charlotte, is prosecuting the case.

 

ASHEVILLE, N.C. – U.S. Attorney Jill Westmoreland Rose announced today that 177 acres of land have been added to the Pisgah National Forest, as a result of efforts of law enforcement in collaboration with the Carolina Mountain Land Conservancy (CMLC). The land, known as the “Hoot Owl Tract,” was pursued by the Department of Justice in a criminal action.

 

“The acquisition of 177 acres of land connects approximately 100,000 acres of the Pisgah National Forest with a previously isolated 1,500 acres of national forest land. I want to thank the USDA and the Carolina Mountain Land Conservancy for partnering with my Office to make this transfer possible. As a result of this collaboration, the added acreage of national forest land ensures the protection of viable natural resources. It will also bring enjoyment to visitors for generations to come,” said U.S. Attorney Rose in a statement today.

 

The action resulted from the 2003 prosecution of Robert and Viki Warren, and others. In that case, the court sentenced the Warrens for their role in a massive crop insurance fraud. As a result of the fraud, the Federal Crop Insurance Corporation administered by the U.S. Department of Agriculture (“USDA”) paid millions of dollars to the conspirators for fraudulent crop damage claims by Warren Farms, including claims related to tomato damage. As part of the sentence, the Court ordered defendants to pay $9,150,603 in restitution to USDA for its losses, as well as a $7.3 million forfeiture money judgment representing the proceeds of the fraud as agreed upon by the parties.

 

In and around 2015 and 2016, in an effort to collect on the forfeiture money judgment and restitution, law enforcement identified that the Warrens owned the Hoot Owl Tract under the name of a limited liability company known as Mountaintop Farms, LLC. Ultimately, through negotiations with defendants, the United States obtained an agreement for transfer of the land from defendants, through CMLC, to USDA, in partial satisfaction of restitution owed as a result of the fraud.

 

The Hoot Owl Tract includes trout waters and tributaries to the Mills River, which supply drinking water to residents of Henderson and Buncombe Counties. The deal reached in the criminal case for transfer of the Hoot Owl Tract to USDA protects vital natural resources for this generation and beyond.

 

In making today’s announcement, the U.S. Rose commended the work of the U.S. Forest Service, and CMLC.

 

The Civil Division of the U.S. Attorney’s Office represented the United States in the forfeiture action. Assistant U.S. Attorneys Richard Edwards and Don Gast handled the criminal prosecution of the defendants.

ASHEVILLE, N.C. – United States Attorney Jill Westmoreland Rose announced today that Larry Dean Bowlsby, 49, of Warrenton, Missouri, was sentenced by U.S. District Judge Martin Reidinger to 10 years in prison for detonating an improvised explosive device inside a Walmart store in 2007. Bowlsby was arrested in Missouri on May 24, 2016, and pleaded guilty to the charges in the Western District of North Carolina on October 2016.

 

C.J. Hyman, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division; Robert Schurmeier, Director of the North Carolina State Bureau of Investigation; Chief Davis Woodard of the Sylva Police Department; and Sheriff Chip Hall of the Jackson County Sheriff’s Office join U.S. Attorney Rose in making today’s announcement.

 

According to filed court documents and today’s sentencing hearing, sometime prior to September 26, 2007, Bowlsby constructed a destructive device, that being a pipe bomb. Court records indicate that on September 26, 2007, Bowlsby entered the Walmart in Sylva, N.C., accompanied by two minors. Once inside, Bowlsby took and used a shopping cart. He had placed the pipe bomb in the bag of one of the minors, but removed it once he was inside the store. According to court records, Bowlsby separated from the minors and took the cart and the pipe bomb to the camping supplies section of the store. He placed the pipe bomb among the small propane cylinders for camp stoves, ignited the device, and left the area. The device detonated and caused an explosion. Court records show that five people were nearby when the device exploded and had to be taken to the hospital for minor injuries inflicted by the explosion. Also, the Walmart store and some merchandise were damaged by the bomb. Bowlsby and the two minors drove away in Bowlsby’s vehicle.

According to court records, investigators captured video footage from the store security cameras that depicted Bowlsby and the two minors inside the store, and his vehicle in the parking lot. Law enforcement were also able to recover Bowlsby’s fingerprint from the shopping cart. Law enforcement ran the print against national databases in 2007 with no success; however, they ran it again in 2016 and the print matched Bowlsby.

According to court records, on January 9, 2008, the Colorado State Patrol stopped Bowlsby’s vehicle, which was the same as the one driven by Bowlsby during the 2007 incident in Sylva. Law enforcement located four incendiary devices made from tennis balls, black powder, electrical tape, and fuses. Bowlsby was arrested and eventually pleaded guilty to charges relating to the tennis ball bombs. Bowlsby’s fingerprints were entered into the national database, which enabled the successful fingerprint search in 2016.

Bowlby is currently in federal custody and will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.

 

In making today’s announcement, U.S. Attorney Rose praised the work the ATF, SBI, the Sylva Police Department and the Jackson County Sheriff’s Office, which handled the investigation.

 

Assistant U.S. Attorney Don Gast of the U.S. Attorney’s Office in Asheville prosecuted the case.

ASHEVILLE, N.C. – A federal indictment was unsealed in U.S. District Court today, charging Leroy Miller, Jr., 51, and Joseph Samuel Davis, 42, both of Tryon, N.C., with federal program fraud conspiracy, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. The indictment also charges Miller with three additional counts, including federal program fraud, extortion under color of official right and witness tampering. The indictment was returned under seal by a federal grand jury sitting in Asheville on April 4, 2017, and remained under seal until Miller’s arrest earlier today.

 

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and Robert Schurmeier, Director of the North Carolina State Bureau of Investigation join U.S. Attorney Rose in making today’s announcement.

 

“Violating the trust of the public deserves swift and sure action by prosecutive authorities,” said U.S. Attorney Rose. “Today, on behalf of the citizens of Tyron, my office responded with an indictment against these two individuals who egregiously abused the trust bestowed upon them by the people.”

 

“The individuals arrested today are accused of stealing from the very system they were entrusted to support. The FBI and our law enforcement partners will investigate those who prey on programs that provide essential services to our citizens for their personal gain,” said Special Agent in Charge Strong.

 

“The public holds government officials to a high standard, and when that public trust is broken, we all suffer,” said SBI Director Schurmeier. “The SBI will continue to place a high priority on public corruption cases such as this one in Polk County, and we sincerely appreciate the diligent work of the U.S. Attorney’s Office in prosecuting this case.”

 

According to allegations in the indictment, over the course of the alleged conduct, Davis served the fire chief of the Tryon Fire Department. Beginning in January 2012, Davis was also appointed as Tryon’s interim, and later permanent, town manager. The indictment alleges that during the relevant time period, Davis received an increase in his salary of more than $5,000 per year, for serving as fire chief and town manager. The indictment further alleges that during this time, Miller was an elected member of the Tryon town council. In his position as a town council member, Miller had the power to affect and influence appointments, including that of Davis as interim and permanent town manager.

 

As detailed in the indictment, from at least April 2012, Miller began soliciting money from Davis. The two defendants reached an agreement whereby Davis would pay some of Miller’s personal bills in exchange for Miller’s championing within the town council for Davis to receive a higher salary, among other things. Miller sometimes made his solicitations for money in person or by telephone, and sometimes by text and email messages. The indictment alleges that from time to time, when he made these solicitations of money, Miller reminded Davis that Miller was in a position to help the fire department with a budget increase, that he had the power to affect Davis’s appointment as town manager and his retention of that position, and that Miller had the power to affect Davis’s salary in both positions.

 

Until in or about April 2016, Davis gave money to Miller out of Davis’s personal funds. Beginning in or about April 2016, Davis had insufficient personal funds to pay Miller when Miller solicited money from him. Davis therefore wrongfully used the town’s credit cards, on multiple occasions, to pay for Miller’s personal expenses, including to pay Miller’s utilities and cable bills and Miller’s auto insurance premiums.

The indictment alleges in September 2016, Tryon’s new town manager would assume that post, and as a result Davis would return to being solely the fire chief and therefore his salary would be lowered. On or about October 21, 2016, Davis sent Miller a text message discussing the strategy and language that Miller should use in attempting to protect Davis’s salary. Miller responded a few minutes later, asking Davis to send him what Davis wanted him to say. On the same day, Miller sent a text message to the new town manager stating that they needed to meet to discuss a budget amendment about salaries, and “specifically to Joey Davis [sic] salary.”

On or about November 8, 2016, Miller sent a text message to Davis asking if he could possibly pay one utility. That same day, Davis told Miller via text message that he could not “run anything through the town anymore with [the new town manager] checking behind me on all my expenditures.”

The indictment further alleges that in addition to obtaining payments of his personal bills using the town’s credit cards, Miller also solicited Davis to participate in a bill-padding and kickback scheme. On or about March 23, 2016, a private contractor (“the contractor”) submitted a bid for construction work on municipal buildings of the town. Davis, as town manager, was responsible for choosing a contractor, and he approved the contract. As a town council member, Miller was aware of the contract. In May 2016, Miller asked Davis for $2,500, and suggested Davis inflate the contractor’s bill by that amount and give the extra money to Miller. Davis, however, did not inflate the contract, and Miller therefore received no money from this proposed scheme.

According to the indictment, beginning in January 2017, Davis told Miller that he had been contacted by the SBI regarding Tryon town funds being used to pay for Miller’s personal bills. Miller advised Davis not to say anything, but that the money was from the town’s “needy fund” and that Davis anticipated the money would be repaid. Miller also advised Davis to get rid of his emails and text messages and to make sure that he did not “have a trail.” Later the same month, the indictment alleges that Davis again met with Miller and told him that the FBI as well as the SBI had now contacted him and wanted to speak with him. Miller again told Davis several times during this meeting to inform the FBI and SBI that Davis made the payments out of the “needy fund” and that he thought the money would be reimbursed. When Davis said that he had “things” on his phone, Miller told him he to wipe it clean.

Miller’s initial appearance is scheduled for 12:00 p.m. today in federal court before U.S. Magistrate Judge Dennis Howell. Davis is also expected to appear in court on the charges pending against him.

The conspiracy charge carries a maximum prison term of five years and a $250,000 fine. The federal program fraud charge carries a maximum prison term or 10 years and a $250,000 fine. The extortion under color of official right charges carries a 20-year maximum prison term and a $250,000 fine. And the witness tampering charge carries a maximum prison term of 20 years and a $250,000 fine.

The charges contained in the indictment are allegations. The defendants are innocent until proven guilty, beyond reasonable doubt, in a court of law.

 

In making today’s announcement, U.S. Attorney Rose commended the FBI and SBI for their investigation of this case. U.S. Attorney Rose also thanked District Attorney Greg Newman of North Carolina’s Judicial District 29B, which encompasses Henderson, Polk and Transylvania counties, for his office’s assistance with this case.

 

Assistant U.S. Attorney Richard Edwards, of the U.S. Attorney’s Office in Asheville, is in charge of the prosecution.

CHARLOTTE, NC - With the deadline for filing income tax returns rapidly approaching, Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina, and Thomas J. Holloman, III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division, Charlotte Field Office, jointly announce recent tax fraud prosecutions and sentencings, and deliver a powerful warning to those who are thinking about breaking the law by committing tax crimes.

 

“As tax filing season reaches its peak, we are putting would-be tax cheats on notice: My office will prosecute those who try to cheat the tax system at the expense of honest taxpayers who file their returns on time and pay the taxes they owe. Our tax system is built on voluntary compliance and tax criminals who do not pay their fair share increase the tax burden on law-abiding taxpayers,” said U.S. Attorney Rose.

 

“The 2017 income tax filing season is soon coming to a close, however, special agents of the IRS – Criminal Investigation work year-round to combat criminal violations of the Internal Revenue Code and related financial crimes. Agents in the Charlotte Field Office have pursued, and will continue to pursue, those who prepare returns fraudulently, steal and misuse identities, and those who take extraordinary measures to conceal their income in an effort to evade their tax responsibility,” said Special Agent in Charge Thomas J. Holloman, III. “To build faith in our nation’s tax system, honest taxpayers need to be reassured that everyone is paying their fair share and we will work vigorously to pursue those who do not.”

 

TAX EVASION AND FILING FALSE TAX RETURNS

 

Over the last year, the U.S. Attorney’s Office has prosecuted and convicted numerous individuals for omitting income from their individual tax returns, and defendants have received prison sentences for tax charges. For example, the following individuals have been prosecuted for lying to the IRS about their taxable income:

 

Matthew Moretz, 31, of Taylorsville, N.C., pleaded guilty to one count of filing a false tax return. From April 2010 to March 2011, Moretz collected unemployment income from the North Carolina Division of Employment. However, beginning in or about March 2010 and continuing through in or about 2013, Moretz was self-employed as the owner of MJM Recycling, a scrap metal business. From tax year 2010 through tax year 2013, Moretz earned additional personal income totaling approximately $529,622.44 that Moretz failed to report on his U.S. Individual Income Tax Returns Form 1040 filed with the IRS. As a result of the unreported taxable income, Moretz had additional tax due and owing of approximately $116,409.38 from 2010 to 2013. Moretz is currently awaiting sentencing.

 

Patrick Emanuel Sutherland, 48, of Charlotte, was convicted of filing false tax returns and obstructing a federal grand jury investigation. Court documents and trial evidence showed that, from at least 2007 to 2015, Sutherland was an actuary, and the owner and operator of numerous companies in the insurance and financial industries. Between 2007 and 2010, Sutherland engaged in an elaborate scheme to conceal a substantial amount of income, including filing false tax returns with the IRS which underreported business receipts and personal income of approximately $2 million in income received from an offshore bank account in Bermuda, as well as from domestic sources. Sutherland is currently awaiting sentencing.

