Western District of North Carolina
Press releases recorded for this federal judicial district.
Owner of Accounting Business Sentenced to Two Years in Prison for Tax FraudRead the Press Release
STATESVILLE, N.C. – On Monday, October 27, 2014, U.S. District Judge Richard L. Voorhees sentenced Denise Swanson of Lenoir, N.C. to 24 months in prison for tax evasion, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Swanson was also ordered to serve three years under court supervision following her release from prison and to pay restitution in the amount of $839,830.99 to client victims and $249,912 to IRS.
U.S. Attorney Tompkins is joined by Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) in making today’s announcement.
According to court documents and yesterday’s sentencing hearing, Swanson was the owner and operator of “Bottom-line Accounting,” a tax preparation and bookkeeping business. Filed court documents show that from 2006 to 2012, Swanson performed tax preparation services for her clients, J.W. and K.W., and their business, C.B. (“the clients”), which included making related tax payments on their behalf. According to court records, Swanson received funds from her clients that were supposed to be used to pay their various tax obligations to IRS and other state agencies. But instead of making the payments, court records show, Swanson embezzled the money and used it to pay for personal expenses including her daughter’s college tuition, renovations to her house and gambling. In total, Swanson embezzled approximately $839,830 from her clients. According to court records, Swanson failed to report the embezzled income on her own individual tax returns for tax years 2006 through 2011. Swanson pleaded guilty to tax evasion for tax year 2010 in August 2013.
Following the sentencing hearing, Swanson was permitted to remain 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.
The investigation was handled by IRS-CI. Assistant United States Attorney Jenny G. Sugar of the U.S. Attorney’s Office in Charlotte prosecuted the case.
Former Schoolteacher & Ponzi Scheme Operator Sentenced to Four Years in PrisonRead the Press Release
CHARLOTTE, N.C. – Today, U.S. District Judge Robert J. Conrad, Jr. sentenced Carl David Wright, 54, of Iron Station, N.C., to serve four years in prison followed by three years of supervised release for stealing more than $1 million from investors, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Judge Conrad also ordered Wright to pay $817,975 as restitution to his victim investors.
Thomas L. Noyes, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS) and B.W. Colier, Acting Director of the North Carolina State Bureau of Investigation (SBI) join U.S. Attorney Tompkins in making today’s announcement.
According to filed court documents and today’s sentencing hearing, Wright was a schoolteacher who solicited investors to invest more than one million dollars in a Ponzi scheme that Wright claimed was a purported “Commodity Investment Group” based in Cherryville, N.C. From August 2008 through March 2013, Wright told investors that he managed the Commodity Investment Group for the purpose of investing in hedge funds, commodities, and Quick Trip service stores. In reality, Wright invested no victim money in anything resembling hedge funds, commodities, or service stores and diverted most victim money to pay supposed returns to other victim investors, commonly referred to as a Ponzi scheme. According to court documents, Wright diverted other victim money to support his lifestyle. Court records show that Wright often siphoned off a large percentage of victim money in cash immediately upon the initial deposit. Indeed, Wright was known at times to carry a significant amount of cash in a black duffel bag, court records indicate. When the scheme collapsed in 2013, Wright had less than $1,000, causing losses to victims of more than half a million dollars. Wright pleaded guilty in July 2013 to one count of mail fraud.
Following the sentencing hearing, Wright was permitted to remain 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.
The investigation was handled by USPIS and SBI. U.S. Attorney Tompkins also thanked the Commodities Futures Trading Commission for their invaluable assistance in this case. Assistant United States Attorney Kurt Meyers of the U.S. Attorney’s Office in Charlotte prosecuted the case.
Father & Son Operators of A Third Party Payroll Company Indicted for Defrauding Client Companies of More Than $11 MillionRead the Press Release
Son embezzled at least $3.7 million to pay for strip clubs, alcohol, jewelry and lavish residence
CHARLOTTE, N.C. – The two operators of a third party payroll company have been indicted for stealing more than $11 million from at least 113 clients and using the money to support their personal lifestyles, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The criminal indictment was returned by a federal grand jury on Thursday, October 23, 2014, and was unsealed today following the arrest of James William Staz, 43, of Iron Station, N.C. James Staz’s father, William James Staz, 72, of Huntersville, N.C., is the co-defendant named in the 10-count indictment.
U.S. Attorney Tompkins 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).
According to the allegations contained in the indictment:
William and James Staz operated “Employee Services.Net, Inc.” (ESN), a third party payroll company the two men formed in 2004 in Cornelius, N.C. James Staz was the vice president and financial manager of ESN until August 2011, when he became the company’s president. His father, William Stanz, was a company shareholder and managed ESN’s day-to-day operations until 2008, when he was incarcerated for a federal bank fraud conviction. William Stanz returned to ESN following his release from prison and continued to be involved in company operations.
As a third party payroll company, ESN provided various personnel services to its client companies, including processing payroll, collecting and paying federal, state and local employment taxes, and preparing and filing the required employment tax forms. In order to provide these services and make payments on behalf of its clients, ESN had access to the clients companies’ bank accounts and directly drafted the funds needed to cover the expenses. At its height, ESN had approximately 500 client companies located throughout the United States.
From about 2008 to March 2014, the defendants defrauded at least 113 ESN clients of approximately $11 million dollars intended for payroll and employment tax payments and used it to support their personal lifestyles. The victim companies include, among others, a company dedicated to delivering services for children with developmental disabilities or chronic illness, families in poverty, and families caring for the elderly and a company involved in the production of racing engines for a number of NASCAR Sprint Cup teams.
During that time period, James Staz embezzled at least $3.7 million in client funds and directed the money to his personal bank account. In order to conceal his embezzlement, James Staz made false entries into ESN’s accounting system to make it appear as though the stolen funds were used for legitimate client expenses. In reality, James Staz used the money to pay for alcohol, strip club entertainment, jewelry, a Mercedes Benz and a luxury home with a lavish three-tiered pool, a cascading waterfall, wet bar and dining area. For example, on October 25, 2012, James Staz embezzled nearly $125,000 from ESN and in the next four days, he spent the stolen funds on nearly $40,000 in charges at strip clubs and night clubs and nearly $120,000 on a new Mercedes Benz. Over the course of the fraudulent scheme, William Staz drew a salary from ESN as high as $200,000, including for the 9-month period he was incarcerated in federal prison.
