Western District of North Carolina
Press releases recorded for this federal judicial district.
Federal Jury Convicts Methamphetamine TraffickerRead the Press Release
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.
Maiden, N.C. Man Sentenced to More Than Six Years on Firearms OffenseRead the Press Release
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.
Former Charlotte Business Owner Sentenced to Prison on Embezzlement ChargesRead the Press Release
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.
Federal Judge Sentences Lincolnton Man to More Than Nine Years on Child Pornography ChargesRead the Press Release
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
Former U.S. Postal Carrier Pleads Guilty to Detaining and Delaying MailRead the Press Release
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.
Dual Jamaican-U.S. Citizen Sentenced in Connection with Lottery Fraud Scheme Based in JamaicaRead the Press Release
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.
Owner of Recycling Business Pleads to Tax FraudRead the Press Release
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.
U.S. Attorney's Office Co-sponsors Heroin and Opiate Conference in Charlotte, N.C., Focusing on Raising Awareness and Addressing Prevention, Treatment, and Law Enforcement Response to EpidemicRead the Press Release
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.”
Former ZeekRewards CEO Sentenced to More Than 14 Years for Operating $900 Million Internet Ponzi SchemeRead the Press Release
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.
Kentucky Man Sentenced to Prison for Engaging in a Child Exploitation EnterpriseRead the Press Release
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.
Kentucky Man Sentenced to Prison for Engaging in A Child Exploitation EnterpriseRead the Press Release
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.
U.S. Man Residing in Costa Rica Pleads Guilty for Role in Two Separate Multi-Million Dollar Fraud SchemesRead the Press Release
Defendant Charged in Connection with $10 Million Offshore Sweepstakes Fraud Ploy,
$2.5 Million High-Yield Investment SchemeA 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.
Man Sentenced to 24 ½ Years in Prison on Kidnapping, Witness Tampering and Firearms OffensesRead the Press Release
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 Pimp Sentenced to 40 Years for Sex Trafficking of A MinorRead the Press Release
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.
Drug Conspiracy Leader Sentenced to More Than 25 Years in PrisonRead the Press Release
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 Man Sentenced for Dealing Firearms Without A LicenseRead the Press Release
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.
Indiana Man Sentenced to 20 Years in Prison for Engaging in a Child Exploitation EnterpriseRead the Press Release
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.
Indiana Man Sentenced to Prison for Engaging in A Child Exploitation EnterpriseRead the Press Release
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.
Baxter Healthcare Corporation to Pay More Than $18 Million to Resolve Criminal and Civil Liability Relating to Sterile ProductsRead the Press Release
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.
Baxter Healthcare Corporation to Pay More Than $18 Million to Resolve Criminal and Civil Liability Relating to Sterile ProductsRead the Press Release
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.
During National Slavery and Human Trafficking Prevention Month, U.S. Attorney's Office Highlights District's Efforts to Combat Human Trafficking and Raise Awareness with Community Outreach, Training and Federal ProsecutionsRead the Press Release
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.
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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.
Pastor Pleads Guilty to Wire Fraud for Stealing Funds from Huntersville Area Church and Affiliated SchoolRead the Press Release
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.
North Carolina Man Sentenced to Prison for Tax Evasion and Possession of an Unregistered FirearmRead the Press Release
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.
Mecklenburg Co. Man Facing Federal Charges in Connection with $19 Million Investment Fraud SchemeRead the Press Release
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
Former Executive Director of Sequoyah Fund, Inc. Sentenced to 27 Months for EmbezzlementRead the Press Release
ASHEVILLE, N.C. – U.S. District Judge Martin Reidinger sentenced today the former Executive Director of the Sequoyah Fund, Inc. to 27 months in prison for embezzling more than half a million dollars from the fund, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. In addition to the prison term imposed, Nell Cooper Leatherwood, 57, of Bryson City, N.C., was also ordered to serve three years under court supervision, and to pay a $5,000 assessment and $545,707.50 as restitution.
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 in North Carolina.
“As the Executive Director of the Sequoyah Fund, Nell Leatherwood was tasked with supporting the economic development of businesses on the Qualla Boundary and providing much-needed financial services to its underserved populations. Instead, she repeatedly misused her access to the fund’s accounts and diverted its limited resources for personal expenses, taking careful steps to cover up her theft. My office will continue to work with our law enforcement partners to investigate and prosecute public servants who use their positions of power for their own enrichment,” said U.S. Attorney Rose.
According to filed court documents and today’s sentencing hearing, beginning in February 2006 through November 2013, Leatherwood was the Executive Director of the Sequoyah Fund, Inc. (SFI), a Tribal entity established to fulfill the commercial serving needs of small businesses operating on the Qualla Boundary. SFI receives funding in the form of grants from the Eastern Band of Cherokee Indians and the federal government. According to court records, SFI maintained corporate bank accounts, including checking accounts and a credit card account. Court records show that, as Executive Director, Leatherwood had access to checks and a credit card associated with these accounts and she was permitted to use the corporate credit card for business-related expenses, only. However, Leatherwood did not have the authority to endorse the SFI corporate checks, which required the signature of two board members.
Court records indicate that from about January 2010 to about November 2013, Leatherwood misused the corporate SFI credit card to pay for personal expenses. These credit card bills were later paid using SFI funds without the SFI board’s knowledge of the nature of the expenditures. Leatherwood also previously admitted to embezzling SFI funds by issuing herself checks linked to the corporate SFI bank account. From about December 2012 to about November 2013, Leatherwood wrote approximately 47 checks to herself, forging board members’ signatures on the checks, which she then cashed and deposited for her personal use. Over the course of approximately four years, court records show that Leatherwood embezzled approximately $65,000 by forging SFI checks.
Leatherwood pleaded guilty in June 2016 to one count of embezzlement from an Indian tribal organization; one count of theft concerning programs receiving federal funds; one count of access device fraud; and forty-seven counts of making, uttering, and possessing forged securities.
Leatherwood will be ordered to report to the Federal Bureau of Prisons to begin serving her sentence 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 commended the FBI for leading the investigation and the USDA-OIG for their assistance in the case. U.S. Attorney Rose thanked the Sequoyah Fund for their assistance throughout the investigation.
U.S. Attorney Don Gast, of the U.S. Attorney’s Office in Asheville, prosecuted the case.
Owner of Costa Rican Call Center and Participants in Scam Sentenced to Prison for Roles in Sweepstakes Fraud Schemes Targeting ElderlyRead the Press Release
Three U.S. citizens were sentenced to prison today for their roles in sweepstakes fraud schemes to defraud hundreds of U.S. residents, many of them elderly, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina.
Jeffrey Robert Bonner, 41, of Sacramento, California; and Frank M. Schiavone, 76, and Lewis E. Ricker, 65, both of Lutz, Florida, were sentenced by U.S. District Judge Robert J. Conrad Jr. of the Western District of North Carolina to 180 months, 48 and 42 months in prison, respectively. Judge Conrad also ordered Bonner to pay $9,688,486.47 in restitution and to forfeit the same amount, and ordered Schiavone and Ricker to each pay $399,852.56 in restitution. Bonner, Schiavone and Ricker pleaded guilty to various counts of conspiracy to commit wire and mail fraud, wire fraud, conspiracy to commit money laundering and international money laundering, all in connection with separate Costa Rican telemarketing fraud schemes.
As part of his guilty plea, Bonner admitted that from approximately 2007 through February 2015, he owned a call center located in Costa Rica that placed phone calls to U.S. residents and falsely informed the potential victims that they had won a substantial cash prize in a “sweepstakes.” Schiavone and Ricker admitted that they worked for a different call center from approximately 2009 to 2015 that operated a nearly identical scheme. 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.” Once they received victims’ money, Bonner, Schiavone, Ricker and other co-conspirators in their respective schemes contacted the victims again to tell them that their prize amount had increased and told the victims to pay new purported fees, duties and insurance to receive the larger sweepstakes prize. The defendants and their co-conspirators continued their attempts to collect additional money from victims until those victims either ran out of money or discovered the fraudulent nature of the scheme.
Schiavone and Ricker collected victim money sent to them in the United States and then routed the money to their co-conspirators in Costa Rica.
Bonner admitted that to mask that the fact he and his co-conspirators were calling from Costa Rica, they utilized voice over internet protocol (VoIP) phones that displayed a 202 area code to give the false impression that they were calling from Washington, D.C. Bonner and his co-conspirators often falsely claimed that they were calling on behalf of a U.S. federal agency to lure victims into a false sense of security. The victim loss associated with Bonner’s scheme is nearly $10 million.
The U.S. Postal Inspection Service, FBI, Internal Revenue Service-Criminal Investigation, Federal Trade Commission and Department of Homeland Security investigated the cases. Trial Attorneys Gustav Eyler and William Bowne of the Criminal Division’s Fraud Section are prosecuting the cases.
The Fraud Section plays a pivotal role in the Department of Justice’s fight against white collar crime around the country. Today’s sentencing is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Stockbroker & Operator of $1.4 Million Ponzi Scheme Sentenced to More Than Five Years for Securities FraudRead the Press Release
STATESVILLE, N.C. – A stockbroker and operator of a $1.4 million Ponzi scheme was sentenced to 63 months in prison by U.S. District Judge Richard Voorhees today, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Charles Caleb Fackrell, 37, of Booneville, N.C., was also ordered to serve three years under court supervision after he is released from prison, and to pay $819,918 as restitution to his victims. Fackrell pleaded guilty to one count of securities fraud in April 2016.
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 North Carolina Secretary of State Elaine F. Marshall.
According to filed court documents and today’s sentencing hearing, from about May 2012 to about December 2014, Fackrell executed a Ponzi scheme using approximately $1.4 million in funds he solicited from at least 20 victim investors in Wilkes County and elsewhere. According to court records, Fackrell was a stockbroker who used his position of trust to solicit victim investors and steer them away from legitimate investments to purported investments with “Robin Hood, LLC,” “Robinhood LLC,” “Robin Hood Holdings, LLC,” “Robinhood Holdings, LLC” and related entities (collectively, “Robin Hood”). These were entities Fackrell controlled and through which he could access the victims’ funds.
Court records indicate that Fackrell solicited his victim investors by making false and fraudulent representations, including that the investors’ money would be invested in, or secured by, gold and other precious metals, when in fact Fackrell spent only a fraction of investor money on such assets. According to court records, Fackrell also falsely told victims that Robin Hood was a very safe investment, paying guaranteed annual returns of 5% to 7%. According to court records, contrary to the promises he made to his victims and instead of investing the victims’ funds as promised, Fackrell used the majority of the money to cover personal expenditures, including hotel expenses, groceries, and medical bills, to make purchases at various retail shops and to make large cash withdrawals. Fackrell also used a portion of the victims’ money to make purported “interest” payments to investors who demanded their money back and to induce further investments from existing investors and their friends and family members. In all, according to court records, Fackrell diverted over $700,000 of his victims’ money – nearly half of the investor money he obtained – back to other investors in Ponzi fashion payments.