 

Reuben T. DeHaan, 44, of Kings Mountain, N.C., was sentenced to 24 months in prison for tax evasion and possession of an unregistered firearm. DeHaan owned a holistic medicine business, which he operated out of his residence in Kings Mountain under the names Health Care Ministries International Inc. and Get Well Stay Well. During the years 2008 through 2014, DeHaan earned more than $2.7 million in gross receipts from his holistic medicine business, but failed to file income tax returns for those years and evaded approximately $678,000 in income taxes due and owing. DeHaan was also ordered to pay 567,665 in restitution to the IRS and $110,449 to the state of North Carolina.

 

FRAUDULENT RETURN PREPARERS AND STOLEN IDENTITY REFUND FRAUD

 

Our office diligently works to investigate and prosecute unscrupulous tax return preparers. Examples of prosecutions of tax return preparers during the last year include:

 

Ramos, formerly of Lincolnton, N.C., was previously sentenced to 48 months in prison for her role in a false claims conspiracy. The conviction stemmed from Ramos’s role in a conspiracy to defraud the government by filing fraudulent tax returns seeking refunds totaling more than $5 million, by using stolen identity information of individuals in Puerto Rico. Ramos fled the United States and failed to report to federal prison after the sentencing. She is awaiting sentencing on charges of obstruction of justice and failure to report and faces additional jail time and fines.

 

In addition to prosecuting tax evaders and fraudulent tax return preparers, our office also investigates and prosecutes individuals who steal taxpayers’ identities to file fraudulent tax returns. Examples include:

 

Cara Michelle Banks, Carmichael Cornilus Hill, and Priscilla Lydia Turner conspired with Senita Dill and Ronald Jeremy Knowles, and others, to file false federal and state tax returns using stolen personal identifying information. From 2009 to 2012, this conspiracy defrauded the United States Treasury of over $3.5 million. Banks, Hill, Turner and others stole personal identifying information and then provided it to Dill to file the false returns in exchange for payment. Dill and Knowles used stolen personal information to file over 1,000 false tax returns. Court records show that Hill provided approximately 26 percent of the stolen identifications used to file the fraudulent returns. In 2016, Banks and Hill were sentenced to 70 months and 75 months in prison, respectively. In November 2016, Turner pleaded guilty to aggravated identity theft and is currently awaiting sentencing. Senita Dill was sentenced to 324 months and Knowles to 70 in prison for their roles in the conspiracy.

 

EMPLOYMENT TAX FRAUD

 

Our office further investigates the abuse of employment tax fraud such as:

 

Frank Alton Moody, II, 57, of Arden, the co-founder and former Chairman of the Board of CenterCede Services, Inc., a payroll services company, was ordered to serve 30 months in prison, two years in supervised release, and to pay $2,146,380.97 as restitution, for conspiring to steal over $2 million from client companies. Moody’s co-conspirators, Jerry Wayne Overcash and John Bernard Thigpen, were previously sentenced to 46 months and 21 months in prison, respectively. The three men used the more than $2 million they stole from client companies to fund their exorbitant salaries. Overcash and Thigpen were also ordered to jointly pay $1.3 million as restitution to the victim client companies.

 

Federal penalties for each count of conviction of tax crimes range from a maximum of one year in prison and a $100,000 fine for failure to file a tax return, false withholding exemptions, and delivering or disclosing false tax documents, to a maximum of 10 years in prison and a $250,000 fine for conspiracy to defraud with respect to false refund claims. Other penalties include a mandatory term of two years in prison and a $250,000 fine for aggravated identity theft charges, three years in prison and a $250,000 fine for obstructing or impeding an investigation and filing or preparing a false tax return, and a maximum of five years in prison and a $250,000 fine for tax evasion, failure to pay taxes, conspiracy to commit a tax offense or conspiracy to defraud.

 

The U.S. Attorney’s Office and the IRS remind tax payers to exercise caution during tax season to protect themselves against a wide range of tax schemes ranging from identity theft to return preparer fraud. Illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice to shutdown scams and to prosecute the criminals behind them. The IRS has issued its annual “Dirty Dozen” which lists common tax scams that taxpayers may encounter, particularly during filing season. Taxpayers are urged look out for, and to avoid, the following common schemes:

 

• • Phishing

  • Phone Scams

  • Identity Theft

  • Return Preparer Fraud

  • Fake Charities

  • Inflated Refund Claims

  • Excessive Claims for Business Credits

  • Falsely Padding Deductions on Returns

  • Falsifying Income To Claim Credits

  • Abusive Tax Shelters

  • Frivolous Tax Arguments

  • Offshore Tax Avoidance

 

Education is the best way to avoid these common schemes. To learn more about the Dirty Dozen scams and for help with recognizing and avoiding abusive tax schemes, the IRS offers educational material at www.irs.gov. Suspected tax fraud can be reported to the IRS using Form 3949-A found on the IRS.gov website.

STATESVILLE, N.C. – U.S. District Judge Richard L. Voorhees handed down prison terms ranging from 188 months to 24 months to 14 methamphetamine traffickers, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.

 

U.S. Attorney Rose is joined in making today’s announcement by Nick Annan, Special Agent in Charge of ICE’s Homeland Security Investigations (HSI) in Atlanta and the Carolinas; Robert Schurmeier, Director of the North Carolina State Bureau of Investigation; Colonel Glenn McNiel of the North Carolina State Highway Patrol;Chief Thurman Whisnant of the Hickory Police Department; Sheriff Coy Reid of the Catawba County Sheriff’s Office; Sheriff Chris Bowman of the Alexander County Sheriff’s Office; Chief Damon D. Williams of the Mooresville Police Department; and Sheriff Darren Campbell of the Iredell County Sheriff’s Office

 

The 14 defendants sentenced over the past three days in U.S. District Court in Statesville are:

1. Irving E. Rodriguez-Munguia, 24, of Mexico, was sentenced to 188 months, followed by five years of supervised release. (5:15-cr-77)

2. Reginald Jerry Shaw, 42, of Charlotte, was sentenced to 151 months, followed by five years of supervised release. (5:16-cr-46)

3. Alexis Noe Bautista, 36, of Mexico, was sentenced to 121 months, followed by five years of supervised release. (5:16-cr-13)

4. Steven Glenn Burke, 32, of West Jefferson, was sentenced to 120 months, followed by five years of supervised release. (5:16-cr-40)

5. Zachary Robert Testerman, 27, of Millers Creek, was sentenced to 77 months, followed by five years of supervised release. (5:16-cr-46)

6. Gary Joseph Phipps, 31, of West Jefferson, was sentenced to 65 months, followed by three years of supervised release. (5:16-cr-47)

7. Christopher Gray Young, 34, of McMinnville, Tennessee, was sentenced to 65 months, followed by five years of supervised release. (5:16-cr-53)

8. Hanna Lee Raymer, 38, of Mooresville, was sentenced to 60 months, followed by four years of supervised release. (5:16-cr-48)

9. Kenneth Otto Jones, 51, of Hickory, was sentenced to 60 months, followed by four years of supervised release. (5:16-cr-60)

10. Heather Lynne Bostian, 32, of Statesville, was sentenced to 57 months, followed by three years of supervised release. (5:16-cr-61)

11. Mark Monroe Goings, 45, of Mount Airy, was sentenced to 50 months, followed by two years of supervised release. (5:16-cr-59)

12. Rhiannon Nicole Forrest, 33, of Statesville, was sentenced to 46 months, followed by three years of supervised release. (5:16-cr-56)

13. Tammy Lynn Paris, 50, of Jasper, Georgia, was sentenced to 46 months, followed by three years of supervised release. (5:16-cr-44)

14. Kristy Hope Eastridge, 33, of Crumpler, was sentenced to 24 months, followed by six years of supervised release. (5:16-cr-47)

All of the defendants were charged as part of an ongoing Organized Crime Drug Enforcement Task Force (OCDETF) investigation, which, since 2015, has resulted in the prosecution of more than 150 individuals. Court records show that the drug trafficking organizations involved have trafficked methamphetamine worth millions of dollars. Over the course of the investigation, law enforcement seized far in exces s of 20 kilograms of crystal methamphetamine, $500,000 in U.S. currency and other assets, and dozens of firearms.

OCDETF is a joint federal, state and local cooperative approach to combat drug trafficking and is the nation’s primary tool for disrupting and dismantling major drug trafficking organizations, targeting national and regional drug trafficking organizations and coordinating the necessary law enforcement entities and resources to disrupt or dismantle the targeted criminal organization and seize their assets.

 

In making today’s announcement U.S. Attorney Rose thanked all the law enforcement agencies for their investigative efforts. Assistant U.S. Attorney Steven R. Kaufman, of the U.S. Attorney’s Office in Charlotte, prosecuted the cases.

CHARLOTTE, N.C. – A federal jury has convicted Damarcus Donte Ivey, 35, of Charlotte, of Hobbs Act robbery and committing murder while using and possessing a firearm during and in furtherance of the robbery, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. U.S. District Judge Max O. Cogburn, Jr. presided over the two-week trial, which ended yesterday afternoon.

 

U.S. Attorney Rose is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division; C.J. Hyman, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division; and Chief Kerr Putney of the Charlotte-Mecklenburg Police Department.

 

According to court documents, evidence presented at trial and witness testimony:

 

On September 10, 2009, Ivey and Kevin Bishop robbed Club Nikki’s, located at 3001 Little Rock Road, in Charlotte. Over the course of the robbery, Ivey and Bishop pointed guns at the club’s patrons and staff, ordered them on the floor, and took personal items from the patrons and cash from the club. Trial evidence showed Ivey take items from the male victim before he fired a shot that killed him. Ivey and Bishop then fled the scene in a Ford F-150. Six minutes after the initial 9-1-1 call, a CMPD officer observed Ivey and Bishop exiting I-85 onto Beatties Ford Road. A chase ensued that ended in a vehicle crash and Ivey and Bishop attempted to flee from CMPD officers on foot. Both men were apprehended by CMPD officers within minutes and were found in possession of proceeds from the robbery. Inside the Ford F-150, officers located the wallet of one of the club’s patron and $355 in cash scattered about the floorboard.

Ivey is currently in federal custody. The Hobbs Act robbery charge carries a maximum prison term of 20 years, and a $250,000 fine. The murder while using a firearm in furtherance of a crime of violence charge carries a mandatory penalty of life in prison. A sentencing date for Ivey has not been set. Kevin Bishop was convicted on state charges in 2014 and was given a 16-20-year sentence for his role in the robbery.

In making today’s announcement, U.S. Attorney Rose said, “I want to thank the Mecklenburg County District Attorney’s Office for their coordination and partnership with my Office in the successful prosecution of this case.”

 

U.S. Attorney Rose also commended CMPD, the FBI, and the ATF for their investigation of the case.

 

Assistant U.S. Attorneys Craig Randall and William Bozin, of the U.S. Attorney’s Office in Charlotte, are in charge of the prosecution.

CHARLOTTE, N.C. – Antonio Terrell Brown, 31, of Charlotte, a former Charlotte-area mail carrier, appeared before U.S. Magistrate Judge David Keesler today and pleaded guilty to mail theft for his involvement in a Jamaican-based lottery fraud scheme, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.

 

According to today’s guilty plea and court documents filed in the case, from 2005 to June 2016, Brown was employed as a mail carrier with the U.S. Postal Service, and was assigned to deliver mail on a rural route in Charlotte. Court records show that in or about January 2015, Brown was approached by an individual about the possibility of diverting packages from his mail route. Brown agreed to divert the packages in exchange for cash, and provided the individual with a list of addresses to be used for the intercepted packages. According to court records, the intercepted packages contained drugs and cash, which was the proceeds of a Jamaican-based sweepstakes lottery scam.

 

According to the factual basis filed with his plea agreement, Brown received text messages from the individual, alerting Brown when drug- or cash-laden packages were placed in the mail for delivery to Brown’s route. These texts contained the postal service tracking numbers and delivery addresses for the packages, and instructions on how to deliver the packages to other individuals. Brown intercepted the packages and delivered them to various individuals who approached him on his route. Court records indicate that Brown received approximately $200-$250 for each package he intercepted on his mail route.

 

According to court records, in or about January 2016, a victim referred to in court documents as “M.A.,” mailed approximately $41,000 in cash to Peter Brown, at an address on Pinewood Drive in Charlotte. The address was one of the addresses that Brown had provided to the individual to be used for the intercepted packages. Brown intercepted the package and delivered it to someone else. Brown then falsely marked the package as “delivered.” The $41,000 contained in the intercepted package was the proceeds of a Jamaican-based lottery sweepstakes scam.

 

Brown agreed in court documents that the amount of loss that was known or personally foreseeable to him was between $150,000 to $250,000. The offense involved 10 or more victims, court documents indicate.

 

Brown is currently released on bond. The mail theft charge carries a maximum prison term of five years and a $250,000 fine. Brown has also agreed to pay restitution, the amount of which will be determine by the Court. A date for Brown’s sentencing hearing has not been set yet.

 

In making today’s announcement, U.S. Attorney Rose thanked the U.S. Postal Inspection Service in Charlotte, under the direction of Inspector in Charge David M. McGinnis, and the U.S. Postal Service, Office of Inspector General, under the direction of Area Special Agent in Charge Paul L. Bowman, for leading the investigation into Brown.

 

Assistant U.S. Attorney Kelli Ferry, of the U.S. Attorney’s Office in Charlotte, is prosecuting the case.

STATESVILLE, N.C. – Frank Alton Moody, II, 57, of Arden, N.C., the former Chairman of the Board of a payroll services company, was sentenced today to 30 months in prison for conspiring to steal over $2 million from client companies, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. In addition to the prison term imposed, Moody was ordered to spend two years under court supervision after he is released from prison and to pay $2,146,380.97 as restitution.

