Western District of North Carolina
Press releases recorded for this federal judicial district.
Owner of Investment Firm Sentenced to Eight Years for Orchestrating $4.7 Million Ponzi SchemeRead the Press Release
CHARLOTTE, N.C. – Chief U.S. District Judge Frank D. Whitney sentenced the owner of a North Carolina investment firm to 96 months in prison today, for orchestrating a Ponzi scheme that solicited victims to invest millions in the foreign currency market (“FOREX”), announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. James H. Mason, 67, of Graham, N.C., was also ordered to serve three years under court supervision and to pay $4,325,820.79 as restitution to the victims of his fraud.
North Carolina Secretary of State Elaine F. Marshall and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI), join Acting U.S. Attorney Rose in making today’s announcement.
According to filed court documents and today’s sentencing hearing, beginning in 2010 and continuing through March 2013, Mason solicited at least 500 victims to invest over $4.7 million in his fraudulent Ponzi scheme. Court records indicate that Mason executed the scheme by inducing victims to invest with his investment companies, “JHM Forex Only Pool” and “Forex Trading at Home Association,” and other related entities, for the supposed purpose of investing in Over-the-Counter (OTC) foreign currency exchange. Mason lulled his victims into a false sense of security by falsely projecting substantial returns on their investments, as much as $100 million, depending on the amount of their initial investment. Furthermore, Mason lied to his victims, falsely claiming that he had over 35 years of experience in commodity futures and options trading, when he had no such experience. According to court records, Mason also failed to disclose to his investor victims a wire fraud conviction in 2000, for which he was sentenced to 18 months in prison.
According to court records, Mason put only a portion of investors’ money into the foreign currency exchange, and lost essentially all the money he did invest while conducting FOREX trading. Court records indicate that Mason failed to disclose his actual trading results to his victims, and instead made false oral representations and provided bogus statements to clients, fraudulently reporting profits. According to court records, in order to induce individuals to further invest in his fraudulent foreign currency commodity pool, Mason established a website so that investors could access their accounts online, which fraudulently depicted that investors were making money – in some cases significant profits – through successful FOREX trading. The profits depicted on individual investor accounts were in fact false, and, in many cases, there was no actual money in the victims’ accounts.
According to court documents, rather than investing the funds as promised, Mason simply deposited victims’ money into various bank accounts he controlled and used a substantial portion of it to pay for personal and business expenses, real estate, cars and other expenses unrelated to any foreign exchange. For example, court records indicate that Mason spent approximately $435,000 of the investors’ money on a residence in Greensboro, N.C., and more than $222,000 for two residences and office space in Hickory, N.C. Court records show that Mason did not claim the additional income on his federal income tax returns filed with the IRS. Mason also used the rest of investors’ money to make “Ponzi” payments to other victims, fraudulently claiming they were “profits” from successful FOREX trading.
Mason pleaded guilty in June 2014 to one count of securities fraud conspiracy and one count of filing a false federal income tax return for tax year 2011. He has been in federal custody since April 2013 and will be transferred to the custody of the Federal Bureau of Prisons upon designation of federal facility. All federal sentences are served without the possibility of parole.
The case was investigated by the North Carolina Secretary of State, Securities Division with assistance from the FBI, Charlotte Division, and IRS-CI. Acting U.S. Attorney Rose also thanked the Commodities Futures Trading Commission for their assistance in this case.
The prosecution is being handled by Special Assistant United States Attorney Kevin M. Harrington and Assistant U.S. Attorney Kurt W. Meyers of the Western District of North Carolina.
Mr. Harrington is an Enforcement Attorney with the North Carolina Department of Secretary of State, Securities Division, and was appointed to serve as a Special Assistant United States Attorney (SAUSA) with the U.S. Attorney’s Office in Charlotte in September 2011. The SAUSA position is reflection of the partnership between the North Carolina Securities Division and the United States Attorney that helps ensure the effective and vigorous prosecution of white collar criminals, particularly in the area of securities fraud.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established 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’s 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. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
Armed Cocaine and Crack Cocaine Dealer Sentenced to 15 Years in PrisonRead the Press Release
CHARLOTTE, N.C. B Today, Chief Judge Frank D. Whitney sentenced Davion Junior Gales, age 29, of West Jefferson, North Carolina, to 15 years in prison, followed by five years of supervised release, for conspiracy to distribute and to possess with intent to distribute cocaine and crack cocaine, money laundering conspiracy, and possession of a firearm in furtherance of drug trafficking, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.
Acting 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; Dewey “Craig” Chillcott, Acting Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division; and Chief Kerr Putney of the Charlotte-Mecklenburg Police Department (CMPD).
According to filed documents and statements made in court, beginning some time in or about 2013 to December 2013, Gales was part of a drug conspiracy that trafficked cocaine and crack cocaine in Mecklenburg County and elsewhere. Court records show that Gales was involved in numerous drug transactions involving multiple kilograms of cocaine. For example, according to court records, on December 2, 2013, Gales paid $75,020 in cash as part of a purchase of approximately $500,000 worth of cocaine. Two days later, on December 4, 2013, Gales provided another $85,000 in cash toward the cocaine purchase, and another $50,005 the following day. Court records show that during one of the drug transactions, Gales possessed a firearm. Court records also show that Gales used drug proceeds to buy expensive vehicles, among other things.
On December 9, 2013, Gales was arrested and law enforcement seized more than two kilograms of cocaine, a firearm, and approximately $118,000 in cash. According to court records, Gales was trafficking some of his cocaine as crack cocaine.
This prosecution is part of an extensive investigation by the Organized Crime Drug Enforcement Task Force (OCDETF) that has resulted in the conviction of more than 35 defendants on cocaine and crack cocaine trafficking, money laundering, 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.
Gales was initially charged by complaint on December 4, 2013, indicted by a federal grand jury on December 19, 2013. He has been in federal custody since his arrest on December 9, 2013.
Acting U.S. Attorney Rose commended HSI, ATF, and CMPD for the investigation leading to the successful prosecution of Gales. Assistant U.S. Attorney Steven R. Kaufman is handling the continuing prosecution of this OCDETF operation.
Buncombe Co. Man Sentenced to More Than 10 Years in Prison on Armed Robbery and Gun ChargesRead the Press Release
ASHEVILLE, N.C. – Anthony Lamont Hill, 31, of Fletcher, N.C., was sentenced today to 121 months in prison for his role in the 2013 armed robbery of a Dollar General store in Woodfin, N.C., announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Senior U.S. District Judge Graham Mullen also sentenced Hill to three years of supervised release and ordered him to pay $4,750 as restitution.
Acting U.S. Attorney Rose is joined in making today’s announcement by Dewey “Craig” Chillcott, Acting Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division, and Chief Brett Holloman of the Woodfin Police Department.
According to filed court documents and today’s sentencing hearing, in August 2013, Hill robbed at gunpoint a Dollar General store located in Woodfin. Court records show that Hill and his accomplice entered the store right before closing time. According to court records, Hill and his conspirator ordered two store employees to remove most of their clothing and proceeded to tie them up. Hill and his accomplice attempted to destroy the store’s security system, before fleeing with approximately $2,500 in cash they had taken from the store’s register, court records show. Hill pleaded guilty in December 2014 to one count of Hobbs Act robbery and one count of possessing and brandishing a firearm during and in relation to a crime of violence.
Hill remains 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 handled by ATF and the Woodfin Police Department. The prosecution for the government was handled by Assistant U.S. Attorney John D. Pritchard of the U.S. Attorney’s Office in Asheville.
Ponzi Scheme Operator Sentenced to More Than 6.5 Years on Securities Fraud ChargesRead the Press Release
CHARLOTTE, N.C. – Claude Darrell McDougal, 56, formerly of Charlotte, was sentenced today to 78 months in prison for orchestrating a Ponzi scheme that defrauded his investor victims of over $2.5 million, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. U.S. District Judge Max O. Cogburn, Jr. also ordered McDougal to serve two years under court supervision after he is released from prison and to pay $2,020,078.26 as restitution to the victims of his fraud.
North Carolina Secretary of State Elaine F. Marshall and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division join Acting U.S. Attorney Rose in making today’s announcement.
According to court documents and today’s sentencing hearing, from 2006 to 2010 McDougal induced over 25 investors in Charlotte and elsewhere to invest more than $2.5 million, by promising his victims their money would be invested in securities, in the form of promissory notes offered by “US Financial Alliance Consultants, LLC” (Financial Alliance). McDougal created Charlotte-based Financial Alliance in 2005, a company that was never registered as a dealer of securities in North Carolina or elsewhere, according to court records. Also, according to court records, McDougal was not registered to sell securities in North Carolina or in any other state, following termination from his previous employer in August 2009. Court documents show that McDougal induced his victims to invest with Financial Alliance by falsely “guaranteeing” fixed rates of return between 6% and 15% annually.
McDougal collected over $2.5 million dollars from victim-investors, many of whom were elderly and invested most, if not all, of their life-savings with him. Instead of investing the victims’ money as promised, McDougal squandered it. According to court records, over the course of the three-year scheme, McDougal invested only $580,000 of the victims’ money and used approximately $450,000 to pay some victims supposed “payouts” from profits made on investments. However, these payments were not based on profits, but came from funds contributed by new investors, commonly referred to as “Ponzi” payments. Court records show that McDougal used approximately $1.19 million of the investors’ funds to support his own lifestyle, including to buy dinners, jewelry and electronics, and to pay for hotel stays, furniture and other business-related expenses. McDougal pleaded guilty to securities fraud in July 2014.
Following the sentencing hearing McDougal was released on bond. 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 case was investigated by the North Carolina Secretary of State, Securities Division, with assistance from the FBI’s Charlotte Division.
Special Assistant U.S. Attorney Kevin M. Harrington prosecuted the case. Mr. Harrington is an Enforcement Attorney with the North Carolina Department of Secretary of State, Securities Division, and was appointed to serve as a Special Assistant United States Attorney (SAUSA) with the U.S. Attorney’s Office in Charlotte in September 2011. The SAUSA position reflects the partnership between the North Carolina Securities Division and the United States Attorney that helps ensure the effective and vigorous prosecution of white collar criminals, particularly in the area of securities fraud.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established 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’s 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. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.”
Federal Judge Sentences Monroe Man to Six Years in Prison on Child Pornography ChargesRead the Press Release
CHARLOTTE, N.C. – U.S. District Judge Max O. Cogburn, Jr. sentenced Darren Mark Webb, 41, of Monroe, N.C. to six years in prison on child pornography charges, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Webb was also ordered to serve a lifetime of supervised release, to register as a sex offender, and to pay $2,500 as restitution to his victims.
John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division joins Acting U.S. Attorney Rose in making today’s announcement.
According to court documents and the sentencing hearing, in or about July 2013, FBI agents conducting an undercover investigation discovered that Webb was downloading child pornography from the Internet. Upon executing a search warrant at Webb’s residence, law enforcement discovered that Webb possessed over 550 images and videos of child pornography, including images and videos of prepubescent children.
Webb pleaded guilty to one count of receiving child pornography in January 2015. 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.
FBI handled the investigation. Assistant U.S. Attorney Cortney S. Randall, of the U.S. Attorney’s Office in Charlotte prosecuted the case.
The 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 the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Kings Mountain Man Sentenced to Nine Years for Armed Robbery of Fast Food Chain Restaurant in CharlotteRead the Press Release
CHARLOTTE, N.C. – U.S. District Judge Max O. Cogburn, Jr. sentenced today James William Lewis, Jr., 32, of Kings Mountain, N.C. to 108 months in prison for the armed robbery of a Charlotte-area fast food restaurant, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Judge Cogburn also ordered Lewis to serve five years of supervised release and to pay $841 as restitution.
Acting U.S. Attorney Jill Westmoreland 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, on December 12, 2013, Lewis robbed a Jack-in-the-Box restaurant, located at 7725 Pineville Matthews Road, in Charlotte.Court documents show that Lewis entered the restaurant and demanded that the manager give him money and threatened to shoot.According to court records, Lewis, who is a former employee of the Jack in the Box restaurant, took the manager back into the office and made him open the safe.Court records indicate that while the manager was opening the safe, Lewis removed a hand gun from under his jacket and proceeded to display and point the hand gun.Lewis then took the cash from the manager and fled the scene, court records show.
In May 2014, Lewis pleaded guilty to one count of Hobbes Act Robbery and one count of use and carry of a firearm in furtherance of a crime of violence, and the possession and brandishing of the firearm
Lewis, who 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 Robert Gleason, of the U.S. Attorney’s Office in Charlotte, prosecuted the case.
Charlotte Man Sentenced to More Than 15 Years in Prison for Sex Trafficking of A MinorRead the Press Release
CHARLOTTE, N.C. – Today, U.S. District Judge Max O. Cogburn, Jr. sentenced Tony Lee Drum, 32, of Charlotte, to 188 months in prison for two counts of sex trafficking of minors and two counts of transporting minors across states lines for purposes of prostitution, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Judge Cogburn also sentenced Drum to a lifetime of supervised release upon completion of his prison term.
Ryan L. Spradlin, 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) join Acting U.S. Attorney Rose in making today’s announcement.
According to filed court documents and statements made in court, between August 2013 and October 2013, Drum knowingly recruited, enticed, and harbored two minor females, identified in court documents as “D.W.” and “A.C.,” for the purpose of engaging in commercial sex acts. Court records show that Drum met D.W. on a telephone chat service and A.C. on social media, and he knew both girls were minors. On two occasions, court records indicate that Drum drove across state lines to pick up the minors and transport them to Charlotte to engage in prostitution. According to court documents, an alert CMPD officer encountered D.W. while patrolling an area in Charlotte in September, 2013, and later identified her as a missing teen. Law enforcement found A.C. sleeping in Drum’s car in October, 2013, while serving an arrest warrant on Drum for trafficking D.W.
“Drum preyed upon young, vulnerable victims, and with the promise of food, shelter and security, he lured them to Charlotte with the intention of exploiting them for his financial benefit. Fortunately, a well-trained law enforcement officer observed one of the victims and the immediate circumstance and as a result, two young women were rescued from a life on the streets. My office is committed to prosecuting sex trafficking cases and continuing to work with our law enforcement partners to identify those who engage in this illegal, dehumanizing business,” said Acting U.S. Attorney Rose.
“Unfortunately, child predators have become increasingly adept at using social media and other modern communication tools to identify and manipulate their victims,” said Special Agent in Charge Ryan L. Spradlin, ICE Homeland Security Investigations Atlanta. “Whenever HSI and our law enforcement partners encounter children for sale, we won’t rest until we’ve identified and arrested the predators seeking to pimp them out and have rescued their victims from a life of exploitation and abuse.”
Drum will remain in federal custody until he is 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 of the case was handled by the HSI and CMPD. Assistant U.S. Attorney Kimlani Ford, 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 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 the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Gastonia Man Sentenced to 11.5 Years Prison for Bank RobberyRead the Press Release
CHARLOTTE, N.C. – U.S. District Judge Max O. Cogburn, Jr. sentenced today James McConnell, 48, of Gastonia, N.C. to 138 months in prison, followed by three years of supervised release on charges stemming from an April 2012 bank robbery, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.
Acting 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, Chief Kerr Putney of the Charlotte Mecklenburg Police Department, and the Chief Robert C. Helton of the Gastonia Police Department.
According to court documents and today’s sentencing hearing, on April 11, 2012, McConnell robbed a BB&T branch located at 9200 S. Tryon Street, stealing $505 in cash. Court records show that McConnell walked into the branch and told the bank teller he had a gun and demanded $2,500 in large bills. Court records indicate that the teller told McConnell she did not have $2,500 and instead handed him $505 in small bills. McConnell then fled with the money in his hand. According to documents filed in the case, McConnell was arrested on June 16, 2012 on unrelated charges and was identified by a witness as the man captured on the bank’s cameras.
McConnell pleaded guilty in July 2014 to one count of bank robbery. According to court documents and statements made in court, McConnell has two prior federal bank robbery convictions.
McConnell remains in federal custody and will be turned 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’s and the Charlotte Mecklenburg Police Department with assistance from the Gastonia Police Department. The prosecution for the government was handled by Assistant U.S. Attorney Corey Ellis of the U.S. Attorney’s Office in Charlotte.
Gastonia Woman Pleads Guilty to Embezzling More Than $500,000 from EmployerRead the Press Release
CHARLOTTE, N.C. – A Gaston County woman appeared before U.S. Magistrate Judge David S. Cayer today and pleaded guilty to stealing more than $500,000 from her employer, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Jennifer Ann Champagne, 39, of Gastonia, N.C. pleaded guilty making and possessing forged and counterfeit securities, wire fraud and access device fraud.
Acting U.S. Attorney Rose is joined in making today’s announcement by Felica R. Rude, Acting Special Agent in Charge of the U.S. Secret Service in Charlotte.
According to charging documents and today’s court proceedings, from 2006 to 2013, Champagne was employed by a Charlotte-based company specializing in the construction and repair of tennis courts and running tracks. Champagne was the company’s office manager and bookkeeper, and had access to the company’s safe, computer accounting programs, online bank accounts, security passwords and other confidential information. According to court records, Champagne did not have access to and was not authorized to sign company checks, or use the company’s bank accounts or credit card accounts outside of the normal course of business.
Court records show that Champagne exploited her position as office manager and embezzled money from her employer by signing the company’s President’s name on forged checks and then altered the company’s books and records to hide the theft. For example, according to court records, Champagne embezzled more than $260,000 by forging 100 company checks in her name and her husband’s landscaping business. Champagne also used the company’s credit card to make more than 400 unauthorized charges totaling over $40,000. Court records indicate that Champagne also made authorized bank transfers from the company’s bank accounts to her bank accounts, and issued a company credit in her name, which she used to make 170 unauthorized charges. Overall, court records show that Champagne’s scheme caused the company a loss of over $540,000.
Champagne was released on bond after her plea hearing. The making and possessing forged and counterfeit securities charge carries a maximum prison term of 10 years and a $250,000 fine. The wire fraud charge carries a maximum prison term of 20 years and a $250,000 fine. The access device fraud charge carries a maximum prison term of 15 years and a $250 fine. As part of her plea agreement, Champagne has agreed to pay restitution, the amount of which will be determined by the Court at sentencing. A sentencing date for the defendant has not been set yet.
The investigation was handled by the U.S. Secret Service. The prosecution for the government is being handled by Assistant U.S. Attorney Kenneth Smith of the U.S. Attorney’s Office in Charlotte.
Federal Jury Finds Methamphetamine Trafficker GuiltyRead the Press Release
STATESVILLE, N.C. B On Wednesday, July 8, 2015, a federal jury in sitting in Statesville, convicted Roger Dale Franklin, 54, of Lenoir, N.C., of nine charges, including conspiracy to distribute and to possess with intent to distribute methamphetamine, possession of methamphetamine with intent to distribute, possession of firearms in furtherance of drug trafficking, and possession of firearms by a convicted felon, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.
Acting U.S. Attorney Rose is joined in making today’s announcement by Ryan L. Spradlin, Acting Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Georgia and the Carolinas, Caldwell County Sheriff Alan C. Jones, and Lenoir Police Chief Scott Brown.
Evidence presented at the two-day trial that ended yesterday established that, from 2007 to 2014, Franklin and his co-conspirators sold more than five kilograms of methamphetamine, which has a street value of more than $150,000. In 2013, law enforcement officials in Lenoir and Caldwell County, as well as Morganton, stopped Franklin in vehicles on four occasions and seized methamphetamine from him, his vehicles, and his co-conspirators. On two of those occasions, he was in possession of handguns.