According to court records, in an attempt to conceal his fraud, Fackrell asked a third party to destroy a computer and documents related to the Ponzi scheme, explaining that he was in trouble with the U.S. Securities and Exchange Commission.
In making today’s sentencing announcement, U.S. Attorney Rose said, “Fackrell is a scammer. He betrayed his victims who believed his sales pitch and trusted him with their hard-earned money. Fackrell took that money and used it to enrich himself and to perpetuate his fraud. Thanks to the great work of our law enforcement partners Fackrell’s fraud was uncovered, putting a stop to his business of siphoning his clients’ money. His dishonesty caused a lot of financial hardship to a lot of people, and for that, Frackrell will serve a well-deserved prison sentence,” Rose added.
“This is one of the most vicious financial crimes we have seen in North Carolina in many years," Secretary of State Marshall said Tuesday. "Caleb Fackrell was a registered stockbroker who completely betrayed that trusted position to rip off his victims using the name ‘Robin Hood’ in the title of his Ponzi Schemes no less,” Marshall said. “His punishment today is well deserved.”Fackrell has been in federal custody since April 2016. All federal sentences are served without the possibility of parole.
In imposing today’s sentence Judge Voorhees noted the horrendous damage to the victims caused by the defendant involving the loss of their nest eggs, and that the defendant was motivated largely by personal greed.
The investigation was led by the FBI and the Securities Division of the North Carolina Department of the Secretary of State. U.S. Attorney Rose also thanked the North Carolina State Bureau of Investigation, the Yadkinville Police Department and Kinston’s Department of Public Safety for their invaluable assistance in this investigation.
Assistant United States Attorney Daniel Ryan, of the U.S. Attorney’s Office in Charlotte, prosecuted the case.
Five Methamphetamine Traffickers Sentenced to PrisonRead the Press Release
STATESVILLE, N.C. – Late yesterday, U.S. District Judge Richard L. Voorhees handed down lengthy prison terms ranging from 106 to 135 months to five methamphetamine traffickers, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.
The five defendants were sentenced are:
- Juan Ernesto Ortiz-Rodriguez, 30, of Statesville, N.C., was sentenced to 135 months, followed by five years of supervised release. (5:15-cr-73)
- Paul William Miles, 31, of Conover, N.C., was sentenced to 120 months, followed by five years of supervised release. (5:15-cr-77)
- Daniel Verbsky Vandervelde, 41, of Conover, was sentenced to 120 months, followed by five years of supervised release. (5:16-cr-37)
- Jerrod Michael Benfield, 35, of Hiddenite, N.C., was sentenced to 120 months, followed by five years of supervised release. (5:15-cr-73)
- Jonathan Daniel Hatfield, 38, of Lenoir, N.C., was sentenced to 106 months, followed by five years of supervised release. (5:16-cr-3)
All of the defendants were charged as part of the Western District’s ongoing Organized Crime Drug Enforcement Task Force (OCDETF) investigation, “Dixie Crystal.” According to court documents, since the beginning of the investigation in 2015, 123 individuals have been prosecuted federally as a result of this investigation. 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 excess of 20 kilograms of crystal methamphetamine, $100,000 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 ICE’s Homeland Security Investigations (HSI); the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division; the North Carolina State Bureau of Investigation; the North Carolina State Highway Patrol; the Alexander County Sheriff’s Office; the Alleghany County Sheriff’s Office, the Ashe County Sheriff’s Office, the Boone Police Department, the Burke County Task Force, the Caldwell County Sheriff’s Office, the Catawba County Sheriff’s Office, the Hickory Police Department, the Iredell County Sheriff’s Office, the Lenoir Police Department, the Lincoln County Sheriff’s Office, the Mooresville Police Department, the Pineville Police Department, the Statesville Police Department, the Wilkes County Sheriff’s Office, and other law enforcement agencies throughout North Carolina and Texas, Georgia, and Tennessee for their assistance in this investigation.
The prosecution is being handled by Assistant U.S. Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte.
Tribal Firefighter Pleads Guilty to Setting Fires on Indian LandsRead the Press Release
ASHEVILLE, N.C. – Raymond Neal Swayney, 31, of Cherokee, N.C., appeared in federal court in Asheville today and pleaded guilty to intentionally setting fires on Indian lands, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. U.S. Magistrate Judge Dennis Howell presided over today’s plea hearing.
According to information contained in filed court documents, the Bureau of Indian Affairs (BIA) has the authority to hire temporary Administratively Determined (AD) Firefighters for emergencies in progress within the boundaries of the Eastern Band of Cherokee Indians (EBCI), including to cope with unexpected emergencies caused by fire or extreme fire potential. The hiring of an AD Firefighter is of uncertain, temporary duration.
Once a fire is assigned a fire code, AD firefighters are paid based upon the number of hours they worked in support of that fire code, which includes not only payment for actual firefighting but also post-fire maintenance of equipment, cleaning trucks, etc.
According to court documents, because AD firefighters are only compensated when they are called in for an active fire code, Swayney and others willfully set several wildland fires on the EBCI reservation, and received compensation for fighting the fires. According to court documents, between March 5, 2010 and February 25, 2014, Swayney and others intentionally set seven fires, which destroyed more than 420 acres of tribal lands and cost over $106,661.98 in BIA funds to extinguish.
Swayney pleaded guilty to one count of conspiracy to set timber afire and to defraud the United States. The charge carries a maximum prison term of five years and a $250,000 fine. Swayney is being held pending sentencing. A sentencing date has not been set yet.
In making today’s announcement, U.S. Attorney Rose thanked the United States Department of the Interior, Office of the Inspector General, for leading the investigation and the Cherokee Indian Police Department, the Swain County Sheriff’s Office, and the Bureau of Indian Affairs for their assistance with the case.
Assistant United States Attorney John Pritchard, of the U.S. Attorney’s Office in Asheville, is prosecuting the case.
Leader of $11 Million Healthcare Fraud Scheme Sentenced to 16 YearsRead the Press Release
CHARLOTTE, N.C. – Cynthia Teresa Harlan, 49, of Charlotte, was sentenced yesterday to 192 months in prison for orchestrating a health care fraud scheme that fraudulently billed Medicaid for more than $11 million in false claims and stealing the identity of others to accomplish the fraud, 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 ordered Harlan to serve three years of supervised release and to pay $3,100,249 as restitution to Medicaid.
John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI) in North Carolina joins U.S. Attorney Rose in making today’s announcement.
A federal jury convicted Harlan in July 2016, of one count of health care fraud conspiracy, three counts of making false statements relating to health care matters, three counts of aggravated identity theft and one count of obstruction of a health care fraud investigation.
Harlan’s co-defendant, Claude Bernard McRae, who was convicted by the same jury of one count of health care fraud conspiracy, was also sentenced yesterday to 88 months in prison. McRae, 38, of Hamlet, N.C., was also ordered to serve three years under court supervision and to pay $1,615,499.22 as restitution.
According to trial evidence, filed documents and the sentencing hearing, between October 2012 and August 2013, Harlan used a network of accomplices to carry out an extensive health care fraud scheme involving the fraudulent submission of fake reimbursement claims to Medicaid for services that were never actually provided to beneficiaries. Harlan owned and operated Heartland Consulting and Marketing, Inc., a Charlotte-area company, purportedly specializing in the operation of mental health companies and Medicaid reimbursement. Harlan recruited a team of individuals that included the owners of outpatient mental and behavioral health services companies, mental health practitioners, note writers, patient recruiters, mental and behavioral health services providers and medical billers, and directed them to fabricate the necessary paperwork used to support the fraudulent claims billed to Medicaid.
The fabricated paperwork included the names and beneficiary information of Medicaid recipients, fabricated intake packets, non-existent mental health diagnoses and made-up treatment plans and fake dates of service. It also included fake notes describing therapy services that never occurred. All of this information was organized in a manner to make it appear that the companies and clinicians involved in the scheme had provided legitimate therapy beneficiaries, contrary to the truth. The patient files were intended to deceive Medicaid auditors in case there was an inquiry about the accuracy of the fake claims.
McCrae and his business partner and indicted co-conspirator, Tyree Craig Jones, were the co-owners of two outpatient mental and behavioral health services companies, Kings of Carolina Care 1, Inc. (Carolina Care 1), and Esteem Family Life Center, LLC (Esteem), both located in Rockingham, N.C. The two men partnered with Harlan and others to submit false reimbursement claims to Medicaid, claiming that the two entities provided mental and behavioral health services to the Medicaid recipients, when, in reality no services were provided at all. According to court records, Jones and McCrae, through Carolina Care 1, attempted to obtain from Medicaid over $5 million in fraudulent reimbursement claims and received over $1.3 million from Medicaid for the fraudulent claims.
Evidence at trial demonstrated that Harlan, Jones and McRae accomplished some of the fraud by misappropriating the Medicaid identification number of doctor. This doctor had never agreed to be part of Carolina Care 1, yet the group claimed that this doctor had provided over $2.3 million in therapy services to Medicaid recipients in just one year. Additionally, evidence presented at trial demonstrated that the false claims submitted by Carolina Care 1 indicated that Carolina Care 1 allegedly serviced over 500 clients in a single day.
According to court records, Harlan misused the names and Medicaid identification numbers of hundreds of Medicaid beneficiaries, including A.H., B.H. and M.H., in order to accomplish the scheme. According to the mothers of A.H. and M.H., who testified at trial, their children did not have mental health issues and never received any therapy services from any company. Harlan received over $400,000 for her role in the scheme.
When Harlan became aware that she was being investigated for Medicaid fraud, Harlan directed some of her co-conspirators to destroy records as well as incriminating emails and text messages relevant to the scheme for the purpose of obstructing the investigation.
Co-defendant Jones pled guilty on the last day of trial and, earlier this month, was sentenced to 85 months in prison and three years of supervised release. Jones was also ordered to pay $1,615,499 as restitution Additionally, to date, the following individuals have been prosecuted federally in connection with this health care fraud conspiracy:
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Aliya Boss was previously sentenced to 44 months in prison, three years supervised release and was ordered to pay $1,135,302 in restitution. Boss filed reimbursement claims to Medicaid fraudulently cliaming that she had provided mental health services to beneficiaries.