To conceal their theft and to cover the losses and tax penalties caused to ESN clients by the delinquent payments, the defendants comingled and used client funds ESN collected for a current payroll/tax period to cover the previous period’s payroll and taxes. To further cover their scheme, the defendants then sent regular emails to clients, falsely stating that all employment taxes had been paid, which was not true for some of ESN’s clients.
The indictment charges William and James Staz with one count of wire fraud. James Staz is also charged with nine counts of money laundering. James Staz had his initial appearance today before U.S. Magistrate Judge David Keesler and will remain in custody pending his arraignment and detention hearing, which have been scheduled for Friday, October 31, at 9:30 a.m. William Staz will be ordered to appear on a summons.
The maximum prison term for the wire fraud charge is 20 years and a $250,000 fine. The maximum prison term for each of the money laundering charges is 20 years in prison and a $500,000 fine or twice the amount of the criminally derived proceeds, whichever is greater.
The details contained in this indictment are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The investigation for the case was handled by the FBI and IRS-CI. The prosecution of the case is being handled by Assistant U.S. Attorney Kelli H. Ferry of the U.S. Attorney’s Office, in Charlotte.
ZeekRewards President Indicted on Federal Charges for Operating $850 Million Internet Ponzi SchemeRead the Press Release
CHARLOTTE, N.C. – The president of ZeekRewards, Paul Burks, has been indicted on federal charges for operating an Internet Ponzi scheme that took in more than $850 million dollars, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The criminal indictment was returned today by a federal grand jury sitting in Charlotte, charging Burks, 67, of Lexington, N.C., with wire and mail fraud conspiracy, wire and mail fraud, and tax fraud conspiracy.
Russell F. Nelson, Special Agent in Charge of the United States Secret Service, Charlotte Field Division and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) join U.S. Attorney Tompkins in making today’s announcement.
According to allegations contained in the indictment, from January 2010 through August 2012, Paul Burks was the owner of Rex Venture Group, LLC (RVG), through which he owned and operated Zeekler, a sham Internet-based penny auction company, and its purported advertising division, ZeekRewards (collectively “Zeek”). The indictment alleges that Burks and his conspirators induced victims – including over 1,500 victims in the Charlotte area – to invest in their fraudulent scheme, by falsely representing that Zeekler was generating massive retail profits from its penny auctions, and that the public could share in such profits through investment in ZeekRewards. Indeed, the indictment alleges that Burks and others claimed, at one point, that investors would be guaranteed a 125% return on their investment.
The indictment alleges that Burks and his conspirators represented that victim-investors in ZeekRewards could participate in the Retail Profit Pool (RPP), which supposedly allowed victims collectively to share 50% of Zeek’s daily net profits. The indictment alleges that Burks and his conspirators did not keep books and records needed to calculate such daily figures, and that Burks simply made up the daily “profit” numbers. The indictment further alleges that, contrary to the conspirators’ claims, the true revenue from the scheme did not come from the penny auction’s “massive profits.” Instead, approximately 98% of all incoming funds came from victim-investors, which were then used to make Ponzi-style payments to earlier victim investors.
In addition to promising massive returns on investments, the indictment alleges that the conspirators also used a number of ways to promote Zeek to current and potential investors. For example, according to the indictment, the conspirators hosted weekly conference calls and leadership calls, where participants could call in listen to Burks and others make false representations intended to encourage victim-investors to continue to invest money and to recruit others to invest in Zeek. The indictment further alleges that Burks also organized and attended “Red Carpet Events,” where victim investors came to hear details of the scheme in person. During these events, according to the indictment, Burks and his conspirators made false representations about the massive retail profits generated by Zeek. The conspirators also used electronic and print media, including websites, emails and journals, to make false and misleading statements about the success of Zeekler to recruit victim investors.
The indictment alleges that as the Ponzi scheme grew in size and scope, it began to unravel as the outstanding liability resulting from the bogus 125% return on investment continued to rise beyond control. According to the indictment, by August 2012, the conspirators fraudulently represented to the collective victims that their investments were worth approximately $2.8 billion, but had no accurate books and records to even determine how much cash on hand was available to pay such liability. According to the indictment, by August 17, 2012, Burks and his conspirators had only $320 million (or approximately 11% of $2.8 billion) available to pay out investors. The indictment alleges that over the course of the scheme, Burks diverted approximately $10.1 million to himself.
Burks is also charged with tax fraud conspiracy for failing to file corporate tax returns or to make corporate tax payments for his companies, among other things. In addition, the indictment alleges, for tax year 2011, Burks issued fraudulent IRS Forms 1099s, causing victim-investors to file inaccurate tax returns for phantom income they never actually received.
The court has issued a summons against Burks and he is expected to appear in federal court for his initial appearance in the coming days. The wire and mail fraud conspiracy charge, the mail fraud charge and wire fraud charge each carry a maximum prison term of 20 years and a $250,000 fine. The tax fraud conspiracy charge carries a maximum prison term of five years and a $250,000 fine.
The details contained in this indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Two of Burks’ conspirators, Dawn Wright Olivares, Zeek’s Chief Operating Officer, and her step-son 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.
In making today’s announcement, U.S. Attorney Tompkins thanked the U.S. Secret Service and IRS-CI for investigating the case, and the U.S. Securities & Exchange Commission, Division of Enforcement for its assistance with the investigation.
The prosecution is handled by Assistant United States Attorneys Jenny Grus Sugar, Corey Ellis and Mark T. Odulio of the U.S. Attorney’s Office in Charlotte.
Additional information and updated court filings about this and related cases filings can be accessed at the district’s website: www.justice.gov/usao/ncw/ncwvwa.html.