This prosecution in Operation “Dixie Crystal” is part of an extensive investigation by the Organized Crime Drug Enforcement Task Force (OCDETF) that has resulted in the conviction of more than 50 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.
Franklin was indicted by a federal grand jury on December 16, 2014, which indictment was superseded on April 22, 2015. He has been in federal since February 2, 2015, and was in state custody prior to that. Franklin will remain in custody until his sentencing date, which has not yet been set. He faces a statutory mandatory minimum sentence of 15 years to life, and a fine of up to $10,000,000.
The case was investigated by HSI in Charlotte, the Caldwell County Sheriff’s Office, Lenoir Police Department, and Morganton Department of Public Safety.The prosecution of this OCDETF investigation is being handled by Assistant U.S. Attorney Steven R. Kaufman.
Charlotte Man Sentenced in Luxury Automobile Fraud SchemeRead the Press Release
CHARLOTTE, N.C. – Michael A. Marshall, 38, of Charlotte, was sentenced today to serve 96 months in prison and to pay $425,442 as restitution for committing bank fraud and related charges, in connection with an automobile loan scheme involving luxury vehicles, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Chief U.S. District Judge Frank D. Whitney ordered Marshall to serve the 96-month sentence consecutive to the sentence Marshall previously received for a probation violation from his prior federal felony.
Acting U.S. Attorney Rose is joined in making today’s announcement by Ryan L. Spradlin, Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Georgia and the Carolinas.
According to filed court documents and court proceedings, from August 2012 to February 2013, Marshall and his co-defendant, Frederick D. Neal, engaged in a fraudulent loan scheme involving luxury vehicles the men purchased in Neal’s name. Court records show that Marshall generally provided the down-payment money for the purchase of the vehicles, and arranged to finance the rest via automobile loans in Neal’s name. Court records indicate that the conspirators obtained the loans by making false statements on the loan applications to the automobile lenders, including falsely claiming that Neal earned over $8,000 per month.
According to court records, the two men fraudulently obtained at least seven luxury vehicles, including a 2009 Maserati Grand Turismo, a 2006 Bentley, a 2011 Porsche Panamera and a 2009 Mercedes Benz SL550, among others. Marshall and Neil “leased” some of the vehicles to others through “Luxotic Rentals, Inc.” (Luxotic), a company controlled by Marshall. Eventually, the vehicles were fraudulently sold to third parties, after “wiping” their titles shortly after obtaining them, according to court records. To get the clean titles, Marshall created fake letters from the automobile lenders purporting to be lien releases for the vehicles, falsely stating that the liens were paid off. Marshall then filed the false lien releases with the North Carolina Division of Motor Vehicles to request and obtain new titles. According to court records, using the new, clean titles, Marshall sold the vehicles to third parties, as if the luxury vehicles were owned free and clear of any liens. According to court records, the scheme caused the lenders a loss of approximately $425,442.
In May 2014, a federal jury found Marshall guilty of conspiracy to commit offenses against the United States, including making false statements to financial institutions, bank fraud and money laundering conspiracy. Neal was sentenced in February 2015 to 18 months in prison, three years of supervised release and was ordered to pay $425,442 as restitution, after pleading guilty to conspiracy to commit offenses against the United States.
The investigation was handled by HSI with the assistance of the North Carolina Division of Motor Vehicles. Assistant U.S. Attorney Kevin Zolot prosecuted the case.
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In a related case, on Wednesday, July 8, 2015, Judge Whitney sentenced Seth Kamose Ali, 42, of Charlotte, to 18 months in prison for assaulting an officer. Court records indicate that while investigating Marshall’s case, law enforcement determined that Ali had notarized at least four of the fraudulent lien release documents used by Marshall to obtain the clean car titles. According to court records, when a federal agent attempted to serve Ali with a trial subpoena in connection with Marshall’s case, Ali slammed his car door on the agent’s hand and attempted to flee by driving his vehicle at high speed toward the agent. A federal jury convicted Ali of assaulting an officer, including acts involving physical contact and inflicting bodily injury.
This investigation was handled by HSI. Assistant U.S. Attorney Kelli Ferry of the U.S. Attorney’s Office in Charlotte handled the prosecution.
Owner of Charlotte-Area Metal & Salvage Business Pleads Guilty to Tax EvasionRead the Press Release
CHARLOTTE, N.C. – The owner of Charlotte-area metal and salvage business pleaded guilty to tax evasion today, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Sammie Marks a/k/a Sammy Marks, 41, of Matthews, N.C., appeared before U.S. Magistrate Judge David Keesler and admitted to concealing from the Internal Revenue Service (IRS) personal earnings derived from his businesses, “Marks Metal & Salvage.”
According to the filed court documents and today’s plea hearing, between tax years 2009 and 2013, Marks deposited checks and cash receipts from his businesses and its customers totaling over $1.1 million into his personal bank account, which he did not include in income reported to IRS. Court records show that, during the relevant time period, Marks failed to disclose or provide records of his bank account and other information about his income to his tax return preparer. Furthermore, court records indicate Marks failed to report the additional income on his individual tax returns filed with the IRS. As a result of the unreported gross receipts, Marks had additional taxable income of $158,614.
Marks pleaded guilty to one count of tax evasion. The charge carries a maximum penalty of five years in prison and a $250,000 fine. As part of today’s plea agreement, Marks has agreed to pay restitution, the amount of which will be determined by the Court at Marks’ sentencing hearing, which has not been scheduled yet. Marks was released on bond following today’s court appearance.
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In a separate case, on Tuesday, June 30, 2015, Jeremy Curtis Anderson, 34, of Charlotte, pleaded guilty to two counts of making a false statement on a loan application. Anderson, who was formerly employed by Wells Fargo Bank as a loan documentation specialist and a consumer loan underwriter, appeared before Judge Keesler and admitted that between 2009 and 2012, he used false information, such as a false security number, false address and false employment information, on loan applications to obtained a car loan and a personal loan from a federally-insured credit union.
Anderson was released on bond following the plea hearing. The maximum penalty for the false statement on a loan application is 30 years in prison and a $1,000,000 fine per count. A sentencing hearing for Anderson has not been set yet.
Acting U.S. Attorney Rose thanked the Internal Revenue Service, Criminal Investigation Division (IRS-CI) under the direction of Special Agent in Charge Thomas J. Holloman, III, Special Agent in Charge, for the investigation of both cases. Ms. Rose also thanked Martin Mulholland, Acting Special Agent in Charge of the U.S. Secret Service in Charlotte, for his agency’s assistance with Anderson’s investigation.
Assistant United States Attorney Jenny G. Sugar of the U.S. Attorney’s Office in Charlotte is in charge of the prosecution of both cases.
Land Developer Involved in Failed Project of Luxury Homes Is Sentenced to 18 Years in Prison for His Role in A $23 Million Bank Loan Scheme and Related ChargesRead the Press Release
ASHEVILLE, N.C. – U.S. District Judge Martin Reidinger sentenced Keith Vinson to 18 years in prison for his role in a scheme involving the failed land development deal of Seven Falls, a golf course and luxury residential community in Henderson County, N.C., announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Vinson, age 57, of Arden, North Carolina, was also ordered to serve three years of supervised release and to pay restitution in the amount of $18,384,584.53. A federal jury convicted Vinson in October 2013 of conspiracy, bank fraud, wire fraud, and money laundering conspiracy.
Acting 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, Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI); and Jason T. Moran, Special Agent in Charge of the Federal Deposit Insurance Corporation (FDIC), Inspector General’s Office of Investigation, Atlanta office.
“Keith Vinson was the central figure among a group of rogue bankers, CPA’s, appraisers, investors and others who together not only violated federal laws, but violated the trust of legitimate investors and potential home owners. The U.S. Attorney’s Office engaged our full resources to investigate and successfully prosecute this greedy group, but the greater message is to those who seek to engage in similar fraudulent activities: we are not finished. Western North Carolina is enticing to investors and developers because of the beauty of the landscape and continued growth; however, those who seek to conduct business in this area should prepare to do so fairly, legally and transparently because we are paying close attention to business transactions by investors, developers and would-be gate keepers” stated Acting United States Attorney Jill Westmoreland Rose.
According to filed court documents, evidence presented at Vinson’s trial and today’s sentencing hearing:
Beginning in 2008, Vinson and his co-defendants conspired and obtained money from several banks through a series of straw borrower transactions in order to funnel monies to Vinson and his failing development of Seven Falls, a proposed golf course and luxury residential community in Henderson County, N.C. A straw borrower is an individual whose name appears on a loan and on the books and records of a bank as the beneficiary of a loan, but whose name is substituted for that of the true borrower and does not in fact receive the benefits of the loan. Lending institutions cannot properly assess the risk of making such loans as they do not know the true circumstances of the loans or the creditworthiness of the true borrowers. Vinson and his conspirators devised this scheme in order to funnel monies to Vinson and his failing development of Seven Falls.
In order to advance this scheme Vinson and his co-conspirators, including Avery Ted “Buck” Cashion, III, Raymond M. “Ray” Chapman, and others, recruited local bank officials including George Gordon “Buddy” Greenwood and Ted Durham, who at the time were, respectively, President of the Bank of Asheville and the President of Pisgah Community Bank. When bank officials realized that they had reached their legal lending limits with respect to some of the straw borrowers, additional straw borrowers were recruited to the scheme and more straw borrower loans were made to them. Additional straw borrower loans were also necessary to keep loans current, a scheme known as “loan kiting.” The loan kiting scheme became necessary when conspirators were unable to make payments on loans made early in the scheme. Seven Falls and another luxury residential golf development by Vinson named “Queens Gap” failed, resulting in millions in property losses. In addition, both the Bank of Asheville and Pisgah Community Bank failed and were taken over by the FDIC.
Many of Vinson’s co-conspirators were sentenced on June 2, 2015. Avery Ted “Buck” Cashion, III, 61, of Lake Luke, N.C., was sentenced to 36 months in prison; Raymond M. “Ray” Chapman, 68, of Brevard, N.C., was sentenced to 36 months in prison; Thomas E. “Ted” Durham, Jr., former President of the failed Pisgah Community Bank, 60, of Fletcher, N.C., was sentenced to 30 months in prison; and Aaron Ollis, 68, a former licensed Real Estate Appraiser, of Arden, N.C., was sentenced to two years of probation, including 12 months and 1 day home detention. Cashion, Chapman, Durham and Ollis each pleaded guilty to conspiracy to defraud the United States. The defendants were also ordered to pay restitution as follows
Avery Ted “Buck” Cashion, III, $14,266,256.47
Raymond M. “Ray” Chapman, $14,266,256.47
Thomas E. “Ted” Durham, $ 6,237,453.37
Aaron Ollis, $10,199,106.87
George M. Gabler, age 60, of Fletcher, N.C., was convicted of one count of willfully failing to report misconduct associated with two Seven Falls lot loans in March 2010. In court documents, Gabler admitted that he withheld documents from a federal grand jury knowing that they were related to fraudulent loans taken out on behalf of conspirator Keith Vinson. For this offense, Gabler, a former Certified Public Accountant, was sentenced to two years of probation, including 500 hours of community service and a $5,000 fine.
Previously, Buddy Greenwood was sentenced to 42 months in prison; Nicholas Dimitris was sentenced to 12 months plus one day in prison; the former Pisgah Community Bank Chief Credit Officer, Robert Craig Gourlay was sentenced to 15 months in prison; David G. Smith, who worked as a loan officer for Pisgah Community Bank was sentenced to nine months in prison, and Andrew Hager was sentenced to eight months in prison in connection with the Seven Falls scheme.
Vinson 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 being jointly handled by the FBI, IRS-CI, and FDIC-OIG. Assistant U.S. Attorneys Don Gast and Michael Savage are in charge of the prosecution.
Former Community College Employee Charged with Theft for Using College Funds to Purchase $179,500 of Items and Selling Them OnlineRead the Press Release
CHARLOTTE, N.C. – A criminal bill of information was filed today in federal court charging Mary S. Sherrill, 52, of Hickory, N.C. with theft of a program receiving federal funds, for using her employer’s funds to purchase approximately $179,000 worth of items and selling them over the Internet, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.
Robert W. Rolin, Jr. Acting Special Agent in Charge of the United States Secret Service, Charlotte Field Office joins Acting U.S. Attorney Rose in making today’s announcement.
According to filed court documents, from about October 2010 to December 2014, Sherrill was employed by Catawba Valley Community College in Hickory as purchasing coordinator. Court records show that as the college’s purchasing coordinator, Sherrill was authorized to place orders for equipment and other goods on behalf of the college and to pay using the college’s funds. Filed court documents show that Sherrill fraudulently and without authority used the college’s funds to purchase computer hard drives, printer cartridges, and other small computer-related items. According to court records, Sherrill then sold the items via the Internet using her personal eBay seller account and kept the profits. Court records show that Sherrill purchased approximately $179,000 worth of items using the college’s monies.
A signed plea agreement was also filed in federal court today, and Sherrill is expected to enter her guilty plea before a U.S. Magistrate judge when the hearing is scheduled by the Court. The charge levied against Sherrill carries a maximum of 10 years in prison and a $250,000 fine. As part of her plea agreement, Sherrill has agreed to pay restitution, the amount of which will be determined by the Court.
The case was investigated by the U.S. Secret Service. Assistant U.S. Attorney Corey F. Ellis is in charge of the prosecution.
North Carolina Man Charged with Attempting to Provide Material Support to ISIL and Weapons OffensesRead the Press Release
CHARLOTTE, N.C. – A Burke County, North Carolina, man has been charged with attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization, announced Assistant Attorney General for National Security John P. Carlin, Acting 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.
The criminal complaint was filed today in federal court, charging Justin Nojan Sullivan, 19, of Morganton, North Carolina, with one count of attempting to provide material support to ISIL, one count of transporting and receiving a silencer in interstate commerce with intent to commit a felony, and one count of receipt and possession of an unregistered silencer, unidentified by a serial number. Sullivan was arrested in his home on Friday, June 19, 2015, without incident.
“As alleged in the complaint, the defendant was planning assassinations and violent attacks in the United States and is charged with attempting to provide material support to ISIL and federal firearms violations,” said Assistant Attorney General Carlin. “The National Security Division’s highest priority is counterterrorism and we will continue to pursue justice against those who seek to provide material support to designated foreign terrorist organizations.”
“Sullivan is charged with attempting to provide material support to ISIL, a designated terrorist organization that poses a serious threat to our country’s security,” said Acting U.S. Attorney Rose. “My highest priority is to detect and prosecute violent extremists and protect innocent Americans from terrorist attacks.”
“Justin Sullivan intended to commit violent acts against innocent people in the U.S. to support the terrorist organization, ISIL,” said Special Agent in Charge Strong. “As demonstrated in this case federal, state, and local law enforcement will work tirelessly to protect our communities from those who plot to carry out terrorist activities of any kind.”
The criminal complaint alleges that the FBI became aware of Sullivan’s plans to obtain a semi-automatic AR-15 rifle at the Hickory Gun Show in Hickory, North Carolina, on June 20, 2015, which he planned to use to kill a large number of U.S. citizens on behalf of ISIL. According to the criminal complaint, an FBI undercover employee (UC) made contact with Sullivan beginning on or about June 6, 2015, during which time Sullivan described himself as “a mujahid,” and as a Muslim convert living in the eastern United States. Sullivan also told the UC that “the war is here,” and gave the UC the opportunity to join what he called the Islamic State of North America, whose “doctrine is Guerilla Warfare in and out,” the complaint alleges. The criminal complaint further alleges that over the next few days and during various conversations, Sullivan discussed with the UC, among other things, his various terrorist attack concepts and instructed the UC on how to obtain weapons, specifically “an AR-15 .223 with split ammo” at a gun show.
According to the complaint, on or about June 9, 2015, Sullivan discussed with the UC the possibility of making homemade silencers and asked the UC whether he would be able to make one. When the UC said that he thought he could, Sullivan told the UC “Ill need to have one built by next week.” The complaint alleges that Sullivan also told the UC “Yeah ill let u mail me…I plan on using it this mont[h],” and that Sullivan planned on doing “minor assassinations before the big attack for training.” He also told that UC that “we are going to send a video to IS.” According to the complaint, during a follow-up conversation, Sullivan told the UC again that he would need the suppressor “before the end of next week,” apparently referring to June 19, 2015.
On June 19, 2015, the FBI, with the support of the Hickory, North Carolina, Police Department, the Burke County, North Carolina, Sheriff’s Office and the North Carolina State Highway Patrol, arrested Sullivan at his home and located the silencer at his residence, which Sullivan had received earlier that day. No one was harmed during the arrest.
Sullivan is currently in federal custody. Sullivan is expected to make his initial appearance in federal court today.
The charge of conspiracy to provide material support to a designated foreign organization carries a maximum potential penalty of 20 years in prison and a $250,000 fine. The charge of transporting and receiving a silencer in interstate commerce with intent to commit a felony carries a maximum potential penalty of 10 years in prison and a fine of $250,000. The charge of receipt and possession of an unregistered silencer, unidentified by a serial number, carries a maximum potential penalty of 10 years in prison and a fine of $10,000.
The charges contained in the complaint are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The case was investigated by the FBI. In making today’s announcement, Acting U.S. Attorney Rose also thanked the Charlotte Division of the U.S. Postal Inspection Service for their invaluable assistance. Rose also thanked the North Carolina State Highway Patrol, the Burke County Sheriff’s Office, and the Hickory Police Department and for their help with the investigation.
The case is being prosecuted by Assistant U.S. Attorney and Senior Litigation Counsel Michael E. Savage of the Western District of North Carolina and Trial Attorney Gregory Gonzalez of the National Security Division’s Counterterrorism section.
Colorado Woman Charged with Wire Fraud Conspiracy for Operating $6.8 Million Ponzi SchemeRead the Press Release
CHARLOTTE, N.C. – A criminal bill of information was filed today in federal court, charging Kristine Louise Johnson, 60, of Aurora, Colorado, with wire fraud conspiracy for operating a $6.8 million Ponzi scheme that defrauded more than 10,000 investor victims, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.
Robert W. Rolin, Jr. Acting Special Agent in Charge of the United States Secret Service, Charlotte Field Office joins Acting U.S. Attorney Rose in making today’s announcement.
According to filed court documents, from about April 2014 to February 2015, Johnson and her conspirators ran the investment scheme through a sham internet company, “The Achieve Community” (TAC). To induce victims to invest their money, the conspirators falsely claimed the investors would receive a bogus 700% return on their investment. According to court records, the victims’ money was never invested. Rather, TAC operated as a “Ponzi” scheme, and the conspirators used monies from later victim-investors to pay fraudulent “returns” to earlier ones and to enrich themselves. Johnson and her conspirators defrauded over 10,000 investors both in the Charlotte-area and worldwide, causing the victims to sustain losses totaling millions of dollars.
Court records show Johnson served as Chief Financial Officer (CFO) and managed TAC’s day-to-day operations, including managing company bank accounts and producing marketing materials. According to filed documents, Johnson falsely told potential participants that TAC was not a “Pyramid Scheme,” when, in fact, TAC operated solely as a pyramid scheme and initial investors were paid with later investors’ money. Johnson also falsely told potential investors that the “more products purchased, the more people move through the matrix and get paid.” According to filed documents, there were no actual products and early victim-investors only received Ponzi-like payments, regardless of the purchase of any products. Johnson and her conspirators also falsely promoted TAC as a “lifetime income plan” with “limitless” returns when, in reality, the Ponzi scheme could only operate with ever increasing infusions of new victim-investor cash.