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Alexander Bass and Torrey Darnell Moton were previously sentenced to 32 and 25 months in prison, respectively, three years of supervised release and were ordered to pay $370,372 as restitution. Bass and Moton owned United Rehabilitation Services (URS), in Erwin, N.C., and filed reimbursement claims to Medicaid fraudulently claiming that URS provided mental health and behavioral health services to beneficiaries.
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Sakeenah Davis and Kino Williams were previously sentenced to 42 and 35 months in prison, respectively, three years supervised release and were ordered to pay $ 506,124 in restitution. Davis and Williams owned New Choices Youth and Family Services, in Charlotte, North Carolina, and filed reimbursement claims to Medicaid fraudulently claiming that URS provided mental health and behavioral health services to beneficiaries.
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Jacqueline Ford was previously sentenced to 21 months in prison and three years of supervised release and was ordered to pay $442,679 restitution. Ford fabricated notes to support the false claims submitted by Carolina Care 1, URS and other companies.
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Zaria Humphries was previously sentenced to 24 months in prison and three years of supervised release and was ordered to pay $222,037 in restitution. Humphries submitted false claims through her company Life Impact Solutions.
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Tanisha Melvin was sentenced to 33 months in prison, three years of supervised release and was ordered to pay $392,159.81 in restitution. Melvin was responsible for creating fake patient records for the conspiracy.
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LaChanda Clotiel Parks, also responsible for generating fake patient paperwork, was sentenced to 28 months in prison followed by three years of supervised release, and was ordered to pay $352,565 in restitution for her role in the conspiracy.
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Dr. Wanda Webb was sentenced two years’ probation and ordered to pay $79,338.74 in restitution. Webb also submitted fraudulent claims through her company, Cornerstone Counseling and Consulting.
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D’Marcus White, also responsible for generating fake patient paperwork, was previously sentenced to two years’ probation.
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Jason Adam Townsend is also facing health care fraud conspiracy and aggravated identity theft charges, for submitting fraudulent claims through his medical billing services company, Townhall Enterprises, LLC, located in Raeford, N.C. His trial is currently scheduled to begin in January 2017.
Harlan is currently in federal custody and will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. McRae will be ordered to self-report at a later date. All federal sentences are served without the possibility of parole.
The investigation was handled by the FBI with assistance from the North Carolina Medicaid Investigations Division. In making today’s announcement, U.S. Attorney Rose also thanked the Rockingham Police Department and the Richmond County Sheriff’s Office for their assistance at trial. The United States is being represented by Assistant U.S. Attorneys Kelli Ferry and Daniel Ryan, of the U.S. Attorney’s Office in Charlotte.
The investigation is the work of the Western District’s joint Health Care Fraud Task Force. The Task Force is multi-agency team of experienced federal and state investigators, working in conjunction with criminal and civil Assistant United States Attorneys, dedicated to identifying and prosecuting those who defraud the health care system, and reducing the potential for health care fraud in the future. The Task Force focuses on the coordination of cases, information sharing, identification of trends in health care fraud throughout the region, staffing of all whistle blower complaints, and the creation of investigative teams so that individual agencies may focus their unique areas of expertise on investigations. The Task Force builds upon existing partnerships between the agencies and its work reflects a heightened effort to reduce fraud and recover taxpayer dollars.
If you suspect Medicare or Medicaid fraud please report it by phone at 1-800-447-8477 (1-800-HHS-TIPS), or E-Mail at [email protected]. To report Medicaid fraud in North Carolina, call the North Carolina Medicaid Investigations Division at 919-881-2320.
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Franklin, N.C. Man Arrested on Federal Arson ChargeRead the Press Release
ASHEVILLE, N.C. – Keith Eugene Mann, 49, of Franklin, N.C. was arrested today on federal arson charges, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. A federal criminal complaint filed this afternoon in U.S. District Court, charges Mann with one count of destroying real property of the United States by means of fire.
U.S. Attorney Rose is joined in making today’s announcement by Steven F. Ruppert, Special Agent in Charge, U.S. Forest Service Law Enforcement and Investigation, Southern Region and Sheriff Robert L. Holland of the Macon County Sheriff’s Office.
According to allegations in the affidavit filed with the criminal complaint, on October 27, 2016, a wildfire was reported on U.S. Forest Service (USFS) Road 388, commonly referred to as Board Tree Road, which is in Macon Co., and within the Nantahala National Forest. The fire was named “Grape Cove.” Court documents allege that the initial investigation of the fire determined that it was set intentionally. Additional investigation revealed that five other fires had been set in close proximity to the Grape Cove Fire, however they appeared to have gone out on their own. As alleged in court documents, over the course of the investigation of these small fires, law enforcement located several wooden stem matches. USFS firefighters conducted suppression of the wildfire, which burned approximately fifteen acres.
According to allegations contained in filed court documents, on November 22, 2016, a wildfire was reported at the end of U.S. Forest Service Road 763, commonly referred to as Jones Creek Road, by someone who identified himself as “Keith Mann.” USFS firefighters responded to the fire and took immediate suppression action. The fire was contained at approximately one acre and was named “Jones Creek.” As alleged in the criminal complaint, law enforcement became aware that a suspicious vehicle, identified as a mid-sized Chevrolet pickup, had been observed in the area.
According to allegations in the complaint, on November 23, 2016, law enforcement returned to the fire site. While there, law enforcement observed a small cardboard box located at the origin of the fire, with numerous burned wooden stemmed matches next to the box. According to allegations in the charging document, on the same day, law enforcement identified the caller who placed the call to Macon County 911 to report the second fire as the defendant, Keith Mann. Law enforcement made contact with Mann who admitted to setting the fires both on Board Tree Road and on Jones Creek Road.
The defendant had his initial appearance today before U.S. Magistrate Judge Dennis Howell. Mann’s detention hearing has been set for Monday, December 5, 2016.
The charge of destroying real property of the United States by means of fire carries a mandatory penalty of five years and a maximum of 20 years in prison.
The charges contained in the criminal complaint are allegations. The defendant is presumed innocent unless and until proven guilty beyond reasonable doubt in a court of law.
The U.S. Forest Service is leading the investigation assisted by the Macon County Sheriff’s Office. Assistant United States Attorney Richard Edwards is in charge of the prosecution.
Federal Judge Sentences Former Headmaster to Five Years for Stealing Nearly $9 Million from School and Affiliated ChurchRead the Press Release
CHARLOTTE, N.C. – U.S. District Judge Max O. Cogburn, Jr. today sentenced the former headmaster of a Huntersville, N.C. area parochial school to 60 months in prison for embezzling nearly $9 million from the school and its affiliated church, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Wayne C. Parker, Jr., 57, of Mooresville, N.C., was also ordered to serve three years under court supervision after he is released from prison and to pay $6,606,463 as restitution in addition to the approximately $3,000,000 the defendant has already paid.
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 information contained in filed court documents and today’s sentencing hearing, from about January 2000 to in or about August 2014, Parker executed a scheme to defraud his employer, a parochial school (School) and its affiliated church (Church), both located in Huntersville, of at least $9 million, by embezzling Church and School bank funds to pay for his personal expenses and the personal expenses of an unnamed co-conspirator.
Court documents show that sometime after joining the Church in 1991, Parker became volunteer treasurer, giving him access to and control over the Church bank accounts. In 1996, Parker was hired as Headmaster of the School, which was founded in 1994 by members of the Church. As headmaster, Parker was responsible for the administration of the School and its finances and had control over its bank accounts.
According to court documents, beginning in at least 2000, Parker began stealing money from the Church and School and used it to pay for personal expenses. For example, in 2000, when he needed extra money to build a house for his family in Mooresville, Parker stole approximately $100,000 from the School and Church to complete the project. Over the next 14 years, court documents allege that Parker used School and Church funds to pay for numerous expenses, including, among other things, the purchase of multiple plots of real estate; vacations around the world; luxury vehicles; luxury dining; Carolina Panthers preferred seats licenses; credit card bills; a boat and jet skis; gold and silver coins; and gifts for family and friends. In 2010, court records show that Parker stole School and Church funds to build a lake front house for approximately $1.2 million dollars. In order to properly fund the construction, Parker made all the School employees take a 5% cut which he publically claimed was due to tough economic conditions.
According to court records, as part of the scheme to siphon School and Church funds, and to hide his theft, Parker opened approximately 29 checking accounts, obtained 26 credit cards, seven loans, and created nine limited liability companies.
As reflected in court documents, in addition to embezzling funds for his own use, Parker also embezzled School and Church funds at the direction of an unnamed co-conspirator. Court documents allege that beginning in 2000, Parker issued additional paychecks to the co-conspirator above and beyond what he was entitled to by the terms of the co-conspirator’s employment. As the scheme progressed overtime, in addition to extra salary checks, Parker used Church and School funds to pay for the co-conspirator’s personal expenses, including college tuition, medical bills, taxes, cars, and credit card bills.
As part of his scheme, and to hide his embezzlement activities from the School’s governing board, Parker created a false, fraudulent and fictitious document from an accounting firm purporting to be the results of an audit. The document falsely stated that the School had been through a full audit and received an unqualified opinion letter giving the School a clean financial bill of health.
According to court documents, in the summer of 2014, after the Church leadership became suspicious of Parker’s activities and called for an independent audit, Parker intentionally stole and destroyed school financial records in an attempt to prevent law enforcement and others from discovering the nature and extent of his embezzlement activities. Additionally, Parker sold one of the houses that he had constructed with embezzled funds to one of his children, for a significantly undervalued price, to hide his crimes and prevent law enforcement from seizing that property. In total Parker’s scheme resulted in a loss of at least $9 million dollars to the Church and School.
In announcing today’s sentence, Judge Cogburn stated, “There has been a huge amount of money stolen,” and that the defendant’s actions were “A concentrated effort over a long period of time,” adding that these “Dedicated teachers deserve better than what’s happened to them.”
Parker 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 handled by the FBI and the Huntersville Police Department. The prosecution for the government is being handled by Assistant United States Attorney Kevin Zolot of the U.S. Attorney’s Office in Charlotte.
North Carolina Man Pleads Gulty to Attempting to Commit an Act of Terrorism Transcending National BoundariesRead the Press Release
ASHEVILLE, N.C. – Justin Nojan Sullivan, 20, of Morganton, North Carolina, appeared in federal court in Asheville, North Carolina today and pleaded guilty to one count of attempting to commit an act of terrorism transcending national boundaries.
The announcement was made by Acting Assistant Attorney General for National Security Mary B. McCord, U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina and Special Agent in Charge John A. Strong of the FBI’s Charlotte, North Carolina, Division. U.S. District Judge Martin Reidinger presided over Sullivan’s plea hearing.