Mecklenburg Co. Social Worker Pleads Guilty in Connection with Medicaid Fraud SchemeRead the Press Release
The Defendant Stole the Identities of Clients and Sold them to Conspirator in Exchange for Cash and Gifts
CHARLOTTE, N.C. – A social worker with the Mecklenburg County Department of Social Services (DSS) appeared in federal court today and pleaded guilty to federal charges for her role in a healthcare fraud scheme involving the stolen identities of clients enrolled with the Medicaid program, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Ieshia Hicks Watkins, 33, of Charlotte, pleaded guilty before U.S. Magistrate Judge David S. Cayer to one count of health care fraud conspiracy and one count of receiving illegal kickbacks.
U.S. Attorney Tompkins is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte.
According to filed court documents and today’s plea hearing, October 2010 to February 2012, while employed at DSS, Watkins stole the names and identities of DSS clients, most of whom were minors. As a social worker, Watkins had access to the information contained in the client files on her caseload and the caseload of others within DSS. Court records indicate that Watkins sold the stolen information to her conspirator, Ronnie Lorenzo Robinson, who then used it to file fraudulent reimbursement claims with Medicaid for sham mental and behavioral health services that were never provided to those Medicaid recipients.
Watkins admitted in court today that she sold the misappropriated information in exchange for cash and gifts. According to information contained in court filings, Watkins received at least $10,000 as payment for selling DSS client names and identifying information to Robinson. Robinson then submitted nearly $30,000 in false and fraudulent claims to Medicaid using the stolen information.
“Driven by greed, Watkins used her position to access the personal information of DSS clients and sold it to her conspirator in exchange for cash and gifts. This case is particularly troubling because these were families and minor children whose welfare Watkins was assigned to protect. Instead, she turned them into victims of identity theft for her own benefit. Since Watkins’ conscience wasn’t enough to stop her from committing this crime, my office will make sure she’s held accountable for it,” said U.S. Attorney Tompkins.
“Ieshia Watkins utilized her trusted position as a social worker to victimize some of the most vulnerable families in North Carolina. Instead of putting the best interests of those parents dependent on Medicaid for their children’s care, Ms. Watkins allowed personal greed to override the commitment she made to those families. Health care fraud wastes taxpayer’s money and increases costs for everyone,” said John Strong, Special Agent in Charge of the FBI in North Carolina.
At sentencing, Watkins faces a maximum term of 10 years in prison and a $250,000 fine for the health care fraud conspiracy charge. She also faces a maximum of five years in prison and a $250,000 fine for receiving illegal kickbacks. In her plea agreement, Watkins has agreed to pay full restitution to Medicaid for any losses resulting from her criminal scheme. The final restitution amount will be determined by the court at Watkins’ sentencing hearing, which has not been scheduled yet. Watkins remains free on bond pending sentencing.
Robinson pleaded guilty in January 2014 to two counts of health care fraud and is currently awaiting sentencing.
The investigation into Watkins was handled by the FBI with assistance from the North Carolina Medicaid Investigations Division. The prosecution was handled by Assistant U.S. Attorney Kelli Ferry of the U.S. Attorney’s Office in Charlotte.
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 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.
Pineville Woman Sentenced to 15 Months in Prison for Stealing Money from Former EmployerRead the Press Release
CHARLOTTE, N.C. – U.S. District Judge Robert J. Conrad, Jr. handed down a 15-month prison sentence to a Pineville woman today for stealing money from her former employer, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Joan Elliott, 69, of Pineville, was also ordered to serve three years under court supervision and to pay $406,929 as restitution.
Russell F. Nelson, Special Agent in Charge of the United States Secret Service, Charlotte Field Division joins U.S. Attorney Tompkins in making today’s announcement.
According to court to documents and today’s sentencing hearing, Elliott was employed as a bookkeeper by a Charlotte-based association representing the lumber and building material industry. Court records show that among Elliott’s responsibilities were issuing company checks to pay business expenses and depositing to the company’s bank account check payments for administrative fees from the insurance company used by members of the association. According to court filings, from 2006 to 2009, Elliott used company checks to pay for personal expenses, falsely representing that the funds were used as payment of legitimate business expenses.
Court records indicate that during the same time period, Elliott further defrauded her employer by failing to deposit to her employer’s bank account checks sent by the company’s insurance company. Instead, records show, Elliott used those checks to pay for personal expenses, by taking the checks to the bank and directing the bank to rewrite official bank checks for the same amounts that Elliott then used toward personal expenditures. Elliott fraudulently obtained between $200,000 and $400,000 from her former employer, court records indicate. According to today’s sentencing hearing, Elliott used some of the stolen funds to pay for, among other things, a car, furniture, and spa visits. Elliott pleaded guilty in January 2013 to one count of forged securities.
Elliott has been released on bond and will be allowed to self-report to begin serving her prison term once the Federal Bureau of Prisons has designated a federal facility. All federal sentences are served without the possibility of parole.
The investigation was handled by the U.S. Secret Service. The case was prosecuted by Assistant United States Attorney Jenny G. Sugar of the U.S. Attorney’s Office in Charlotte.
Graham Co. Man Pleads Guilty to Lacey Act Violation and Is Sentenced to 20 Months in Prison for Petty Offenses Involving Illegal Hunting ActivitiesRead the Press Release
ASHEVILLE, N.C. – David Chadwick Crisp, 35, of Graham Co., appeared before U.S. Magistrate Judge Dennis L. Howell and pleaded guilty to one count of misdemeanor Lacey Act violation, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. He will be sentenced by U.S. District Judge Martin K. Reidinger on that offense at a later date.
Today, Crisp also pleaded guilty to four offenses involving illegal hunting activities within the Nantahala National Forest, one illegal hunting activity on Fontana Lake, and one boating violation on Fontana Lake. For those six offenses, he was sentenced to serve a total of 20 months in prison. In addition to the prison term, Judge Howell ordered Crisp to serve one year of probation upon his release from prison, and ordered him to pay $3,000 in fines, and to surrender his North Carolina hunting and fishing licenses for a period of one year. Crisp also agreed that when he is later sentenced by Judge Reidinger he will pay $2,232 to the North Carolina Wildlife Resources Commission as restitution for one of the black bears he killed.