As described in court documents, Johnson and her conspirators falsely represented that TAC was able to sustain and continue making payouts through the use of what they called a “Triple Algorithm” and a “3D Matrix,” which were so complex that they could not be explained in writing. In reality, no such business model existed and the only revenue for the scheme came from victim-investors. According to court records, in order to sustain the scheme, Johnson and her conspirators encouraged investors to “re-purchase” positions in the matrix, thereby reducing the amount of money needed to pay out to early investors and enabling the fraudsters to prolong the scheme. Court records indicate that Johnson used over $200,000 of the victims’ money for her own enrichment.
According to court filings, as the scheme grew in size and scope, Johnson and her conspirators concealed the true nature of the scheme through multiple misrepresentations. According to court records, when the conspirators became concerned that the use of the term “investment” would draw scrutiny from regulators, they instructed victim-investors that “We ARE NOT an INVESTMENT program, please don’t use that term when you speak or post about our re-purchase strategy.”
According to court records, Johnson and her conspirators also lied about the company’s “business model” to the third-party payment processors which processed TAC’s money transactions. When one payment processor concluded that TAC was operating a Ponzi scheme and terminated TAC as a client, court records show that Johnson and her conspirators falsely told victim investors that it was because the payment processor was unable to handle the large amount of money TAC paid to its investors.
As indicated in court documents, the investment scheme began to crumble when payment processors stopped processing the Ponzi payments to victim-investors. By the time the scheme collapsed in February 2015, the conspirators owed victim-investors at least $51 million in purported investment returns, yet Johnson, her conspirators and TAC had available only 4% or approximately $2.6 million.
A signed plea agreement was also filed today, and Johnson is expected to appear before a U.S. Magistrate judge in the coming days to formally accept the plea. The wire fraud charge carries a maximum of 20 years in prison and a $250,000 fine. As part of her plea agreement, Johnson has agreed to pay restitution, the amount of which will be determined by the Court.
The case was investigated by the U.S. Secret Service. In making today’s announcement, Acting U.S. Attorney Rose also thanked the Denver Regional Office of the Securities and Exchange Commission for its assistance with the investigation.
Assistant U.S. Attorney Corey F. Ellis is in charge of the prosecution.
Charlotte Area Tax Return Preparer Pleads Guilty to Multi-Million Dollar Tax Return FraudRead the Press Release
CHARLOTTE, N.C. – A Charlotte-area tax return preparer pleaded guilty today to aiding or assisting in the filing of a false claim for tax refund, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Fitzroy E. Lawrence, 48, of Charlotte, appeared before U.S. Magistrate Judge David S. Cayer and admitted to aiding and assisting in the filing of hundreds of false tax returns that were filed with the IRS seeking fraudulent tax refunds totaling approximately $2.6 million.
According to the filed court documents and today’s plea hearing, for tax years 2008 through 2011, Lawrence aided and assisted in the preparation of hundreds of false tax returns, many of which included false wages and false dependent information. In pleading guilty, Lawrence also admitted that the tax loss associated with the offense is $2,635,641.
Lawrence pleaded guilty to one count of aiding or assisting in filing a false claim against the United States. The maximum penalty for this charge is five years in prison and a $250,000 fine. As part of today’s plea agreement, Lawrence has agreed to pay restitution, the amount of which will be determined by the Court at his sentencing hearing, which has not been scheduled yet. Lawrence was released on bond following his plea hearing.
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In a separate case, another Charlotte-area tax return preparer pleaded guilty for his role in filing false tax returns for clients. Malik Shropshire, 43, of Charlotte, appeared before Judge Cayer today and admitted to conspiring to file false tax returns and lying on a loan application. Shropshire’s conspirator, his sister Nkhenge Shropshire, was sentenced to 33 months in prison for her participation in the scheme in October 2014 in a related case.
According to the filed court documents and today’s plea hearing, beginning in 2010 and continuing through 2012, Shropshire worked as a tax preparer and a financial advisor. Shropshire and his conspirators recruited individuals to have their tax returns prepared by promising large refunds. For tax years 2008 through 2011, Shropshire aided and assisted in the preparation of hundreds of false tax returns that were filed with the IRS. Most of these tax returns were false because, among other things, they included false Schedule C businesses, false dependents, and false refundable education credits. As a result of the inclusion of the false information on the tax returns, the taxpayers’ tax liabilities decreased, the taxpayers received larger tax refunds, and the taxpayers qualified for the Earned Income Tax Credit.
Shropshire pleaded guilty to one count of conspiracy to impede the IRS and one count of making a false statement on a loan application. The maximum penalty for the conspiracy charge is five years in prison and a $250,000 fine. The maximum penalty for the false statement on a loan application is 30 years in prison and a $1,000,000 fine. Shropshire was released on bond following his plea hearing.
Acting U.S. Attorney Rose thanked the Internal Revenue Service, Criminal Investigation Division (IRS-CI) under the direction of Special Agent in Charge Thomas J. Holloman, III, Special Agent in Charge, for the investigation of both cases. Ms. Rose also thanked Thomas L. Noyes, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service, for his agency’s assistance with Shropshire’s investigation.
Assistant United States Attorney Jenny G. Sugar of the U.S. Attorney’s Office in Charlotte is in charge of the prosecution of both cases.
Gaston County Prosecutor to Make U Visa Certification Decisions in Accordance with Federal GuidanceRead the Press Release
CHARLOTTE, N.C. – In May 2015, federal officials from the United States Attorney’s Office for the Western District of North Carolina met with Gaston County District Attorney, Locke Bell regarding when to certify so-called “U visas,” announced Jill Westmoreland Rose, Acting U.S. Attorney Office for the Western District of North Carolina. The U visa allows a victim of certain qualifying crimes to temporarily remain in the United States to help law enforcement investigate or prosecute the perpetrator. However, a victim is not eligible for a U visa unless the prosecutor or head of the law enforcement agency certifies, among other things, that he or she has been a victim of a qualifying crime and has been, is being, or is likely to be helpful in the investigation or prosecution. Mr. Bell agreed to make U visa certifications without reference to nationality, as is consistent with applicable federal statutes. Mr. Bell authorized this release.
Charlotte Man Charged with Tax Evasion for Using Shell Companies to Hide IncomeRead the Press Release
CHARLOTTE, N.C. – A criminal bill of information was filed today in federal court charging Chris Yung Le, 63, of Charlotte, with tax evasion, for using shell companies to hide his and others’ income, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.
Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) joins Acting U.S. Attorney Rose in making today’s announcement.
According to filed court documents, Le was the owner and operator of two companies, Columbia General Services Corp. (Columbia General) and Comprehensive Administrative Services Corp. (CAS). Court documents show that Le maintained separate bank accounts for each company, but had listed for both businesses the same address as his Charlotte residence. According to documents filed with the court, from about 2007 to about 2013, the two companies primarily served as shell entities for income generated by other businesses, and Le used the companies’ bank accounts to conceal his and other individuals’ personal earnings from the IRS. Court records reflect a series of bank transactions Le conducted in order to hide personal income. Also, court records indicate that Le did not report income of at least $469,000 on his personal tax returns for tax year 2013. The additional tax due on this unreported income is approximately $131,322.
A signed plea agreement was also filed today and Chris Le is expected to appear before a U.S. Magistrate Judge in the coming days to formally accept the plea. The tax evasion charge carries a maximum penalty of five years in prison and a $100,000 fine. As part of his plea agreement, Chris Le has agreed to pay restitution, the amount of which will be determined by the Court.
In a related prosecution, Mark Tuan Le, an internal medicine physician and former owner of Northcross Medical Center, previously pleaded guilty to health care fraud conspiracy in connection with a healthcare fraud scheme that billed health insurers for services that were not provided, and for evading over $800,000 in taxes in 2009 and 2010 by funneling money to companies and bank accounts controlled by Mark Le and others. In parallel civil proceedings, Mark Le has also agreed to pay $6.2 million to the United States to settle related civil fraud allegations. Mark Le currently awaits sentencing.
The investigation into Chris Le was handled IRS-CI. The criminal prosecution is handled by Assistant U.S. Attorney Kelli Ferry.
Charlotte-Area Appliance Repairman Pleads Guilty to $576,000 Fraudulent Warranty Claim Scheme, Filing False Tax ReturnRead the Press Release
CHARLOTTE, N.C. – The owner and operator of Charlotte-area appliance repair companies pleaded guilty today to wire fraud and filing a false tax return, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. John Wesley Clark, 42, of Charlotte, N.C., appeared before U.S. Magistrate Judge David S. Cayer and admitted to submitting false and fraudulent warranty work order claims to an electronics company and to filing a false income tax return.
Thomas J. Holloman, III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) and Thomas L. Noyes, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service join Acting U.S. Attorney Rose in making today’s announcement.
According to the filed court documents and today’s plea hearing, beginning in at least 2010 and continuing through 2012, Clark, also known as John Isaacs, Jonathan Fitzgerald, and JA Adams, engaged in a scheme to defraud a major electronics company based in New Jersey by submitting false and fraudulent warranty work order claims, resulting in payments of $576,000 for warranty work that was not performed. Clark was the owner and operator of various Charlotte area appliance repair companies, including JA Appliance Co; Fitzgerald Appliance Co; BR Appliance; C&A Appliance Co.; D&L Appliance Co.; and J&S Appliance Co. Court records indicate that Clark, sometimes using an alias, established his companies as authorized service centers for the major electronics company. He then submitted fraudulent warranty work orders that listed, among other things, false customer information, false addresses, false part numbers, and false repair dates.
For tax years 2010 through 2012, Clark failed to report all of the income he obtained through the fraudulent warranty claims on his federal tax returns. Additionally, Clark filed fraudulent forms W-2 with his federal tax returns that falsely stated that tax withholding had been paid over to the IRS.
Clark pleaded guilty to one count of wire fraud and one count of filing a false tax return. The wire fraud charge carries a maximum penalty of 20 years in prison and a $250,000 fine. The filing a false tax return charge carries a maximum penalty of three years in prison and a $250,000 fine. As part of today’s plea agreement, Clark has agreed to pay restitution, the amount of which will be determined by the Court at Clark’s sentencing hearing, which has not been scheduled yet. Clark was released on bond following his plea hearing.
The investigation of the case was handled by IRS-CI and the U.S. Postal Inspection Service. The case is being prosecuted by Assistant United States Attorney Jenny G. Sugar of the U.S. Attorney’s Office in Charlotte.
Six Charged in Health Care Fraud Scheme Targeting MedicaidRead the Press Release
CHARLOTTE, N.C. – Six members of a health care fraud ring that targeted Medicaid by submitting approximately $10 million in fraudulent reimbursement claims have been charged with health care fraud conspiracy, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.
Filed criminal bills of information charge Wanda Marie Webb, 65, and Lachanda Clotier Parks, 40, both of Charlotte; Alexander Bass, 41, and Torrey Darnell Moton, 44, both of Fuquay-Varina, N.C.; Jacqueline Priscilla Ford, 34, of Fayetteville, N.C; and D’Marcus Antonio White, 25, of Baton Rouge, Louisiana with one count of health care fraud conspiracy. Webb and Ford pleaded guilty in Court earlier today. Parks, Moton, Bass and White previously entered their guilty pleas.
Acting 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.
According to filed court documents, admissions reflected in the filed plea agreements and statements made in court, at various times between October 2012 and August 2013, unindicted conspirators #1 (CC#1) and #2 (CC#2) conspired with Webb, Parks, Bass, Moton, Ford and White to defraud Medicaid by filing false claims for payment for mental and behavioral health services to Medicaid recipients which were never actually provided. According to court records, the network of conspirators executed the fraud through a number of mental and behavioral health services companies, including “United Rehabilitation Services” (URS) in Erwin, N.C., which was owned and operated by Bass and Moton.
Court records show that Bass and Moton agreed to pay CC#1 $4,000 per month in exchange for coordinating the filing of fraudulent claims to Medicaid on behalf of URS. At the direction of CC#1, Bass and Moton also paid CC#2, who operated as the scheme’s patient-recruiter, to collect Medicaid beneficiary numbers which were then used to file the false claims. Court records indicate that between January and July 2013, CC#1, Bass and Moton filed over $1.1 million in fraudulent claims, and Medicaid paid out approximately $400,000 directly to Bass and Moton.
According to plea documents and other court filings, the network of conspirators generated fake documents to support the fraudulent claims and in case Medicaid ever audited the providers for the claimed services. White, Ford and Parks generated fictitious paperwork, which included fake intake sessions, fake clinical assessments and fabricated therapy notes. At the direction of CC#1, White’s role, among other things, was to organize on spreadsheets the information of the non-existent mental health problems and treatment plans for the Medicaid recipients, to reflect which fake services were allegedly rendered to each recipient, court records show.
Court records also indicate that during the relevant time period, Webb, a licensed and Medicaid-approved psychologist, agreed to allow CC#1 to use her Medicaid provider number to submit the fraudulent reimbursement claims, listing Webb as the attending clinician. Court records show that Webb kept approximately 68% of the Medicaid reimbursements, and paid 25% to CC#1 and 7% to other individuals responsible for processing the fake claims. According to court records, just in the month of August 2013, using Webb’s Medicaid provider number, the conspirators submitted approximately $239,175 in false claims, of which $79,338.74 was paid out to Webb directly.
The health care fraud conspiracy charge carries a maximum sentence of 10 years in prison and a $250,000 fine.
The investigation, which is ongoing, is being handled by the FBI with assistance from the North Carolina Medicaid Investigations Division. Assistant U.S. Attorney Kelli Ferry is in charge of the prosecution.
Related Prosecutions
Four other defendants previously admitted to their involvement in the Medicaid fraud scheme. In late 2014, Aliya Boss, Zaria Davis Humphreys, Kino Williams and Sakeenah Davis each pleaded guilty to one count of health care fraud conspiracy and currently await sentencing. (Please visit: http://www.justice.gov/usao-wdnc/pr/charlotte-woman-pleads-guilty-conspiracy-defraud-medicaid-more-43-million to view WDNC’s press release related to those prosecutions).
The investigation and charges are 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.
Georgia Woman Handed Down Six-Year Sentence for False Tax Refund ConspiracyRead the Press Release
ASHEVILLE, N.C. – On Thursday, June 4, 2015, U.S. District Judge Martin Reidinger sentenced a Georgia woman to 72 months in prison for conspiring with others to file over 1,000 false tax returns and collecting more than $3.5 million in fraudulent tax refunds, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Yolanda Tiess Kitson, 35, of Hephzibah, Ga. was also sentenced to three years of supervised release and was ordered to pay more than $3.9 million as restitution.
Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI); Russell F. Nelson, Special Agent in Charge of the United States Secret Service, Charlotte Field Division; and Thomas L. Noyes, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service join Acting U.S. Attorney Rose in making today’s announcements.
According to court records and court proceedings, Kitson conspired with Senita Dill and Ronald Jeremy Knowles to file fraudulent tax returns using the personal information of more than 1,000 veterans and their family members which Kitson had stolen through her job as a contractor at the Eisenhower Army Medical Center at Fort Gordon in Augusta, Ga. Kitson obtained the personal information from patient records and passed it to her sister, Dill. Using that information, Dill and Knowles filed over 1,000 false tax returns and received over $3.5 million of stolen U.S. Treasury funds. Dill and Knowles were previously sentenced to 324 and 70 months in prison, respectively, for their roles in the conspiracy. (Please visit: http://www.justice.gov/usao-wdnc/pr/polk-co-couple-sentenced-false-tax-refund-conspiracy to view WDNC’s press release related to those prosecutions).
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Judge Reidinger also sentenced yesterday James Wesley Hills, II, 36, of Houston Texas, to serve 45 months in prison and three years of supervised release for making false claims against the United States and aggravated identity theft. He was also ordered to pay over $60,000 in restitution. According to court documents and the sentencing hearing, Hills gained access to personal identifying information of customers of Primerica, a financial products company, and between 2010 and 2011 he used the stolen information to file fraudulent tax returns. Hills filed at least 38 false tax returns in this manner and collected over $50,000 of stolen U.S. Treasury funds.
IRS-CI and USPIS investigated Kitson’s case. Hills’ investigation was also handled U.S. Secret Service.
Assistant U.S. Attorney Don Gast of U.S. Attorney’s Office in Asheville prosecuted both cases.
U.S. Attorney's Office Employee Receives Prestigious Attorney General AwardRead the Press Release
WASHINGTON – Timothy Reid Dunbar, Automated Litigation Support Specialist, of the U.S. Attorney’s Office in the Western District of North Carolina, was one of the members of the Department of Justice recognized by Attorney General Loretta Lynch, Deputy Attorney General Sally Quillian Yates, and Executive Office for U.S. Attorneys (EOUSA) Director Monty Wilkinson at the 31st Director’s Awards Ceremony today in Washington, D.C.
The Western District of North Carolina was one of 31 districts represented at the ceremony which was held in the Great Hall at the Robert F. Kennedy Department of Justice Building.
“Our honorees include career executives and supervisors; Assistant U.S. Attorneys and Special Assistant U.S. Attorneys; appellate attorneys and law enforcement officials; administrators, paralegals, and public affairs officers. These individuals, and so many others, have faced daunting and sometimes dangerous challenges. They have dedicated their leadership and their expertise, their time and their energy, to the service of their mission. And they have remained devoted, at all times, to the high ideals and deeply-held values that animate our country and our cause,” said Attorney General Lynch.
Tim Dunbar’s significant contibutions to the Western District’s Automated Legal Support (ALS) team have been critical in the prosecution of some of the office’s most complex and high-profile matters, including the historic $16.7 billion Residential Mortgage-Backed Sucurities case against Bank of America, and the public corruption case against former Charlotte Mayor Patrick Cannon. In addition to managing data, Tim uses his creativity and solution-oriented approach to assist attorneys and agents in efficiently searching and analyzing case-related data. Moreover, Tim produces highly professional trial graphics, audio files and visual displays, many with hundreds of exhibits. Tim is also a leading thinker for ALS nationwide, serving on the LAW Beta Test Team and the E-discovery Working Group.
Tim graduated from Washington State University with a Bachelor’s Degree in Business with an emphasis in Management Information Systems and is originally from Seattle, Washington.
“I am honored and delighted that Tim Dunbar was recognized today for his outstanding achievements and important contributions to furthering the mission of the Justice Department. Tim is a critical member of our litigation team whose technical expertise and creativity contribute significantly to our trial preparation and presentations. This well-deserved award speaks to Tim’s dedication, hard work and professionalism, and I am proud to be working alongside such a talented and committed public servant,” said Acting U.S. Attorney Rose.
EOUSA provides oversight, general executive assistance, and direction to the 94 United States Attorneys’ offices around the country. For more information on EOUSA and its mission, visit http://www.justice.gov/usao.
Two Men Sentenced for Armed Bank RobberyRead the Press Release
STATESVILLE, N.C. – Earlier today, U.S. District Judge Richard Voorhees handed down lengthy prison terms to two men involved in a 2013 armed bank robbery, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Judge Voorhees sentenced Darius Donnell Freeman, 33, of Charlotte to serve 447 months in prison. Freeman’s conspirator, Wincy Joseph, 29, also of Charlotte, was sentenced to 135 months in prison. Judge Voorhees also ordered the defendants to serve five years under court supervision following their release from prison and to pay $5,185.99 as restitution.