“Sullivan was in contact and plotted with now-deceased Syria-based terrorist Junaid Hussain to execute acts of mass violence in the United States in the name of the Islamic State of Iraq and the Levant (ISIL),” said Acting Assistant Attorney General McCord. “Counterterrorism remains our highest priority and we will continue to identify and hold accountable those who seek to commit acts of terrorism within our borders.”
“Sullivan admitted in court today that he attempted to commit acts of terrorism transcending national boundaries by planning mass casualty shooting attacks on behalf of ISIL against innocent people in North Carolina and Virginia. Sullivan also admitted he had frequent and direct communications with Junaid Hussain, one of ISIL’s prominent members in Syria, who asked Sullivan to make a video of the deadly attack,” said U.S. Attorney Rose. “There is no more important work that we in the Department of Justice undertake than the fight against terrorism. It is frightening to know that the defendant in this case was able to use social media to contact and seek advice from ISIL, a murderous organization. Yet, it emboldens us to be fiercely aggressive and diligent in our efforts to combat this special kind of evil.” U.S. Attorney Rose added.
“Justin Sullivan planned to kill hundreds of innocent people. He pledged his support to ISIL and took calculated steps to commit a murderous rampage to prove his allegiance to the terrorist organization. There is no higher priority for the FBI than to thwart the next terrorist attack. This case is proof of what law enforcement agencies can accomplish to disrupt terrorist activities of any kind,” said Special Agent in Charge Strong.
According to information contained in plea documents, starting no later than September 2014, Sullivan watched violent ISIL attacks on the Internet, such as beheadings, and collected them on his laptop computer. Court records indicate that Sullivan openly expressed support for ISIL in his home and destroyed religious items that belonged to his parents.
Beginning no later than June 7, 2015, Sullivan conspired with Junaid Hussain, a prominent ISIL member responsible for online recruitment and providing directions and inspiration for terrorist plots in Western countries, to plan mass shooting attacks in North Carolina and Virginia. Sullivan discussed those plans on social media with an undercover FBI employee (UCE), who Sullivan attempted to recruit to join in such attacks.
Court documents indicate that Sullivan told the UCE via social media that it was better to remain in the United States to support ISIL than to travel. Sullivan suggested that the UCE obtain weapons and told the UCE that he was planning to buy a semi-automatic AR-15 rifle at an upcoming gun show in Hickory, North Carolina. On or about June 20, 2015, Sullivan attempted to purchase hollow point ammunition to be used with the weapon(s) he intended to purchase.
According to court records, Sullivan had researched on the Internet how to manufacture firearm silencers and asked the UCE to build functional silencers that they could use to carry out the planned attacks. Court records show that Sullivan told the UCE he planned to carry out his attack in the following few days at a concert, bar or club, where he believed as many as 1,000 people would be killed using the assault rifle and silencer.
Filed documents indicate that over the course of Sullivan’s communications with Junaid Hussain, Hussain had asked Sullivan to make a video of his planned terrorist attack, to which Sullivan had agreed.
On or about June 19, 2015, the silencer, which was built according to Sullivan’s instructions, was delivered to him at his home in North Carolina, where Sullivan’s mother opened the package, according to court records. Sullivan took the silencer from his mother and hid it in a crawl space under his house. When Sullivan’s parents questioned him about the silencer, Sullivan, believing that his parents would interfere with his plans to carry out an attack, offered to compensate the UCE to kill them.
In filed plea documents, Sullivan admitted that he took substantial steps towards carrying out terrorist attacks in North Carolina and Virginia by: (1) recruiting the UCE; (2) obtaining a silencer from the UCE; (3) procuring the money that would have enabled him to purchase the AR-15; (4) trying to obtain a specific type of ammunition that he believed would be the most “deadly”; (5) identifying separate gun shows where he and the UCE could purchase AR-15s; and (6) obtained coupons for the gun shows he planned for himself and the UCE to attend on June 20 or 21, 2015.
According to filed documents, on June 19, 2015, Sullivan was arrested at his parents’ home, where law enforcement also executed a search warrant for the silencer and other items. Law enforcement interviewed Sullivan on separate occasions following his arrest. Sullivan also provided false statements on his involvement in the murder of his neighbor, John Bailey Clark, who had been killed in December 2014. Sullivan later admitted that he had stolen the rifle from his father’s gun cabinet and hid it in the crawl space. Forensic testing shows that the .22 rifle hidden by Sullivan was used to murder Mr. Clark.
The grand jury alleged that Sullivan also killed Mr. Clark, but Sullivan did not admit to this act in his plea today. However, in the plea documents filed, the United States Attorney set forth evidence supporting this allegation and specifically reserved the Government’s right to prove this additional conduct at Sullivan’s sentencing hearing.
The District Attorney’s Office for North Carolina’s 25th Prosecutorial District, which includes Burke, Caldwell and Catawba Counties, is handling North Carolina’s prosecution of Sullivan for Clark’s murder.
Sullivan is currently in federal custody. According to the filed plea agreement, Sullivan pleaded guilty to Count Nine of the Superseding Indictment, which charged him with attempting to commit an act of terrorism transcending national boundaries, an offense that carries a maximum penalty of life in prison. Under the plea agreement, the parties have agreed that a sentence of life in prison is an appropriate sentence.
In making today’s announcement, Acting Assistant Attorney General McCord and U.S. Attorney Rose thanked District Attorney David Learner for his office’s continued assistance and coordination. Both also praised the investigative efforts of the FBI, the Burke County Sheriff’s Office and the North Carolina State Bureau of Investigation in this case. Acting Assistant Attorney General McCord and U.S. Attorney Rose also thanked the U.S. Postal Inspection Service’s Charlotte Division, the FBI’s Washington Field Office, the U.S. Attorney’s Office for the Eastern District of Virginia, the U.S. Customs and Border Protection in Charlotte, the North Carolina Highway Patrol and the Hickory Police Department for their assistance in this investigation.
The case is being prosecuted by Assistant U.S. Attorney Michael E. Savage of the Western District of North Carolina and Trial Attorney Gregory R. Gonzalez of the National Security Division’s Counterterrorism section.
North Carolina Man Pleads Guilty to Attempting to Commit an Act of Terrorism Transcending National BoundariesRead the Press Release
Justin Nojan Sullivan, 20, of Morganton, North Carolina, appeared in federal court in Asheville, North Carolina today and pleaded guilty to one count of attempting to commit an act of terrorism transcending national boundaries.
The announcement was made by Acting Assistant Attorney General for National Security Mary B. McCord, U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina and Special Agent in Charge John A. Strong of the FBI’s Charlotte, North Carolina, Division. U.S. District Judge Martin Reidinger presided over Sullivan’s plea hearing.
“Sullivan was in contact and plotted with now-deceased Syria-based terrorist Junaid Hussain to execute acts of mass violence in the United States in the name of the Islamic State of Iraq and the Levant (ISIL),” said Acting Assistant Attorney General McCord. “Counterterrorism remains our highest priority and we will continue to identify and hold accountable those who seek to commit acts of terrorism within our borders.”
“Sullivan admitted in court today that he attempted to commit acts of terrorism transcending national boundaries by planning mass casualty shooting attacks on behalf of ISIL against innocent people in North Carolina and Virginia. Sullivan also admitted he had frequent and direct communications with Junaid Hussain, one of ISIL’s prominent members in Syria, who asked Sullivan to make a video of the deadly attack,” said U.S. Attorney Rose. “There is no more important work that we in the Department of Justice undertake than the fight against terrorism. It is frightening to know that the defendant in this case was able to use social media to contact and seek advice from ISIL, a murderous organization. Yet, it emboldens us to be fiercely aggressive and diligent in our efforts to combat this special kind of evil.” U.S. Attorney Rose added.
“Justin Sullivan planned to kill hundreds of innocent people. He pledged his support to ISIL and took calculated steps to commit a murderous rampage to prove his allegiance to the terrorist organization. There is no higher priority for the FBI than to thwart the next terrorist attack. This case is proof of what law enforcement agencies can accomplish to disrupt terrorist activities of any kind,” said Special Agent in Charge Strong.According to information contained in plea documents, starting no later than September 2014, Sullivan watched violent ISIL attacks on the Internet, such as beheadings, and collected them on his laptop computer. Court records indicate that Sullivan openly expressed support for ISIL in his home and destroyed religious items that belonged to his parents.
Beginning no later than June 7, 2015, Sullivan conspired with Junaid Hussain, a prominent ISIL member responsible for online recruitment and providing directions and inspiration for terrorist plots in Western countries, to plan mass shooting attacks in North Carolina and Virginia. Sullivan discussed those plans on social media with an undercover FBI employee (UCE), who Sullivan attempted to recruit to join in such attacks.
Court documents indicate that Sullivan told the UCE via social media that it was better to remain in the United States to support ISIL than to travel. Sullivan suggested that the UCE obtain weapons and told the UCE that he was planning to buy a semi-automatic AR-15 rifle at an upcoming gun show in Hickory, North Carolina. On or about June 20, 2015, Sullivan attempted to purchase hollow point ammunition to be used with the weapon(s) he intended to purchase.
According to court records, Sullivan had researched on the Internet how to manufacture firearm silencers and asked the UCE to build functional silencers that they could use to carry out the planned attacks. Court records show that Sullivan told the UCE he planned to carry out his attack in the following few days at a concert, bar or club, where he believed as many as 1,000 people would be killed using the assault rifle and silencer.
Filed documents indicate that over the course of Sullivan’s communications with Junaid Hussain, Hussain had asked Sullivan to make a video of his planned terrorist attack, to which Sullivan had agreed.
On or about June 19, 2015, the silencer, which was built according to Sullivan’s instructions, was delivered to him at his home in North Carolina, where Sullivan’s mother opened the package, according to court records. Sullivan took the silencer from his mother and hid it in a crawl space under his house. When Sullivan’s parents questioned him about the silencer, Sullivan, believing that his parents would interfere with his plans to carry out an attack, offered to compensate the UCE to kill them.
In filed plea documents, Sullivan admitted that he took substantial steps towards carrying out terrorist attacks in North Carolina and Virginia by: (1) recruiting the UCE; (2) obtaining a silencer from the UCE; (3) procuring the money that would have enabled him to purchase the AR-15; (4) trying to obtain a specific type of ammunition that he believed would be the most “deadly”; (5) identifying separate gun shows where he and the UCE could purchase AR-15s; and (6) obtained coupons for the gun shows he planned for himself and the UCE to attend on June 20 or 21, 2015.