 

Two of Moody’s conspirators, Jerry Wayne Overcash and John Bernard Thigpen, were previously sentenced to 46 and 21 months, respectively, for their roles in the conspiracy.

 

U.S. Attorney Rose is joined in making today’s announcement by David M. McGinnis, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS) and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).

 

According to filed court documents and today’s sentencing hearing, Moody was the Chairman of the Board of CenterCede Services Inc. (CenterCede), a payroll services company with clients in Charlotte and elsewhere. CenterCede was established in August 2010 by Overcash and Moody, to assume business operations of The Resource Solutions Group (TRSG). Court documents in related cases indicate that, similar to CenterCede, TRSG had been a payroll services company until it was shut down by IRS in August 2010, for failing to pay more than $9 million in federal payroll taxes TRSG collected from its clients. Moody served as Chairman of the Board at TRSG.

 

According to court documents, from November 2010 to November 2011, CenterCede purportedly provided payroll preparation and processing services to its clients. As such, CenterCede collected funds from its clients to pay the client companies’ federal tax obligations, gross payroll for the clients’ employees, worker’s compensation, and unemployment insurance, among others, as well as fees due to CenterCede. Contrary to their representations to clients, the conspirators did not pay the clients’ federal taxes in appropriate amounts and by the applicable deadlines.

 

According to court records, Moody and his conspirators did not remit to the IRS the full tax liabilities of CenterCede’s clients. Instead, the conspirators diverted client funds, which were used to pay the exorbitant salaries of Moody, Overcash and others, and to cover CenterCede’s growing liabilities.

 

To keep the scheme afloat, the conspirators paid only those obligations necessary to keep their ongoing cash flow crisis a secret from clients. As reflected in court documents, the conspirators favored what they called “priority” clients, attempted to keep those priority clients from learning about monthly cash shortfalls and frequently paid those clients’ obligations ahead of other non-priority clients. “Priority” clients generally had large payrolls with deposits necessary to fund CenterCede’s short-term cash needs and keep the scheme afloat.

 

Court records show that when clients inquired about failures to pay obligations, the conspirators took steps to conceal the fraud by providing false excuses and misleading explanations. Moody pleaded guilty to one count of conspiracy in October 2016.

 

Moody will be ordered to the Federal Bureau of Prisons to begin serving his sentence upon designation of a federal facility. All federal sentences are served without the possibility of parole.

 

The investigation was led by USPIS and IRS-CI. Assistant U.S. Attorneys Corey F. Ellis and Taylor J. Phillips, of the U.S. Attorney’s Office in Charlotte, prosecuted the case.

 

CHARLOTTE, N.C. – A criminal indictment was returned by a federal grand jury charging Alan Peter Darcy, 78, of Murphy, N.C., with wire fraud for orchestrating an $800,000 investment fraud scheme, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.  

North Carolina Secretary of State Elaine F. Marshall and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, join U.S. Attorney Rose in making today’s announcement. 

According to allegations contained in the indictment, in or about February 2012 through at least June 2016, Darcy engaged in a scheme to defraud multiple victims of more than $800,000 by inducing them to invest in a variety of bogus financial instruments and products, such as fraudulent “cash flow contracts,” “Joint Participation Agreements,” and leased “Bank Guarantees.” As alleged in the indictment, Darcy claimed to provide various types of project funding and private banking services through Sceptre LLC (Sceptre), Mission 1, LLC (Mission 1), and related entities which Darcy controlled.  Darcy further claimed that he had access to, and multiple successes with, specialized opportunities for obtaining private banking instruments and engaging in lucrative trading opportunities not available to the general public.

The indictment alleges that, through multiple lies and deception, Darcy stole approximately $250,000 from a charitable foundation (Victim Foundation) by falsely representing that the Victim Foundation’s money would be used “to leverage an arbitrage-styled financial investment,” which would result in substantial ongoing monthly payments to the Victim Foundation. The indictment also alleges that Darcy stole approximately $49,000 from a victim-investor by falsely promising he would use her money to create a “private, passive Trust” to generate substantial monthly distributions totaling approximately $1,000,000.  The indictment further alleges that Darcy stole approximately $100,000 from another victim and his affiliates by falsely promising that, among other things, the money would be used to lease a “Bank Guarantee” from an international bank to obtain monthly distributions totaling over $10 million. Similarly, Darcy fraudulently induced a victim-investor and his affiliates to send him via wire transfers approximately $60,000 by falsely promising to generate a return of $1.5 million using a “private bank guarantee.” 

According to the charges, Darcy also induced victims to part with their money by making false and fraudulent representations about the manner in which victims’ money would be used or invested, and about when and how Darcy and his businesses would be compensated.  For example, the indictment alleges that Darcy falsely told certain victims that their investments were fully refundable and that they would be placed in a safe escrow or custodial account.  Darcy also told victims that his businesses would be contributing money to the proposed transactions, and that Darcy and his businesses would be compensated only out of profits from the successful completion of the proposed transactions.

As alleged in the federal indictment, contrary to his representations, Darcy did not hold the victims’ money in escrow or create trust accounts for the victims.  Instead, Darcy deposited the money into bank accounts he controlled and spent more than $400,000 of the victims’ money to fund his personal lifestyle, including through large amounts of cash withdrawals and personal expenditures such as pet care, entertainment, travel and the purchase of a used Jaguar automobile. 

When questioned by victims as to why he was not able to return their money, the indictment alleges that Darcy gave a number of false excuses, including that all international banks had taken “annual holiday.”

The indictment charges Darcy with one count of wire fraud, and he has been ordered to appear in court on a summons. The maximum statutory penalty for the offense is 20 years in prison, a $250,000 fine, or both. All the charges contained in the indictment are allegations.  The defendant is presumed innocent until proven guilty beyond reasonable doubt in a court of law.

In making today’s announcement, U.S. Attorney Rose thanked the North Carolina Secretary and the FBI for leading the joint investigation.  Assistant U.S. Attorneys Daniel Ryan and Daniel Bradley of the U.S. Attorney’s Office are in charge of the prosecution.

 

U.S. Attorney’s Office to Host Seminar in Asheville on Friday, March 31, 2017, on Investment Fraud Schemes Targeting Elderly Investors

The U.S. Attorney’s Office, together with invited guest speakers from the U.S. Securities and Exchange Commission, will host a seminar on Friday, March 31, 2017, from 10:00 a.m. to 12:00 p.m., at the University of North Carolina – Asheville, Highsmith Student Union, Suite 220.  The purpose of the seminar is to educate elderly investors on avoiding investment fraud schemes and safeguarding their savings from potential fraudsters. 

“There are many types of financial fraud scams that target seniors.  As a result, millions of older Americans become victims of financial fraud each year. Perpetrators of financial investment schemes often prey upon older investors, and use a number of tactics and false promises of high returns on investments to convince victim-investors to hand over large portions, if not all, of their savings. Often, by the time the fraud is uncovered, the financial losses sustained by the older investors are devastating and with little hope of financial recovery,” said U.S. Attorney Jill Westmoreland Rose, in announcing the seminar. “That is why financial fraud education is so important. The upcoming seminar is an opportunity to educate seniors about different types of financial investment schemes, the red flags to look out for and some of the ways they can protect themselves from financial investment fraud. Sadly, we come across too many financial fraud victims who might have avoided getting ripped off if they had only known to ask, and insisted upon receiving answers to, some basic question from the beginning.”

The seminar will cover a broad range of topics, including the most common types of investment fraud scams targeting the elderly, red flags to watch out if approached by someone touting an investment opportunity, tips on how to avoid becoming the victim of an investment scheme, and who to contact to report a suspicious investment offer or if you have been the victim of an investment scam. An open discussion and Q&A session will follow the speakers’ presentations.

The seminar is open to the public.  Registration is not required.  RSVPs are encouraged to ensure adequate seating. To RSVP attendance please email [email protected].  For questions please call Lia Bantavani at (704) 338-3140.   

CHARLOTTE, N.C. – U.S. Attorney Jill Westmoreland Rose announced today that Carlos Antoine Benson and Jacob Ivan Hill were sentenced to life in prison by Chief U.S. District Judge Frank D. Whitney, in connection with the 2014 armed robbery, kidnapping and murder of a Charlotte man. Benson was ordered to serve two consecutive life sentences, and both defendants were ordered to pay $6,750 as restitution.

 

Benson, 37, and Hill, 36, both of Charlotte, were convicted by a federal jury in September 2016 of all charges in the federal indictment, including Hobbs Act robbery and crimes resulting in murder.

 

C.J. Hyman, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division and Chief Kerr Putney of the Charlotte-Mecklenburg Police Department join U.S. Attorney Rose in making today’s announcement.

 

According to filed court documents, trial evidence, witness testimony and information introduced at the sentencing hearing:

 

On November 12, 2014, Benson and Hill robbed an individual at gunpoint from whom Hill had been purchasing small amounts of cocaine. Benson and Hill told the individual they wanted to get in touch with his supplier (the victim), causing the individual, at gunpoint, to hand over his cell phone to Hill. Pretending to be the individual, Hill called the victim and arranged to meet on the same day at the parking lot of an apartment complex in Charlotte to purchase drugs. Benson and Hill warned the individual they would “off him” if he tried to alert the victim to the plan.

 

At the designated location, Benson, armed with a handgun, hid in the back of the individual’s parked vehicle, while Hill walked to a wooded area nearby to serve as lookout for the robbery. When the victim arrived, he entered the parked vehicle and sat in the front passenger seat. Benson sat up behind him and pointed the gun at the victim. Benson told the victim not to flinch, and began to demand the victim’s rings. When the victim reached for a handgun tucked in his pocket, Benson fired his gun, shooting the victim six times, including once in the back of the head. Benson was also wounded.

 

Immediately after the shooting, Benson approached the victim’s vehicle and observed the victim’s girlfriend seated in the driver’s seat. Benson raised his gun to shoot. The woman, who at the time was four months pregnant, managed to drive away unharmed and called 9-1-1. Benson and Hill fled the scene in Hill’s vehicle. Hill then drove to a secluded cul-de-sac, dropped off Benson in the grass and drove away. Hill was arrested later that same day with firearms and drugs inside his vehicle. Paramedics located Benson in the grass and transported him to the hospital. Upon discharge from the hospital, Benson was arrested.

In announcing today’s sentence, U.S. Attorney Rose said, “Benson and Hill planned and carried out a scheme to rob a suspected narcotics trafficker, ultimately killing him over a small amount of drugs and cash. The two men will now have to spend the rest of their lives in prison for their violent crime. I want to thank the ATF and CMPD for their investigation of this case and for their collaborative efforts to protect our communities from this type of criminal activity.”

“ATF’s mission is to combat violent crime and this investigation achieved that goal. The arrests and subsequent life sentences for Benson and Hill send a clear message that ATF and its law enforcement partners will not allow violent criminals to continue victimizing our communities and neighborhoods,” said Special Agent in Charge Hyman.

 

Following a two-week trial, Benson and Hill were each convicted of nine charges, including: Hobbs Act robbery and aiding and abetting; conspiracy to commit kidnapping; kidnapping and aiding and abetting; conspiracy to possess with intent to distribute cocaine; possession with intent to distribute cocaine and aiding and abetting; brandishing/discharging a firearm during and in relation to a crime of violence or drug trafficking crime and aiding and abetting; causing death in the course of using, carrying and possessing a firearm and in relation to a crime of violence or drug trafficking crime and aiding and abetting; and possession of a firearm by a convicted felon.

 

Benson and Hill are currently in federal custody and will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentenced sentences are served without the possibility of parole.

 

The investigation was led by the ATF and CMPD. Assistant U.S. Attorney Sanjeev Bhasker, of the U.S. Attorney’s Office in Charlotte, prosecuted the case.

CHARLOTTE, N.C. – Dorian Dent Williams, 25, Kernersville, N.C., was sentenced late yesterday to 100 months in prison on conspiracy to distribute marijuana through the U.S. mail and postal robbery charges, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. In addition to the prison term, Chief U.S. District Judge Frank D. Whitney ordered Williams to serve three years under court supervision after he is released from prison.

 

U.S. Attorney Rose is joined in making the announcement by David M. McGinnis, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS) and Chief Kerr Putney of the Charlotte-Mecklenburg Police Department.

 

According to documents filed in the case and yesterday’s sentencing hearing, from about November 2015 to January 9, 2016, Williams operated a marijuana trafficking conspiracy, in which he paid people to receive mailed packages containing marijuana. The packages were sent from Arizona to residential addresses in Charlotte and High Point, N.C. using the U.S. Postal Service. According to court records, on January 9, 2016, a U.S. mail carrier was delivering mail and parcels to a residential neighborhood in Charlotte. Court records indicate that the mail carrier had two parcels addressed to a residence, and was in the process of leaving a delivery notice on the door of the residence when he was approached by a female from a neighboring residence. The female asked for the two packages. The mail carrier refused to give her the packages, indicating they were not addressed to her. The mail carrier was then approached by a male, who stood at the doorway of the postal vehicle and demanded the parcels. The mail carrier again refused to hand them over, threatened to call the police and resumed his mail delivery after the man left.

 

According to court records, while the mail carrier was still on his delivery route, Williams pulled in front of him in a pick-up truck, blocking his postal vehicle. Then, Williams and another male, who was brandishing a handgun, demanded the two parcels. Court records show that the mail carrier handed over the parcels and the two men drove off in the pick-up truck. Williams previously admitted in court documents that he had arranged for the two packages containing marijuana to be mailed to the residential address on the mail carrier’s delivery route, and that he had been waiting nearby for their delivery. According to court records, over the course of the conspiracy, Williams was responsible for shipping approximately 144 kilograms of marijuana from Arizona to North Carolina utilizing the postal service.