In May 2014, a federal jury convicted both men of armed bank robbery and possession of a firearm in furtherance of a crime of violence charges. The jury also found Freeman guilty of carjacking and a second possession of a firearm in furtherance of a crime of violence.
Acting 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, Chief Matthew A. Selves of the Troutman Police Department and Chief Rodney D. Monroe of the Charlotte-Mecklenburg Police Department.
According to filed court documents and trial proceedings:
In or about May 20, 2013, at approximately 5:15 a.m. Freeman carjacked a victim at gunpoint at a Circle K gas station located on South Boulevard in Charlotte. Later that morning, Freeman and Joseph used the carjacked vehicle to rob a Bank of America branch in Troutman, N.C. Soon after the bank opened, Freeman entered the bank wearing a black cap, sunglasses, gloves and brandishing a silver handgun. Freeman jumped on the tellers’ counter and demanded cash. Joseph entered the bank behind Freeman, dressed in a black sweatshirt with the hood pulled over his head, sunglasses and gloves, and demanded cash from another bank employee. The defendants then fled the scene with $5,185.99 in cash, driving off in the car Freeman had jacked earlier that day. Law enforcement later found the car abandoned on Interstate-77 in Iredell County. The defendants were identified five days later, following a tip from a concerned citizen. Freeman was arrested on June 6, 2013 and Joseph on June 13, 2013.
The investigation was led by the FBI, the Troutman Police Department and CMPD. Acting U.S. Attorney Rose also thanked the Mooresville Police Department, the Iredell County Sheriff’s Office and the Statesville Police Department for their assistance in the investigation.
The prosecution was handled by Assistant U.S. Attorney Elizabeth Greene and Special Assistant U.S. Attorney Rebecca McNerney.
Five Involved in Failed Land Development of Luxury Homes Sentenced to PrisonRead the Press Release
ASHEVILLE, N.C. – Five of the eleven defendants charged in connection to a scheme involving the development of Seven Falls, a golf course and luxury residential community in Henderson County, N.C. were sentenced today, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.
Acting 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, Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI); Jason Moran, Special Agent in Charge of the Federal Deposit Insurance Corporation (FDIC), Inspector General’s Office of Investigation, Atlanta office.
U.S. District Judge Martin Reidinger sentenced Avery Ted “Buck” Cashion, III, 61, of Lake Luke, N.C., to 36 months in prison, and three years of supervised release; Raymond M. “Ray” Chapman, 68, of Brevard, N.C., to 36 months in prison, and three years of supervised release; Thomas E. “Ted” Durham, Jr., former President of the failed Pisgah Community Bank, 60, of Fletcher, N.C., to 30 months in prison, and three years of supervised release; and Aaron Ollis, 68, a former licensed Real Estate Appraiser, of Arden, N.C., to two years of probation, including 12 months and 1 day home detention. Cashion, Chapman, Durham and Ollis each pleaded guilty to conspiracy to defraud the United States. The defendants were also ordered to pay restitution as follows:
Avery Ted “Buck” Cashion, III, $14,266,256.47
Raymond M. “Ray” Chapman, $14,266,256.47
Thomas E. “Ted” Durham, $ 6,237,453.37
Aaron Ollis, $10,199,106.87
George M. Gabler, age 60, of Fletcher, N.C., was convicted of one count of willfully failing to report misconduct associated with two Seven Falls lot loans in March 2010. In court documents, Gabler admitted that he withheld documents from a federal grand jury knowing that they were related to fraudulent loans taken out on behalf of conspirator Keith Vinson. For this offense, Gabler, a former Certified Public Accountant, was sentenced to two years of probation, including 500 hours of community service and a $5,000 fine.
Keith Vinson, was convicted at trial in October 2013 of conspiracy, bank fraud, wire fraud, and money laundering conspiracy. He is scheduled to be sentenced on June 25, 2015 in Asheville, N.C.
According to court documents filed in the case, trial evidence and statements made in court during the sentencing hearings:
Beginning in 2008, the defendants conspired and obtained money from several banks through a series of straw borrower transactions, in order to funnel monies to Vinson and his failing development of Seven Falls, a golf course and luxury residential community in Henderson County, N.C. A straw borrower is an individual whose name appears on a loan and on the books and records of a bank as the beneficiary of a loan, but whose name is substituted for that of the true borrower and does not in fact receive the benefits of the loan. Lending institutions cannot properly assess the risk of making such loans as they do not know the true circumstances of the loans or the creditworthiness of the true borrowers. The co-conspirators devised this scheme in order to funnel monies to Vinson and his failing development of Seven Falls.
In order to advance this scheme Vinson, Chapman, Cashion and others recruited local bank officials including George Gordon “Buddy” Greenwood and Ted Durham, who at the time were, respectively President of the Bank of Asheville and the President of Pisgah Community Bank. When bank officials realized that they had reached their legal lending limits with respect to some of the straw borrowers, additional straw borrowers were recruited to the scheme and more straw borrower loans were made to them. Additional straw borrower loans were also necessary to keep loans current, a scheme known as “loan kiting.” The loan kiting scheme became necessary when conspirators were unable to make payments on loans made early in the scheme. Seven Falls and another luxury residential golf development by Vinson named “Queens Gap” failed resulting in millions in property losses. In addition, both the Bank of Asheville and Pisgah Community Bank failed and were taken over by the FDIC.
Previously, Buddy Greenwood was sentenced to 42 months in prison; Nicholas Dimitris was sentenced to 12 months plus one day in prison; the former Pisgah Community Bank Chief Credit Officer, Robert Craig Gourlay was sentenced to 15 months in prison; David G. Smith, who worked as a loan officer for Pisgah Community Bank was sentenced to nine months in prison, and Andrew Hager was sentenced to eight months in prison in connection with the Seven Falls scheme.
The investigation was being jointly handled by the FBI, IRS-CI, and FDIC-OIG. Assistant U.S. Attorneys Don Gast and Michael Savage are in charge of the prosecution.
Yancey County Man Sentenced to More Than 21 Years in Prison for Producing Child PornographyRead the Press Release
ASHEVILLE, N.C. – On Thursday, May 28, 2015 U.S. District Judge Martin Reidinger sentenced Patrick Ronald Silva, 44, of Burnsville, N.C. to 262 months in prison on production of child pornography charges, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Silva was ordered to serve a lifetime of supervised release, to register as a sex offender, and to pay $6,000 as restitution to his victim.
Ryan L. Spradlin, Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Georgia and the Carolinas, and Sheriff Gary Banks of the Yancey County Sheriff’s Office join U.S. Attorney Rose in making today’s announcement.
In June 2014, Silva pleaded guilty to one count of production of child pornography. According to court documents and statements made in court, from May 26, 2012 to June 26, 2012, in Yancey County, Silva solicited his co-defendant, Tabatha Black, to produce child pornography of a female minor. Court records indicate that Silva then distributed the child pornography via the Internet and e-mail. Law enforcement executed a search warrant at Silva’s residence, and seized his computer and cellular phones. A forensic examination of the seized items revealed that they contained images and videos of child pornography. Silva has been in federal custody since April 2014. Black was sentenced in February 2015 to 210 months in prison and a lifetime of supervised release, after pleading guilty to one count of production of child pornography.
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Judge Reidinger also sentenced a second defendant today on child pornography charges. Robert George Ross, 29, of Old Fort, N.C. was sentenced to 60 months in prison, a lifetime of supervised release, and was ordered to register as a sex offender. According to court records, in July 2013 in McDowell County, Ross received and possessed images depicting child pornography. Court records show that Ross possessed approximately 800 images of child pornography as well as numerous videos. Ross pleaded guilty in October 2014 to one count of possession of child pornography and one count of receipt of child pornography. He has been in federal custody since April 2014. The case was investigated by HSI, the Yancey County Sheriff’s Office, and the McDowell County Sheriff’s Office.
In announcing today’s sentences, Acting U.S. Attorney Rose said, “The U.S. Attorney’s Office will continue to work closely with our law enforcement partners to protect the most vulnerable members of our communities from child predators. Victimizing innocent children is repulsive and in all instances will receive swift and forceful attention from my office.” Rose also thanked all the law enforcement agencies that investigated these cases for their outstanding work.
The defendants 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 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 the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Commodity Trading Advisor Principal Sentenced to Nine Years in Prison Following Guilty PleaRead the Press Release
CHARLOTTE, N.C. – Earlier this month, Senior U.S. District Judge Graham Mullen sentenced a South Carolina man to 108 months in prison for his role as the “Chief Investment Officer” for an entity involved in the $75 million racketeering conspiracy known as “Operation Wax House,” announced the Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. In addition to the lengthy prison term, Toby Hunter, 39, of Fort Mill, S.C. was also sentenced to three years of supervised release and was ordered to pay $8,095,903.80 in restitution to victims.
North Carolina Secretary of State Elaine F. Marshall and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) join Acting U.S. Attorney Rose in making today’s announcement.
“Our agents and enforcement attorneys worked diligently with our federal partners on this case for several years, and we were gratified to see this end result in federal court. Toby Hunter and other members of this vast racketeering enterprise showed utter contempt for the law and callous disregard for the victims. I want to thank our federal partners for their work in bringing this case to such a successful conclusion and giving victims some comfort in knowing that justice has been done,” said Elaine F. Marshall, North Carolina Secretary of State.
“Toby Hunter was a financial predator, now unable to harm investors for a long time. We are grateful for our partnership with the North Carolina Secretary of State, Securities Division, the FBI, and the IRS. With such a team, fraudsters and scammers should beware: we are coming for you,” said Jill Westmoreland Rose, Acting United States Attorney.
According to filed court documents and statements made during Hunter’s sentencing hearing, Hunter and his conspirators collectively stole over $27 million from more than 50 investor victims. Hunter and his conspirators used the victims’ money to pay for personal expenditures, including private jets, high profile offices, entertaining themselves and others, and supporting their luxurious lifestyles. Hunter pleaded guilty in December 2013 to one count of racketeering conspiracy.
According to filed court documents and statements made during Hunter’s sentencing hearing, Hunter served the racketeering enterprise as the Chief Investment Officer for Prestige Capital Advisors, one of the entities used to defraud investor-victims. Hunter was a registered commodity trading advisor with the National Futures Association (NFA), and had passed the Financial Industry Regulatory Authority (FINRA) Series 6 and Series 63 exams. Hunter registered Prestige Capital Advisor with the NFA, and used his education, licenses, and supposed experience to help lure investor victims to the scheme, including a victim defrauded of $4 million.
Following the sentencing hearing, Hunter was released on bond and will be ordered to surrender to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal cases are served without the possibility of parole.
Hunter’s case was investigated by the North Carolina Secretary of State, Securities Division, the FBI, Charlotte Division, and IRS-CI.
The Hunter prosecution was handled by Assistant U.S. Attorney Maria Vento and Special Assistant United States Attorney Kevin M. Harrington. Mr. Harrington is an Enforcement Attorney with the North Carolina Department of Secretary of State, Securities Division, and was appointed to serve as a Special Assistant United States Attorney (SAUSA) with the U.S. Attorney’s Office in Charlotte in September 2011. The SAUSA position reflects the partnership between the North Carolina Securities Division and the United States Attorney that helps ensure the effective and vigorous prosecution of white collar criminals, particularly in the area of securities fraud.
Federal Judge Hands Down Lengthy Prison Terms to Leaders of Operation Wax House Mortgage & Investment Fraud SchemeRead the Press Release
CHARLOTTE, N.C. – Today, Senior U.S. District Judge Graham C. Mullen sentenced four defendants involved in mortgage and investment fraud schemes codenamed “Operation Wax House,” including three of the conspiracy’s leaders, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.
Judge Mullen sentenced James Tyson, Jr., 34, of Charlotte, to 30 years in prison, Carrie Tyson, 61, of Winterville, N.C., to 18 years in prison, Victoria Hunt, 36, of Rockville, Maryland, to 8 years in prison, and Vonetta Tyson Barnes, 41, of Mililani, Hawaii, to 30 days in prison. Each defendant was also sentenced to serve a term of three years supervised release.
Tyson, Jr., his mother, Carrie Tyson, and Victoria Hunt are three of the leaders of the Racketeering Influenced Corrupt Organization (RICO) (the “Enterprise”) which operated in Mecklenburg and Union Counties from approximately 2005 until the defendants were arrested in 2012. A fourth leader, Ramin Amini, remains a fugitive. The Enterprise was responsible for a mortgage fraud and an investment fraud scheme that collectively defrauded victims of more than $75 million.
John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Thomas J. Holloman, III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) join Acting U.S. Attorney Rose in making today’s announcement.
“As leaders of the racketeering conspiracy, James Tyson, Jr., Carrie Tyson and Victoria Hunt were single-handedly responsible for the financial hardships so many of their victims have suffered. In many instances, the victims knew and trusted the defendants, only to find themselves conned out of their money and left to deal with the devastating consequences of the fraud. Today’s lengthy sentences deliver a heavy dose of justice to the masterminds of a vast scheme that has been financially and psychologically devastating for so many individuals,” said Acting U.S. Attorney Rose.
“More than sixty people, from all walks of life, were cheated out of their hard earned money by those involved in these complex fraud schemes. Today’s sentencings represent the leaders of this vast racketeering enterprise which utilized mortgage fraud and high yield investment schemes to enrich themselves at a time our country was facing a tenuous economic future. The numerous convictions stemming from this long term investigation are proof of the FBI’s commitment toward holding accountable all those who put our nation’s economy at risk,” said John Strong, Special Agent in Charge of FBI Charlotte.
“The brazen, sustained criminal activity perpetrated by these defendants lasted for years, and demanded the attention of IRS Criminal Investigation and our law enforcement partners. While the short-term gains of a financial crime wave such as this may appear enticing, the necessary consequences reflected in today’s sentencings are now their long-term reality,” said Thomas J. Holloman III, Special Agent in Charge of IRS-CI.
According to filed court documents, evidence presented at trials, and statements made in court proceedings, including during today’s hearings:
The Enterprise, led by the three defendants sentenced today, stole approximately $27 million from victims as part of its investment operations and approximately $48 million in loans from financial and lending institutions as part of its mortgage fraud operations.
James Tyson, Jr.
In court today, prosecutors described defendant Tyson, Jr. as the leader of the leaders, the most culpable person in the RICO Enterprise, and the most culpable of the 91 defendants charged as part of Operation Wax House. Tyson led the Enterprise in all aspects of its operations, including its investment fraud, its mortgage fraud, and its money laundering operations as well as a conspiracy to distribute marijuana. At today’s court hearing, prosecutors described Tyson, Jr. as the linchpin of the multiple interwoven illegal schemes carried out by the Enterprise.
The Enterprise defrauded $27 million from victims as part of its investment operations, using a series of sham corporations to steal from individual investor-victims. When the fraud associated with one sham corporation was discovered, the Enterprise would create another sham company with a different co-conspirator serving as the public front of the company, so that it could continue to steal money from unsuspecting investor victims. As the leader, Tyson, Jr. was involved in creating and running each of the various sham companies used by the Enterprise to steal money from victims, and he was directly involved in stealing nearly $19 million from more than 60 individual victims.
When the Enterprise could not find victims who had money to invest, the conspirators induced individuals to become “credit” investors. In exchange for handing over their personal information and good credit to the Enterprise, the victims were falsely told that the loan payments would be made for them and they would receive investment returns. The Enterprise then took loans out in these victims’ names, kept the loan proceeds, and ultimately left the victims with thousands of dollars of debt.
In addition to the investment fraud scheme, Tyson, Jr. personally engaged in at least 18 different mortgage fraud transactions, resulting in loses to financial and lending institutions of more than $11 million. Tyson, Jr. received more than $2.3 million of the fraudulent proceeds from those mortgage fraud transactions, including more than $1.5 million of fraudulent proceeds from financial institutions.
Tyson, Jr. pleaded guilty to racketeering (RICO) conspiracy, securities fraud, mortgage fraud, wire fraud, money laundering conspiracy and bank bribery conspiracy. As part of the RICO conspiracy, Tyson Jr. pleaded guilty to the predicate act of conspiracy to distribute marijuana. Prosecutors noted that Tyson, Jr. arranged truckloads of marijuana from Texas and elsewhere to be transported to North Carolina, distributing hundreds of pounds of marijuana. Tyson, Jr. also admitted to paying bribes of $7,500 to $30,000 to a bank employee in exchange for bogus letters of credit that he and his co-conspirators tried to leverage to fraudulently induce other victims.
In announcing today’s sentence of Tyson, Jr., Judge Mullen described the defendant as the “apex of this pyramid of criminal activity.” Tyson, Jr. has been in custody since he was arrested on October 21, 2012, returning from Senegal, where he was operating the Enterprise’s last fraud company, PEI, a purported import-export business.
Carrie Tyson
Carrie Tyson was also a leader of the Enterprise, and, in some instances, mentored the conspirators on how to operate the various schemes. For example, Carrie Tyson created and served as President of one of the first companies the Enterprise used to steal money from victims, “Brighton Developers,” falsely promising investor-victims that their investments were secured by lots of land. When the terms of those investment contracts expired, Carrie Tyson wrote more than a million dollars in checks on an account which she knew had a negative balance. In total, Carrie Tyson was directly involved in defrauding at least 14 victims out of at least $1.3 million. Carrie Tyson was also a leader of the Enterprise’s mortgage fraud operations, participating in at least five different mortgage fraud transactions, resulting in losses of more than $4 million. Carrie Tyson’s husband, James Tyson, Sr., was charged and previously sentenced to 37 months in prison for his role in the scheme. Carrie Tyson pleaded guilty to RICO conspiracy in November 2013.
In announcing today’s sentence of Carrie Tyson, Judge Mullen noted that Carrie Tyson was “among the worst” of the defendants. Carrie Tyson has been in custody since September 2013, when she was found to have been in violation of her conditions of release.
Victoria Hunt
Victoria Hunt was the third leader of the Enterprise, who handled the Enterprise’s investment fraud and money laundering operations. Hunt served as Vice President and then CEO of “Sovereign Equity Group” and CEO of “Prestige Capital” and the “Elite Automotive” card dealership, which were used by the Enterprise to steal money from individual victims. Hunt targeted her friends and professional acquaintances to invest in the Enterprise’s sham businesses. In total, Hunt, working with Tyson, Jr., defrauded more than 60 victims of more than $19 million. Hunt also participated in the Enterprise’s mortgage fraud operations, providing down payment money for at least two transactions which resulted in losses of more than $2 million. Hunt pleaded guilty to RICO conspiracy, securities fraud, mortgage fraud, wire fraud and money laundering conspiracy in January 2013. Following the sentencing hearing, Hunt was released on bond. She will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility.
Vonetta Tyson Barnes
Vonetta Tyson Barnes, Carrie Tyson’s daughter, was a promoter in the Enterprise’s investment fraud operations. She served as the President of “Sovereign Equity Group” after her brother, Tyson, Jr., stepped down. Barnes also created another sham company, “Inspiron Holdings,” used by the Enterprise to steal money from victims. In total, Barnes was involved in stealing nearly $900,000 from approximately 16 victims. She pleaded guilty in September 2013 to one count of RICO conspiracy. Following the sentencing hearing, Barnes was released on bond and 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.
These convictions are the latest in Operation Wax House, an investigation which began in 2007. Of the 91 individuals charged, 89 defendants have either pleaded guilty or have been convicted following trial. The two remaining defendants are international fugitives. Of the 89 defendants convicted, five remain to be sentenced in the coming months.