According to filed documents, on June 19, 2015, Sullivan was arrested at his parents’ home, where law enforcement also executed a search warrant for the silencer and other items. Law enforcement interviewed Sullivan on separate occasions following his arrest. Sullivan also provided false statements on his involvement in the murder of his neighbor, John Bailey Clark, who had been killed in December 2014. Sullivan later admitted that he had stolen the rifle from his father’s gun cabinet and hid it in the crawl space. Forensic testing shows that the .22 rifle hidden by Sullivan was used to murder Mr. Clark.
The grand jury alleged that Sullivan also killed Mr. Clark, but Sullivan did not admit to this act in his plea today. However, in the plea documents filed, the United States Attorney set forth evidence supporting this allegation and specifically reserved the Government’s right to prove this additional conduct at Sullivan’s sentencing hearing.
The District Attorney’s Office for North Carolina’s 25th Prosecutorial District, which includes Burke, Caldwell and Catawba Counties, is handling North Carolina’s prosecution of Sullivan for Clark’s murder.
Sullivan is currently in federal custody. According to the filed plea agreement, Sullivan pleaded guilty to Count Nine of the Superseding Indictment, which charged him with attempting to commit an act of terrorism transcending national boundaries, an offense that carries a maximum penalty of life in prison. Under the plea agreement, the parties have agreed that a sentence of life in prison is an appropriate sentence.In making today’s announcement, Acting Assistant Attorney General McCord and U.S. Attorney Rose thanked District Attorney David Learner for his office’s continued assistance and coordination. Both also praised the investigative efforts of the FBI, the Burke County Sheriff’s Office and the North Carolina State Bureau of Investigation in this case. Acting Assistant Attorney General McCord and U.S. Attorney Rose also thanked the U.S. Postal Inspection Service’s Charlotte Division, the U.S. Secret Service, the North Carolina Highway Patrol, the U.S. Attorney’s Office of the Eastern District of Virginia, the FBI’s Washington Field Office and the Hickory Police Department for their assistance in this investigation.
The case is being prosecuted by Assistant U.S. Attorney Michael E. Savage of the Western District of North Carolina and Trial Attorney Gregory R. Gonzalez of the National Security Division’s Counterterrorism section.
Georgia Man Sentenced to More Than 21 Years for String of Armed Robberies in CharlotteRead the Press Release
CHARLOTTE, N.C. – Chief U.S. District Judge Frank D. Whitney sentenced today Alex Arnez Jones, 27, of Atlanta, Georgia, to 262 months in prison for a string of armed robberies of Charlotte-area businesses, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Judge Whitney also ordered Jones to serve three years of supervised release and to pay $6,319 as restitution.
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 Kerr Putney of the Charlotte-Mecklenburg Police Department.
According to filed court documents and today’s sentencing hearing, between November 17, and November 23, 2015, Jones robbed five Charlotte-area businesses at gunpoint. Court documents show that on November 17, Jones robbed a Boost Mobile store located on Central Avenue, a Fuel Mart gas station on North Tryon Street and a Subway restaurant on South Boulevard. Upon entering each business, Jones brandished a firearm and demanded money from store employees. In one of the robberies, Jones pointed his firearm at a store employee, threating to shoot her if she did not comply.
Four days later, on November 21, 2015, Jones robbed Beautiful Hair Palace, a business located on Central Avenue in Charlotte. Jones entered the store and, brandishing his firearm, he ordered the store clerk to put store merchandise into a backpack he was carrying and to hand over all the cash from the register. According to court records, when the employee told Jones she did not have access to the register, Jones took $220 from the employee’s wallet. On November 23, 2015, Jones entered iBeauty, a business located on North Tryon Street, posing as a customer interested in certain products. After a few minutes inside the store, court records show that Jones pulled out his firearm and, pointing it at the store owner, he demanded cash and merchandise.
Jones pleaded guilty in August 2016 to five counts of Hobbs Act Robbery and one count of use and carry of a firearm in furtherance of a crime of violence.
Jones is currently in federal custody, 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 handled by the FBI and CMPD. Assistant U.S. Attorney Craig Randall of the U.S. Attorney’s Office in Charlotte, prosecuted the case.
Five Charged in Drug Conspiracy Operating in Mecklenburg CountyRead the Press Release
CHARLOTTE, N.C. – United States Attorney Jill Westmoreland Rose announced today that five individuals are facing federal charges for their involvement in a heroin trafficking ring operating in Mecklenburg County. A criminal indictment was returned on November 15, 2016, and was unsealed today in federal court, following the defendants’ arrests. Eleven other members of the conspiracy are facing state drug charges.
According to allegations contained in the criminal indictment, from on or about April 2015 to about November 2016, the defendants operated in a drug conspiracy responsible for trafficking heroin in Mecklenburg County and elsewhere.
The five defendants named in the federal indictment are each charged with one count of conspiracy to distribute and to possess with intent to distribute heroin. They are:
- Maggie Elizabeth Sanders, 36, of Concord, N.C. (arrested)
- Kevin Tyler Bell, 24, of Concord (arrested)
- Elyssa Breanne Shuford, 37, of Gastonia, N.C. (arrested)
- Jamie Nicole McDaniel, 31, of Concord (arrested)
- Joshua Dale Gregory, 28, of Concord (pending arrest)
In addition to the drug trafficking conspiracy charge, Kevin Bell and Jamie McDaniel are each charged with one count of possession with intent to distribute heroin, and Elyssa Shuford is charged with two counts of possession with intent to distribute heroin. Maggie Sanders is also charged with one count of possession of a firearm in furtherance of a drug trafficking crime.
Eleven others are facing state charges for their involvement in the drug conspiracy. They are: Kenneth Junior Bell, Silas Lamont Swain, Monica Bell, Jessica Marie James, Christopher Godwin, Sara Dianne Weaver, Charles Thomas Anderson, Jason Eugene Lavender, Michael Todd Lowe, James Dillard Proctor, and Timothy Kyle Bennett.
Over the course of the investigation law enforcement seized in Mecklenburg and Cabarrus Counties more than ten kilograms of heroin and five firearms. The drugs were shipped into the Western District of North Carolina from Mexico.
In making today’s announcement, U.S. Attorney Rose said, “The arrests in this case are part of my office’s ongoing effort to combat heroin trafficking rings throughout our district. As heroin is quickly becoming the number one cause of overdose related deaths, not just in Western North Carolina but throughout the country, law enforcement agencies continue to ramp up the fight against drug trafficking conspiracies operating in our communities.”
U.S. Attorney Rose thanked the Drug Enforcement Administration, ICE’s Homeland Security Investigations in Charlotte, the North Carolina State Highway Patrol, the Charlotte Mecklenburg Police Department, the Concord Police Department, the Gastonia Police Department, the Huntersville Police Department, the Mint Hill Police Department, the Kannapolis Police Department, the Iredell County Sheriff’s Office and the Wingate Police Department for their assistance in this case.
This prosecution is part of an extensive 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 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.
The federal defendants arrested today are currently in federal custody. Their initial appearances were held in U.S. District Court before U.S. Magistrate Judge David S. Cayer.
The charges contained in the indictments are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Assistant U.S. Attorney Sanjeev Bhasker of the U.S. Attorney’s Office in Charlotte is handling the prosecution.
Former Lincolnton Resident Pleads Guilty to Failing to Report Federal Prison, Contempt of CourtRead the Press Release
CHARLOTTE, N.C. – Dania Ramos, 41, formerly of Linconton, N.C., appeared before U.S. Magistrate Judge David C. Keesler today and pleaded guilty to failing to report to federal prison and contempt of court, 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, on March 20, 2012, U.S. District Court Judge Robert J. Conrad, Jr. sentenced Ramos to 48 months in prison for her role in a false claims conspiracy, in case number 3:11cr75-04. 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.
At her sentencing hearing, Ramos was ordered to abide by the previously imposed conditions of release, including that she immediately advise the court, defense counsel, and the U.S. Attorney in writing before any change of address; that she surrender to serve any sentence imposed; and that she travel only in the Western District of North Carolina. Ramos was specifically advised by the court that the U.S. Marshals would send her a letter telling her when she would begin serving her sentence.
According to filed documents and today’s court proceedings, on April 16, 2012, the U.S. Probation Office received information that Ramos could not be located or contacted. On or about May 8, 2012, the U.S. Marshals Service sent a report notification to Ramos via certified mail directing Ramos to report to FCI/SFF Hazelton WV on June 12, 2012. Ramos failed to report as required and her whereabouts remained unknown until December 23, 2015, when Ramos was arrested at the border of Mexico and the United States in Texas attempting to enter the United States.
Ramos is currently in federal custody. The failure to report charge carries a maximum prison term of 5 years and a $250,000 fine. The criminal contempt charge carries a maximum prison term of life imprisonment or a fine. A sentencing date for the defendant has not been set yet.
The investigation was handled by the IRS-CI. The prosecution for the government is being handled by Assistant U.S. Attorney Jenny G. Sugar of the U.S. Attorney’s Office in Charlotte.
TSA Officer and Seven Others Arrested on Drug Conspiracy ChargesRead the Press Release
CHARLOTTE, N.C. – United States Attorney Jill Westmoreland Rose announced that eight individuals were arrested on Wednesday, November 9, 2016, on federal drug conspiracy charges for their involvement in a drug trafficking network operating in Charlotte and Greensboro, N.C. The criminal complaint was unsealed today following the defendants’ court appearances in federal court.
John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation in North Carolina and Harold Scott, Jr., Special Agent in Charge, Office of Inspection - Washington Field Office of the Department of Homeland Security’s Transportation Security Administration (TSA) join U.S. Attorney Rose in making today’s announcement.
The eight defendants named in the criminal complaint were arrested on charges of conspiracy and attempt to distribute and to possess with intent to distribute Schedule I and Schedule II controlled substances; and distribution of controlled substances and possession with intent to distribute Schedule I and Schedule II controlled substances. They are:
- Jamie Blunder, 48, of Charlotte.
- David Pate, 44, of High Point, N.C.
- Alafia Fowlkes, 42, of Jamestown, N.C.
- Samuel Little, 58, of Greensboro.
- Irvin Lampley, 56, of Greensboro.
- Aaron Dixon, 40, of Greenville, N.C.
- Cameron Roberts, 29, of Greensboro.
- Dennis Harrington, 47, of Greensboro.
A ninth defendant named in the charging document, Willie Nevius, 48, of Greensboro, has not been arrested yet.
According to allegations contained in the criminal complaint, beginning in at least December 2015, the defendants operated as a drug conspiracy responsible for trafficking cocaine, marijuana and other controlled substances in Charlotte and Greensboro. The criminal complaint alleges that Blunder, a TSA officer, was the leader of the conspiracy and used a network of co-conspirators to transport and distribute the narcotics to and from Greensboro and elsewhere. According to the affidavit filed with the criminal complaint, the investigation to date indicates that while Blunder did not utilize the Charlotte Douglas Airport to traffic narcotics, he may have relied on his TSA position to avoid law enforcement detection while travelling to, within, and back from the Jamestown, High Point, and Greensboro areas.