 

Williams pleaded guilty in October 2016 to one count of conspiracy to distribute and to possess with intent to distribute marijuana, and one count of postal robbery. He remains in the custody of the United States Marshals Service pending placement by the Federal Bureau of Prisons. All federal sentences are served without the possibility of parole.

 

The investigation was led by USPIS and CMPD. Assistant U.S. Attorney Dana Washington, of the U.S. Attorney’s Office in Charlotte, prosecuted the case.

CHARLOTTE, N.C. – Today, Chief U.S. District Judge Frank D. Whitney sentenced Brady Leon Beck, Jr., 40, of Monroe, N.C. to 50 years in prison on child pornography and related charges, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Beck was also ordered to serve a lifetime of supervised release and to register as a sex offender after he is released from prison.

 

Director Robert Schurmeier of the North Carolina State Bureau of Investigation, Chief Kerr Putney of the Charlotte-Mecklenburg Police Department, and Chief Robert C. Helton of the Gastonia Police Department join U.S. Attorney Rose in making today’s announcement.

 

According to filed court documents and information introduced at the sentencing hearing, in or around June 2014, Beck used his cellular phone to produce an image of child pornography of a three-year-old child victim. In November 2014, court records indicate that law enforcement became aware that Beck had shared child pornography via email with another individual. Law enforcement executed search warrants and seized electronic and computer devices that belonged to Beck. A forensic analysis of the devices revealed that Beck possessed images of children, ranging in age from infant to approximately 15 years of age, being sexually abused. Law enforcement also conducted a search of an email account associated with Beck, and discovered that Beck had sent and received child pornography with others, including sending the images of the three-year-old child victim.

 

Beck is a registered sex offender, which stems from his 2004 conviction of second-degree rape of a 10-year-old female victim. He pleaded guilty in December 2016 to one count of transportation of child pornography and one count of committing a felony offense involving a minor while registered as a sex offender. Beck is currently in federal custody and will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.

 

The investigation was led by the SBI, CMPD and the Gastonia Police Department. The U.S. Attorney’s Office in Charlotte prosecuted the case.

 

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice, aimed at combating the growing online sexual exploitation of children. By combining resources, federal, state and local agencies are better able to locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue those victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov

STATESVILLE, N.C. B A federal jury sitting in Statesville convicted Carlos Antonio Flores, age 34, of Statesville, of conspiracy to distribute and to possess with intent to distribute methamphetamine and possession of methamphetamine with intent to distribute, following a three-day trial that ended yesterday, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.

 

U.S. Attorney Rose is joined in making today’s announcement by Nick Annan, Special Agent in Charge of ICE’s Homeland Security Investigations (HSI) in Atlanta and the Carolinas and Sheriff Darren Campbell of the Iredell County Sheriff’s Office.

 

According to filed court documents and evidence presented at trial, Flores was involved in a drug trafficking conspiracy that operated mainly in Iredell, Alexander, Caldwell, Catawba, and Ashe Counties. Trial evidence established that from at least as early as April 2015 through October 30, 2015, Flores and his co-conspirators distributed more than 15 kilograms of methamphetamine, which has a street value of more than $1,500,000. According to trial evidence, law enforcement arrested Flores on October 30, 2015, when he and several co-conspirators were caught distributing more than a kilogram of 96% pure crystal “ice” methamphetamine concealed in a cat litter box.

 

This prosecution is part of an ongoing investigation by the Organized Crime Drug Enforcement Task Force (OCDETF) that has resulted in the conviction of more than 200 defendants on methamphetamine trafficking and firearms charges. OCDETF is a joint federal, state and local cooperative approach to combat drug trafficking and is the nation’s primary tool for disrupting and dismantling major drug trafficking organizations, targeting national and regional drug trafficking organizations and coordinating the necessary law enforcement entities and resources to disrupt or dismantle the targeted criminal organization and seize their assets.

Flores has been in federal custody October 2015. At sentencing, Flores faces a statutory mandatory minimum sentence of 10 years in prison and a maximum term of life in prison, and a fine of up to $10,000,000.

 

The case was investigated by HSI in Charlotte, the Iredell County Sheriff’s Office, the North Carolina State Bureau of Investigation, the Alexander County Sheriff’s Office, and the Caldwell County Sheriff’s Office.

 

The prosecution of case is being handled by Assistant U.S. Attorneys Steven R. Kaufman and Sanjeev Bhasker of the U.S. Attorney’s Office in Charlotte.

 

STATESVILLE, N.C. – U.S. District Judge Richard L. Voorhees sentenced yesterday James Holland Helms, 21, of Maiden, N.C., to 75 months in prison, followed by three years of supervised release on a firearms offense, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.

 

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and Chief Tracy Ledford of the Maiden Police Department join U.S. Attorney Rose in making today’s announcement.

 

According to filed court documents and yesterday’s sentencing hearing, on October 12, 2015, Maiden Police officers responded to a residential address in Maiden in reference to a report of shots being fired at the residence. Court records indicate that Helms fired multiple shots at the residence as he drove past the house in his vehicle.

 

Court records indicate that earlier in the evening Helms had engaged in a verbal altercation with individuals at the residence. Helms later drove his vehicle by the residence and fired several shots at the residence while individuals were standing on the front porch. According to court records, one of the individuals stated that Helms fired the gun and a bullet struck the door. After firing multiple shots at the residence, Helms sped off the scene, and, while driving, he threw the firearm out of the window. The firearm was recovered hours later by law enforcement investigating the incident. Court records also indicate law enforcement investigators identified two bullet holes in the victim’s residence and one in a vehicle parked in the driveway that resulted from Helms’ shooting. Helms was identified as the shooter and was taken into custody the day of the shooting. Helms has a previous criminal offense and is prohibited from possessing a firearm.

 

In October 2016 Helms pleaded guilty to one count of possession of a firearm by a convicted felon. He will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.

 

The FBI and the Maiden Police Department handled the investigation. Assistant U.S. Attorney Craig Randall of the U.S. Attorney’s Office in Charlotte prosecuted the case.

CHARLOTTE, N.C. – On Friday, March 3, 2017, U.S. District Judge Robert J. Conrad, Jr. sentenced a former Charlotte business owner to 12 months and a day in prison on embezzlement charges, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Cameron Garrison, 37, was also ordered to serve two years under court supervision and to pay $116,245.19 as restitution.

 

Isabel Colon, Regional Director of Employee Benefits Security Administration’s Atlanta Regional Office of U.S. Department of Labor and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation in North Carolina join U.S. Attorney Rose in making today’s announcement.

 

According to court documents and information introduced at the sentencing hearing, from in or about 2008 through in or about 2010, Garrison failed to remit, and converted for his own use, employee contributions which were supposed to be remitted to the Garrison Enterprises 401(k) profit sharing plan. In total, Garrison failed to remit, and converted for his own use, approximately $95,000 in employee contributions to the plan. According to court records, Garrison founded Garrison Enterprises, Inc. (Garrison Enterprises) in 1999 and served as its Chief Executive Officer until his termination in 2010. Garrison Enterprises focused its business on developing web-based applications for data management. The company was administratively dissolved in January 2015, court records show.

 

According to filed court documents, in or about 2006, Garrison Enterprises established the Garrison Enterprises 401(k) profit sharing plan (the Plan). Garrison was named and served as the trustee of the Plan, with authority to direct the investment of the Plan's assets for the sole benefit of the Plan's participants and beneficiaries. The Plan permitted participants to contribute a portion of their pay to the Plan through payroll deductions, and to take loans out of their account balances in the Plan in certain circumstances and then repay those loans through payroll reductions, collectively referenced to as "employee contributions."

 

According to court records, from in or about 2008 through in or about 2010, Garrison converted for his own use employee contributions which were supposed to be remitted to the Plan. Court records indicate that after the money was deducted from the employees’ paychecks, instead of remitting the money to the Plan, Garrison maintained the employees’ monies in the general assets of the corporate bank account and then transferred those monies into his personal account. Garrison made those transfers in the form of payroll, car allowances, and loan repayments. In addition, court records show that Garrison withdrew cash and made payments for personal expenses directly from the corporate accounts. According to court records, from in or about 2008 through in or about 2010, Garrison fraudulently failed to remit to the Plan and converted for his own use approximately $95,000 in employee contributions that were due to 21 different recipients, resulting in a loss of between $95,000 and $150,000.

 

“Theft of employee benefit assets jeopardizes the benefits of workers. This case reaffirms the U.S. Department of Labor’s commitment to protect workers’ benefits by identifying criminal activity wherever and whenever it occurs,” said Isabel Colon, Regional Director of Employee Benefits Security Administration’s Atlanta Regional Office.

 

Garrison pleaded guilty in September 2016 to one count of embezzlement from employee 401(k). He will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.

 

The investigation was led by the U.S. Department of Labor’s Employee Benefits Security Administration and the FBI. Assistant U.S. Attorney Maria Vento, with the U.S. Attorney’s Office in Charlotte, prosecuted the case.

CHARLOTTE, N.C. – On Thursday, March 2, 2017, Chief U.S. District Judge Frank D. Whitney sentenced a Lincolnton, N.C. man to 112 months in prison on child pornography charges, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Daniel Lee Rathbone, 38, was also ordered to serve a lifetime of supervised release and to register as a sex offender after he is released from prison.

 

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation in North Carolina and Chief Robert C. Helton of the Gastonia Police Department join U.S. Attorney Rose in making today’s announcement.

 

According to court documents and information introduced at the sentencing hearing, in or about June 3, 2015, law enforcement became aware that Rathbone was using an online peer-to-peer network to download child pornography. In August 2015, law enforcement executed a search warrant at Rathbone’s residence and recovered a desktop computer. A forensic analysis of Rathbone’s device revealed that he possessed 181 images and 261 videos of child pornography, some of which depicted prepubescent minors engaging in sadistic and masochistic conduct. Some of the images and videos contained identified victims of 38 different series of child pornography. Rathbone also has a previous state conviction for taking indecent liberties with a child.

 

Rathbone pleaded guilty in October 2016 to one count of receipt of child pornography. He is currently in federal custody and will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.

 

The investigation was led by the FBI and the Gastonia Police Department. The U.S. Attorney’s Office prosecuted the case.

 

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice, aimed at combating the growing online sexual exploitation of children. By combining resources, federal, state and local agencies are better able to locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue those victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov

CHARLOTTE, N.C. – Gary Wayne Collins, 53, of Forest, City, N.C., appeared before U.S. Magistrate Judge Dennis Howell on Tuesday, February 21, 2017, and pleaded guilty to detaining and delaying U.S. mail in Cleveland and Rutherford Counties, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.

 

Paul L. Bowman, Area Special Agent in Charge of the United States Postal Service, Office of Inspector General (USPS-OIG) joins U.S. Attorney Rose in making today’s announcement.

 

According to filed court documents and the plea hearing, on April 15, 2014, a witness observed Collins placing several tubs of mail behind a dumpster in Shelby, N.C. The witness notified the local Postmaster and the tubs of mail were recovered. The Postmaster determined that the recovered tubs contained deliverable mail for addresses on Collins’ delivery route, who at the time was a U.S. Postal Service Rural Carrier. Court records indicate that when postal agents interviewed Collins two days later, Collins told the agents that he had never intended to dump any mail and that he had left the tubs near the dumpster only temporarily, intending to return later to pick them up. Collins also told the agents that he had never thrown away any mail or stored it at his residence. The mail recovered on April 15, 2014, comprised 1,513 pieces, including 628 pieces of First-Class mail and three parcels.

 

According to court documents, in May 2014, postal agents discovered more than 1,800 pieces of undelivered mail hidden in Collins’ residence and his vehicle. The undelivered mail included 134 pieces of First-Class mail dating as far back as April 2000. Court records indicate that postal agents also found additional pieces of undelivered mail inside a partially-collapsed outbuilding located on Collins’ property. to court records, the Postal Service used a backhoe to remove two full-sized dump truck loads of mail from the outbuilding. That mail could not be salvaged due to extensive weather damage and had to be destroyed. Collins admitted in court yesterday that for approximately ten years he had been bringing to his residence the mail that he had not delivered.

 

Collins pleaded guilty to one count of unlawfully destroying, detaining and delaying U.S. mail, a charge that carries a maximum penalty of five years in prison and a $250,000 fine. Collins was released on bond following his plea hearing. A sentencing date has not been set yet.

 

The investigation was led by USPS-OIG. Assistant U.S. Attorney Richard Edwards, of the U.S. Attorney’s Office in Asheville, is prosecuting the case.

 

A dual Jamaican and U.S. citizen charged in connection with the operation of a Jamaican-based fraudulent lottery scheme was sentenced in Charlotte, North Carolina, the Department of Justice announced today.

 

Felecia Roxanne Lindo, 33, was sentenced to serve 24 months in prison and three years’ supervised release by U.S. District Court Judge Robert J. Conrad Jr. in Charlotte. Lindo was also ordered to pay $292,900 in restitution.

 

Lindo pleaded guilty on Sept. 28, 2016, to one count of conspiracy to commit wire fraud, in the Western District of North Carolina. As part of her guilty plea, Lindo acknowledged that from in or about 2011 through at least in or about September 2012, she was a member of a lottery fraud conspiracy that targeted victims in the United States.

 

“Lottery scammers tied to Jamaica continue to prey on victims in the United States, promising large winnings in a lottery when in fact the victims are duped into sending the money to a member of the scheme,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The Department of Justice is committed to prosecuting those who participate in international lottery schemes, which often target elderly Americans.”