Operation Wax House in the Western District of North Carolina is being handled by the Charlotte Division of the FBI and the Criminal Division of the IRS for the Financial Fraud Enforcement Task Force, along with the Securities Division of the North Carolina Secretary of State with respect to a separate prosecution. The Operation Wax House prosecution is being handled for the government by Assistant United States Attorney Maria K. Vento.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established 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’s 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. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
Thirty-seven MS-13 Gang Members Indicted on Racketeering Conspiracy Charges ; Some Also Charged with Murder, Attempted Murder, and Firearms ViolationsRead the Press Release
CHARLOTTE, N.C. – Thirty-seven members of the street gang “La Mara Salvatrucha,” or “MS-13,” have been indicted by a federal grand jury on racketeering conspiracy charges, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Twenty-two defendants have also been charged variously with additional offenses, including murder, attempted murder, assault, and firearms violations.
This morning, law enforcement arrested 16 of the alleged gang members during an early morning round-up. Five remain at large and are subject to active arrest warrants. Another 16 are currently in state custody on various state charges.
John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division; Ryan L. Spradlin, Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Atlanta; Mark Senter, Branch Head of the North Carolina Alcohol Law Enforcement; Chief Rodney D. Monroe of the Charlotte-Mecklenburg Police Department; and Mecklenburg County District Attorney Andrew Murray join Acting U.S. Attorney Rose in making today’s announcement.
“As outlined in today’s indictment, the alleged MS-13 gang members have committed numerous violent crimes, including armed robberies, assaults, and murders, for the benefit of the criminal enterprise. Today’s charges send a clear message to gangsters who think their gang affiliation puts them beyond the law’s reach. Prosecutors and law enforcement officers will continue to work hand-in-hand to identify and prosecute gang offenders whose violent acts create mayhem in our streets and devastate communities,” said Acting U.S. Attorney Rose.
“The arrest of these MS-13 gang members is part of a coordinated law enforcement effort to eradicate gang violence in North Carolina. Innocent families should not suffer because of the callous and violent actions of others. The FBI will pursue those criminal offenders who impact the safety and stability of our neighborhoods, no matter their gang affiliation,” said John Strong, Special Agent in Charge of FBI Charlotte.
“Transnational criminal gangs like MS-13 inflict untold damage in our communities by engaging in violence and trafficking in drugs, weapons and even human beings,” said Ryan L. Spradlin, Special Agent in Charge of ICE Homeland Security Investigations (HSI) in Atlanta. “This lengthy investigation has uncovered alleged crimes ranging from petty drug deals to capital murder. There is no doubt that North Carolina communities will be safer as a result of these arrests.”
“The partnerships between my office, the U.S. Attorney’s Office and both federal and local law enforcement reflect our dedication to ensuring that collaborative investigations and prosecutions target violent crime on our streets,” said Mecklenburg County District Attorney Andrew Murray. “We’ll continue to work together as we pursue justice for those affected by crime and protect the community from future harm.”
“The success of this roundup should be attributed to the strength of these law enforcement partnerships and send a clear message to gang members that all of us are working together in our pursuit to put the criminals out of business for the betterment of our communities,” said Mark Senter, NC Alcohol Law Enforcement branch head.
The indictment charges each of the 37 alleged gang members with one count of Racketeering Influenced Corrupt Organization (RICO) conspiracy. The named defendants are:
- Carlos Almote a/k/a “Rabioso,” 25, of Charlotte. (in state custody)
- Jose Danny Argueta a/k/a “Shadow,” 23, of Charlotte. (in state custody)
- Miriam Barilles-Escamilla a/k/a “Gata,” 26, of El Salvador. (not arrested)
- Juan Bergamasco-Suarez a/k/a “Temper” or “Kilo,” 21, of Charlotte. (in state custody)
- Milton Chavarria a/k/a “Syko,” 23, of Charlotte. (in state custody)
- Raul Contreras a/k/a “Smoke,” 24, of Charlotte. (in state custody)
- Luis Erazo a/k/a “Joker,” 24, of Honduras. (arrested)
- Marvin Fuentes-Canales a/k/a “Crazy,” 22, of El Salvador. (not arrested)
- Luis Funes-Rivera a/k/a “Demonio,” 20, of Charlotte. (in state custody)
- Jorge Garcia a/k/a “Shorty,” 25, of Charlotte. (arrested)
- Cesar Garcia-Perez a/k/a “Vikingo,” 35, of Charlotte. (in state custody)
- Saul Gavidia a/k/a “Scrappy,” 20, of Landis, N.C. (arrested)
- William Gavidia a/k/a “Duro,” 23, of Kannapolis, N.C. (arrested)
- Raul Guardado a/k/a “Guanaco,” 42, of Charlotte. (arrested)
- Neris Gutierrez a/k/a “Oso” or “Furioso,” 26, of Guatemala. (not arrested)
- Angel Hernandez a/k/a “Taz” or “Magic,” 24, of Rock Hill, S.C. (arrested)
- Jose Manuel Linares a/k/a “Chepito,” 21, of Charlotte. (arrested)
- Rene Lopez-Ventura a/k/a “Mafioso,” 32, of Charlotte. (arrested)
- Jose Moran-Celis a/k/a “Lil Silent,” 20, of Charlotte. (arrested)
- Daniel Navarro a/k/a “Lunatico,” 21, of Charlotte. (in state custody)
- Jonathan Noble a/k/a “Ghost,” 22, of Charlotte. (arrested)
- Luis Ordonez-Vega a/k/a “Big Boy,” 36, of Concord, N.C. (in state custody)
- Christian Pena a/k/a “Pitbull,” 19, of Charlotte. (in state custody)
- Jorge Perez a/k/a “JP Bukie,” 30, of Charlotte. (arrested)
- Victor Pineda a/k/a “Chele,” 23, of Charlotte. (arrested)
- Rosendo Rivas a/k/a “Jester,” or “Demonio” or “Nene” 24, of Rock Hill. (in state custody)
- Fec Rodriguez-Vareal a/k/a “Chelito,” 28, of Charlotte. (arrested)
- Salvador Ruiz a/k/a “Chava,” 26, of Kannapolis. (not arrested)
- Jorge Sosa a/k/a “Koki” or “Loco,” 23, of Charlotte. (in state custody)
- Oscar Trejo a/k/a “Trigger” or “Maliente,” 23, of Charlotte. (in state custody)
- Jaime Turcios a/k/a “Pitufo” or “Smurf,” 24, of Charlotte. (arrested)
- Jose Vasquez a/k/a “Muneco,” 26, of El Salvador. (arrested)
- Marlon Vasquez-Maldonado a/k/a “Gangster,” 23, of Charlotte. (in state custody)
- Albert Vela-Garcia a/k/a “Conejo,” 25, of Landis. (arrested)
- Luis Villalta a/k/a “Little Psycho,” 25, of El Salvador. (not arrested)
- Alexis Villalta-Morales a/k/a “Rikichi,” 23, of Charlotte. (in state custody)
- Miguel Zelaya a/k/a “Most Wanted,” 19, of Charlotte. (in state custody)
In addition to the RICO conspiracy charge, three defendants face murder in aid of racketeering and related charges, Zelaya for the murder of Jose Orlando Ibarra, and Ordonez-Vega and Pena for the murder of Noel Navarro Hernandez. Ten defendants – Argueta, Garcia, Linares, Funes-Rivera, Ruiz, Sosa, Trejo, Vasquez, Vela-Garcia, and Villalta-Morales – are also charged with attempted murder in aid of racketeering and related charges.
According to the allegations contained in the 41-count indictment:
From at least in or about 2009 to present in Mecklenburg County and elsewhere, the defendants 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. MS-13 in North Carolina is divided into different groups, or “cliques,” identified by names such as “Charlotte Locotes Salvatrucha,” and “Centralles,” 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. The group leaders are often called “shot callers” or “voices,” and they are tasked with passing down information and orders from leaders higher in the gang hierarchy. Group leaders also act to resolve disputes, address organizational issues, and to participate in gang decisions, including the assault or murder of those suspected of cooperating with law enforcement, known as “green light.”
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.
As alleged members of MS-13, the defendants charged in the indictment held multiple meetings at various times, to discuss gang-related matters and to plan the commission of future crimes for the benefit of the gang. As outlined in the indictment, over the relevant time period, the defendants allegedly were responsible for numerous criminal acts including drug distribution, armed robberies, extortion, illegal possession of weapons, the assault of individuals suspected of cooperating with law enforcement and murder.
Specifically, the indictment alleges that on December 18, 2013, Zelaya allegedly murdered Jose Orlando Ibarra in Charlotte, whom he believed to be a member of a rival gang, and on or about June 6, 2014, also in Charlotte, Pena and Ordonez-Vega allegedly murdered Noel Navarro Hernandez. According to the indictment, on April 23, 2011, Contreras murdered Rigoberto Castillo in Rock Hill, S.C., and on June 23, 2013, in Charlotte, Garcia-Perez shot and killed Alejandro Sebastian Alvarez, a rival gang member. Contreras and Garcia-Perez were prosecuted on state charges for those murders.
The indictment contains a notice of special sentencing factors, which provides for a greater sentence for those defendants charged with offenses related to the murders. A chart identifying each defendant’s charges and maximum penalties is attached below. The defendants’ sentences will be determined by the Court, after considering the federal sentencing guidelines and statutory sentencing factors.
The defendants arrested today have begun making their initial appearances in Charlotte before a U.S. Magistrate Judge. The defendants currently in state custody will be transferred to the custody of the U.S. Marshals to appear in court on the federal charges.
The charges contained in the indictment are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
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.
Acting U.S. Attorney Rose praised the outstanding investigative work of the FBI, HSI, CMPD and ALE and noted that the investigation is still ongoing.Ms. Rose also thanked the Mecklenburg County District Attorney’s Office for their continued support and cooperation with this case.
Assistant U.S. Attorneys Elizabeth Greene and William Miller are in charge of the prosecution.
Duke Energy Subsidiaries Plead Guilty and Sentenced to Pay $102 Million for Clean Water Act CrimesRead the Press Release
WASHINGTON – Three subsidiaries of North Carolina-based Duke Energy Corporation, the largest utility in the United States, pleaded guilty today to nine criminal violations of the Clean Water Act at several of its North Carolina facilities and agreed to pay a $68 million criminal fine and spend $34 million on environmental projects and land conservation to benefit rivers and wetlands in North Carolina and Virginia. Four of the charges are the direct result of the massive coal ash spill from the Dan River steam station into the Dan River near Eden, North Carolina, in February 2014. The remaining violations were discovered as the scope of the investigation broadened based on allegations of historical violations at the companies’ other facilities.
Under the plea agreement, both Duke Energy Carolinas and Duke Energy Progress, must certify that they have reserved sufficient assets to meet legal obligations with respect to its coal ash impoundments within North Carolina, obligations estimated to be approximately $3.4 billion.
Officials from the Justice Department’s Environment and Natural Resources Division and the three U.S. Attorney’s Offices in North Carolina, the Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance, EPA’s Office of Inspector General, the Internal Revenue Service (IRS) Criminal Investigations and the North Carolina State Bureau of Investigation (SBI) made the announcement following a plea hearing at the federal courthouse in Greenville, North Carolina today.
“The massive coal ash spill into North Carolina’s Dan River last year was a crime and it was the result of repeated failures by Duke Energy’s subsidiaries to exercise controls over coal ash facilities,” said Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division. “The terms of these three plea agreements will help prevent this kind of environmental disaster from reoccurring in North Carolina and throughout the United States by requiring Duke subsidiaries to follow a rigorous and independently verifiable program to ensure they comply with the law.”
“Duke Energy's crimes reflect a breach of the public trust and a lack of stewardship for the natural resources belonging to all of the citizens of North Carolina,” said U.S. Attorney Thomas G. Walker for the Eastern District of North Carolina. “The massive release at the Dan River coal ash basin revealed criminal misconduct throughout the state – conduct that will no longer be tolerated under the judgment imposed by the court today.”
“Duke’s subsidiaries discharged potentially toxic pollutants that put at risk North Carolina’s water quality and wildlife and today’s outcome ensures they will be held responsible for violating federal environmental requirements,” said Acting U.S. Attorney Jill W. Rose for the Western District of North Carolina. “The defendants will now have to comply with the terms imposed by the court, including paying hefty financial penalties and making significant financial contributions toward improving the quality of impacted waterways, wetlands and our water supply system.”
“Duke’s actions adversely impacted the Dan River ecosystem and caused residents who live near and rely on the water supply much apprehension about the safety of the river,” said Criminal Chief Cliff Barrett for the U.S. Attorney’s Office in the Middle District of North Carolina. “Today’s plea holds Duke accountable for this result and charts a course to remediate the impact of these spills.”
“Over two hundred sixteen million Americans rely on surface water as their source of drinking water,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “Duke Energy put that precious resource at risk in North Carolina as the result of their negligence. Companies that cut corners and contaminate waters on which communities depend, as Duke did here, will be held accountable.”
On Feb. 20, 2015, the three U.S. Attorney’s Offices in North Carolina filed separate criminal bills of information in their respective federal courts, alleging violations of the Clean Water Act at the following Duke facilities: the Dan River steam station (Rockingham County), the Cape Fear steam electric plant (Chatham County), the Asheville steam electric generating plant (Buncombe County), the H.F. Lee steam electric plant (Wayne County) and the Riverbend steam station (Gaston County). The alleged violations included unlawfully failing to maintain equipment at the Dan River and Cape Fear facilities and unlawfully discharging coal ash and/or coal ash wastewater from impoundments at the Dan River, Asheville, Lee and Riverbend facilities.
As part of their plea agreements, Duke Energy Business Services LLC, Duke Energy Carolinas LLC and Duke Energy Progress Inc. will pay a $68 million criminal fine and a total $24 million community service payment to the National Fish and Wildlife Foundation for the benefit of the riparian environment and ecosystems of North Carolina and Virginia. The companies will also provide $10 million to an authorized wetlands mitigation bank for the purchase of wetlands or riparian lands to offset the long-term environmental impacts of its coal ash basins. In addition, they will pay restitution to the federal, state and local governments that responded to the Dan River spill and be placed on a period of supervised probation for five years.
Duke’s subsidiaries operating 18 facilities in five states, including 14 in North Carolina, will also be required to develop and implement nationwide and statewide environmental compliance programs to be monitored by an independent court appointed monitor and be regularly and independently audited. Results of these audits will be made available to the public to ensure compliance with environmental laws and programs. The companies’ compliance will be overseen by a court-appointed monitor who will report findings to the court and the U.S. Probation Office as well as ensuring public access to the information.
Approximately 108 million tons of coal ash are currently held in coal ash basins owned and operated by the defendants in North Carolina. Duke Energy Corporation subsidiaries also operate facilities with coal ash basins in South Carolina, approximately 5.99 million tons of coal ash, Kentucky, approximately 1.5 million tons of coal ash, Indiana, approximately 35.6 million tons of coal ash and Ohio, approximately 5.9 million tons of coal ash.
The companies must also meet the obligations imposed under federal and state law to excavate and close coal ash impoundments at the Asheville, Dan River, Riverbend and Sutton facilities.
Additionally, at the insistence of the United States, the holding company Duke Energy Corporation has guaranteed the payment of the monetary penalties and the performance of the nationwide and statewide environmental compliance plans.
“Duke’s environmental crimes required a special financial review of their actions to which we were proud to join our partners in investigating,” said Special Agent in Charge Thomas J. Holloman, III of the IRS Criminal Investigation. “The considerable fines, formal apologies and massive cleanup initiatives will impact the Duke image and brand, assuring the public that corporations will be held accountable for their gross actions involving the environment, wildlife and the communities of this great state.”
“The SBI worked closely with the Environmental Protection Agency Criminal Investigation Division and the Internal Revenue Service in this matter,” said Acting Director B.W. Collier of the North Carolina SBI. “This type of collaboration is critical to ensuring a thorough and intensive review on cases such as this. The SBI remains committed to the public interest and is prepared to continue assisting the U.S. Attorney’s office.”
The criminal investigation was conducted by the Criminal Investigation Division, Region Four and the Office of Inspector General of EPA, Criminal Investigations of the IRS and North Carolina State Bureau of Investigation with assistance from the Federal Bureau of Investigation and the Department of Defense Criminal Investigative Service.
Woman Sentenced to 33 Months for Selling Stolen Merchandise on the InternetRead the Press Release
CHARLOTTE, N.C. – Chief U.S. District Judge Frank D. Whitney sentenced Maria Steele Vera, 60, of Dallas, Texas to 33 months in prison and to one year of supervised release for selling stolen merchandise on the Internet, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. In April 2014, Vera pleaded guilty to wire fraud in connection with her scheme. Judge Conrad also ordered Vera to pay more than $70,000 in restitution.
Acting U.S. Attorney Rose is joined in making today’s announcement by Russell F. Nelson, Special Agent in Charge of the United States Secret Service, Charlotte Field Division.
According to filed court documents and court proceedings, from 2009 to 2013, Vera shoplifted items from numerous hobby and craft retail stores in Mecklenburg County and elsewhere, which she then listed for sale on E-bay. Court records indicate that Vera created various E-bay seller accounts and sold the stolen items below retail value. Court records also show that this scheme netted Vera between $400,000 and $1,000,000. According to court records, when law enforcement executed a search warrant at Vera’s residence, they recovered 70 plastic crates full of stolen craft and scrapbooking products, as well as 50 flat rate mailing boxes.
Following the sentencing hearing Vera was released on bond. She 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.
Acting U.S. Attorney Rose credited the U.S. Secret Service for the investigation leading to today’s sentence.
Assistant U.S. Attorney Kevin Zolot of the U.S. Attorney’s Office in Charlotte prosecuted the case.
Two Men Sentenced to Prison for Fraudulent Loan SchemeRead the Press Release
CHARLOTTE, N.C. – On Wednesday, May 6, 2015, U.S. District Judge Robert J. Conrad, Jr. sentenced to prison two men for their role in a scheme involving more than $1 million in fraudulent automobile and personal loans, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.
Shawn Davis, 44, of Huntersville, N.C. and Darren Eugene Littles, 47, of Charlotte, were sentenced to 30 months and 27 months in prison, respectively, followed by a three years of supervised release. Judge Conrad also ordered Littles to pay $394,784.50 and Davis $45,284.04 as restitution. Davis and Littles each pleaded guilty to one count of bank fraud conspiracy and one count of financial institution fraud.
Acting U.S. Attorney Rose is joined in making today’s announcement by Russell F. Nelson, Special Agent in Charge of the United States Secret Service, Charlotte Field Division.
Two additional defendants charged in connection with the scheme were sentenced on March 30, 2015.Kimberly Arnell Cureton, 45, of Rock Hill, S.C. was sentenced to 24 months in prison and one year of supervised release.She pleaded guilty to aggravated identity theft.Kevin Lamone Desmore, 43, of Durham, N.C., was sentenced to 15 months in prison and three years of supervised release.Desmore pleaded guilty to bank fraud conspiracy and making a false statement on a loan application.
According to filed court documents and yesterday’s court proceedings, the defendants conspired with each other and obtained automobile and personal loans from financial institutions by lying on the loan applications and submitting false or forged information and documentation to support the fraudulent loan packages.Court records indicate that, at times, the loan packages contained inflated prices for the automobiles to be purchased and, in many instances, the loan applicants failed to make the required loan payments but attempted to keep the funds obtained as a result of the fraudulent loan applications.