In addition to last week’s arrest of the eight defendants, law enforcement executed multiple search warrants and recovered eight firearms, at least two kilograms of cocaine and more than $150,000 in cash. Over the course of the investigation, law enforcement also recovered drug paraphernalia and packaging material consistent with kilogram-quantity cocaine wrapping and packaging.
The charges contained in the complaint are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
U.S. Attorney Rose thanked the FBI for leading the investigation and TSA for their invaluable assistance with this case.
Assistant U.S. Attorneys Corey Ellis and Lambert Guinn of the U.S. Attorney’s Office in Charlotte is prosecuting the case.
Former Navy Recruiter Sentenced to 17 Years on Child Coercion and Enticement ChargesRead the Press Release
ASHEVILLE, N.C. – U.S. District Court Judge Max O. Cogburn, Jr. sentenced yesterday a Weaverville, N.C. man to 204 months in prison on child coercion and enticement charges, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Judge Cogburn also ordered Benjamin Ernest Johnson, 39, to serve a lifetime of supervised release and to register as a sex offender after he is released from prison. Johnson pleaded guilty in May 2016 to one count of Coercion and Enticement of a minor.
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.
“Johnson was a wolf among sheep, a predator who took advantage of his access to high school students and used his position of trust to sexually exploit impressionable young victims. His conduct is not only a disgrace to all military personnel, it is also criminal. And for that, he will deservedly serve time in federal prison,” said U.S. Attorney Rose.
“Benjamin Johnson was trusted to advise young people about the benefits of a military career. Instead, he used that access to manipulate children for his own vile sexual gratification. The FBI has zero tolerance for those who prey on our children,” said Special Agent in Charge Strong.
“No form of sexual misconduct is ever acceptable anywhere in the Department of the Navy. Ensuring the safety of our Navy applicants and members of the communities we work in is our top priority. Upon notice of the allegations of misconduct with a minor, the former service member was immediately removed from all recruiting duties and subsequently discharged from the Navy. We will continue to train our Navy recruiters on appropriate behavior when working with Navy applicants and we will continue to enforce high standards and professional conduct,” said
Commander Stan Dickerson, Commanding Officer Naval Recruiting District Raleigh.According to filed court documents and yesterday’s sentencing hearing, in February 2014 Johnson was a United States Navy Petty Officer First Class on active duty stationed in Asheville. Johnson’s duties were to conduct recruiting of high school students in Western North Carolina. According to court records, sometime in the fall of 2013, Johnson was assigned as a recruiter at a high school in Buncombe County. Over the course of his official duties as a recruiter, Johnson met child victim one (CV1), a 15-year-old female high school student who was enrolled in the school’s Naval Junior Reserve Officer Training Corps (NJROTC). Court records indicate that Johnson began to communicate with CV1 via instant messaging, and over the course of their exchanges Johnson solicited and received sexually explicit images of CV1. Johnson also sent the minor sexually explicit images of himself.
According to court records, Johnson also solicited sexually explicit photos from another child victim (CV2) Johnson met in 2011 when the victim was a freshman in high school. Johnson maintained a relationship with CV2 until March 2014. Court records indicate that Johnson met the victim when he was a recruiter at CV2’s high school, where the victim was a NJROTC student. According to court records, CV2 and Johnson became friends on social media after the victim enrolled in a different high school in the area. Court records show that Johnson induced CV2 to send him multiple sexually explicit images of herself via instant messaging. Johnson also sent CV2 multiple sexually explicit images of himself. According to court records, CV2 indicated that she and Johnson had scheduled an upcoming trip to a military testing location and Johnson was going to use it as an opportunity to have physical contact with the victim.
In announcing today’s sentence Judge Cogburn said, “This is a serious crime with a serious punishment.”
Johnson has been in custody since May 11, 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 and were assisted by the Asheville Police Department. In making today’s announcement, U.S. Attorney Rose also thanked the Department of the Navy for their cooperation and assistance with the investigation.
Assistant United States Attorney David A. Thorneloe of the U.S. Attorney’s Office in Asheville prosecuted the case.
Asheville Area Cattle Farm and Owner Plead Guilty to Clean Water Act Violation for Discharging Cow Feces into French Broad RiverRead the Press Release
ASHEVILLE, N.C. – Crowell Farms, Inc. located in Asheville, and its owner pleaded guilty in federal court today to criminal violations of the Clean Water Act, 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, and Judy Billings, Special Agent in Charge of the State Bureau of Investigations’ Diversion and Environmental Crimes Unit (SBI/ DECU).
A criminal bill of information filed in U.S. District Court on October 4, 2016, charged Crowell Farms, Inc. (Crowell Farms) and Michael Alexander Crowell, 65, of Asheville, with one count of violation of the Clean Water Act, in connection with the discharging of cow feces into the French Broad River. According to filed documents and statements made in court, Crowell Farms is in the beef cattle farming business maintaining more than 150 cows and manages many acres of agricultural fields. In the annual course of its operations, Crowell Farms disposes of thousands of pounds of solid and liquid animal waste, which are considered pollutants under the Clean Water Act. Michael Crowell is the Operator Responsible-in-Charge (ORC) for the permitted waste disposal system at Crowell Farms. As the ORC, Michael Crowell is responsible for ensuring that animal waste is properly disposed into the farm’s waste management system, namely in solids waste lagoons.
Michael Crowell admitted in court today that from in or about November 2015 through at least December 2015, he had installed bypasses at the farm’s waste lagoons that were discharging liquid animal waste into a tributary of the French Broad River. Michael Crowell also admitted that he had trouble managing Crowell Farms’ waste management system and that he had installed the bypasses himself. Filed documents show that Michael Crowell previously told inspectors he was aware that he had done “the wrong thing.” Crowell Farms does not have a permit to discharge liquid waste to waters and it is only permitted to discharge it to an on-site land application system. State inspectors further discovered that Crowell Farms does not own the proper land application equipment.
In addition to pleading guilty to violating the Clean Water Act, Crowell Farms has also agreed: 1) to pay a fine of $40,000 (reduced by the $27,000 fine paid to the State of North Carolina), which will be directed to entities that safeguard the French Broad River and other environmental concerns in the Southeast; 2) to serve a probationary term of three years during which regulators and investigators can inspect their records and facilities without notice and without a warrant; and 3) to design and implement a compliance plan subject to approval by the EPA. At sentencing, Michael Crowell faces a maximum prison term of three years and an additional fine of $5,000 to $50,000. A sentencing date has not been set yet.
The Clean Water Act is a federal law enacted to prevent, reduce and eliminate pollution, and to restore and maintain the chemical, physical, and biological quality of the Nation’s waters for the protection and propagation of fish and aquatic life and wildlife, for recreational purposes, and for the use of such waters for public drinking water, agricultural, and industrial purposes. The French Broad River supplies drinking water to more than one million people and is frequently used for recreational water activities, such as swimming and kayaking. It is also protected because it supports secondary recreation, including fishing, fish consumption, and agriculture.
The investigation was led by the EPA’s Criminal Investigation Division and SBI’s DECU. Assistant United States Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte is prosecuting the case.
North Carolina Woman Sentenced to 48 Months in Prison for Fleeing Country to Avoid Telemarketing Fraud SentenceRead the Press Release
A Greensboro, North Carolina, woman was sentenced to 48 months in prison today for fleeing the United States after being sentenced to 60 months in prison for her role in managing a telemarketing scheme that induced victims to send money for a falsely promised sweepstakes prize, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina.
Jessica Anne Brown, 40, was sentenced by U.S. District Judge Robert J. Conrad Jr. of the Western District of North Carolina. The 48-month sentence will run consecutive to the previously-issued 60-month sentence. Brown pleaded guilty on June 1, 2016, to one count of failure to surrender for service of sentence and one count of contempt of court.
As part of her guilty plea, Brown admitted that she violated her court-ordered release conditions by removing her location monitor and using an unlawfully-obtained passport to flee to Canada after having been ordered to surrender for a 60-month prison sentence stemming from her role in managing an illegal call center in Costa Rica that defrauded hundreds of U.S. victims. Brown further admitted that she fled to Canada with the intent of avoiding her sentence.
This case was investigated by the U.S. Marshals Service, U.S. Postal Inspection Service, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and Department of State. Trial Attorneys Gustav Eyler and William Bowne of the Criminal Division’s Fraud Section prosecuted the case. The Canada Border Services Agency and the Criminal Division’s Office of International Affairs also provided substantial assistance.
The Fraud Section plays a pivotal role in the Department of Justice’s fight against white collar crime around the country. Today’s sentencing is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Manager of Real Estate Investment Company Sentenced to Prison for Multi-Million Dollar Securities FraudRead the Press Release
CHARLOTTE, N.C. – United States District Judge Robert J. Conrad, Jr. today sentenced a Charlotte man to 60 months in prison for his role in a securities fraud scheme involving bogus real estate investments, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Frank Enrique Lleras, 31, was also ordered to serve three years under court supervision after he is released from prison, and to pay $2.7 million dollars in restitution to his victims.
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 Thomas L. Noyes, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS).
According to documents filed with the court and today’s sentencing hearing, Lleras was the managing member of Optimum Income Property Investments, LLC (Optimum), a real estate investment company that purported to make money for victim investors by purchasing distressed and foreclosed real estate, and then reselling or leasing those properties. From about 2013 to about 2014, Lleras induced more than 20 victim investors from the Dominican Republic medical community to invest approximately $3,000,000 in the fraudulent real estate scheme. According to court records, to execute the scheme, Lleras established bank accounts in the name of limited liability companies (LLCs) associated with each victim-investor, and then purported to purchase property for each victim in the name of those LLCs.
Court documents also show that to convince his victim investors the scheme was legitimate, Lleras provided fraudulent investment statements showing that victim investors had gained interest on their investments. Lleras also provided fabricated deeds and bogus real estate tax bill receipts, causing victim investors to believe that their funds had been used as promised and that taxes on their properties had been paid. Contrary to promises made to investors, court documents indicate that Lleras did not invest victim investor funds but instead diverted their money to other business ventures and to support his personal lifestyle, including to purchase expensive jewelry.
Lleras pleaded guilty in January 2016 to one count of securities fraud and one count of wire fraud. 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 of the case was led by the FBI and USPIS. Assistant U.S. Attorney Corey F. Ellis of the U.S. Attorney’s Office in Charlotte prosecuted the case.