 

Lindo was charged on Sept. 20, 2016, with one count of conspiracy to commit wire fraud. As part of her guilty plea, Lindo acknowledged that victims of the scheme received a telephone call stating that they had won money in a sweepstakes or lottery. Victims were instructed to send money for fees or other expenses in order to release their purported lottery winnings. The victims of the scheme sent hundreds of thousands of dollars to Lindo, who then forwarded a portion of the money to Jamaica. Lindo acknowledged there was no lottery, that there were no winnings, and that she kept some the victims’ money for her own benefit.

 

“The prison sentence demonstrates the serious consequences of engaging in fraud designed to steal from Americans,” said U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina. “We appreciate the work of the Justice Department’s Consumer Protection Branch in investigating and prosecuting international lottery scams operating in the Western District.”

“The Postal Inspection Service seeks to end fraud on American citizens, many of whom are older, by those engaged in international lottery schemes,” said Inspector in Charge David W. Bosch of the U.S. Postal Inspection Service’s Philadelphia, Pennsylvania Division. “Today’s sentencing demonstrates there are no safe havens for those who participate in these types of fraud schemes.”

This prosecution is part of the Department of Justice’s effort to work with federal and local law enforcement to combat fraudulent lottery schemes in Jamaica that prey on U.S. citizens.

 

Acting Assistant Attorney General Readler and U.S. Attorney Rose commended the investigative efforts of the U.S. Postal Inspection Service and the Internal Revenue Service Criminal Investigation. The case was prosecuted by Trial Attorney Raquel Toledo of the Civil Division’s Consumer Protection Branch with the assistance of Assistant U.S. Attorney Kelli H. Ferry of the Western District of North Carolina.

 

For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Western District of North Carolina, visit its website at https://www.justice.gov/usao-wdnc.

CHARLOTTE, N.C. – Matthew Moretz, 31, of Taylorsville, N.C., appeared before U.S. Magistrate Judge David C. Keesler today and pleaded guilty to one count of filing a false tax return, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.

 

U.S. Attorney Rose is joined in making today’s announcement by Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).

 

According to filed documents and today’s court proceedings, from April 2010 to March 2011, Moretz collected unemployment income from the North Carolina Division of Employment. However, beginning in or about March 2010 and continuing through in or about 2013, Moretz was self-employed as the owner of MJM Recycling, a scrap metal business. From tax year 2010 through tax year 2013, Moretz concealed significant personal earnings from his business from the IRS. During the relevant time period, Moretz failed to disclose or provide records from all of bank accounts to his bookkeeper and tax return preparers.

 

According to filed documents and today’s court proceedings, for years 2010 through 2013, Moretz earned additional personal income totaling approximately $529,622.44 that Moretz failed to report on his U.S. Individual Income Tax Returns Form 1040 filed with the IRS. Specifically, Moretz failed to report cash deposits totaling $99,344.39, $194,675.59, $124,432.58, and $111,169.88, respectively, for 2010 through 2013. As a result of the unreported taxable income, Moretz had additional tax due and owing of approximately $116,409.38 from 2010 to 2013.

 

Moretz was released on bond after his plea hearing. The false tax return charge carries a maximum prison term of three years and a $250,000 fine. As part of his plea agreement, Moretz has agreed to pay restitution of $116,409.38 to the IRS.

 

The investigation was led by IRS-CI. Assistant U.S. Attorney Jenny G. Sugar, of the U.S. Attorney’s Office in Charlotte, is prosecuting the case.

 

CHARLOTTE, N.C. – Today, the U.S. Attorney’s Office for the Western District of North Carolina, in partnership with the U.S. Drug Enforcement Administration (DEA), the Charlotte Mecklenburg Police Department (CMPD), Mecklenburg County, Anuvia Prevention and Recovery Center, and Cardinal Innovations, hosted a day-long conference to raise community awareness to the rise of heroin and opiate abuse in the Charlotte-Mecklenburg area.

 

“Heroin and opiate abuse is a growing public health threat that is taking a toll on our community. Today’s conference puts a spotlight on the devastating impact of heroin and opiate addiction and highlights the importance of combining resources to address this public health crisis, focusing on awareness, enforcement, prevention and treatment,” said U.S. Attorney Jill Westmoreland Rose during her opening remarks. “In addition to stemming the flow of drugs into our neighborhoods through law enforcement action, we are partnering with local organizations, healthcare providers, service groups, and community members to develop a long-term strategy to combat this epidemic and to find new and creative approaches to beat back the heroin and opiate threat in the Charlotte area.”

More than 240 professionals from the fields of law enforcement, medicine, substance abuse prevention and treatment, and interested community members attended the summit, held at Calvary Church in Charlotte. Speakers from federal and local law enforcement agencies, physicians, mental healthcare professionals, substance abuse experts and representatives of community organizations presented on a broad range of topics including: the rise in heroin and opiate addiction; drug trafficking trends and law enforcement action; the physiology of addiction; public education and prevention initiatives, available treatment options and rehabilitation recourses. Participants also heard a parent’s account on the impact of the death of a child due to a drug overdose.

U.S. Attorney Rose thanked all the co-sponsors for partnering with the Justice Department to organize the conference. U.S. Attorney Rose emphasized the importance of the event stating that, “Today’s summit is part of our ongoing effort to bring attention to heroin addiction and opioid drug abuse, as we to continue to build upon existing relationships and forge new collaborations to confront this epidemic and address the problem in real and meaningful ways.”

CHARLOTTE, N.C. – U.S. Attorney Jill Westmoreland Rose announced today that U.S. District Court Judge Max O. Cogburn, Jr. sentenced the former CEO of ZeekRewards to 176 months in prison for operating a $900 million Internet Ponzi scheme. Paul Burks, 70, of Lexington, N.C. was also ordered to serve three years of supervised release and to pay $244,000,000 as restitution. A federal jury convicted Burks in July 2016 of wire and mail fraud conspiracy, wire and mail fraud, and tax fraud conspiracy following a three-week trial.

 

Michael Rolin, Special Agent in Charge of the United States Secret Service, Charlotte Field Division and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) join U.S. Attorney Rose in making today’s announcement.

 

According to filed court documents, evidence introduced at Burks’ trial and today’s sentencing hearing:

 

From January 2010 through August 2012, Paul Burks was the owner of Rex Venture Group, LLC (RVG), through which he owned and operated Zeekler, a sham Internet-based penny auction company, and its purported advertising division, ZeekRewards (collectively “Zeek”). Burks and his conspirators induced more than 900,000 victims – including over 1,500 victims in the Charlotte area – to invest in their fraudulent scheme, by falsely representing that Zeekler was generating massive retail profits from its penny auctions, and that the public could share in such profits through investment in ZeekRewards. Burks and his conspirators, including Zeek’s former Chief Operating Officer Dawn Wright Olivares and her step-son and Zeek’s Senior Technology Officer Daniel C. Olivares, claimed at one point that investors would be guaranteed a 125% return on their investment.

 

Burks and his conspirators represented that victim-investors in ZeekRewards could participate in the Retail Profit Pool (RPP), which supposedly allowed victims collectively to share 50% of Zeek’s daily net profits. Burks and his conspirators did not keep books and records needed to calculate such daily figures. Instead, Burks simply made up the daily “profit” numbers. Contrary to the conspirators’ claims, the true revenue from the scheme did not come from the penny auction’s “massive profits.” Instead, approximately 98% of all incoming funds came from victim-investors, which were then used to make Ponzi-style payments to earlier victim investors.

 

In addition to promising massive returns on investments, Burks and his conspirators used a number of ways to promote Zeek to current and potential investors. For example, the conspirators hosted weekly conference calls and leadership calls, where participants could call in listen to Burks and others make false representations intended to encourage victim-investors to continue to invest money and to recruit others to invest in Zeek. Burks also organized and attended “Red Carpet Events,” where victim investors came to hear details of the scheme in person. During these events, Burks and his conspirators made false representations about the massive retail profits generated by Zeek. They also used electronic and print media, including websites, emails and journals, to make false and misleading statements about the success of Zeekler to recruit victim investors.

 

As the Ponzi scheme grew in size and scope it became unsustainable and it eventually began to unravel as the outstanding liability resulting from the bogus 125% return on investment continued to rise beyond control. By August 2012, Burks and his conspirators fraudulently represented to the collective victims that their investments were worth nearly $3 billion, but had no accurate books and records to even determine how much cash on hand was available to pay such liability. Contrary to representations made to victim investors, at that time, Burks and his conspirators had only $340 million available to pay out investors. Over the course of the scheme, Burks diverted approximately $10.1 million to himself.

 

Burks also failed to file corporate tax returns or to make corporate tax payments for his companies, among other things. In addition, for tax year 2011, Burks issued fraudulent IRS Forms 1099s, causing victim-investors to file inaccurate tax returns for phantom income they never actually received.

 

At sentencing, Judge Cogburn stated that for the defendant’s scheme to work would have required a miracle on the order of the “loaves and fishes.” Judge Cogburn stated that a significant sentence was necessary to promote respect for the law, provide just punishment, and also deter others considering committing fraud. Judge Cogburn further noted that the scheme was “almost breathtaking” and emphasized that the defendant had time to stop it.

 

Burks will be ordered to report to the Federal Bureau of Prisons to begin serving his sentence upon designation of a federal facility. All federal sentences are served without the possibility of parole.

 

Burks’ co-conspirators, Dawn Wright Olivares, Zeek’s Chief Operating Officer, and her step-son and Zeek’s Senior Technology Officer, Daniel C. Olivares, were previously sentenced to 90 and 24 months in prison and three years of supervised release, respectively, for their involvement in the scheme.

 

In making today’s announcement, U.S. Attorney Rose thanked the U.S. Secret Service and IRS-CI for investigating the case, and the U.S. Securities & Exchange Commission, Division of Enforcement for its assistance with the investigation.

 

The prosecution is handled by Assistant United States Attorneys Jenny Grus Sugar and Corey Ellis of the U.S. Attorney’s Office in Charlotte.

 

Additional information and updated court filings about this and related cases filings can be accessed at the district’s website: http://www.justice.gov/usao/ncw/ncwvwa.html.

A member of a highly sophisticated, global child exploitation enterprise dedicated to the sexual exploitation of children was sentenced to prison today.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division; U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina; Special Agent in Charge John A. Strong of the FBI’s Charlotte, North Carolina, Division; Special Agent in Charge Amy Hess of the FBI’s Louisville, Kentucky, Division made the announcement.

David Lynn Browning, 47, of Wooton, Kentucky, was sentenced to 240 months in prison for engaging in a child exploitation enterprise, along with a lifetime term of supervised release.  U.S. District Judge Richard L. Voorhees of the Western District of North Carolina imposed the sentence.  Browning pleaded guilty on Dec. 18, 2015, and has remained in the custody of the U.S. Marshals Service since his arrest on July 29, 2015.

 According to admissions made in connection with the plea, Browning acted as the global moderator of a highly-sophisticated global enterprise dedicated to the sexual exploitation of children, organized via a members-only website that operated on the Tor anonymity network, through which he and more than 150,000 other members authored and viewed tens of thousands of postings relating to sexual abuse of children as young as infants and toddlers.  According to admissions, Browning was heavily involved in the day-to-day operations of the website – including managing membership, developing and enforcing strict rules and deleting website content that did not depict or discuss child pornography.  Browning also admitted to spending hundreds of hours logged in to the website – authoring more than 1,000 postings, and designing the website logo.  In addition, Browning admitted that website members employed advanced technological means in order to undermine law enforcement’s attempts to identify them, including the use of a hidden service on the Tor anonymity network and elaborate file encryption.

On Sept. 16, 2016, a federal jury convicted co-defendant and lead administrator of the site, Steven W. Chase, 57, of Naples, Florida, of engaging in a child exploitation enterprise and related charges.  A sentencing date for Chase has not yet been set.  On Jan. 12, 2017, co-defendant and co-administrator of the site, Michael Fluckiger, 46, of Portland, Indiana, was sentenced to 240 months in prison for engaging in a child exploitation enterprise, along with lifetime supervised release. 

As a result of the ongoing investigation, at least 51 alleged hands-on abusers have been prosecuted and 55 American children who were subjected to sexual abuse have been successfully identified or rescued.

The FBI’s Violent Crimes Against Children Section, Major Case Coordination Unit and Digital Analysis and Research Center investigated the case with assistance from the FBI’s Charlotte, Louisville, Tampa and Boston, Field Offices.  Trial Attorney Reginald E. Jones of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Cortney Randall of the Western District of North Carolina prosecuted the case.  

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

CHARLOTTE, N.C. – A member of a highly sophisticated, global child exploitation enterprise dedicated to the sexual exploitation of children was sentenced to prison today.

 

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division; U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina; Special Agent in Charge John A. Strong of the FBI’s Charlotte, North Carolina, Division; Special Agent in Charge Amy Hess of the FBI’s Louisville, Kentucky, Division made the announcement.

 

David Lynn Browning, 47, of Wooton, Kentucky, was sentenced to 240 months in prison for engaging in a child exploitation enterprise, along with a lifetime term of supervised release. U.S. District Judge Richard L. Voorhees of the Western District of North Carolina imposed the sentence. Browning pleaded guilty on Dec. 18, 2015, and has remained in the custody of the U.S. Marshals Service since his arrest on July 29, 2015.

 

According to admissions made in connection with the plea, Browning acted as the global moderator of a highly-sophisticated global enterprise dedicated to the sexual exploitation of children, organized via a members-only website that operated on the Tor anonymity network, through which he and more than 150,000 other members authored and viewed tens of thousands of postings relating to sexual abuse of children as young as infants and toddlers. According to admissions, Browning was heavily involved in the day-to-day operations of the website – including managing membership, developing and enforcing strict rules and deleting website content that did not depict or discuss child pornography. Browning also admitted to spending hundreds of hours logged in to the website – authoring more than 1,000 postings, and designing the website logo. In addition, Browning admitted that website members employed advanced technological means in order to undermine law enforcement’s attempts to identify them, including the use of a hidden service on the Tor anonymity network and elaborate file encryption.