According to court records, Littles was the primary facilitator of the conspiracy.Littles recruited individuals to submit fraudulent loan applications, contacted financial institutions and submitted the fraudulent loan packages and, at times, used stolen identities of individuals or impersonated other people to facilitate the fraud.Littles received a commission based on the fraudulent auto loans deals.Court records indicate that Davis’ role in the conspiracy was to create fraudulent tax documents to support the loan applications, including fake W2s, tax returns and tax earning statements, among other things.Court records show that Davis has a previous federal conviction in connection with a 2000 investigation into bank fraud.
According to court records, Cureton served as a “credit scrubber,” who helped improve applicants’ negative credit scores, and Desmore worked as a recruiter of individuals whose information was used to fill out the fraudulent applications.On some occasions, Desmore even created fake residential leases to support the loan applications.According to court records, between 2008 and 2011 the conspirators obtained and attempted to obtain more than $1 million dollars in automobile and personal loans as a result of the conspiracy.
In handing down the two sentences, Judge Conrad noted that Davis had continued to engage in fraudulent conduct, and that Littles was “a leader in the conspiracy who facilitated the obtaining of fraudulent loans.”
The defendants were released on bond following the sentencing hearing.They will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility, to begin serving their sentences.All federal sentences are served without the possibility of parole.
The U.S. Secret Service investigated the case.Assistant U.S. Attorney Kenneth Smith was in charge of the prosecution.
Former Chief Finance Officer Sentenced to 51 Months in Prison for Stealing Approximately $4 Million from His EmployerRead the Press Release
CHARLOTTE, N.C. – On Wednesday, May 6, 2015, U.S. District Judge Robert J. Conrad, Jr. sentenced Nathan Thomas Mroz, 40, of Charlotte, to 51 months in prison and to two years of supervised release in connection with his scheme to steal money from his former employer, Andersen Heating & Cooling (Andersen), announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. In April 2014, Mroz, the former Chief Finance Officer (CFO) for Andersen, a Mint Hill-based HVAC company, pleaded guilty to mail fraud in connection with his scheme. Judge Conrad also ordered Mroz to pay approximately $4,000,000 in restitution.
Acting 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.
According to filed court documents and court proceedings, from 2005 to 2013, Mroz was employed by Andersen as financial controller and later as CFO and had access to the company’s funds and books and records. Court records show that over the course of his employment, Mroz exploited his position to create fake accounts payable invoices and to generate corresponding payments, which Mroz directed to himself or mailed to various credit cards he maintained. According to court documents, to cover up his scheme, Mroz fraudulently categorized the bogus company payments as legitimate business expenses in the company’s books and records. Court records reflect that Mroz spent the stolen money on personal expenditures, including vacations to Disneyland and Europe, luxury vehicles, private school tuition, jewelry, and a $115,000 home for his nanny, among others. In all, court documents indicate that Morz stole approximately $4 million from Andersen.
In handing down the sentence, Judge Conrad noted that Mroz “abused his position of trust with respect to his controller and CFO functions” and that the execution of the scheme required “hundreds of acts of fraud and deceit” by Mroz. Judge Conrad stressed the “devastating harm to the company” as a result of Mroz’s greed and the “calamitous effect of Mroz’s scheme on innocent groups of people.”
Judge Conrad also ordered defendant to forfeit a Charlotte residence that he had used stolen money to purchase for use by his nanny, as well as diamond jewelry valued at approximately $40,000. The forfeiture was in addition to a payment in excess of $116,000 that defendant already made as restitution pursuant to his plea agreement.
Following the sentencing hearing Mroz was released on bond. 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.
Acting U.S. Attorney Rose credited the FBI for the investigation leading to today’s sentence. She also thanked the Mint Hill Police Department for their invaluable assistance throughout the investigation.
Assistant U.S. Attorney Mark T. Odulio of the U.S. Attorney’s Office in Charlotte prosecuted the case.
U.S. Attorney's Office Hosts Annual Meeting of White Collar & Securities Fraud Working GroupRead the Press Release
CHARLOTTE, N.C. – Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina, today announced the annual meeting of the district’s White Collar and Securities Fraud Working Group. The working group was formed in 2011 to combat financial fraud by bringing together key federal, state and local law enforcement and regulatory partners. The working group targets a wide-range of financial schemes, including accounting fraud, Ponzi schemes and other finance-related matters. The annual meeting, which was hosted by U.S. Attorney’s Office in Charlotte, focused on strengthening existing relationships identifying recent trends, discussing ongoing investigations and setting enforcement priorities.
Members of the working group include officials from the U.S. Attorney’s Office (USAO), U.S. Securities & Exchange Commission (SEC), U.S. Commodity Futures Trading Commission (CFTC), Federal Bureau of Investigation (FBI), U.S. Secret Service, Internal Revenue Service-Criminal Investigation (IRS-CI), U.S. Postal Inspection Service, Homeland Security Investigations, Federal Deposit Insurance Corporation, Office of the Inspector General (FDIC-OIG), the North Carolina Attorney General’s Office, the North Carolina Department of Secretary of State, Securities Division, the North Carolina State Bureau of Investigation (SBI), and the Mecklenburg County District Attorney’s Office.
“Since its formation in 2011, the working group has worked collaboratively on a range of investigations leading to the successful prosecution of cases involving a variety of financial fraud schemes,” said Acting U.S. Attorney Rose. “Financial crimes can have devastating effects on the victims of fraud, who are not always able to fully recover their losses. The working group’s accomplishments are a clear message to the public that we are committed to protecting investors from financial scams, safeguarding our financial systems from fraud and going after those who engage in unlawful financial activities,” Rose added.
Examples of prosecutions include:
• United States v. Beaver: Chuckie Beaver pleaded guilty in November 2014 to one count of securities fraud for defrauding more than 30 investors of over $2 million dollars. From June 2012 to April 2014, Beaver induced over 30 victims falsely claiming their money would be invested in “Best Services, Inc.,” a company owned by Beaver and specializing in the repair of industrial electronic equipment. Beaver solicited friends, neighbors, and fellow church members to invest with his company, claiming that his company needed more capital to purchase materials to complete a large number of outstanding repair orders from major corporations. To further the scheme, created and showed his investors bogus documents, including false repair orders indicating significant work activity, fake customer checks, and fake customer emails, giving a false impression he had strong relationships with major corporations. Beaver awaits sentencing.
• United States v. Burks: Paul Burks, president of ZeekRewards, was indicted in October 2014 on federal charges for operating an Internet Ponzi scheme and is awaiting trial. The indictment alleges that from January 2010 to August 2012, 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”). The indictment alleges that Burks and his conspirators induced victims – including over 1,500 victims in the Charlotte area – to invest more than $850 million in their fraudulent scheme. Dawn Wright Olivares, Zeek’s Chief Operating Officer and Zeek’s Senior Technology Officer, Daniel C. Olivares, pleaded guilty in December 2013 to investment fraud conspiracy. Dawn Wright Olivares also pleaded guilty to tax fraud conspiracy. Both defendants await sentencing.
• United States v. Davey et. al.: Jonathan Davey was sentenced in January 2015 to 21 years in prison for his role in Ponzi scheme that defrauded victims of more than $40 million. Davey, a certified public accountant and registered investment advisor, served as the “Administrator” for numerous hedge funds for the Black Diamond Ponzi Scheme, an investment fraud scheme that deprived 400 victims of more than $40 million. Davey collected over $11 million from victims with his own hedge fund, by falsely stating that he had done proper due diligence on Black Diamond and that he was operating a legitimate hedge fund with significant safeguards. As the Black Diamond scheme began to collapse, Davey and others started a derivative Ponzi scheme and collected over $5 million from new victim investors, and used the new victim money to make payments to old investors and to themselves. Davey was one of 11 conspirators sentenced in the Black Diamond Ponzi scheme. The conspirators’ prison terms ranged from six months to 40 years.
• United States v. Femenia, et. al.: John W. Femenia, a former Wells Fargo investment banker, and three of his conspirators were sentenced in February 2015 to prison terms ranging from 6 to 60 months, arising from their participation on an insider trading conspiracy. From March 2010 to December 2012, Femenia, Roger A. Williams, Kenneth M. Raby, Aaron M. Wens, Frank M. Burgess, Jr., and James A. Hayes conducted illegal insider trading activities based on stolen material non-public information, including information on Wells Fargo and its clients’ upcoming corporate mergers and acquisitions.
• United States v. Gandy et. al.: Terry Gandy was sentenced in December 2014 to 57 months in prison for stealing over $2 million from more than 30 investors. Gandy mainly targeted his former co-workers at Philipp Morris and solicited funds from them, promising rates of 20% to 30% annual rates of return. Gandy used the victims’ money to fund his own personal lifestyle, including luxury hotels, multiple trips to Las Vegas, cash withdrawals at Las Vegas casinos, luxury cars, and to pay purported “profits” to other investors who asked for their money. To support his fraudulent scheme, Gandy provided his victims false account statements depicting bogus and over-inflated account balances. His conspirator, John Reid Perkins, was sentenced to 64 months in jail for his role in the scheme.
• United States v. Hunter: Toby Hunter is scheduled to be sentenced on May 6, 2015, for his role in securities fraud scheme that was part of the racketeering conspiracy related to the Operation Wax House investigation. Hunter and his conspirators targeted professional athletes and doctors as well as their personal and professional acquaintances and convinced them to invest in a series of sham corporations controlled by the Enterprise. They collectively stole over $27 million from more than 50 investor victims, including monies that the investor victims were induced to obtain as loans from financial institutions. The Enterprise used the victims’ money to finance its mortgage fraud operations and to support its members’ lifestyles.
• United States v. Mason: James Mason pleaded guilty in June 2014 to conspiracy to commit securities fraud and tax evasion for running a $5 million foreign currency investment fraud. Mason used most of investor victims’ money for his personal and familial living expenses, including purchasing a $435,000 home for his daughter and a $52,000 Lincoln vehicle for himself. Mason, who did not inform his investors about his 2000 federal wire fraud conviction, unsuccessfully invested a small amount of investor money. He currently awaits sentencing.
• United States v. McDougal: Claude Darrell McDougal pleaded guilty in July 2014 to securities fraud for orchestrating a Ponzi scheme and defrauding his victims of over $2.5 million. From 2006 to 2010, McDougal induced over 25 investors from Charlotte and elsewhere by promising their money would be invested in securities, in the form of promissory notes offered by US Financial Alliance Consultants, LLC (Financial Alliance). McDougal created the Charlotte-based company in 2005, but it was never registered as a dealer of securities in North Carolina or elsewhere. McDougal was also not registered to sell securities in North Carolina or another state. McDougal is awaiting sentencing.
• United States v. Rand: Michael Rand was sentenced in April 2015 to 120 months in prison on conspiracy and obstruction of justice charges in connection with federal investigation into a seven-year accounting fraud conspiracy at Beazer Homes USA, Inc. (“Beazer”). Rand was Beazer’s Chief Account Officer and directed an accounting fraud conspiracy to falsify reported profits at Beazer by lying to Beazer’s auditors, fraudulently achieving earnings targets, falsifying Beazer’s books and records, and deceiving the public by boosting and lowering company earnings. Rand was convicted of wire fraud conspiracy, conspiracy to commit securities fraud, to make false and misleading statements to auditors and accountants, to circumvent Beazer’s internal accounting controls, and to falsify the books, records, and accounts of Beazer.
• United States v. Shepherd: James Alexander Shepherd was sentenced in February 2015 to 84 months in prison for defrauding more than 100 investors of over $6 million. From 2006 to 2013, Shepherd defrauded investors, primarily in Union County, of approximately $6 million. Shepherd carried out the fraud by promising his victims returns on their investments in funds he owned and controlled, among other things. In about 2006, Shepherd began misappropriating some of the investors’ money and used it to pay other investors, to trade in his personal accounts, and to fund the operations of a newsletter he distributed nationwide. Shepherd also used the money to fund his personal lifestyle, including to pay for a $2 million home.
• United States v. Wright: C. David Wright was sentenced to 48 months in October 2014 for running a $1 million Ponzi scheme that he referred to as a “Commodity Investment Group.” Wright told investors that he invested in hedge funds, commodities, and Quick Trip service stores. In reality, Wright diverted victim money to a side-business he owned, used it to make Ponzi payments, and to fund his own lifestyle.
• Bank of America Residential Mortgage-Backed Securities (RMBS): In addition to collaborating on criminal enforcement matters, the U.S. Attorney’s Office and the SEC brought a historic civil fraud suit against Bank of America in August 2013 concerning an $850 million mortgage securitization. As part of the historic $16.65 billion settlement reached in August 2014, Bank of America acknowledged that it marketed this securitization as being backed by bank-originated “prime” mortgages that were underwritten in accordance with its underwriting guidelines, when, in fact, Bank of America knew that a significant number of loans in the security were “wholesale” mortgages originated through mortgage brokers. The bank sold these RMBS to federally backed financial institutions without conducting any third party due diligence on the securitized loans and without disclosing key facts to investors in the offering documents filed with the SEC.
“Our annual meeting provides an opportunity to renew and strengthen ties with our regulatory and law enforcement partners. As a member of the group, I am proud of the work we’ve accomplished,” said Assistant U.S. Attorney (AUSA) Mark T. Odulio, who represents the U.S. Attorney’s Office in the working group.
For tips on how to identify investor scams and for additional information on investor fraud please visit: www.stopfraud.gov.
Last 3 of 27 Defendants Sentenced on Drug and Gun ChargesRead the Press Release
CHARLOTTE, N.C. – The remaining three of the 27 defendants charged in connection with an investigation into drug trafficking and illegal firearm possession in Catawba County were sentenced today, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.
Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division and Chief Tom Adkins of the Hickory Police Department (HPD) join Acting U.S. Attorney Rose in making today’s announcement.
Lavoris Hector, 27, of Hickory, N.C., was sentenced to 10 years in prison, followed by five years of supervised release. He pleaded guilty to conspiracy to possess with intent to distribute crack cocaine. Kenneth Norman, 36, of Hickory, pleaded guilty to possession with intent to distribute crack cocaine and was sentenced to 15 months in prison followed by three years of supervised release. Tyree Rhinehardt, 22, of Hickory, was sentenced to 12 months and one day in prison and three years of supervised release. He pleaded guilty to aiding and abetting possession with intent to distribute crack cocaine.
According to filed court documents and court proceedings, the defendants were charged following a seven-month investigation which began in October 2012, targeting individuals who participated in illegal drug transactions and gun trafficking in and around Hickory. Over the course of the investigation law enforcement seized more than 80 firearms, including 53 handguns, 19 rifles, 10 shotguns and one short barrel shotgun. Law enforcement also seized more than 1,425 grams of narcotics, including over 1,125 grams of cocaine and more than 230 grams of marijuana, with a total street value of over $55,000.
The following defendants have been sentenced to date, in connection with the case:
- Kerston Deshawn Edwards was sentenced to 188 months in prison and four years of supervised release. He pleaded guilty to possession with intent to distribute crack cocaine.
- Damion Eugene Houston was sentenced to 120 months in prison and five years of supervised release. He pleaded guilty to conspiracy to possess with intent to distribute crack cocaine.
- Jonathan Marquis Meyers was sentenced to 96 months in prison and four years of supervised release. He pleaded guilty to possession with intent to distribute crack cocaine.
- Traquon Rashaad Davis was sentenced to 84 months in prison and four years of supervised release. He pleaded guilty to possession with intent to distribute crack cocaine and possession of a firearm in furtherance of a drug trafficking crime.
- Brandon Jaqwan Sifford was sentenced to 81 months in prison and five years of supervised release. He pleaded guilty to possession with intent to distribute crack cocaine and possession of a firearm in furtherance of a drug trafficking crime.
- Christopher Durand Myers was sentenced to 78 months in prison and three years of supervised release. He pleaded guilty to aiding and abetting possession with intent to distribute crack cocaine.
- Damion Jordan Armstrong was sentenced to 77 months in prison and five years of supervised release. He pleaded guilty to conspiracy to possess with intent to distribute crack cocaine and possession of a firearm by a felon.
- Anthony Roger Mull was sentenced to 77 months in prison and four years of supervised release. He pleaded guilty to conspiracy to possess with intent to distribute crack cocaine and possession of a firearm by a felon.
- Xavier Ahmad Cade was sentenced to 68 months in prison followed by two years of supervised release. He pleaded guilty to possession of a firearm by a felon.
- Keon Maurquie Gaither was sentenced to 64 months in prison and three years of supervised release. He pleaded guilty to one count of conspiracy to possess with intent to distribute crack cocaine and possession of a firearm by an obliterated serial number.
- William Shalon Linebarger was sentenced to 63 months in prison and four years of supervised release. He pleaded guilty to conspiracy to possess with intent to distribute crack cocaine.
- Anthony Lamar Mason was sentenced to 63 months in prison and three years of supervised release. He pleaded guilty to aiding and abetting possession with intent to distribute crack cocaine.
- Brandon Colbert was sentenced to 60 months in prison and four years of supervised release. He pleaded guilty to possession with intent to distribute crack cocaine.
- Donald Lavar Ramseur was sentenced to 60 months in prison and four years of supervised release. He pleaded guilty to conspiracy to possess with intent to distribute crack cocaine and three counts of aiding and abetting possession with intent to distribute crack cocaine.
- Cortez Lamar Rogers was sentenced to 47 months in prison and three years of supervised release. He pleaded guilty to felon in possession of a firearm.
- Chaetez Sean Clayton was sentenced to 46 months in prison and three years of supervised release. He pleaded guilty to possession with intent to distribute crack cocaine.
- Larry Elwood Steptoe was sentenced to 46 months in prison and three years of supervised release. He pleaded guilty to possession with intent to distribute crack cocaine.
- Donnell Lavon Thomas was sentenced to 38 months in prison and one year of supervised release. He pleaded guilty to possession of a firearm by a felon.
- Larry Jermaine Linebarger was sentenced to 37 months imprisonment and three years of supervised release. He pleaded guilty to conspiracy to possess with intent to distribute crack cocaine and aiding and abetting possession with intent to distribute crack cocaine.
- Kadeem Jamal Albright was sentenced to 33 months in prison and three years of supervised release. He pleaded guilty to two counts of possession with intent to distribute crack cocaine; one count of conspiracy to possess with intent to distribute crack cocaine and one count of aiding and abetting possession with intent to distribute crack cocaine.
- Antonio Rashawn Whitworth was sentenced to 33 months in prison and three years of supervised release. He pleaded guilty to conspiracy to possess with intent to distribute crack cocaine.
- Kianta Martese Davis was sentenced to 30 months in prison followed by threeyears of supervised release.He pleaded guilty to conspiracy to possess with intent to distribute crack cocaine.
- Kenteze Rayvon Martin was sentenced to 30 months in prison and three years of supervised release. He pleaded guilty to conspiracy to possess with intent to distribute crack cocaine.
- Eric Jay Ramirez was sentenced to 30 months in prison and three years of supervised release. He pleaded guilty to felon in possession of a firearm.
- Paris Michael Thompson was sentenced to 27 months in prison and three years of supervised release. He pleaded guilty to conspiracy to possess with intent to distribute crack cocaine.
- Isreal Lerock Linebarger was sentenced to probation. He pleaded guilty to one count of unlawful dealing in firearms.
- Marquice Tyrone Streeter was sentenced to time served. He pleaded guilty to conspiracy with intent to distribute crack cocaine.
The investigation was conducted by the ATF and Hickory PD.Assistant U.S. Attorney Jennifer Dillon of the U.S. Attorney’s Office in Charlotte is leading the prosecution.