According to court documents and court records, the misdemeanor Lacey Act violation Crisp pleaded guilty to earlier in the day involved the illegal transportation of an American black bear the defendant knew had been killed in the Nantahala National Forest in violation of state and federal laws.
The six offenses to which Crisp pleaded guilty and for which he was sentenced today were:
• Knowingly operating a vessel on the waters of the State of North Carolina between sunset and sunrise without the use of navigational lights.
• Knowingly and intentionally hunting bear at night and during closed season.
• Knowingly and intentionally hunting dear at night.
• Knowingly and intentionally hunting deer with the use and aid of artificial light.
• Knowingly and intentionally hunting without a license.
• Knowingly and intentionally hunting deer with a firearm during closed season.According to court records, Crisp’s illegal activities took place in the Nantahala National Forest and elsewhere in Graham Co., between November 2010 and October 2012. According to the filed factual basis presented in open court today, which Crisp agreed under oath was accurate, Crisp and his conspirators used illegal hunting techniques on a number of occasions to illegally hunt for bears, hogs, deer and other wildlife in the National Forest and within the Great Smoky Mountains National Park. Court records indicate that among the illegal techniques used were spotlights, bear baiting using chocolate, and equipping a bait barrel with a dog collar that could then be used to track the bear, as well as hunting at night and out of season.
According to court records, to conceal his illegal hunting activities from law enforcement, Crisp took further measures, for example, keeping a “throw away” rifle hidden in a hollow tree, to avoid detection going in an out the national park with a gun. Court records also indicate that when an undercover agent said to Crisp that there would probably be a lot of bears in the national park, but that bear hunting there is illegal, Crisp responded, “You can if you don’t get caught.” On another occasion, court records show, Crisp told an undercover agent that he had not tagged a bear yet, even though he had helped kill four bears and had killed one himself.
Following Crisp’s guilty plea and in announcing Crisp’s sentence, Judge Howell said that he had never seen this quantity or level of wildlife violations.
* * *The following defendants have also been prosecuted for illegal hunting activities and related violations:
On September 5, 2014, Walter Stancil and Jerry Parker were convicted of conspiracy to violate the Lacey Act and are awaiting sentencing.
On October 2, 2014, Walter Stancil was convicted of removing Forest Service property, a game camera that was set up on one of his bear bait sites. He received a sentence of 15 days in jail.
On October 9, 2014, David Crisp was convicted at trial of aiding and abetting the illegal placement of chocolate, for bear bait, in the Nantahala National Forest. He was sentenced to 90 days in jail and a $2,000 fine.
Jerry Parker pled guilty yesterday to illegally conducting a commercial enterprise, that is, a bear hunting guide service, in the Nantahala National Forest without a commercial special use permit. He was sentenced to a fine of $1,500 and was ordered to forfeit his North Carolina hunting and fishing license for two years and was ordered not to hunt or fish in North Carolina for two years.
The investigations were conducted by the U.S. Fish and Wildlife Service, the US Forest Service, the NC Wildlife Resources Commission, and the Georgia Department of Natural Resources. The prosecutions are being handled by Assistant U.S. Attorney Richard Edwards of the U.S. Attorney’s Office in Asheville.
Former Charlotte Mayor Patrick D. Cannon Sentenced to 44 Months in PrisonRead the Press Release
CHARLOTTE, N.C. – Today, Chief U.S. District Judge Frank D. Whitney sentenced former Charlotte Mayor Patrick D. Cannon, 47, to 44 months in prison followed by two years of supervised release for accepting more than $50,000 in bribes while serving in office, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division. Judge Whitney also ordered Cannon to pay a $10,000 fine and forfeiture in the amount of $50,500.
U.S. Attorney Tompkins stated, “Patrick Cannon betrayed the public’s trust and embarrassed the city he was elected to serve. Cannon accepted more than $50,000 in bribes, but the social injury to this community is far deeper. While the perception of rampant public corruption can slowly tear a community apart, justice can bind us together and restore our faith in our government. Today, Cannon was held accountable for using his official position for personal gain. His sentence is also a reminder that my office will prosecute those who put personal interests ahead of the people they were elected to serve.”
“Patrick Cannon sold his oath of office, violated the integrity of our government, and betrayed the citizens of Charlotte. Public corruption will not be tolerated; no matter the position or names of those involved. As outlined in the criminal complaint, the FBI is uniquely positioned to dedicate whatever resources necessary to expose even the most deeply entrenched and secretive pay to play schemes," said John Strong, Special Agent in Charge of the FBI in North Carolina.
According to filed court documents and today’s sentencing hearing, from 2009 to March 2014, while serving as City Council Member and/or Mayor Pro Tem, and later as the Mayor of Charlotte, Cannon solicited and accepted bribes such as gifts, cash and other things of value totaling over $50,000, in exchange for a pattern of official actions. Court records show that Cannon accepted the bribes from a Charlotte business owner and two undercover agents posing as investors interested in opening businesses in Charlotte, in exchange for use of his official position on an “as needed” basis. Court records indicate that Cannon promised to use his influence with city and county officials and others to assist his payors’ with business projects and to intervene with any zoning, permitting and transportation issues, among others. In June 2014, Cannon pleaded guilty to one count of honest services wire fraud.
In announcing today’s sentence, Judge Whitney commented on the seriousness of the offense, stating that public corruption undermines the legitimacy of government and the public’s faith in its elected leaders and it feeds the cynics who believe that all government is corrupt.
Following the sentencing hearing, Cannon was released on bond. The court rejected the defendant’s request for a later reporting date and he will be ordered to self- report to the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.
The investigation was handled by the Charlotte Division of the FBI. Assistant United States Attorneys Michael E. Savage and Craig D. Randall of the U.S. Attorney’s Office in Charlotte prosecuted the case.
Franklin, N.C. Man Sentenced to 21 Months in Prison for Filing A False Tax ReturnRead the Press Release
ASHEVILLE, N.C. – U.S. District Judge Martin Reidinger sentenced Isaac H. Birch today to 21 months in prison followed by one year of supervised release for filing a false tax return, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Birch was also ordered to pay $480,047 as restitution to the United States Treasury.