 

On Sept. 16, 2016, a federal jury convicted co-defendant and lead administrator of the site, Steven W. Chase, 57, of Naples, Florida, of engaging in a child exploitation enterprise and related charges. A sentencing date for Chase has not yet been set. On Jan. 12, 2017, co-defendant and co-administrator of the site, Michael Fluckiger, 46, of Portland, Indiana, was sentenced to 240 months in prison for engaging in a child exploitation enterprise, along with lifetime supervised release.

 

As a result of the ongoing investigation, at least 51 alleged hands-on abusers have been prosecuted and 55 American children who were subjected to sexual abuse have been successfully identified or rescued.

 

The FBI’s Violent Crimes Against Children Section, Major Case Coordination Unit and Digital Analysis and Research Center investigated the case with assistance from the FBI’s Charlotte, Louisville, Tampa and Boston, Field Offices. Trial Attorney Reginald E. Jones of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Cortney Randall of the Western District of North Carolina prosecuted the case.

 

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

 

Defendant Charged in Connection with $10 Million Offshore Sweepstakes Fraud Ploy, $2.5 Million High-Yield Investment Scheme

A U.S. man residing in Costa Rica pleaded guilty today for his role in two separate schemes.  One scheme was a $10 million “sweepstakes scheme” that targeted elderly U.S. residents, and the other was a $2.5 million high-yield investment fraud scheme, announced Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division and U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina.

Kristian Francis Sierp, 45, formerly of Boca Raton, Florida, pleaded guilty in two cases before U.S. Magistrate Judge David S. Cayer of the Western District of North Carolina.  Sentencing is set for June 19 before Chief U.S. District Judge Frank D. Whitney of the Western District of North Carolina.

In the first case, which charged Sierp with participating in a $10 million telemarketing sweepstakes scheme, Sierp pleaded guilty to one count of conspiracy to commit mail and wire fraud, one count of mail fraud and one count of conspiracy to commit money laundering.  

As part of his guilty plea, Sierp admitted that from approximately January 2011 through September 2015, he worked in various illegal Costa Rican call centers belonging to co-conspirator Elliot Rosenberg, where they placed telephone calls to U.S. residents, falsely informing them that they had won a substantial cash prize in a “sweepstakes.”  The victims, many of whom were elderly, were told that in order to receive the prize, they had to pay for a purported “refundable insurance fee,” Sierp admitted.  Sierp further admitted that after he received victims’ money for an initial fee, he would contact the victims again to demand additional purported fees to cover even larger promised prizes.  

Sierp further admitted that he and his co-conspirators continued their attempts to collect additional money from a victim until that victim either ran out of money or discovered the fraudulent nature of the scheme.  To further their fraud and mask that they were calling from Costa Rica, Sierp and his co-conspirators often falsely claimed that they were calling on behalf of a U.S. federal agency and utilized voice over internet protocol (VoIP) phones that displayed a 202 area code, giving the false impression that they were calling from Washington, D.C., he admitted.

In the second case, which charged Sierp with engaging in a high-yield investment fraud scheme, Sierp pleaded guilty to one count of conspiracy to commit mail and wire fraud.  

As part of his guilty plea in this case, Sierp admitted that he worked with co-conspirators since at least January 2016 to sell stock in Niyato Industries Inc., a Nevada corporation purportedly operated from Charlotte.  Sierp admitted that he and his co-conspirators falsely marketed Niyato as a manufacturer of compressed natural gas (CNG) automobiles and a distributor of CNG fuel that had patented technology, valuable contracts and high-profile executives.  

Sierp also admitted that he and his co-conspirators falsely sold investors on a promise that Niyato was planning an imminent stock IPO that would reap pre-IPO investors a tenfold return on their investments.  In truth, Sierp admitted, he and his co-conspirators knew that Niyato had no facilities, products, patents or plans for an imminent IPO, but rather was merely a vehicle for inducing investor funds.  Sierp further admitted that he made all investor sales using a fake name from a telemarketing call center that he owned and operated in Costa Rica. 

The U.S. Postal Inspection Service, FBI, Internal Revenue Service Criminal Investigation, Federal Trade Commission and Department of Homeland Security’s Homeland Security Investigations investigated the cases.  Trial Attorneys William Bowne and Gustav Eyler of the Criminal Division’s Fraud Section are prosecuting the cases.

CHARLOTTE, N.C. B Today, U.S. District Judge Robert J. Conrad, Jr. sentenced Lonnie Cecil Buchanan, Jr., 47, of Monroe, N.C. to 294 months in prison on kidnapping, witness tampering and firearms offenses, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Judge Conrad also ordered Buchanan to serve five years of supervised release after he completes his prison term. Buchanan pleaded guilty to the charges in April 2012, following nearly two days of trial testimony.

 

U.S. Attorney Rose is joined in making today’s announcement by C.J. Hyman, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division, Chief J. Bryan Gilliard of the Monroe Police Department and Sheriff Jay L. Brooks of the Chesterfield County Sheriff’s Office in South Carolina.

 

According to filed court documents and evidence presented at trial, on February 26, 2012, Buchanan, while holding a firearm, approached a female victim at the Hilltop shopping center parking lot in Monroe, N.C. Witnesses at trial described the victim’s “blood curdling screams” as she ran to her vehicle in an attempt to get away from Buchanan. Buchanan chased the victim and jumped into her car. Witnesses testified at trial that Buchanan and the victim violently struggled in the car until the victim was knocked unconscious. Buchanan then dragged the victim to a van he had parked nearby. Witnesses at trial testified that Buchanan stood over the victim with his hand on her throat and when he noticed other people around him he told the victim that he “was going to take her to the hospital.”

 

Witnesses testified that Buchanan lifted the victim from the ground and placed her on the floor of the van. Witnesses also testified that Buchanan passed the hospital and drove the victim into Chesterfield County in South Carolina. According to trial evidence and witness testimony, Buchanan repeatedly hit the victim and told her he would kill her. After 30 hours of being held captive, law enforcement located the van at a vacant house in the woods, with both Buchanan and the victim inside. Buchanan was arrested and the victim was taken to the hospital for treatment.

 

According to filed court documents, in March 2012, a federal grand jury indicted Buchanan on kidnapping, possession of firearm by a convicted felon, and possession of a firearm in furtherance of kidnapping charges. Court records indicate that following his arrest and while in federal custody, Buchanan began to call the kidnapping victim in an attempt to persuade her to recant statements she made to law enforcement and the federal grand jury. As a result of that conduct, in December 2012, a federal grand jury added two charges of witness tampering in a superseding bill of indictment.

 

In announcing today’s sentence, Judge Conrad stated that the offense was “very serious,” it occurred “in broad daylight with a gun,” and that the defendant kept the victim “in captivity for over 24 hours, including assaulting her until she was unconscious.” Judge Conrad also stated that the defendant is “a danger to the community and has a disrespect for the law,” citing the seriousness of the offense, the need to promote respect for the law, and most importantly to protect the public from further crimes of the defendant as reasons for Buchanan’s lengthy prison term.

 

The defendant is currently in custody. He will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility.  All federal sentences are served without the possibility of parole.

 

ATF, the Monroe Police Department and the Chesterfield County Sheriff's Office led the investigation.  Assistant United States Attorneys Jennifer Lynn Dillon and Dana Washington of the U.S. Attorney's Office in Charlotte prosecuted the case.

CHARLOTTE, N.C. – Today, U.S. District Judge Robert J. Conrad, Jr. sentenced Kenwaniee Vontorian Tate, 41, of Charlotte, to 40 years in prison for sex trafficking of a minor, sex trafficking by fraud, force and committing sex trafficking of a minor while being required to register as a sex offender, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. In addition to the prison term imposed, Tate was also ordered to serve a lifetime under court supervision, to register as a sex offender, and to pay $42,100 as restitution to the victim of sex trafficking.

 

U.S. Attorney Rose is joined making today’s announcement by Nick Annan, Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Georgia and the Carolinas and Chief Kerr Putney of the Charlotte-Mecklenburg Police Department (CMPD).

 

In making today’s announcement U.S. Attorney Rose stated, “Tate preyed upon a vulnerable young girl, lured her into a world of sex and violence and exploited her in the worst possible way. Sex trafficking and victimizing minors for financial gain is a reprehensible crime. My office will continue to work closely with our law enforcement partners to identify and prosecute sex traffickers who profit from prostituting minors.”

 

“Human traffickers strip victims of their humanity; treating them as little more than pieces of meat to generate cash,” said Special Agent in Charge Annan “The depravity of the subject in this particular case reaches its lowest form, by forcing underage girls into this dark underworld of abuse and victimization; the public should breathe a sigh of relief that this dangerous criminal is now safely behind bars.”

 

According to filed documents, statements at today’s sentencing hearing and evidence presented at Tate’s trial, between September 2014 and February 2015, Tate caused and forced a minor female to engage in prostitution. Tate met the victim when she was a 15-year-old runaway and became her pimp shortly after they met. Tate and the minor victim moved from hotel to hotel while she worked as a prostitute. Testimony at trial established that Tate controlled all of the profits from the prostitution of the minor victim and used it to support himself. He also controlled the victim, who Tate required to follow his rules and to ask for his permission to do anything. Tate advertised the minor victim for sex on an Internet website and arranged sexual encounters for her.

 

Testimony at trial also revealed that while she the was prostituting for him, Tate physically abused the minor victim. Specifically, Tate slapped the minor victim, punched her in the face, pulled her hair, threw her to the ground, and slammed her head into the wall when she did not do as Tate instructed. Testimony at trial also established that Tate was careful to only hit the victim in the face one time because visible bruises affected her ability to make money as a prostitute. Trial evidence showed that the sex trafficking came to an end when CMPD officers arrested Tate on February 17, 2015, while looking for a different missing minor and found the victim hiding in Tate’s hotel room closet.

Trial evidence also established that at the time that Tate caused the minor victim to engage in prostitution, Tate was registered as a sex offender in North Carolina based upon previous state convictions in Minnesota for criminal sexual conduct. Tate was also convicted previously in Minnesota federal court for conspiracy to commit sex trafficking of a minor for his involvement in a sex trafficking ring, whose members transported adult and juvenile females from Minnesota to Las Vegas, Nevada, to engage in commercial sex acts. The judge in that case ordered Tate to serve a 16-month sentence.

 

Tate has been in federal custody since his arrest in November 2015. He will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.

 

The investigation was led by HSI and CMPD. Assistant U.S. Attorney Kimlani M. Ford of the U.S. Attorney’s Office in Charlotte prosecuted the case.

 

CHARLOTTE, N.C. – Alex Lenard McCoy, 32, of Gastonia, N.C. was sentenced today to 310 months in prison on a federal drug conspiracy charge and a supervised release violation, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. In addition to the prison term imposed, Chief U.S. District Judge Frank D. Whitney also ordered McCoy to serve five years under court supervision after he is released from prison.

 

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division; Nick Annan, Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Georgia and the Carolinas; and Chief Robert C. Helton of the Gastonia Police Department join U.S. Attorney Rose in making today’s announcement.

 

According to filed court documents and today’s sentencing hearings, from 2011 to June 2015, McCoy and co-defendants Mickey Burris, Rodney Moore, and Eric Briggs operated as a drug conspiracy, selling crack cocaine in Gaston County and elsewhere. Court records indicate that McCoy was the leader of the drug conspiracy and engaged in drug trafficking activity while he was on federal supervision for a previous drug conviction. Court records also show that McCoy maintained a residence for purposes of drug trafficking and was responsible for the trafficking of more than a kilogram of crack cocaine. At the time of his arrest, law enforcement seized from McCoy $7,157 in drug proceeds. McCoy pleaded guilty in June 2016 to one count of drug trafficking conspiracy.

 

McCoy’s co-defendants were previously sentenced as follows: Mickey Burris was sentenced to 120 months in prison and five years of supervised release; Rodney Moore was sentenced to 51 months in prison and four years of supervised release; and Eric Briggs was sentenced to six months in prison and two years of supervised release.

 

McCoy will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentencings are served without the possibility of parole.

 

The prosecutions are the result of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation. OCDETF is a joint federal, state and local cooperative approach to combat drug trafficking and is the nation’s primary tool for disrupting and dismantling major drug trafficking organizations, targeting national and regional drug trafficking organizations and coordinating the necessary law enforcement entities and resources to disrupt or dismantle the targeted criminal organization and seize their assets.

 

The investigation was led by FBI, HSI, and Gastonia PD. Assistant United States Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte prosecuted the case.

 

ASHEVILLE, N.C. – An Asheville man was sentenced yesterday by U.S. District Judge Martin Reidinger to 48 months in prison for dealing in firearms without a license, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Conley Dale Patterson, 72, was also ordered to serve three years under court supervision upon completion of his prison term and to pay $2,300 as restitution.

 

U.S. Attorney Rose is joined in making today's announcement by C.J. Hyman, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division.

 

According to filed court documents and statements made in court, Patterson is the owner of the “Asheville Combat Zone,” located at 1472 Patton Avenue in Asheville. The business sells a variety of military surplus equipment and other items. According to court records, from July 2009 to October 2014, Patterson engaged in the business of dealing in firearms from his store without possessing a Federal Firearms License (FFL). Court records indicate that Patterson had received previous warnings by law enforcement that he was prohibited from dealing in firearms without being a licensed dealer. However, Patterson continued to engage in a pattern of selling multiple firearms without an FFL, including selling firearms to convicted felons. Over the course of the investigation, law enforcement recovered from Patterson’s store at least 10 firearms, including seven rifles, two shotguns and a pistol.