Two Men Sentenced to Prison on Wire Fraud Conspiracy Charges for Attempting to Steal More Than $1.3 Million Through Unauthorized Wire TransfersRead the Press Release
CHARLOTTE, N.C. – Jamel Ski Yates, a/k/a “Goo,” 43, of Charlotte, was sentenced yesterday by U.S. District Judge Robert J. Conrad, Jr. to 36 months in prison on federal wire fraud conspiracy charges for attempting to steal more than $1.3 million through unauthorized wire transfers, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Yates was also ordered to serve two years under court supervision upon completion of his prison term and to pay $251,146 as restitution.
Yates’ co-defendant, Anthony Shawn Wilkerson, 46, of East Point, Georgia, was also sentenced today, to a year and a day in prison followed by two years of supervised release and was ordered to pay $251,146 as restitution. Wilkerson pleaded guilty to wire fraud conspiracy and wire fraud charges for his role in the conspiracy.
John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division joins U.S. Attorney Rose in making todays’ announcement.
Five additional defendants who conspired with Yates to execute the wire fraud scheme have been sentenced to date:
- Shaka Stayman was sentenced to 84 months in prison, after pleading guilty to wire fraud conspiracy and wire fraud charges.
- Dural Samuels was sentenced to 28 months in prison and was ordered to pay restitution of $252,730 after pleading guilty to wire fraud conspiracy and wire fraud charges.
- Barry Shade was sentenced to 12 months in prison and was ordered to pay restitution of $251,147 after pleading guilty to wire fraud conspiracy charges.
- Abiola O. Oginni was sentenced to one year and a day in prison after pleading guilty to wire fraud conspiracy charges.
- Dwayne A. Reynolds was sentenced to three years of probation and was ordered to pay restitution in the amount of $20,037 after pleading guilty to wire fraud conspiracy.
According to filed court documents and statements made in court, from about January 2010 through in or about January 2011, Yates and his co-conspirators engaged in a wire fraud scheme by unlawfully accessing multiple customer accounts maintained by a financial services company located in Charlotte. Court records show that Yates was the insider who stole personally identifiable information (PII) of approximately 90 customers of the victim company, and provided that information to Samuels. According to court records, using that information, Samuels used his network of co-conspirators, which included Stayman, Shade, Oginni, Wilkerson and Reynolds, to withdraw funds from the compromised victim company accounts and then deposit the stolen funds into the co-conspirators’ own bank accounts or the bank accounts of other individuals (also known as “money mule accounts”).
According to court records, the co-conspirators attempted to withdraw more than $1.3 million from the compromised customer accounts by executing multiple wire transfers ranging from $6,000 to $48,000. They then deposited the stolen funds into the money mule accounts and retrieved it through multiple cash withdrawals. According to court records, the co-conspirators were able to steal more over $300,000 through their wire fraud scheme.
Yates and Wilkerson will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility to begin serving their prison terms. All federal sentences are served without the possibility of parole.
The investigation was led by the FBI. Assistant U.S. Attorney Thomas O’Malley, of the U.S. Attorney’s Office in Charlotte, prosecuted the case.
Two MS-13 Gang Members Convicted of Murder Are Sentenced to Life in PrisonRead the Press Release
CHARLOTTE, N.C. – U.S. Attorney Jill Westmoreland Rose announced today that U.S. District Judge Robert J. Conrad, Jr. handed down life sentences to two MS-13 gang members convicted of murder.
In April 2016, a federal jury convicted Miguel Zelaya, 22, of Charlotte, of conspiracy to participate in racketeering activity (RICO), murder in aid of racketeering, use or 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 Jose Orlando Ibarra.
Luis Ordonez-Vega, 37, of Concord, N.C. was convicted of RICO conspiracy, murder in aid of racketeering, use or 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 Noel Navarro Hernandez.
A third MS-13 gang member, Jorge Garcia, 27, of Charlotte, was also sentenced today to 70 months in prison and two years of supervised release, after pleading guilty to a RICO conspiracy and attempted murder in aid of racketeering charges.
According to filed court documents, trial evidence and statements made in court:
From at least in or about 2009 to about May 2015, the three men along with 34 other co-defendants named in a federal indictment, were members of the MS-13 gang, a criminal organization with over 6,000 members in the United States and 30,000 members internationally. MS-13 originated in Los Angeles, California, and has spread to states across the country, including in North Carolina. The gang’s members are mostly immigrants or descendants of immigrants from El Salvador and other Central and Latin American countries. In North Carolina, some of the active MS-13 members are divided into different groups, or “cliques,” which include the “Trece Locos Salvatrucha,” the “Hollywood Locos Salvatrucha,” the “Charlotte Locotes Salvatrucha,” the “Centrales Locos Salvatrucha,” and the “Coronados Little Cycos Salvatrucha,” among others. The different cliques work together to carry out criminal acts, to protect the interests of the criminal enterprise, and to assist each other in avoiding law enforcement detection.
MS-13 members adhere to a set of gang rules and pay dues which fund the gang’s criminal activities and support other gang members or their families in the U.S and abroad. Gang members are also expected to protect the name, reputation, and status of the gang and its members, and to punish through acts of violence and intimidation those who disrespect the gang. Some MS-13 members signify their affiliation with the gang by wearing blue, black and white color clothing and certain “Mara Salvatrucha,” or “MS-13” tattoos.
Members of MS-13 in Charlotte participated in multiple meetings at various times to discuss gang-related matters and to plan the commission of future crimes for the benefit of the gang. They were also responsible for numerous criminal acts including murder and attempted murder.
Zelaya, a/k/a “Most Wanted” and “Ne Ne”, is a member of the “Coronados Little Cycos Salvatrucha” clique. On December 18, 2013, Zelaya shot and killed Jose Orlando Ibarra, an associate of a rival gang, “The Latin Kings.” Zelaya admitted to law enforcement that he shot Jose Ibarra because Ibarra owed him money for a gun and because Ibarra and his brother, a Latin King member, had been looking for one of Zelaya’s “homies” with a shotgun.
Ordonez-Vega, a/k/a “Big Boy,” is a self-admitted member of MS-13 from Nassau County, New York, and a member of the “Brentwood Locos Salvatrucha” clique. Ordonez-Vega has “MS” tattooed across his stomach and “La Mara Salvatrucha” tattooed across his chest. On June 6, 2013, Ordonez-Vega shot and killed Noel Navarro Hernandez in a strip mall parking lot in Charlotte. Ordonez-Vega and other MS-13 members targeted Navarro because they believed that Navarro was a rival gang member because of the way he talked, wore red, and his haircut.
Twenty-nine other MS-13 gang members were previously sentenced in connection with this case:
- Raul Contreras was sentenced to 360 months in prison and three years of supervised release.
- Oscar Trejo was sentenced to 300 months in prison and three years of supervised release.
- Cesar Garcia-Perez was sentenced to 276 months in prison and three years of supervised release.
- Daniel Navarro was sentenced to 240 months in prison and three years of supervised release.
- Jose Danny Argueta was sentenced to 228 months in prison and two years of supervised release.
- Milton Chavarria was sentenced to 228 months in prison and three years of supervised release.
- Alexis Villalta-Morales was sentenced to 204 months in prison and two years of supervised release.
- Christian Pena was sentenced to 180 months in prison.
- Carlos Almonte was sentenced to 144 months in prison and two years of supervised release.
- Luis Funes-Rivera was sentenced to 144 months in prison and two years of supervised release.
- Albert Vela-Garcia was sentenced to 78 months in prison and two years of supervised release.
- Jose Moran-Celis was sentenced to 72 months in prison and two years of supervised release.
- Marlon Vasquez-Maldonado was sentenced to 72 months in prison and three years of supervised release.
- Rene Lopez-Ventura was sentenced to 66 months in prison and two years of supervised release.
- Jose Manuel Linares was sentenced to 60 months in prison and two years of supervised release.
- Juan Bergamasco-Suarez was sentenced to 57 months in prison and two years of supervised release.
- Neris Gutierrez was sentenced to 51 months in prison and two years of supervised release.
- Jose Vasquez was sentenced to 46 months in prison and two years of supervised release.
- Luis Erazo was sentenced to 37 months in prison and two years of supervised release.
- Raul Guardado was sentenced to 36 months in prison and three years of supervised release.
- Jonathan Noble was sentenced to 36 months in prison and two years of supervised release.
- Jaime Turcios was sentenced to 36 months in prison and three years of supervised release.
- Rosendo Rivas was sentenced to 30 months in prison and two years of supervised release.
- Jorge Perez was sentenced to 27 months in prison and two years of supervised release.
- Marvin Fuentes-Canales was sentenced to 24 months in prison and two years of supervised release.
- Saul Gavidia was sentenced to 21 months in prison and three years of supervised release.
- Victor Pineda was sentenced to 21 months in prison and two years of supervised release.
- Angel Hernandez was sentenced to 21 months in prison.
- Fec Rodriguez-Vareal was sentenced to 15 months in prison and one year of supervised release.
Two more defendants, Jorge Sosa and William Gavidia, were previously convicted at trial and are currently awaiting sentencing. Sosa was convicted of RICO conspiracy, attempted murder in aid of racketeering and use or 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, that being attempted murder in aid of racketeering. Gavidia was convicted of RICO conspiracy.
Three others remain fugitives. They are Miriam Barilles-Escamilla, Salvador Ruiz, and Luis Villalta.
In making today’s announcement U.S. Attorney Rose thanked the Charlotte Division of the FBI and ICE’s Homeland Security Investigations for leading the joint investigation, along with North Carolina’s Alcohol Law Enforcement and the Charlotte-Mecklenburg Police Department.
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.
Assistant U.S. Attorneys Elizabeth Greene and William Miller of the U.S. Attorney’s Office in Charlotte are prosecuting the case.
Federal Jury Convicts Charlotte Insurance & Financial Executive of Filing False Tax Returns and Obstruction of Grand Jury InvestigationRead the Press Release
CHARLOTTE, N.C. – A federal jury convicted Patrick Emanuel Sutherland, 48, of Charlotte, of filing false tax returns and obstructing a federal grand jury investigation charges, 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 court documents and evidence presented at trial, 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. Trial evidence established that Sutherland filed 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. For example, according to the evidence, despite receiving substantial income for the relevant time period, Sutherland reported a combined income of approximately $276,697, and paid less than a mere $10,000 in total federal income taxes. During the same four-year period, Sutherland’s lifestyle and expenditures for personal living expenses far exceeded his total income reported on his individual tax returns, including over $80,000 in private school tuition for his daughter and high end jewelry purchases.
According to evidence presented at trial, witness testimony and filed court documents, to conceal the fraud, Sutherland falsely claimed that international wires to his domestic bank accounts were loans from his sister’s company. In reality, most of these funds were insurance commissions due to Sutherland or were funds obtained from a brokerage account in Bermuda which Sutherland controlled.