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 U.S. Attorney Tompkins in making today’s announcement.
According to filed court documents and today’s sentencing hearing, Birch, 38, of Franklin, N.C. filed false tax returns for tax years 2007-2009, claiming he was entitled to hundreds of thousands of dollars in tax refunds. Court records indicate that Birch filed a false 2007 income tax return that contained fraudulent information, including other income in the amount of $735,425 and federal income tax withheld in the amount of $735,424. According to information in court documents and court proceedings, Birch filed these fraudulent returns after attending a tax return preparation seminar in Albany, N.Y., which taught participants how to file large refund claims against the Treasury Department using fraudulent methods. Court records show that Birch’s fraudulent action caused the Treasury Department to issue fraudulent tax refund checks in the amount of $480,047. Birch pleaded guilty in August 2013 to one count of filing a false tax return.
Birch was released on bond and will be ordered to self-report to the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.
The investigation of the case was handled by IRS and USPIS. The prosecution of the case is handled by Assistant U.S. Attorney Don Gast of U.S. Attorney’s Office in Asheville.
Cherokee, N.C. Woman Sentenced to More Than Five Years in Prison in Connection with Oxycodone Distribution RingRead the Press Release
ASHEVILLE, N.C. – U.S. District Judge Martin Reidinger today sentenced Taryn Krista Elizabeth Toineeta Rattler, 26, of Cherokee, N.C., to 70 months in prison on drug trafficking conspiracy charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Rattler was also ordered to serve three years under court supervision upon completion of her prison term.
U.S. Attorney Tompkins 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 North Carolina; Jason O’Neal, Deputy Associate Director of the Bureau of Indian Affairs, Division of Drug Enforcement; Chief Ben Reed of the Cherokee Indian Police Department; Sheriff Curtis Cochran of the Swain County Sheriff’s Office; Sheriff Mickey Anderson of the Graham County Sheriff’s Office; and Sheriff Jimmy Ashe of the Jackson County Sheriff’s Office.
According to filed court documents and court proceedings, from January 2007 to December 2012, Rattler and her conspirators engaged in a conspiracy to distribute narcotics including Oxycodone, cocaine, marijuana and Alprazolam in Swain and Jackson Counties. At today’s sentencing hearing, Rattler was found to be accountable for trafficking 404,400 milligrams of Oxycodone over the course of the conspiracy, with a street value of $404,400. In September 2013, Rattler pleaded guilty to one count of conspiracy to distribute a Schedule I controlled substance.
Three of Rattler’s conspirators have already have received prison sentences: Mark Allen Winstead was sentenced to 38 months; Timothy Leroy Rattler was sentenced to 18 months; and Jacob Hunter Rattler was sentenced to 15 months. Jackie Lee Rattler and Evan Thomas Norris, Jr. have also pleaded guilty and currently await sentencing.
In a separate case, Judge Reidinger also sentenced today Kandace Rhean Griffin to 70 months in prison, followed by three years of supervised release. According to court records, from March to October 2012, Griffin conspired with other individuals to distribute Oxycodone and other narcotics in Swain County. Griffin, 25, of Cherokee, pleaded guilty in September 2013 to one count of conspiracy to possess with intent to distribute a Schedule II controlled substance.
All federal sentences are served without the possibility of parole. U.S. Attorney Tompkins thanked all the law enforcement agencies involved in these investigations for their continued cooperation and assistance. The prosecution was handled by Assistant U.S. Attorney John Pritchard, of the U.S. Attorney’s Office in Asheville.
Iron Station, N.C. Man Sentenced in Connection with Home BurglariesRead the Press Release
STATESVILLE, N.C. – On Monday, October 6, 2014, U.S. District Judge Richard L. Voorhees sentenced Miquan Limik Smith, 27, of Iron Station, N.C. to 63 months in prison, followed by 24 months of supervised release for conspiracy to receive stolen firearms by committing burglaries and violating other federal firearms laws, announced Anne M. Tompkins, 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 Sheriff Phillip H. Redmond of the Iredell County Sheriff’s Office join U.S. Attorney Tompkins in making today’s announcement.
According to court documents and yesterday’s sentencing hearing, on or about January 31, 2013, Smith and his co-conspirator, Trishton Philemon Johnson, 26, of Charlotte, carried out two home burglaries in Iredell County, stealing firearms and other items of value. Court records show that law enforcement officers were alerted to the break-ins, identified the vehicle the defendants were in, and pulled the vehicle over on Interstate 77 in Iredell County. According to court records, the defendants drove off and, after a high speed chase, law enforcement officers stopped the vehicle. Johnson was arrested at the vehicle stop but Smith, who had fled the scene on foot, was arrested shortly thereafter.
Johnson pleaded guilty in July 2013 to one count of receiving stolen firearms and aiding and abetting. He was sentenced in March 2014 to 24 months in prison, followed by two years of supervised release.
In November 2013, a federal jury convicted Smith on all charged violations, including one count of conspiracy to receive stolen firearms by committing burglaries, one count of receiving stolen firearms, and one count of possession of a firearm by a felon.
Smith has been 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 Iredell County Sheriff’s Office. The case was prosecuted by Assistant United States Attorneys Jennifer L. Dillon and Kenneth M. Smith of the U.S. Attorney’s Office in Charlotte.
Jury Convicts Charlotte Man of Federal Racketeering in Connection with Operation Wax HouseRead the Press Release
CHARLOTTE, N.C. – On Wednesday, October 1, 2014, a federal jury returned a guilty verdict against Kurosh Mehr for his role in a $75 million racketeering conspiracy, announced the U.S. Attorney’s Office for the Western District of North Carolina. This conviction is the latest in Operation Wax House, an investigation which began in 2007 and has netted 91 defendants to date, of which 88 have pleaded guilty or have been convicted at trial. Mehr, 53, of Charlotte was convicted of racketeering conspiracy, mortgage fraud, and money laundering conspiracy.
U.S. Attorney Tompkins 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).