Federal Judge Sentences Methamphetamine Trafficker to Life in PrisonRead the Press Release
STATESVILLE, N.C. – Today, a federal judge sentenced Martin Martinez Saldana, 44, of West Jefferson, N.C., to life in prison on conspiracy to distribute and to possess with intent to distribute methamphetamine and possession of a short-barreled shotgun charges, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.
Acting U.S. Attorney Rose is joined in making today’s announcement by John S. Comer, Acting Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA), which oversees the Charlotte District Office; Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division; B.W. Collier, Acting Director of the North Carolina State Bureau of Investigation (SBI); and Sheriff James Williams of the Ashe County Sheriff’s Office (ACSO).
According to filed court documents and evidence presented at Saldana’s four-day trial in March 2014, from as early as 2011 through the end of 2012, Saldana and his conspirators distributed in Ashe County and elsewhere more than 20 pounds of near-pure crystal methamphetamine, also known as “ice.” Trial evidence established that the high level of purity of the methamphetamine indicates it originated from a Mexican “super lab” with an estimated street-level value of more than $1 million. The evidence at trial also established that when law enforcement executed a search warrant at Saldana’s residence they seized four handguns, including a revolver hidden under his mattress, and an illegal short-barreled shotgun, as well as ammunition. Over the course of the investigation, law enforcement also seized five real properties in Ashe County worth over $500,000 combined, $50,000 in cash, one vehicle, one-quarter kilogram of methamphetamine “ice” and drug packaging materials. Among the seized items also were three images of Santa Muerte, who has been adopted by drug traffickers as folk “patron saint.”
Saldana was indicted by a federal grand jury on December 13, 2012, which indictment was superseded on August 20, 2013. He has been in federal custody since his arrest on December 12, 2012, when law enforcement discovered that Saldana was planning to go to Mexico.
Acting U.S. Attorney Rose commended the DEA in Charlotte, ACSO, SBI, and ATF for the investigation leading to the successful prosecution of Martin Martinez Saldana, and also thanked the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Alleghany Sheriff’s Office, and the Boone Police Department for the assistance in this case. Assistant U.S. Attorney Steven R. Kaufman handled the prosecution of the case.
Federal Indictment Charges South Carolina Man with Sex Trafficking of A MinorRead the Press Release
CHARLOTTE, N.C. – A South Carolina man charged with sex trafficking of a minor was arrested yesterday in Columbia, S.C., announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. On April 22, 2015, a federal grand jury returned the two-count criminal indictment against Martin Allen Meggett, 27, of West Columbia, S.C.
John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Sheriff Bruce Bryant of the York County Sheriff’s Office in South Carolina join Acting U.S. Attorney Rose in making today’s announcement.
The indictment alleges that on or about September 9, 2014 and September 10, 2014, in Mecklenburg County, Meggett knowingly harbored, transported, provided and obtained by any means a person he knew was under 18 for the purpose of engaging in a commercial sex act. The indictment also alleges that Meggett transported the minor across state lines for the purposes of prostitution.
Following his arrest, Meggett had his initial appearance in federal court in Columbia where he remains in federal custody. He will be transferred to the Western District of North Carolina to appear before a U.S. Magistrate Judge when the court schedules his arraignment and detention hearings.
The penalty for each count is a mandatory minimum of 10 years and a maximum of life in prison. The charges contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The investigation of the case was jointly handled by the FBI and the York County Sheriff’s Office. The prosecution of the case is handled by Assistant U.S. Attorney Kimlani Ford, of the U.S. Attorney’s office in Charlotte.
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 the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Federal Judge Hands Down 10-Year Sentence to Former Chief Accounting Officer for Beazer Homes USA, Inc.Read the Press Release
CHARLOTTE, N.C. – Today, U.S. District Judge Robert J. Conrad, Jr. sentenced Michael T. Rand, 52, of Sandy Springs, Ga., to 120 months in prison and to three years of supervised release on conspiracy and obstruction of justice charges in connection with federal investigation into a seven-year accounting fraud conspiracy at Beazer Homes USA, Inc. (“Beazer”), announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. In July 2014, a federal jury convicted Rand of the charges following a two-week retrial. Rand, who was the former Chief Accounting Officer for Beazer, was previously found guilty in October 2011, however that verdict was later vacated due to juror misconduct, which prompted the presiding judge to order Rand’s retrial.
John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division joins Acting U.S. Attorney Rose in making today’s announcement.
The charges against Rand arise from a government investigation involving Beazer and its employees that began in March 2007. In July 2009, Beazer was charged with, among other things, participation in the conspiracy and securities fraud with Rand. Beazer accepted responsibility for those charges and, in a deferred prosecution agreement, agreed to pay restitution of $50 million. Rand was indicted by a federal grand jury in August 2010.
“As the Chief Accounting Officer of a publicly-traded company, Rand had an obligation to Beazer’s investors and the public to abide by accounting rules and maintain proper books and records that accurately reflected the company’s financial status. Corporate corruption erodes the public’s trust in our financial system which can have an adverse effect on our economy. Rand’s sentence reflects the seriousness of his offense and underscores my office’s commitment to protecting Americans from executives that engage in corporate fraud,” said Acting U.S. Attorney Rose.
“As evidenced by the significant efforts of the investigative and prosecutive team, the FBI remains committed to holding corporate executives responsible for any and all malfeasance which affects America’s financial markets. The ordinary investor should have confidence in the accuracy of corporate accounting requirements and rest assured that executives who place their personal interests above all others will be held responsible. The two juries who heard the complicated testimony in this matter clearly agreed with this position,” stated John A. Strong, Special Agent in Charge for the Charlotte Division of the FBI.
A federal jury found that, while serving as Beazer’s Chief Account Officer, Rand directed an accounting fraud conspiracy to falsify reported profits at Beazer by lying to Beazer’s auditors, fraudulently achieving earnings targets, falsifying Beazer’s books and records, and deceiving the public by boosting and lowering company earnings. Rand was convicted of conspiracy to commit securities fraud, to make false and misleading statements to auditors and accountants, to circumvent Beazer’s internal accounting controls, and to falsify the books, records, and accounts of Beazer. He was also convicted of engaging in wire fraud conspiracy.
According to court documents and evidence presented at Rand’s second trial, Rand executed the conspiracy in two main ways: Between 2005 and 2006, Rand entered into a hidden oral side agreement with another company through one of its employees, which was designed to allow Beazer to obtain cash and to improperly report revenue from purported “sales” of model homes. This activity was in direct contravention of the accounting rules and hidden from Beazer’s auditors. Between 2000 and 2007, Rand directed a scheme to commit securities fraud and create false books and records at Beazer by practicing “cookie jar accounting,” which allowed Rand and others to falsely report profits in Beazer’s publicly reported financial statements.
The jury also convicted Rand of obstruction of justice in relation to a federal grand jury investigation. Trial evidence showed that after being notified of the federal grand jury’s investigation of Beazer in March 2007, Rand deleted nearly 6,000 emails, obstructing the grand jury investigation then focused on the separate investigation into mortgage fraud at Beazer.
Finally, the jury convicted Rand of lying to hinder an investigation by making numerous false statements to investigators on behalf of the Audit Committee of Beazer’s Board of Directors, after learning that such false statements would be reported to the FBI and the U.S. Attorney’s Office.
In announcing today’s sentence, Judge Conrad described the defendant’s conduct as Chief Accounting Officer at Beazer as “criminal, dishonest and corrupt,” with “repeated acts to cook the books,” and as a result, “illegality became a norm” at Beazer. The Court emphasized that its sentence was intended to deter others because our “markets depend on the integrity of accounting officers.”
Following the sentencing hearing Rand was released on bond. 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.
Acting U.S. Attorney Rose credited FBI special agents for the investigation leading to today’s sentence. She also thanked the U.S. Securities & Exchange Commission for their invaluable assistance throughout the investigation.
Assistant U.S. Attorneys Kurt W. Meyers and Maria K. Vento of the U.S. Attorney’s Office in Charlotte prosecuted the case.
Dairy Company Owner Sentenced to Six Months of Home Detention and Ordered to Pay $15,000 Fine for Discharging 11,000 Gallons of Cow Feces into the French Broad RiverRead the Press Release
ASHEVILLE, N.C. – William “Billy” Franklin Johnston, the owner of one of North Carolina’s largest dairy farms located in Fletcher, N.C., was sentenced today to four years of probation, six months of which he has to spend in home detention, for his role in the discharging of cow feces into the French Broad River, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. U.S. Magistrate Judge Dennis L. Howell also ordered Johnston to pay a $15,000 fine. The dairy company, Tap Root Dairy, LLC (Tap Root), was also fined $80,000 and was placed on a four-year probationary term. The company is also required to abide by a comprehensive environmental compliance plan.
Acting U.S. Attorney Rose is joined in making today’s announcement by Special Agent in Charge Maureen O’Mara of the U.S. Environmental Protection Agency, Criminal Investigation Division (EPA-CID), Atlanta Area Office, and B. W. Collier, Acting Director of the North Carolina State Bureau of Investigation (SBI).
A criminal bill of information filed in U.S. District Court on November 11, 2013, charged Tap Root and Johnston, 62, of Mills River, N.C., with one count of violation of the Clean Water Act, in connection with the discharging of cow feces into the French Broad River. Johnston, the owner of Tap Root, is also a Board Member of the North Carolina Department of Agriculture and currently serves as a Council member for the Town of Mills River.
According to filed documents and statements made in court, Tap Root maintains several hundred cows and manages hundreds of acres of crop fields in Fletcher. In the annual course of its operations, Tap Root disposes millions of pounds of solid and liquid animal waste, which are considered pollutants under the Clean Water Act. Court documents indicate that beginning in 2009, Johnston let his certification lapse as Operator in Charge (OIC) of Tap Root’s animal waste management system. Despite receiving repeated warnings and notices, court records show that as of December 4, 2012, Tap Root still had not designated a valid OIC to oversee its waste management system. Furthermore, according to filed documents, from September 3, 2012 to December 4, 2012, for a total of 93 days, Johnston and the Tap Root employees had failed to check and maintain the levels of cow waste in their on-site waste containment lagoons. According to court records, this resulted in the spillover and discharge of 11,000 gallons of cow feces and other waste into the French Broad River on December 4, 2012. Testing by the North Carolina Department of Environment and Natural Resources concluded that the fecal coliform level where the waste stream meets the river was 99,000 parts per million, whereas anything above 800 parts per million is indicative of a release. Even downstream, testing found that the fecal coliform level was 2,200 parts per million.
“Agriculture is an important sector of Western North Carolina’s economy but it should not thrive at the expense of public health. Environmental protection laws are in place to ensure appropriate land use and safeguard our communities from potentially harmful pollutants,” said Acting U.S. Attorney Rose.
“As one of North Carolina’s largest dairies, Tap Root Dairy Farm has an obligation to protect the surrounding community from pollution,” said Maureen O’Mara, Special Agent in Charge of EPA’s criminal enforcement program in North Carolina. “Animal wastes are considered pollutants under the Clean Water Act because when discharged illegally, they can cause serious damage to the environment and put human health at risk. Today’s sentencing shows that those who violate our nation’s environmental laws will be held accountable for their crimes.”
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. In 2012, North Carolina listed the French Broad River from Mud Creek to NC Highway 146 as “impaired” for fecal coliform bacteria. Tap Root is located on this impaired section of the French Broad River.
The investigation of this case was conducted by special agents of the EPA’s Criminal Investigation Division, and SBI’s Diversion and Environmental Crimes Unit. The prosecution is being handled by Assistant United States Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte.
Federal Indictment Charges Letter Carrier for Dumping U.S. MailRead the Press Release
CHARLOTTE, N.C. – A federal criminal indictment charging Marlin D. Haley, 22, of Charlotte, with two counts of destroying and delaying U.S. mail was returned by a federal grand jury on Thursday, April 23, 2015, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Haley was arrested this morning and had his initial appearance before U.S. Magistrate Judge David S. Cayer.
Paul Bowman, Area Special Agent in Charge of the United States Postal Service, Office of Inspector General joins Acting U.S. Attorney Rose in making today’s announcement.
According to the criminal indictment and court proceedings, on two separate occasions on March 22, 2015 and April 6, 2015, in Mecklenburg County, Haley unlawfully did and attempted to secret, destroy, delay and open U.S. Mail entrusted to him for delivery. The indictment alleges that Haley dumped the mail instead of delivering it to the addressed recipients.
Haley faces a maximum penalty of five years in prison and a $250,000 for each count.
The charges contained in these indictments are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by USPS, Office of the Inspector General. Assistant U.S. Attorney Kenneth Smith is prosecuting the case.
Acting US Attorney Jill Westmoreland Rose Statement on the Sentencing of David PetraeusRead the Press Release
Acting U.S. Attorney Jill Westmoreland Rose released the following statement on the sentencing of David Petraeus:
“Good afternoon. David Petraeus appeared before U.S. Magistrate Judge David Keesler of the Western District of North Carolina today and admitted to the unauthorized removal and retention of classified information and lying to the FBI and CIA about his possession and handling of classified information. Petraeus was sentenced to a two-year probationary term and was ordered to pay $100,000 fine. I want to thank my colleagues at DOJ National Security Division, the Charlotte FBI office for leading the investigation, as well as all our investigative partners for their work on the case.”
Acting US Attorney Jill Westmoreland Rose Statement on the Sentencing of David PetraeusRead the Press Release
CHARLOTTE – Acting U.S. Attorney Jill Westmoreland Rose released the following statement on the sentencing of David Petraeus:
“Good afternoon.David Petraeus appeared before U.S. Magistrate Judge David Keesler of the Western District of North Carolina today and admitted to the unauthorized removal and retention of classified information and lying to the FBI and CIA about his possession and handling of classified information.Petraeus was sentenced to a two-year probationary term and was ordered to pay $100,000 fine.I want to thank my colleagues at DOJ National Security Division, the Charlotte FBI office for leading the investigation, as well as all our investigative partners for their work on the case.”
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Federal Indictment Charges 12 "United Blood Nation" Gang Members with Racketeering ConspiracyRead the Press Release
CHARLOTE, N.C. – A second superseding federal indictment was unsealed this morning charging 12 alleged gang members with racketeering conspiracy, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Of the 12 defendants charged, seven face additional charges, including murder in aid of racketeering and related firearms violations, which potentially expose those defendants to the federal death penalty.
Of the 12 defendants named in the indictment, three were previously arrested on federal armed robbery charges and two are in custody in South Carolina on state murder charges. Law enforcement arrested seven of the alleged gang members during an early morning round-up.
John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division; Kevin Brackett, Solicitor for York and Union Counties in South Carolina; Chief Rodney D. Monroe of the Charlotte-Mecklenburg Police Department; and Sheriff Bruce Bryant of the York County Sheriff’s Office in South Carolina join Acting U.S. Attorney Rose in making today’s announcement.
“The individuals charged today have alleged ties to a ruthless street gang that uses fear, intimidation, and even murder to protect the interests of their criminal organization,” said Acting U.S. Attorney Rose. “My Office will work closely with our law enforcement partners, in North Carolina and across state lines, to identify and prosecute violent gang offenders and deliver justice to victims of gang violence.”
“From the moment the FBI became involved in the investigation of the murders of Douglas and Deborah London, agents, task force officers, and other FBI employees worked tirelessly to find those responsible. Together with our law enforcement partners, we have discovered and unraveled a dangerous criminal enterprise that spread a web of violence without regard for innocent lives,” said John A. Strong, Special Agent in Charge of the FBI in North Carolina.
The indictment charges each of the 12 alleged gang members with RICO conspiracy. The named defendants are:
- Jamell Lamon Cureton a/k/a “Assassin,” a/k/a “Murda Mel,” 22, of Charlotte.
- Nana Yaw Adoma a/k/a “Ratchet,” 20, of Charlotte.
- David Lee Fudge a/k/a “Flames” a/k/a “Flame,” 22, of Pineville, N.C.
- Daquan Lamar Everett a/k/a “Day Day,” 20, of Charlotte.
- Randall Avery Hankins, II a/k/a “Foe,” 20, of Charlotte.
- Malcolm Jarrel Hartley a/k/a “Silent” a/k/a “Bloody Silent,” 21, of Charlotte.
- Nehemijel Maurice Houston a/k/a “Mijel” a/k/a “Swagg Out,” 20 of Charlotte.
- Briana Shakeyah Johnson a/k/a “Breezy B” a/k/a “Breezy V” 19, of Concord, N.C.
- Ibn Rashaan Kornegay a/k/a “IB,” 35, of Greenville, N.C.
- Centrilia Shardon Leach a/k/a “CeCe,” 31, of Charlotte.
- Ahkeem Tahja McDonald a/k/a “Lil Keem” a/k/a “Savage,” 21, of Charlotte.
- Rahkeem Lee McDonald a/k/a “Hitman” a/k/a “Big Keem,” 22, of Charlotte.
In addition to the RICO conspiracy charge, Cureton, Fudge, Hankins, Hartley, Johnson and Rahkeem McDonald are charged with two counts of murder in aid of racketeering and two counts of 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 death, for the October 2014 murders of Douglas and Deborah London. Hartley faces two additional charges of possession of a firearm by a felon.
“The murder of a witness is more than just a violent assault calculated to shut down a prosecution,” said Solicitor Kevin Brackett, “it is an attack on the rule of law. It indicates a degree of contempt for the criminal justice system that deserves society’s harshest penalty.”
The unsealed indictment also charges Cureton and Ahkeem McDonald with one count of murder in aid of racketeering and one count of 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 death in connection with the August 2013 murder of Kwamne Donqurius Clyburn.
Cureton, Adoma and Fudge are also charged with one count of Hobbs Act Robbery, one count of assault with a dangerous weapon in aid of racketeering activity, and one count of use or carry a firearm in relation to a crime of violence and possession of a firearm in furtherance of a crime of violence, for the May 2014 armed robbery of the Pineville area mattress store owned by Douglas and Deborah London.
“These indictments send a very strong message to those who engage in violent criminal activity. The Charlotte-Mecklenburg Police Department and our partner agencies will continue to be steadfast in our focus to keep the community safe,” said Chief Rodney D. Monroe of Charlotte Mecklenburg Police.
According to the allegations contained in the second superseding indictment filed in federal court, other publicly filed documents and statements made in court, from at least in or about 2012 to present:
The 12 defendants were members of the “United Blood Nation,” a criminal enterprise commonly known as “UBN,” or the “Bloods.” The defendants operated as a Racketeer Influenced and Corrupt Organization (RICO), responsible for carrying out violent acts for the purpose of protecting and furthering the gang’s power, intimidating communities and rival gangs, enriching its members and providing financial assistance to incarcerated UBN members, and obstructing law enforcement from identifying and prosecuting other gang members.
As UBN members, the defendants operated according to a common set of Bloods’ rules, also known as “The 31,” followed the gang’s ranking system, used the communication codes and language affiliated with the gang, and used distinctive markings, tattoos and colors to indicate allegiance to the gang. The defendants also regularly participated in gang meetings, during which they collected gang dues, planned actions against individuals suspected of cooperating with law enforcement, discussed the commission of crimes to include robbery and murder, and made plans to obstruct justice and to prevent the prosecution of other UBN gang members, among others.
On or about May 25, 2014, Cureton, Adoma and Fudge robbed “The Mattress Warehouse,” located in Pineville, N.C. Cureton committed the robbery at gun point, while Adoma served as the lookout man and Fudge the getaway driver. During the robbery, Cureton and Douglas London exchanged gunfire, Cureton was injured and the three conspirators fled the scene. Cureton sought medical treatment at an area hospital and was arrested on state charges related to the robbery. A criminal indictment bringing federal armed robbery and related charges against Cureton and Adoma was filed in Charlotte on November 18, 2014. In a first superseding indictment filed on January 21, 2015, Fudge was added as a third defendant for his role the robbery.