Trial evidence established that Sutherland worked with offshore insurance companies and some of his commissions had to be paid to an offshore intermediary. Sutherland used his Bermuda-based shell company, Steward Technology Services Limited (STS) to funnel personal and business funds to Sutherland’s U.S. bank accounts. On numerous occasions, Sutherland mischaracterized the wire transfers from STS’s bank account in Bermuda to Sutherland’s various domestic accounts as capital contributions and loans.
Evidence presented at trial demonstrated that on several occasions between June 2012 and September 2012, Sutherland sought to obstruct a federal investigation by providing fraudulent documents, including records of sham loans and documents purportedly reflecting his lack of control over his foreign business bank account in Bermuda.
The federal jury delivered the guilty verdict following a five-day trial. Sutherland is currently released on bond. The penalty for filing a false tax return is a maximum term of three years in prison and a $250,000 fine per count. The obstruction of official proceedings charge carries a maximum term of 20 years in prison and a $250,000 fine.
IRS-CI led the investigation. Assistant United States Attorneys Jenny G. Sugar and Daniel Ryan of the U.S. Attorney’s Office in Charlotte prosecuted the case.
Matthews, N.C. Man Sentenced to More Than 10 Years on Child Pornography ChargesRead the Press Release
CHARLOTTE, N.C. – Dean Paul Stitz, 47, of Matthews, N.C. was sentenced yesterday by U.S. District Judge Robert J. Conrad, Jr. to 121 months in prison on child pornography charges, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Stitz was also ordered to serve a lifetime of supervised release and to register as a sex offender.
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 court documents and information introduced at the sentencing hearing, from about May to about July 2014, law enforcement became aware that Stitz was using a peer-to-peer network to distribute child pornography on the Internet. According to court records, law enforcement executed a search warrant at Stitz’s residence, seizing his laptop computer and an external hard drive. Forensic analyses of those devices revealed that Stitz possessed well over 600 images and videos of child pornography, some of which depicted minors engaging in sadistic and masochistic conduct.
Stitz pleaded guilty in April 2016 to one count of distribution of child pornography. He is currently in 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 FBI. Assistant U.S. Attorney Lambert Guinn of 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
U.S. Department of Justice Nationwide Election Day ProgramRead the Press Release
CHARLOTTE, N.C. – U. S. Attorney Jill Westmoreland Rose announced today that Michael E. “Mike” Savage and Richard Edwards, Assistant United States Attorneys (AUSAs) in the Charlotte and Asheville offices of the U.S. Attorney for the Western District of North Carolina will lead the efforts of this Office in connection with the Justice Department’s nationwide Election Day Program for the upcoming November 8, 2016, general elections. AUSAs Savage and Edwards have been appointed to serve as District Election Officers (DEOs) for the Western District of North Carolina and in that capacity they are responsible for overseeing the District’s handling of complaints of election fraud and voting rights abuses in consultation with Justice Department Headquarters in Washington.
United States Attorney Rose said, “Every citizen must be able to vote without interference or discrimination and to have that vote counted without it being stolen because of fraud. The Department of Justice will act promptly and aggressively to protect the integrity of the election process.”
The Department of Justice has an important role in deterring election fraud and discrimination at the polls, and combating these violations whenever and wherever they occur. The Department’s long-standing Election Day Program furthers these goals, and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open on election day.
Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input. It also contains special protections for the rights of voters and provides that they can vote free from acts that intimidate or harass them. For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting may violate federal voting rights law. Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice.
The franchise is the cornerstone of American democracy. We all must ensure that those who are entitled to the franchise exercise it if they choose, and that those who seek to corrupt it are brought to justice. In order to respond to complaints of election fraud or voting rights abuses on election day on November 8, 2016, and to ensure that such complaints are directed to the appropriate authorities, U.S. Attorney Rose stated that AUSA/DEOs Mike Savage and Don Gast will be on duty in this District while the polls are open. They can be reached by the public at the following telephone numbers:
In Charlotte: 704-344-6222 and in Asheville: 828-271-4661
In addition, the FBI will have special agents available in each field office and resident agency throughout the country to receive allegations of election fraud and other election abuses on election day. The local FBI field office can be reached by the public at 704-672-6100.
Complaints about possible violations of the federal voting rights laws can be made directly to the Civil Rights Division’s Voting Section in Washington by phone at 1-800-253-3931 or (202) 307-2767, by fax at (202) 307-3961, by email to [email protected] or by complaint form at http://www.justice.gov/crt/complaint/votintake/index.php.
United States Attorney Rose said, “Ensuring free and fair elections depends in large part on the cooperation of the American electorate. It is imperative that those who have specific information about discrimination or election fraud make that information available immediately to my Office, the FBI, or the Civil Rights Division.”
Lexington, N.C. Physician Pleads Guilty to Unlawful Distribution of FentanylRead the Press Release
CHARLOTTE, N.C. – U.S. Attorney Jill Westmoreland Rose announced that James Randall Long, MD, 56, of Lexington, N.C., appeared before U.S. Magistrate Judge David S. Cayer and pleaded guilty to unlawful distribution of Fentanyl, a Schedule II controlled substance. Dr. Long admitted today in court that he prescribed the drug outside the scope of his professional practice to a woman with whom he was romantically involved, knowing that she was abusing the drug to further her addiction to opiates.
U.S. Attorney Rose is joined in making today’s announcement by Daniel R. Salter, Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA), which oversees the Charlotte District Office; Jim Schandevel, Special Agent in Charge of the North Carolina State Bureau of Investigation’s Western District Office; and Chief Kerr Putney of the Charlotte-Mecklenburg Police Department.
Fentanyl is a powerful opioid drug typically prescribed by doctors to help patients manage chronic pain symptoms. Those addicted to opiates often turn to Fentanyl for its intense euphoric effects and commonly rely on the drug as a substitute for heroin. Fentanyl is significantly more potent than heroin with potentially fatal side effects.
“Dr. Long admitted he abused the public trust placed in him as a physician authorized to dispense controlled substances and misused his medical license to prescribe a potentially lethal drug to a woman he knew had a substance abuse problem. As opioid addiction is becoming the number one cause of drug overdose deaths in the United States, my office is committed to investigating and prosecuting those who serve as sources of supply. From the street corner to a doctor’s office, anyone who distributes these potentially deadly substances poses a significant threat to public health safety and is subject to investigation and prosecution,” said U.S. Attorney Rose.
According to court records and filed plea documents, Dr. Long admitted that shortly after meeting the woman in 2014 and until July 2015, he provided her prescriptions for Fentanyl outside the scope of his professional practice and not for a legitimate medical purpose. Dr. Long also admitted he knew the woman was not using the drug according to its prescribed use but was instead abusing it to further her addiction. Dr. Long further admitted that during that time, he wrote and authorized Fentanyl prescriptions in the woman’s name and in the name of several other individuals, some of whom were not patients of Dr. Long and did not know prescriptions were being filled in their name.
Dr. Long pleaded guilty to distribution and possession with intent to distribute Fentanyl by an authorized registrant outside the scope of professional practice and not for a legitimate medical purpose. He was released on bond following today’s plea hearing. The penalty for the charge carries a maximum prison term of twenty years and a $1,000,000 fine.
The investigation was led by DEA with assistance from CMPD and SBI. U.S. Attorney Rose thanked the Mint Hill Police Department and the Gastonia Police Department for their help in the investigation.
Assistant U.S. Attorney William M. Miller of the U.S. Attorney’s Office in Charlotte is prosecuting the case.
Former Chairman of the Board of Payroll Services Company Pleads Guilty to Conspiracy ChargesRead the Press Release
CHARLOTTE, N.C. – Frank Alton Moody, II, 56, of Arden, N.C., pleaded guilty to federal charges for his role in conspiring to steal over $2 million from client companies and using the money to fund their exorbitant salaries, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Two of Moody’s conspirators, Jerry Wayne Overcash, 67, of Charlotte, and John Bernard Thigpen, 60, of Rock Hill, S.C., previously pleaded guilty and were sentenced for their roles in the conspiracy.
U.S. Attorney Rose is joined in making today’s announcement by Thomas L. Noyes, 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 documents filed with the court, 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.
Court documents show that 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.
Instead, Moody and his co-conspirators agreed, with the intent to defraud the company’s clients and the IRS, not to remit to the IRS the full tax liabilities of CenterCede’s clients. Client funds were then diverted to pay the 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. According to the indictment to which Moody pleaded guilty, when a client company asked why its tax payments had not been paid, Moody wrote “John [Thigpen] has told me it was a over site [sic] in the Tax department and all is fixed. No problems with [victim client company].” In truth and fact, that client’s taxes had been intentionally unpaid in favor of the payment of “priority” client obligations.
The conspiracy charge carries a maximum of five years in prison and a $250,000 fine. As part of his plea agreement, Moody has agreed to pay restitution to his victims, the amount of which will be determined by the Court.
The investigation for the case is being handled 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 are in charge of the prosecution.
Former Flat Rock , N.C. Jewelry Store Owner Senteced to More Than Three Years on Mail Fraud ChargesRead the Press Release
ASHEVILLE, N.C. – U.S. District Judge Martin Reidinger sentenced yesterday Dina R. Garfinkel, a.k.a. Dina Drake, Dina Lebovitch, and Ruth Lebovitch, to 41 months in prison on mail fraud charges, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Garfinkel, 69, of New York City, was also ordered to serve three years under court supervision after she is released from prison and to pay $400,000 as restitution to her victims.
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 Georgia and the Carolinas.
According to filed documents and statements made in court, Garfinkel was the owner and operator of Nikki B. Designs, LLC, a jewelry store located in Flat Rock, N.C. From about 2012 through April 2013, Garfinkel defrauded 12 wholesale companies of at least $400,000 in merchandise she had ordered on consignment, commonly referred to in the jewelry industry as “on memo.” Court records show that using an alias, Garfinkel would contact wholesalers located throughout the United States and order diamonds and/or jewelry on memo. According to court records, in most instances in order to establish trust and rapport with the victim companies, Garfinkel made quick payments for the initial orders she received. This caused the wholesalers to send Garfinkel additional merchandise, for which she either did not pay, partially paid, or paid using worthless checks. According to statements made in court, Garfinkel has three previous convictions for carrying out the same scheme in New York and in Florida.
Garfinkel pleaded guilty to mail fraud in April 2016. She is currently in federal custody and will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.
The investigation was led by HSI. Assistant U.S. Attorney Richard Edwards of the U.S. Attorney’s Office in Asheville prosecuted the case.