The federal criminal trial began on Monday, September 29, 2014 before Senior U.S. District Judge Graham Mullen. According to evidence introduced at trial, the enterprise, which operated from 2005 to 2012, engaged in an extensive pattern of racketeering activities, which included investment or securities fraud, mortgage fraud in the form of wire fraud and bank fraud, and money laundering.
According to trial evidence, Mehr was a promoter and buyer in the enterprise’s mortgage fraud operations. The evidence at trial showed that initially Mehr served as a promoter, providing tens of thousands of dollars as down payment money for the enterprise’s purchase of luxury homes utilizing several straw buyers. In exchange, trial evidence showed that the conspiracy would divide up the loan funds that were supposed to be the seller’s proceeds, paying themselves back the down payment money they fronted plus a 10% kickback following the closing of the loan. According to trial evidence, Mehr later agreed to serve as a buyer for the enterprise in a flip transaction, in which he bought a house from a straw buyer for a price that was approximately $500,000 over the price the enterprise had purchased the house for months earlier. The evidence showed that this $500,000 difference was used to cover the down payment (which was netted from the seller’s proceeds) and to pay kickbacks to members of the enterprise, including more than $300,000 which was transferred to Mehr and his coconspirators. Following the jury’s conviction, the defendant was remanded to custody. The racketeering conspiracy charge carries a maximum term of 20 years in prison and a $250,000 fine or twice the gross profits or other proceeds. The money laundering conspiracy charge carries a maximum term of 20 years in prison and a $500,000 fine or twice the amount of criminally derived proceeds. The mortgage fraud conspiracy charge carries a maximum prison term 30 years in prison and $1 million fine. A sentencing date for the defendant has not been set yet.
Three defendants have charges pending in the case, two of which, including one of the leaders, are international fugitives. Each remaining defendant and his or her status are listed below:
• Ramin Amini, 45, of Tehran, Iran, is charged with racketeering conspiracy, mortgage fraud and money laundering conspiracy. Role: Leader and promoter in the scheme. Status: International fugitive.
• John Wayne Perry, Jr., 32, of Charlotte, is charged with racketeering conspiracy and money laundering conspiracy. Role: Promoter. Status: On bond; Scheduled for trial after September 2014.
• Nazeere Saddig, 41, formerly of Charlotte, is charged with racketeering conspiracy and mortgage fraud. Role: Promoter and buyer. Status: International fugitive.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. The case was tried by Assistant United States Attorneys Maria K. Vento and Jenny Grus Sugar.
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.
Two Men Sentenced to Prison on Child Pornography ChargesRead the Press Release
CHARLOTTE, N.C. – On Tuesday, September 23, 2014, Chief U.S. District Judge Frank D. Whitney sentenced George Beall to 78 months in prison on federal child pornography charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Beall was also ordered to register as a sex offender and to serve the rest of his life under court supervision after he is released from prison. Judge Whitney also ordered Beall to pay $66,000 as restitution to eleven separate victims of child pornography.
Also on Tuesday, Judge Whitney sentenced Richard Lee Miller to 78 months in prison on federal child pornography charges. Miller was also ordered to register as a sex offender and to a lifetime of supervised release.
U.S. Attorney Tompkins is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation, Charlotte Division.
In June 2013, Beall, 68, of Matthews, N.C. pleaded guilty to one count of possessing child pornography. According to filed documents and statements made in court, in May 2011, law enforcement became aware of Beall’s collection of child pornography after it was discovered by computer repair technicians. Court documents indicate that law enforcement later seized additional computer equipment pursuant to a search warrant. Court records indicate that a forensic examination revealed that Beall possessed thousands of images and videos which included 96 different children already identified by law enforcement as victims of child pornography.
Beall has been in federal custody since his bond was revoked in June 2013. He will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.
In August 2013, Miller, 63 of Charlotte, N.C. pleaded guilty to one count of possessing child pornography. According to filed documents and statements made in court, in March 2012, law enforcement were alerted to Miller’s collection of child pornography after it was discovered by computer repair technicians. According to court records, law enforcement later seized additional computer equipment from Miller’s residence. Court records indicate that a forensic examination revealed that Miller possessed thousands of images and videos which included eight different children already identified by law enforcement as victims of child pornography.
Miller has been in federal custody since his bond was revoked in August 2013. He will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.
Both investigations were handled by the FBI. Assistant U.S. Attorneys Cortney S. Randall and David A. Thorneloe prosecuted the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice, aimed at combating the growing online sexual exploitation of children. By combining resources, federal, state and local agencies are better able to locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue those victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Federal Judge Sentences Columbia, S.C. Attorney for Making A False Statement to A Federal AgentRead the Press Release
COLUMBIA, S.C. – On Tuesday, September 23, 2014, U.S. District Judge Margaret B. Seymour sentenced Joenathan Shelly Chaplin, an attorney in Columbia, S.C. to three years of probation for making a false statement to a federal agent, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Judge Seymour ordered Chaplin to spend the first six months of his probationary sentence in home confinement with electronic monitoring and to pay a $100 assessment fee.
Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI); John S. Comer, Acting Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA) which overseas South Carolina, and Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) join U.S. Attorney Tompkins in making today’s announcement.
According to court documents and yesterday’s sentencing hearing, Chaplin, 47, admitted to knowingly and willfully making a materially false, fictitious, and fraudulent statement and representation to the government. According to court records, Chaplin’s false statements to federal agents occurred when he was questioned in relation to a drug and firearm investigation. Court records show that during that investigation, it was determined that Chaplin was directing his criminal defendant clients to pay his fees in a structured manner to avoid reporting those payments to the IRS. When questioned about this practice Chaplin lied to federal investigators. Court records indicate that Chaplin also told an IRS agent that he was not aware of the reporting requirements of IRS’s Form 8300, which is a “Report of Cash Payments Over $10,000 Received in a Trade or Business” and must be filed with the IRS if a person or business has received over $10,000 in one transaction or a series of related transactions while conducting their trade or business.