Patterson pleaded guilty to one count of dealing in firearms without a license in August 2016. He will be ordered to report to the Federal Bureau of Prisons to begin serving his sentence upon designation of a federal facility. All federal sentences are served without the possibility of parole.

The investigation was handled by ATF.  The U.S. Attorney's Office in Asheville prosecuted the case.

A member of a highly sophisticated, global child exploitation enterprise dedicated to the sexual exploitation of children was sentenced to prison today.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina; Special Agent in Charge John A. Strong of the FBI’s Charlotte, North Carolina, Division; Special Agent in Charge Harold H. Shaw of the FBI’s Boston Division; and Special Agent in Charge Paul Wysopal of the FBI’s Tampa, Florida, Division made the announcement.

Michael Fluckiger, 46, of Portland, Indiana, was sentenced to 240 months in prison for engaging in a child exploitation enterprise, along with lifetime supervised release.  U.S. District Judge Richard L. Voorhees of the Western District of North Carolina imposed the sentence.  Fluckiger pleaded guilty on December 2, 2015 and has remained in the custody of the U.S. Marshals Service since his arrest on March 4, 2015.  

According to admissions made in connection with the plea, Fluckiger acted as the co-administrator of a highly-sophisticated global enterprise dedicated to the sexual exploitation of children, organized via a members-only website that operated on the Tor anonymity network, through which he and more than 150,000 other members authored and viewed tens of thousands of postings relating to sexual abuse of children as young as infants and toddlers.  According to admissions, Fluckiger was heavily involved in the day-to-day operations of the website – including managing membership, developing and enforcing strict rules and deleting website content that did not depict or discuss child pornography.  In addition, Fluckiger admitted that website members employed advanced technological means in order to undermine law enforcement’s attempts to identify them, including the use of a hidden service on the Tor anonymity network and elaborate file encryption.

On Sept. 16, 2016, a federal jury convicted co-defendant and lead administrator of the site, Steven W. Chase, 57, of Naples, Florida, of engaging in a child exploitation enterprise and related charges.  A sentencing date for Chase has not yet been set.  Co-defendant and global moderator of the site, David Lynn Browning, 47, of Wooton, Kentucky, pleaded guilty on Dec. 18, 2015, and is scheduled to be sentenced on Feb. 7, 2017.  

As a result of the ongoing investigation, at least 48 alleged hands-on abusers have been prosecuted and 49 American children who were subjected to sexual abuse have been successfully identified or rescued.

The FBI’s Violent Crimes Against Children Section, Major Case Coordination Unit and Digital Analysis and Research Center investigated the case with assistance from the FBI’s Charlotte, Tampa, and Boston, Field Offices.  Trial Attorney Reginald E. Jones of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Cortney Randall of the Western District of North Carolina prosecuted the case.  

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

CHARLOTTE, N.C. – A member of a highly sophisticated, global child exploitation enterprise dedicated to the sexual exploitation of children was sentenced to prison today.

 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina; Special Agent in Charge John A. Strong of the FBI’s Charlotte, North Carolina, Division; Special Agent in Charge Harold H. Shaw of the FBI’s Boston Division; and Special Agent in Charge Paul Wysopal of the FBI’s Tampa, Florida, Division made the announcement.

 

Michael Fluckiger, 46, of Portland, Indiana, was sentenced to 240 months in prison for engaging in a child exploitation enterprise, along with lifetime supervised release. U.S. District Judge Richard L. Voorhees of the Western District of North Carolina imposed the sentence. Fluckiger pleaded guilty on December 2, 2015 and has remained in the custody of the U.S. Marshals Service since his arrest on March 4, 2015.

 

According to admissions made in connection with the plea, Fluckiger acted as the co-administrator of a highly-sophisticated global enterprise dedicated to the sexual exploitation of children, organized via a members-only website that operated on the Tor anonymity network, through which he and more than 150,000 other members authored and viewed tens of thousands of postings relating to sexual abuse of children as young as infants and toddlers. According to admissions, Fluckiger was heavily involved in the day-to-day operations of the website – including managing membership, developing and enforcing strict rules and deleting website content that did not depict or discuss child pornography. In addition, Fluckiger admitted that website members employed advanced technological means in order to undermine law enforcement’s attempts to identify them, including the use of a hidden service on the Tor anonymity network and elaborate file encryption.

 

On Sept. 16, 2016, a federal jury convicted co-defendant and lead administrator of the site, Steven W. Chase, 57, of Naples, Florida, of engaging in a child exploitation enterprise and related charges. A sentencing date for Chase has not yet been set. Co-defendant and global moderator of the site, David Lynn Browning, 47, of Wooton, Kentucky, pleaded guilty on December 18, 2015, and is scheduled to be sentenced on February 7, 2017.

 

As a result of the ongoing investigation, at least 48 alleged hands-on abusers have been prosecuted and 49 American children who were subjected to sexual abuse have been successfully identified or rescued.

 

The FBI’s Violent Crimes Against Children Section, Major Case Coordination Unit and Digital Analysis and Research Center investigated the case with assistance from the FBI’s Charlotte, Tampa, and Boston, Field Offices. Trial Attorney Reginald E. Jones of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Cortney Randall of the Western District of North Carolina prosecuted the case.

 

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

Healthcare company Baxter Healthcare Corporation (Baxter) has agreed to pay $18.158 million to resolve its criminal and civil liability arising from Baxter’s failure to follow current Good Manufacturing Practices (cGMP) when manufacturing sterile drug products in North Carolina, the Department of Justice announced today. Today’s resolution includes a deferred prosecution agreement and penalties and forfeiture totaling $16 million and a civil settlement under the False Claims Act (FCA) with the federal government totaling approximately $2.158 million. Baxter is a Delaware corporation and subsidiary of Baxter International Inc., headquartered in Deerfield, Illinois, with many manufacturing facilities throughout the United States and the world, including one in Marion, North Carolina (North Cove).

 

In a criminal information filed today in the Western District of North Carolina, the government charged that, between July 2011 and November 2012, Baxter introduced into interstate commerce drugs that were adulterated under the Federal Food, Drug, and Cosmetic Act (FDCA) because Baxter did not follow cGMP when making those products. At North Cove, Baxter manufactured large-volume sterile intravenous (IV) solutions in a clean room that had high-efficiency particulate absorption (HEPA) filters installed in the ceiling. Air was pushed into the clean room through the HEPA filters. As alleged in the information, during the relevant time period, a Baxter employee reported the presence of mold on the HEPA filters to plant management. However, Baxter continued to manufacture IV solutions in that clean room for months while the filters the employee had identified as moldy remained in place. Subsequent testing of the filters following an unannounced U.S. Food and Drug Administration (FDA) inspection revealed several mold species on the filters. There was no evidence of impact on the IV solutions from the mold found on the filters.

 

In a deferred prosecution agreement to resolve the charge, Baxter admitted that it distributed products in interstate commerce that were adulterated in violation of the FDCA. Under the terms of the deferred prosecution agreement, Baxter will pay a total of $16 million in monetary penalties and forfeiture and will implement enhanced compliance provisions, including periodic certifications to the government concerning its implementation of those provisions. The deferred prosecution agreement will not be final until accepted by the U.S. District Court.

 

“Following current Good Manufacturing Practices is essential to ensure the safety and efficacy of our drugs,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Today’s settlement shows that the government will continue to hold companies accountable for failing to fulfill this critically important responsibility.”

 

“Despite notification by an employee of potential contamination concerns, Baxter was poorly focused on instituting sufficient safety standards for their products,” said U.S. Attorney Jill Westmoreland Rose for the Western District of North Carolina (WDNC). “Today’s resolution reflects WDNC’s commitment to hold accountable drug companies that violate manufacturing standards and wrongly profit from those violations.”

 

“FDA’s manufacturing standards are designed to ensure the quality, safety, and efficacy of drugs distributed to American consumers, and FDA expects pharmaceutical companies to correct deficiencies in an expedited manner,” said Special Agent in Charge Justin Green of FDA’s Office of Criminal Investigations, Miami Field Office. “We will remain vigilant in our efforts to protect the U.S. public health from potentially dangerous products.”

 

In addition, Baxter will pay approximately $2.158 million to resolve allegations that the company violated the FCA by submitting false claims to the Department of Veterans Affairs based upon Baxter’s failure to follow cGMPs.

 

The civil settlement resolves a lawsuit filed by Christopher Wall, an employee of Baxter, under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The civil lawsuit was filed in the Western District of North Carolina and is captioned United States ex rel. Christopher Wall v. Baxter International, Inc. et al., No. 13cv42 (W.D.N.C.). Mr. Wall will receive $431,535.99 from the proceeds of the civil settlement.

 

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $31.4 billion through False Claims Act cases, with nearly $19.6 billion of that amount recovered in cases involving fraud against federal health care programs.

 

The settlement with Baxter was the result of a coordinated effort among the U.S. Attorney’s Office for the Western District of North Carolina and the Civil Division’s Consumer Protection Branch and Commercial Litigation Branch, with assistance from the FDA’s Office of Chief Counsel. The criminal investigation was conducted by the FDA’s Office of Criminal Investigations.

 

Except as to conduct admitted in connection with the deferred prosecution agreement, the claims settled by the civil agreement are allegations only and there has been no determination of civil liability.

 

For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at http://www.justice.gov/civil/consumer-protection-branch. For more information on the Commercial Litigation Branch’s Fraud Section, visit https://www.justice.gov/civil/fraud-section. For more information about the U.S. Attorney’s Office for the Western District of North Carolina, visit https://www.justice.gov/usao-wdnc.

 

WASHINGTON - Healthcare company Baxter Healthcare Corporation (Baxter) has agreed to pay $18.158 million to resolve its criminal and civil liability arising from Baxter’s failure to follow current Good Manufacturing Practices (cGMP) when manufacturing sterile drug products in North Carolina, the Department of Justice announced today. Today’s resolution includes a deferred prosecution agreement and penalties and forfeiture totaling $16 million and a civil settlement under the False Claims Act (FCA) with the federal government totaling approximately $2.158 million. Baxter is a Delaware corporation and subsidiary of Baxter International Inc., headquartered in Deerfield, Illinois, with many manufacturing facilities throughout the United States and the world, including one in Marion, North Carolina (North Cove).

 

In a criminal information filed today in the Western District of North Carolina, the government charged that, between July 2011 and November 2012, Baxter introduced into interstate commerce drugs that were adulterated under the Federal Food, Drug, and Cosmetic Act (FDCA) because Baxter did not follow cGMP when making those products. At North Cove, Baxter manufactured large-volume sterile intravenous (IV) solutions in a clean room that had high-efficiency particulate absorption (HEPA) filters installed in the ceiling. Air was pushed into the clean room through the HEPA filters. As alleged in the information, during the relevant time period, a Baxter employee reported the presence of mold on the HEPA filters to plant management. However, Baxter continued to manufacture IV solutions in that clean room for months while the filters the employee had identified as moldy remained in place. Subsequent testing of the filters following an unannounced U.S. Food and Drug Administration (FDA) inspection revealed several mold species on the filters. There was no evidence of impact on the IV solutions from the mold found on the filters.

 

In a deferred prosecution agreement to resolve the charge, Baxter admitted that it distributed products in interstate commerce that were adulterated in violation of the FDCA. Under the terms of the deferred prosecution agreement, Baxter will pay a total of $16 million in monetary penalties and forfeiture and will implement enhanced compliance provisions, including periodic certifications to the government concerning its implementation of those provisions. The deferred prosecution agreement will not be final until accepted by the U.S. District Court.

 

“Following current Good Manufacturing Practices is essential to ensure the safety and efficacy of our drugs,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Today’s settlement shows that the government will continue to hold companies accountable for failing to fulfill this critically important responsibility.”

 

“Despite notification by an employee of potential contamination concerns, Baxter was poorly focused on instituting sufficient safety standards for their products,” said U.S. Attorney Jill Westmoreland Rose for the Western District of North Carolina (WDNC). “Today’s resolution reflects WDNC’s commitment to hold accountable drug companies that violate manufacturing standards and wrongly profit from those violations.”

 

“FDA’s manufacturing standards are designed to ensure the quality, safety, and efficacy of drugs distributed to American consumers, and FDA expects pharmaceutical companies to correct deficiencies in an expedited manner,” said Special Agent in Charge Justin Green of FDA’s Office of Criminal Investigations, Miami Field Office. “We will remain vigilant in our efforts to protect the U.S. public health from potentially dangerous products.”

 

In addition, Baxter will pay approximately $2.158 million to resolve allegations that the company violated the FCA by submitting false claims to the Department of Veterans Affairs based upon Baxter’s failure to follow cGMPs.

 

The civil settlement resolves a lawsuit filed by Christopher Wall, an employee of Baxter, under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The civil lawsuit was filed in the Western District of North Carolina and is captioned United States ex rel. Christopher Wall v. Baxter International, Inc. et al., No. 13cv42 (W.D.N.C.). Mr. Wall will receive $431,535.99 from the proceeds of the civil settlement.

 

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $31.4 billion through False Claims Act cases, with nearly $19.6 billion of that amount recovered in cases involving fraud against federal health care programs.

 

The settlement with Baxter was the result of a coordinated effort among the U.S. Attorney’s Office for the Western District of North Carolina and the Civil Division’s Consumer Protection Branch and Commercial Litigation Branch, with assistance from the FDA’s Office of Chief Counsel. The criminal investigation was conducted by the FDA’s Office of Criminal Investigations.

 

Except as to conduct admitted in connection with the deferred prosecution agreement, the claims settled by the civil agreement are allegations only and there has been no determination of civil liability.