Over the next five months, the defendants exchanged correspondence and conducted numerous in-person and telephonic gang meetings, during which they discussed and planned the murder of Douglas London, the only eyewitness to the robbery. On or about October 23, 2014, Johnson drove Hartley to South Carolina, where Hartley shot and killed Douglas and Deborah London at their home. Shortly after, Cureton ordered the gang to remain silent about the Londons’ murders. Kornegay also conducted a telephone gang meeting with other UBN gang members, during which he directed them to lay low to avoid contact with law enforcement.
The indictment further charges Cureton and Ahkeem McDonald with the murder of Kwamne Donqurius Clyburn. According to the indictment, on or about August 22, 2013, the two gang members shot and killed Kwamne Clyburn for “false claiming,” that is, claiming to be a UBN member when he was not.
Nine defendants are currently in federal custody and had their initial appearances in Charlotte today. Law enforcement arrested Kornegay in Greenville and he appeared in federal court in Raleigh. Hartley and Johnson will be extradited from South Carolina in the coming days.
A chart identifying each defendant’s charges and maximum penalties is attached below. The indictment contains a notice of special sentencing factors, which provides for a greater sentence for those defendants charged with offenses related to the murders. The defendants’ sentences will be determined by the Court, after considering the federal sentencing guidelines and statutory sentencing factors.
The charges contained in the indictment are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
At today’s press conference announcing the charges, Acting U.S. Attorney Rose praised the outstanding investigative work of the FBI, CMPD and the York County Sheriff’s office and noted that the investigation is still ongoing.Ms. Rose also thanked the York County Solicitor’s Office for their continued support and cooperation with the case.
Assistant U.S. Attorneys Elizabeth Greene and Don Gast are in charge of the prosecution.
Federal Judge Sentences Buncombe Co. Man to 12.5 Years in Prison on Child Pornography ChargesRead the Press Release
ASHEVILLE, N.C. – On Thursday, April 16, 2015, U.S. District Judge Martin Reidinger sentenced Robert Lemarr, 42, of Leicester, N.C. to 12.5 years in prison on child pornography charges, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Lemarr was ordered to serve a lifetime of supervised release, to register as a sex offender, and to pay $20,000 as restitution to his victims.
B.W. Collier, Acting Director of the North Carolina State Bureau of Investigation (SBI) and Acting Asheville Police Chief Steve Belcher join Acting U.S. Attorney Rose in making today’s announcement.
According to court documents and the sentencing hearing, on or about August 2014, Lemarr did knowingly transport and aid and abet the transportation of child pornography. Court records indicate that on or about December 2012, Lemarr possessed over 100,000 images of child pornography, including images of toddlers and infants. Lemarr pleaded guilty to one count of transportation of child pornography and one count of possession of child pornography and has been in federal custody since April 2014. The case was investigated by the Asheville Police Department and the State Bureau of Investigation and assisted by the North Carolina Internet Crimes Against Children Task Force.
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Judge Reidinger also sentenced on Tuesday, April 14, 2015, Robert Maillet, 56, of Asheville, N.C., to 148 months in prison. According to court records, Maillet pleaded guilty in April 2014 to one count of receiving child pornography and one count of possession of child pornography. According to court documents and court records, law enforcement discovered approximately 8,000 images of child pornography in computer hardware that were seized from Maillet’s residence. In addition to the prison term, Judge Reidinger also ordered Maillet to a lifetime of supervised release and to pay $3,000 as restitution to a victim of child pornography. Mailett has been in federal custody since January 2014. The case was investigated by Homeland Security Investigations, SBI, and the Asheville Police Department.
The defendants 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 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 the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Owner and Operator of Charlotte Area Laundromats Pleads Guilty to Tax EvasionRead the Press Release
CHARLOTTE, N.C. – The owner and operator of Charlotte-area laundromats pleaded guilty to tax evasion today, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Teng Lor, 55, of Matthews, N.C., appeared before U.S. Magistrate Judge David S. Cayer and admitted to concealing from the Internal Revenue Service (IRS) significant personal earnings derived from his businesses, “T&C Equipment, Inc.” (T&C Equipment) and “LOR Enterprises, Inc.” (LOR Enterprises).
Thomas J. Holloman, III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) joins Acting U.S. Attorney Rose in making today’s announcement.
According to the filed court documents and today’s plea hearing, between tax years 2010 and 2012, Lor deposited cash receipts from the two businesses totaling over $1.5 million into his business and personal bank accounts. Court records show that the deposits were structured to avoid the filing of currency transaction reports. According to court records, during the relevant time period, Lor failed to disclose or provide records from all of the bank accounts to his tax return preparer. Court records indicate that for tax years 2010 through 2012, T&C Equipment and LOR Enterprises earned additional gross receipts totaling approximately $744,162 that Lor failed to report on the corporate tax returns filed with the IRS. As a result of the unreported gross receipts, Lor had additional taxable income of $544,261. Court records show that for the same tax years, Lor also failed to report all of his income on his individual state income tax returns.
Lor pleaded guilty to one count of tax evasion. The charge carries a maximum penalty of five years in prison and a $250,000 fine. As part of today’s plea agreement, Lor has agreed to pay restitution, the amount of which will be determined by the Court at Lor’s sentencing hearing, which has not been scheduled yet. Lor was released on bond following his plea hearing.
The investigation of the case was handled by IRS-CI. The case is being prosecuted by Assistant United States Attorney Jenny G. Sugar of the U.S. Attorney’s Office in Charlotte.
Indictment Charges Florida Man with Passport FraudRead the Press Release
ASHEVILLE, N.C. – Jose Salvador Lantigua, 62, of Jacksonville, Florida, has been charged with passport fraud and aggravated identity theft, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. His wife, Daphne Sylvia Simpson, 57, of Sapphire, N.C., has also been charged with one count of making false statements to a federal agent in connection with the case.
Scott Moretti, Special Agent in Charge of the Washington Field Office, U.S. Department of State, Diplomatic Security Service; B.W. Collier, Acting Director of the North Carolina State Bureau of Investigation (NC SBI); Steven M. Watkins, Director of the North Carolina Division of Motor Vehicles License and Theft Bureau (NC DMV L&T); Sheriff Chip Hall of the Jackson County Sheriff’s Office; and Chief Phil Harris, of the Brevard Police Department join Acting U.S. Attorney Rose in making todays’ announcement.
According to allegations contained in the federal indictment, on or about November 18, 2014, Lantigua lied on his application for a U.S. passport, falsely representing that his name was “Ernest Allen Wills.” According to court records, to support his passport application, Lantigua allegedly provided a birth certificate in the name “Ernest Allen Wills,” and, as proof of identity, Lantigua allegedly used a fraudulently-obtained North Carolina license issued in the victim’s name but bearing Lantigua’s photo. Court records show that Lantigua is the subject of an ongoing investigation in Florida, for allegedly faking his own death to fraudulently obtain life insurance money. The indictment charges Lantigua with one count of knowingly making a false statement on a passport and one count of aggravated identity theft. Law enforcement arrested Lantigua in Brevard, N.C., on March 21, 2015, and he remains in federal custody.
Lantigua’s wife, Daphne Simpson, has also been charged with one count of making a false statement to law enforcement. According to allegations contained in the indictment, Simpson lied when she told a special agent that the man who was with her at the time was “Ernest Wills” who was her “friend,” when Simpson knew that the man was actually her husband, Lantigua. Simpson was arrested in Florida on March 21, 2015, by the Florida Division of Insurance Fraud and currently remains in state custody. Simpson is facing insurance fraud and related state charges for filing fraudulent insurance claims and receiving a $500,000 payout from one of Lantigua’s life insurance policies. The federal court in Asheville will schedule Simpson’s initial appearance on the federal charges in the coming days.
If convicted of the offenses, Lantigua faces a maximum of 10 years in prison and a $250,000 fine for the passport fraud charge. The aggravated identity theft charge carries a minimum mandatory sentence of two years to be served consecutively with any other sentence imposed. Simpson faces a maximum of five years in prison and a $250,000 fine for the false statement charge.
The charges contained in the indictment are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The investigation is being handled by the U.S. Department of State’s Diplomatic Security Service, assisted by NC-SBI, NCDMV&T, Jackson Co. Sheriff’s Office and Brevard PD.Assistant U.S. Attorney Don Gast, of the U.S. Attorney’s Office in Asheville, is prosecuting the case.
Maker of Erectile Dysfunction Products Sentenced to Nine Years in Prison for Misbranding and Selling Drugs as "All-natural" Herbal SupplementsRead the Press Release
CHARLOTTE, N.C. – Kamraz Rezapour, 53, formerly of Creston, N.C. was sentenced today to 108 months in prison for defrauding consumers of nearly $5 million by misbranding erectile dysfunction drugs and selling them as “all natural” herbal supplements, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Chief U.S. District Judge Frank D. Whitney also sentenced Rezapour to three years of supervised release and ordered the defendant to pay a $15,000 fine and $44,100.52 in restitution. The Court also ordered the forfeiture of the proceeds of Rezapour’s crimes, including over $1.5 million in seized funds, gold and silver coins, along with a condominium located in Tampa, Florida.
David W. Bourne, Special Agent in Charge of the Food and Drug Administration, Office of Criminal Investigations (FDA-OCI), Miami Field Office, and Thomas L. Noyes, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS), join Acting U.S. Attorney Rose in making today’s announcement.
According to filed court documents and today’s sentencing hearing, beginning in 2009 through April 2013, Rezapour defrauded consumers of nearly $5 million, by falsely claiming that the erectile dysfunction products he sold were “100 % safe and natural.” Court records show that Rezapour was the owner and operator of Nutrition for Health, Inc. and Mojo Risen, LLC., which sold dietary supplements, male enhancement drugs and erectile dysfunction drugs, including “Mojo Risen,” “Mojo Sensation” and “VajiVedic.” Court documents indicate that Rezapour advertised Mojo Risen and the other erectile dysfunction pills as non-prescription, “all natural” herbal supplements, when, in fact, the products contained ingredients similar to prescription drugs such as Viagra, which require FDA approval to market and distribute. Rezapour previously admitted that in order to induce consumers to purchase his Mojo Risen, Rezapour repeatedly claimed that the sexual enhancement products were “100% safe and natural” and without “harsh and dangerous side effects.” Rezapour failed to list the prescription ingredients in the packaging and advertising material for the supplements he sold, including bearing the symbol “Rx only” on labels, a requirement for all prescription drugs, and did not include any warnings about the possible adverse side effects of his products.
According to court records, Rezapour received the ingredients from a supplier in China. Court records indicate that the packages were falsely labeled as containing “paint products,” among other things, to evade detection by the U.S. Customs authorities and the FDA. Rezapour ultimately distributed his products nationwide, including to customers located in Charlotte, and netted more than $4.9 million in payments for the mislabeled products.
Rezapour pleaded guilty in February 2014 to one count of wire fraud and two counts of drug misbranding, and has been detained since April 2013. Rezapour 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 into Rezapour was conducted by FDA-OCI and USPIS, with the assistance of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. The prosecution is handled by Assistant U.S. Attorney Kelli Ferry.
In June 2013, the FDA issued a warning against Mojo Risen, advising consumers not to purchase or to discontinue using this product immediately. The FDA also advised consumers who have experienced any negative side effects as a result of using this product to consult a health care professional as soon as possible. For more information please visit:
https://www.fda.gov/drugs/resourcesforyou/consumers/buyingusingmedicinesafely/medicationhealthfraud/ucm355904.htm
Tax Preparer Sentenced to Two Years in Prison for Tax Evasion & Filing False Tax ReturnsRead the Press Release
CHARLOTTE, N.C. – On Wednesday, March 25, 2015, U.S. District Judge Robert J. Conrad, Jr. sentenced Jessica Ordonez, 38, of Belmont, N.C. to 24 months in prison on tax evasion and filing false tax returns, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Judge Conrad also ordered Ordonez to serve one year under court supervision following her release from prison and to pay $288,302.63 as restitution.
Acting 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 (IRS-CI).
According to court records and the sentencing hearing, Ordonez was the owner of Tax Pros (a/k/a “Ordonez Tax Services”), which provided tax preparation and other services and had offices in Gastonia and Morganton, N.C. Court documents show that between 2004 and 2012 Ordonez prepared at least 100 false tax returns for 23 taxpayers, using fraudulent Individual Taxpayer Identification Numbers (ITINs). According to court records, Ordonez used false Additional Child Tax Credit and other false information to prepare the fraudulent returns, which entitled her clients to large fraudulent tax refunds. The tax loss associated with the fraudulent returns was approximately $202,217. In addition to filing the false returns, court records indicate that Ordonez failed to report her own income on her individual tax returns for tax years 2009 to 2011, with a corresponding tax loss of $86,085. Ordonez pleaded guilty in April 2014 to one count of tax evasion and one count of aiding and assisting in the preparation and presentation of a false tax return.
In handing down Ordonez’s sentence, Judge Conrad emphasized that Ordonez had engaged in very serious fraud over a long period of time and noted the seriousness of the offenses and the importance of deterrence in tax fraud cases.
Ordonez has been released on bond and 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.
The investigation was handled by IRS-Criminal Investigation. The prosecution for the government is being handled by Assistant United States Attorney Jenny Sugar of the U.S. Attorney’s Office in Charlotte.
Man Charge in Post Office SchemeRead the Press Release
CHARLOTTE, N.C. – A federal grand jury returned a criminal indictment today against Jimmy Lee Williams, 47, charging him with 29 felony charges in connection with a fraudulent check fraud scheme that allegedly netted more than $650,000 in postage stamps and other merchandise, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Williams is also known by several aliases including Jimmy Williamson.
Thomas L. Noyes, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service; John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division; and B.W. Collier, Acting Director of the North Carolina State Bureau of Investigation join Acting U.S. Attorney Rose in making todays’ announcement.
According to allegations contained in the indictment, in two separate time periods between November 2010 to present, Williams used two different networks of conspirators to defraud U.S. Post Offices and other businesses in the Southeast region. According to the indictment, Williams provided counterfeit checks and fake identification to his 16 accomplices, who used them to buy postage stamps, gift cards and other merchandise from U.S. Post Offices, retail stores and warehouses throughout North and South Carolina, Virginia, Maryland and the District of Columbia.
According to the indictment, Williams and/or his accomplices purchased postage stamps and other goods with a total face value of more than $650,000 using counterfeit or fraudulent checks. In the first scheme, Williams used counterfeit checks manufactured by Ronald Carr, who was charged last year in a related case with bank fraud and defrauding the United States. In the second scheme, Williams used checks drawn on his own closed accounts and the bank accounts of accomplices he met in prison and through youth football leagues in the Concord, North Carolina area. One such accomplice, Javorick Moore, was convicted in a related case in 2014 in the Eastern District of Virginia of defrauding the post office and other offenses. In both schemes, Williams’ accomplices gave the stamps they obtained to Williams, who then sold them to an Internet company in California as well as a North Carolina pawn shop, typically for 50%-70% of the face value. Williams carried out the first scheme while released on bond for a violation of a condition of supervised release arising from a previous federal conviction.
Williams has been charged with two counts of conspiracy which each carry a maximum prison term of five years and a $250,000 fine; five counts of making & counterfeit securities which carry a maximum of 10 years in prison and a $250,000 fine per count; five counts of theft of government property which carry a maximum of 10 years in prison and a $250,000 fine per count; five counts of receiving stolen government property which carry a maximum of 10 years in prison and a $250,000 fine per count; five counts of scheme to obtain bank property which carry a maximum of 30 years in prison and a $1 million fine per count; three counts of interstate transportation of stolen property which carry a maximum of 10 years in prison and a $250,000 fine per count; and one count of concealment money laundering which carries a maximum of 20 years in prison and a $500,000 fine.
Williams is currently in federal custody. He will be ordered to appear in court on the charges in the coming days.
The charges contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
USPIS, the FBI, and NC SBI investigated the case. Assistant U.S. Attorney Michael Savage, of the U.S. Attorney’s Office in Charlotte, is prosecuting the case.
Three More Defendants Sentenced for Their Role in Federal Racketeering ConspiracyRead the Press Release
Defendants among 91 Charged in Operation Wax House
CHARLOTTE, N.C. – Denetria Myles, 43, of Charlotte, Frank DeSimone, 42, of Charlotte, and William Brown, 35, of Matthews, N.C., were sentenced by U.S. District Court Judge Graham C. Mullen on Wednesday, February 18, 2015, on federal racketeering charges, announced the U.S. Attorney’s Office for the Western District of North Carolina. One additional defendant was sentenced earlier this month for his role in the scheme.
The U.S. Attorney’s Office 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 J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).
These convictions are the latest in Operation Wax House, an investigation which began in 2007. Of the 91 individuals charged, eighty-nine defendants have either pleaded guilty or have been convicted following trial. The two remaining defendants are international fugitives.
Myles was sentenced to 51 months in prison followed by three years of supervised release. Myles served the conspiracy as a buyer, seller, promoter, and licensed notary. In total, the fraudulent transactions Myles participated in resulted in more than $2 million in losses to financial and lending institutions, with Myles receiving nearly a quarter million in exchange for her crimes. Myles was convicted at trial in October 2013 of racketeering conspiracy and bank fraud.
DeSimone was sentenced to 51 months in prison, followed by two years of supervised release. According to court records and Wednesday’s sentencing hearing, DeSimone operated as a promoter in the investment fraud operations and was involved with multiple fraudulent companies controlled by the Enterprise. In sentencing DeSimone, Judge Mullen noted that an active sentence was necessary to protect the public from further crimes of this defendant. DeSimone pleaded guilty for his role in the RICO conspiracy in November 2013.
Brown was sentenced to 48 months in prison followed by one year of supervised release. According to court records and Wednesday’s sentencing hearing, Brown served the racketeering Enterprise as a promoter in its mortgage fraud operations. As part of the racketeering Enterprise, Brown was involved in at least ten separate mortgage fraud transactions, resulting in losses of approximately $3 million, and he received more than $780,000 in fraudulent kickbacks. According to court records, over the course of the conspiracy Brown also engaged in identity theft. Brown pleaded guilty for his role in the RICO conspiracy in October 2013.
Earlier this month, on February 3, 2015, Judge Mullen also sentenced Sean Williams, 46, of Huntersville, N.C. to 30 months in prison followed by two years of supervised release. Williams was a licensed loan officer and a certified public accountant, who owned and operated a mortgage company, which he used to process loan applications for mortgage fraud transactions, resulting in a total loss of more than $5 million. Williams pleaded guilty to mortgage fraud charges.
Of the 26 six defendants charged in RICO Indictment, 15 await sentencing, including three of the scheme’s leaders. The fourth leader, Ramin Amini, 46, last known address Tehran, Iran, is one of two international fugitives.
Operation Wax House in the Western District of North Carolina is being handled by the Charlotte Division of the FBI and the Criminal Division of the IRS for the Financial Fraud Enforcement Task Force, along with the Securities Division of the North Carolina Secretary of State with respect to a separate prosecution. The Operation Wax House prosecution is being handled for the government by Assistant United States Attorney Maria K. Vento.
Today’s announcement 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’s 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. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
The names and case numbers of the all the defendants charged to date in Operation Wax House are listed below, organized by their alleged role in the scheme.