The case was investigated by IRS-CI, DEA and ATF. The prosecution was handled by Assistant U.S. Attorney Jill Westmoreland Rose of the U.S. Attorney’s Office for the Western District of North Carolina in Charlotte, upon recusal of the U.S. Attorney’s Office for the District of South Carolina.
Charlotte Man Sentenced to 46 Months in Prison for His Role in A Mortgage Fraud SchemeRead the Press Release
Defendant Received More Than $500,000 In Mortgage Fraud Proceeds
CHARLOTTE, N.C. – Former NFL football player Jimmy Hitchcock was sentenced on Tuesday, September 23, 2014, to serve 46 months in federal prison, to be followed by two years of supervised release, for his role in a multi-million mortgage fraud conspiracy, announced U.S. Attorney Anne M. Tompkins.
U.S. Attorney Tompkins 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).
Hitchock, 43, of Clemmons, N.C., pleaded guilty in June 2013 to one count of mortgage fraud conspiracy, one count of bank bribery conspiracy and one count of money laundering conspiracy. In sentencing Hitchcock yesterday, Chief U.S. District Judge Frank D. Whitney found that Hitchcock was the leader or organizer of this mortgage fraud conspiracy and further that Hitchcock had engaged in a sophisticated scheme by, among other things, creating bogus “official checks” that could be used to make it appear as if buyers had made down payments when in fact they had not. According to court documents, Hitchcock created other false documents to support the mortgage fraud transactions and recruited a bank insider to assist in the fraud, by paying her bribes to provide bogus verifications of deposit to support the mortgage fraud transactions.
According to information presented at the sentencing hearing, the losses incurred by financial and lending institutions associated with the mortgage fraud transactions that Hitchcock participated in were approximately $4.5 million. Additionally, Hitchcock personally received more than $500,000 from the loan proceeds fraudulently obtained by the conspiracy during the sixteen months it operated.
Hitchcock has been in federal custody since his September 2012 arrest in on these charges.
Hitchcock was one of six defendants charged in a second superseding bill of indictment for their role in this mortgage fraud conspiracy, and is the fourth in this conspiracy to be sentenced. The other defendants sentenced to date are:
• Christopher T. Belin, 35, of Norfolk, Va. - Real estate agent and promoter was sentenced to 33 months in prison, followed by three years of supervised release.
• Mitzi Jackson, 41, of Mint Hill, S.C. - Bank insider, sentenced to nine months in prison, followed by one year of supervised release with nine months home detention.
• Coley Scagliarini, 40, of Charlotte - Mortgage broker, sentenced to 46 months in prison, followed by two years supervised release.Co-defendant Michelle Mallard, 47, of Montgomery, Ala. is scheduled to be sentenced on October 28, 2014. A sentencing date has not yet been set for co-defendant James E. Fink, 44, of Waxhaw, N.C.
Ninety-one (91) people have been charged to date in Operation Wax House. To date, eighty-four (84) defendants have pleaded guilty and three have been found guilty at trial. Operation Wax House in the Western District of North Carolina is being handled by the Charlotte Division of the FBI and the Criminal Investigation 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 prosecution for the government was handled by Assistant United States Attorneys Kurt W. Meyers and Maria K. Vento.
The President’s Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit http://www.stopfraud.gov
Anti-gang and Violent Crime Reduction Initiative Leads to More Than 135 ArrestsRead the Press Release
CHARLOTTE, N.C. – A total of 138 defendants have been arrested and currently face state charges in connection with operation “Southern Snare,” an anti-gang and violent crime reduction initiative led by the United States Marshals Service in coordination with federal, state and local law enforcement agencies. The arrests took place over the course of the four-month long operation, which began in May and concluded on September 5, 2014.
This anti-gang and violent crime reduction initiative targeted gang activities and violent crime in Gaston and Cleveland counties, with special emphasis placed on communities within Gastonia and Shelby, N.C. During this operation, authorities seized 56 firearms, narcotics with an approximate street value of $178,000, and an estimated $15,000 in U.S. currency.
Kelly M. Nesbit, United States Marshal of the United States Marshals Service (USMS) 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; Ryan L. Spradlin, Acting Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Atlanta and the Carolinas; B.W. Collier, Acting Director of the North Carolina State Bureau of Investigation; Johnny Hawkins, Director of Security Services, North Carolina Department of Public Safety; Chief James W. Buie of the Gaston County Police Department; Chief Robert Helton of the Gastonia Police Department; Sheriff Alan Cloninger of the Gaston County Sheriff’s Office; Locke Bell District Attorney for Gaston County; Chief Jeffrey H. Ledford of the Shelby Police Department; Chief Melvin Proctor of the Kings Mountain Police Department; Sheriff Alan Norman of the Cleveland County Sheriff’s Office; and Rick Shaffer, District Attorney for Cleveland and Lincoln Counties join Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina in making today’s announcement.
“I commend the law enforcement partners involved in this cross-jurisdictional and multi-agency operation for their hard work and their commitment to making our streets and communities safer,” stated Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.
“The success of Operation Southern Snare is the result of our close cooperation and coordination with our law enforcement partners. Targeted initiatives like this one bring relief to communities afflicted by gang activity and the violence it brings. I want to thank all our law enforcement partners for their involvement and support throughout this operation, and I look forward to our continued partnership, as we work together to remove gang members and violent offenders from our streets and to protect our neighborhoods from the spread of violence. Most of all, I commend the law enforcement agents and officers who worked tirelessly to make this initiative a success and I want to thank them for continuing to put their lives at risk to safeguard our communities,” said Kelly M. Nesbit, U.S. Marshal, Western District of North Carolina.
“ATF’s mission is to identify, pursue and perfect criminal cases against individuals who illegally possess and use firearms in furtherance of their criminal activities,” said ATF’s Special Agent in Charge Wayne L. Dixie. “We will continue to work with the U.S. Marshals Service and our local counterparts in Cleveland and Gaston Counties to ensure that those who foster violence in this region are held to account for their activities.”