 

For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at http://www.justice.gov/civil/consumer-protection-branch. For more information on the Commercial Litigation Branch’s Fraud Section, visit https://www.justice.gov/civil/fraud-section. For more information about the U.S. Attorney’s Office for the Western District of North Carolina, visit https://www.justice.gov/usao-wdnc.

CHARLOTTE, N.C. – In recognition of January as National Slavery and Human Trafficking Prevention Month, United States Attorney Jill Westmoreland Rose highlighted the efforts of the U.S. Attorney’s Office to combat human trafficking and to raise awareness through community outreach, training and federal prosecutions.

 

“Human trafficking is one of the most inhumane and depraved crimes that can be inflicted upon a person. Whether subjected to forced labor or forced to engage in commercial sex, trafficked victims are reduced to a status less than human, their worth measured by how profitable they are to their traffickers. In the Western District, our federal prosecutions have resulted in lengthy prison sentences for perpetrators brought to justice. But we must do more. Traffickers pray upon the most vulnerable members of our society, looking to benefit from their exploitation. There isn’t a state, city, town or community shielded from human trafficking and its devastating impact. As part of our anti-trafficking strategy, we have focused on forging strong partnerships throughout the district, and we are working with community organizations and our law enforcement partners to raise awareness and to educate the public about the epidemic of human trafficking,” said U.S. Attorney Rose.

 

In 2016, the U.S. Attorney’s Office partnered with the Charlotte Metropolitan Human Trafficking Task Force and federal, state, and local agencies and law enforcement to provide training on human trafficking and victim identification to professionals whose work may bring them in contact with victims of trafficking. This included emergency room physicians and nurses, hospitality industry employees, public defenders, youth and family services case workers with the Department of Social Services, and members of multiple faith-based organizations and community groups. Though tailored to address each group’s specific needs, the goal of the training was to enhance participants’ understanding of human trafficking, to educate them on recognizing the indicators, or “tell-tale signs,” of trafficking victims, to familiarize them with accessing services available to rescued victims, and to highlight best practices for reporting trafficking activity and supporting law enforcement in combating human trafficking.

 

In 2016, the U.S. Attorney’s Office’s anti-trafficking efforts also resulted in significant prosecutions. In February 2016, Martin Allen Meggett was sentenced to 10 years in prison after pleading guilty for the sex trafficking of a minor. In April 2016, a federal jury convicted Kenwaniee Vontorian Tate for the sex trafficking of a minor. His sentencing hearing has been scheduled for January 25, 2017. And, in May 2016, Shahid Hassan Muslim was sentenced to life in prison for operating an extensive sex trafficking enterprise that recruited women and underage girls into prostitution.

 

“While our successes are many and notable our work against human trafficking continues,” said U.S. Attorney Rose.

 

* * *

If you believe you are the victim of a trafficking situation or may have information about a potential trafficking situation, call the National Human Trafficking Resource Center (NHTRC) at 1-888-373-7888. NHTRC is a national, toll-free hotline, with specialists available to answer calls from anywhere in the country, 24 hours a day, seven days a week, every day of the year related to potential trafficking victims, suspicious behaviors, and/or locations where trafficking is suspected to occur. You can also submit a tip to the NHTRC online.

 

You can also contact ICE-Homeland Security Investigations at 1-866-DHS-2-ICE (1-866-347-2423) or the Charlotte Office of the FBI at 704-672-6100.

 

CHARLOTTE, N.C. – Wade Malloy, 62, of Stanley, N.C., and former pastor of a Huntersville area church, appeared in court today and pleaded guilty to one count of wire fraud, for stealing money from the church and its affiliated parochial school, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.  

U.S. Attorney Rose is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and Chief Cleveland L. Spruill of the Huntersville Police Department.

According to filed court documents and today’s plea hearing, from about 2000 to about August 2014, Malloy conspired with Wayne C. Parker, Jr. (Parker) to execute a scheme to defraud Malloy’s employer, a church (Church) and its affiliated parochial school (School), both located in Huntersville, of between $500,000 and $1,000,000, by embezzling Church and School bank funds to pay for Malloy’s personal expenses.  

According to court records, Malloy and others founded the Church in 1991. Malloy became the Church’s first pastor and served in that capacity until 2014.  Among other responsibilities as pastor, Malloy was responsible for overseeing the operation and finances of the Church.  Court records show that the School was founded in 1994 by Malloy and other members of the Church.  Upon Malloy’s recommendation, the Church hired Parker as Headmaster and Chief Financial Officer (CFO) of the School in 1996.  As CFO, Parker had control over the School’s and Church’s finances and bank accounts.

According to court records, beginning in 2000 and until 2014, Malloy, with Parker’s help, began embezzling School and Church bank funds.  Court records indicate that Malloy had Parker issue additional paychecks to Malloy above and beyond what he was entitled to by the terms of his employment.  As the scheme progressed overtime, in addition to the extra salary checks, Malloy had Parker used Church and School funds to pay for Malloy’s personal expenses that included, among other things, college tuition, medical bills, cars, and credit card bills. 

Malloy entered his guilty plea before U.S. Magistrate Judge David S. Cayer.  He was released on bond after the hearing.  The penalty for the wire fraud charge carries a maximum prison term of five years and a $250,000 fine.  As part of his plea agreement, Malloy has agreed to pay restitution, the amount of which will be determined by the Court at sentencing.  A sentencing date has not been set yet.

Parker was sentenced on November 30, 2016, to 60 months in prison for his role in the embezzlement scheme.  He was also ordered to serve three years under court supervision upon completion of his prison term and to pay $6,606,463 as restitution.

The investigation was led by the FBI and the Huntersville Police Department.  Assistant United States Attorney Kevin Zolot, of the U.S. Attorney’s Office in Charlotte, is prosecuting the case.

A Kings Mountain, North Carolina man, who set up straw companies to evade income taxes and used cash from his business to build an underground bunker, was sentenced today to 24 months in prison for tax evasion and possession of an unregistered firearm, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, and U.S. Attorney Jill Westmoreland Rose for the Western District of North Carolina.  

According to documents filed with the court, Reuben T. DeHaan, 44, owned a holistic medicine business, which he operated out of his residence in Kings Mountain under the names Health Care Ministries International Inc. and Get Well Stay Well.  DeHaan admitted that, with the help of others, including Richard H. Campbell Jr., he set up straw companies and opened bank accounts in the name of the straw companies to hide his income and assets from the Internal Revenue Service (IRS).  DeHaan also admitted to dealing extensively in cash to evade the payment of income tax.  During the years 2008 through 2014, DeHaan earned more than $2.7 million in gross receipts from his holistic medicine business, but failed to file income tax returns for those years and evaded approximately $678,000 in income taxes due and owing. DeHaan also admitted to possessing a short barrel rifle and two silencers that were not registered to him in the National Firearms Registration and Transfer Record. A court-ordered search of DeHaan’s residence revealed an underground bunker with an arsenal of weapons, including a Bushmaster pistol that was illegally modified into a short barrel rifle and two unregistered silencers. 

Evidence presented at DeHaan’s detention hearing showed that he had been a supporter of the sovereign citizen’s movement and had renounced his U.S citizenship, carried different passports issued by the “World Government of World Citizens”—an Internet site that provides passports for a fee—and an international driving permit in lieu of a North Carolina driver’s license.  He also claimed he was exempt from the payment of taxes because he was an ordained “medicine man” whose earnings were exempt from taxation.  

“With today’s prison sentence, Reuben DeHaan pays the price for his criminal conduct, including his multi-year efforts to evade tax through long-debunked sovereign citizen tactics,” said Principal Deputy Assistant Attorney General Ciraolo. “These claims and schemes, including the concealment of income and assets through straw companies, have been repeatedly rejected by the courts, waste government resources, and undermine the public’s confidence in the fairness of the tax system. Those who use such schemes to violate our nation’s tax laws will be held accountable and face the full force of all applicable federal criminal and civil penalties.” 

“DeHaan denounced his American citizenship yet benefited greatly from our economy through his ‘natural healing’ business, which netted over $2.7 million in gross receipts,” said U.S. Attorney Rose.  “He also used his untaxed income to build an underground bunker containing an arsenal of assault weapons, including illegal weapons.  But this self-described ‘medicine man’ was also a tax cheat, who used a number of tactics to avoid paying his fair share on those earnings.  Tax fraudsters like DeHaan increase the tax burden on honest Americans.” 

“Schemes to conceal and insulate wealth in order to evade income tax, such as those utilized by DeHaan, are unfair to every taxpayer who obeys the law and pays their fair share,” said Chief Richard Weber of IRS-Criminal Investigation (CI).  “There are not different rules for different people in our society.  The public should know that IRS CI will do everything we can to hold individuals accountable to the same tax laws that they are subject to, ensuring that our tax system is fair to everyone.”

In August, DeHaan pleaded guilty to one count of tax evasion and one count of possession of an unregistered firearm.  In addition to the prison term imposed, DeHaan was ordered to serve three years of supervised release and to pay $567,665 in restitution to the IRS and $110,449 to the state of North Carolina.  Campbell pleaded guilty in August to conspiring to defraud the IRS and will be sentenced at a later date. 

Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Rose commended special agents of IRS-Criminal Investigation and the FBI, who conducted the investigation, and Assistant U.S. Attorney Michael Savage and Trial Attorney Mara Strier of the Tax Division, who prosecuted the case.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website. 

CHARLOTTE, N.C. – A Mecklenburg Co. man is facing federal charges in connection with an investment scheme that defrauded 100 victims of $19 million, announced Jill Westmoreland Rose, U.S.  Attorney for the Western District of North Carolina.  A federal grand jury returned a criminal indictment against Richard Wyatt Davis, Jr., a.k.a. Rich Davis, 40, on Tuesday, December 13, 2016, charging him with one count of wire fraud, two counts of securities fraud, and three counts of tax evasion.  The indictment was unsealed today following Davis’s arrest by law enforcement.

U.S. Attorney Jill Westmoreland Rose is joined in making today’s announcement by Michael Rolin, Special Agent in Charge of the United States Secret Service, Charlotte Field Division and Michael C. Daniels, Acting Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division, Charlotte Field Office (IRS-CI).

According to allegations contained in the indictment:

From approximately 2005 and continuing through in or about 2016, Davis defrauded more than 100 investors of more than $19 million by inducing his victims to invest in fraudulent investment funds controlled by him, including the DCG Commercial Fund I and DCG Real Assets, as well as other fraudulent investment vehicles (collectively, Davis Entities).  In order to recruit his victim-investors, Davis made false misrepresentations regarding his credentials, including his educational background and about being a Registered Financial Consultant.  Davis also purported to victim-investors that his fraudulent investment vehicles were low risk investments involving real estate, precious metals, and natural resources and touted the investments as a safe alternative to the stock market.  Davis also falsely assured victim-investors that their investments were growing in value.  For example, Davis falsely represented to a number of investors that Davis Entities transactions had received an average net internal rate of return of 32% percent, which was not true.  As a result of his many lies and falsehoods, Davis’s investors frequently rolled over their entire retirement savings into entities controlled by the defendant. 

Davis generally targeted investors residing in and around Charlotte, N.C.  His clients included professional athletes and individuals who were recruited through Davis’s church. Davis also spoke at events for “preppers” and survivalists, thereby targeting victim-investors who were fearful of the stock market and the banking system.  Davis preyed upon these investors’ fears of traditional financial markets and took advantage of their trust into someone who shared their religious views.

Contrary to promises made to his investors, in reality Davis invested none of the victims’ money.  Rather, Davis transferred the majority of the victims’ funds to other entities he controlled, and used some of the money to make Ponzi-style payments to earlier investors in an effort to conceal and prolong the scheme. Davis also diverted victim-investors’ money to support his personal lifestyle, including to pay for his and his then wife’s personal credit cards, mortgage payments, nannies, a groundskeeper, a personal chef, vehicles, significant cash withdrawals, payments to family members, and to pay for large administrative and overhead expenses that did not increase value for investors.

To avoid fulfilling victim withdrawals requests, Davis provided numerous excuses, including that the victims’ money was unavailable because the funds were tied up in investments with specific maturity periods.  Davis also falsely advised victims that they needed to invest additional funds in order to secure the return to their original investment.  Davis was also frequently evasive or failed to report to investors’ inquiries about the status of their investments, and even threatened to discontinue managing the investments if investors asked for too much information.

The indictment also alleges that Davis filed false tax returns for 2009 and 2011 which reflected negative total income.  Davis also failed to file individual income tax returns for 2010 and 2012.  During the same time period, Davis submitted various financial statements to banks and courts, claiming his annual income was anywhere between $385,000 and upwards of $1.5 million. 

Davis had his initial appearance today before U.S. Magistrate Judge David Keesler.  Davis was ordered to remain in custody until his detention hearing, which was scheduled for December 20, 2016.

The wire fraud charge carries a maximum prison term of 30 years and a $1 million fine.  The securities fraud charge carries a maximum prison term of 20 years and a $250,000 fine per count.  And the maximum prison term for the tax evasion charge is five years and a $250,000 fine per count. 

All the charges contained in the indictment are allegations.  The defendant is presumed innocent until proven guilty beyond reasonable doubt in a court of law.

In making today’s announcement U.S. Attorney Rose thanked the U.S. Secret Service and the IRS for leading the joint investigation.

Assistant U.S. Attorney Jenny G. Sugar, of the U.S. Attorney’s Office in Charlotte, is in charge of the prosecution.In June 2016, the U.S. Securities and Exchange Commission (SEC) filed a civil complaint against Davis.  Without admitting or denying the allegations, Davis has entered into a partial settlement with the SEC, which bars him from any further sale of securities in a pooled investment vehicle, as well as from future violations of antifraud and securities registration provisions of the federal securities laws. Davis is also required to cooperate with a court-appointed receiver. See https://www.sec.gov/litigation/litreleases/2016/lr23554.htm