“Operation Southern Snare’s arrests have made a significant difference in eliminating Shelby and Gastonia’s gang activity and apprehending those who commit violent crimes,” SBI Director B.W. Collier said. “A lot of effort and collaboration among the participating law enforcement agencies has led to safer communities in Cleveland and Gaston counties. I applaud this successful operation.”
“Collaborating with our partners at the federal and local levels on operations like this one brings tremendous benefits,” said Johnny Hawkins, Director of Security Services for the North Carolina Department of Public Safety. “The law enforcement agencies benefit from the sharing of expertise and resources and citizens know that their communities are safer due to these efforts.”
“The efforts of all the law enforcement officers involved in this operation will result in amazing returns for our community. This project is a great example of the impact we can make by working hand-in-hand with our federal and state partners. Together, we have addressed issues such as gangs, drugs and guns, which have been deteriorating our communities. Although this operation is coming to a close, we see it as a beginning instead of an ending. The partnerships formed over the past few months will continue to grow and our communities will reap the benefits,” said Chief of Shelby Police Department, Jeffrey H. Ledford.
“The success of Operation ‘Southern Snare’ had a positive and lasting impact on our community. This type of multiagency cooperation sends a clear message to the citizens of Kings Mountain and to criminals who think they can conduct their illegal activities in our area: The Kings Mountain Police Department will work alongside our federal and state law enforcement partners to protect the safety of the communities we serve,” said Chief Melvin Proctor of Kings Mountain Police Department.
“The U.S. Marshalls Service has been very beneficial in assisting us in dealing with our gang members in Cleveland County. We are looking forward to continuing this team approach with future operations,” said Sheriff Alan Norman of the Cleveland County Sheriff’s Office.
The defendants arrested during this operation currently face state charges in connection with this investigation which include: narcotics-related offenses, firearms violations and other violent crimes. The investigations are ongoing which may result in additional charges against the defendants.
This initiative was led by the U.S. Marshals Service in coordination with ATF, HSI, NC SBI, NC Dept. of Public Safety, Gaston Co. PD, Gastonia PD, Gaston Co. SO, Shelby PD, Kings Mountain PD, and Cleveland County SO.
Attorney General Recognizes District EmployeeRead the Press Release
WASHINGTON – Amy Ray, Assistant United States Attorney and Chief of the Appellate Division of the U.S. Attorney’s Office in the Western District of North Carolina was one of 243 members of the Department of Justice recognized by Attorney General Eric Holder and Executive Office for U.S. Attorneys (EOUSA) Director Monty Wilkinson at the 30th annual Director’s Awards Ceremony today in Washington D.C.
The Western District of North Carolina was one of the 44 districts represented at the ceremony which was held in the Great Hall at the Robert F. Kennedy Department of Justice Building.
In his prepared remarks to awardees, Attorney General Holder said, “Locally, nationally, and internationally, you represent the very best that this Department has to offer. Your work embodies our ongoing commitment – not merely to win cases, but to do justice; to protect our fellow citizens from crime, violence, and terrorism; to empower the most vulnerable among us; and to uphold the rule of law.”
EOUSA Director Monty Wilkinson echoed those sentiments, saying to the recipients, “You have persevered, and remained focused and motivated – achieving remarkable results in work that makes a difference in the lives of citizens across our great country. The vast scope of your collective accomplishments is nothing short of exceptional.”
AUSA Ray was recognized for her outstanding appellate advocacy in United States v. Simmons, a significant appellate decision that impacted hundreds of federal criminal cases. She also is recognized for her leadership in advising other districts and in working with the Department of Justice’s Criminal Division and the Solicitor General’s office in determining the Department’s positions on the many legal issues that arose as a result of Simmons. AUSA Ray handled not only the Simmons appeal, but also two other Simmons-related appeals, United States v. Powell and United States v. Miller. Both Powell and Miller were significant appeals for which numerous cases were held in abeyance. AUSA Ray has not only been outstanding in her advocacy on behalf of the Department in the wake of Simmons, but she has become a national expert at the United States Attorney’s office level on Simmons and its consequences.
Ms. Ray received her Bachelor’s Degree in English from the University of Virginia and her law degree from Florida State University. She is originally from Mount Dora, Florida.
“Amy Ray is a very deserving recipient of this prestigious award. The award recognizes her exemplary work and outstanding achievements as an appellate lawyer. Amy is a talented Assistant United States Attorney, a committed public servant, and is dedicated to furthering the mission of the Department of Justice in enforcing the laws of our nation and protecting the rights of our citizens,” said Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.
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.
Shelby Woman Pleads Guilty to Embezzling over $410,000 from Employer and Filing A False Tax ReturnRead the Press Release
CHARLOTTE, N.C. – A Shelby woman appeared before U.S. Magistrate Judge David S. Keesler today and pleaded guilty to stealing more than $410,000 from her employer and filing a false tax return, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Tara Gist-Savage, 40, of Shelby, N.C. pleaded guilty to one count of wire fraud and one count of filing a false tax return.
U.S. Attorney Tompkins 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) and Chief James W. Buie of the Gaston County Police Department.
According to charging documents and today’s court proceedings, from 2008 to 2013, Gist-Savage was employed by an energy services company based in Belmont, N.C. Gist-Savage was in charge of the energy company’s payroll, as well as the payroll of an affiliated company. Court records show that beginning in at least 2008, Gist-Savage used her position to access the personal identity information of the companies’ former and inactive employees and used that information to generate fraudulent payroll checks and wires in the names of at least 49 individuals. According to court documents, Gist-Savage provided the fraudulent information to various payroll businesses used by the companies to generate payroll payments, and directed the fraudulent payroll checks and wires to four different bank accounts held in her name. In all, court documents indicate that Gist-Savage embezzled $410,936.04 in this manner from her former employer.
According to charging documents and today’s court proceedings, for years 2008 through 2012, Gist-Savage failed to report the fraudulently obtained income on her U.S. Individual Income Tax Returns. The estimated tax due and owing relative to the unreported income was approximately $101,650.
Gist-Savage has been released on bond. The wire fraud charge carries a maximum prison term of 20 years and a $250,000 fine. The filing false tax return charge carries a maximum prison term of three years and a $250,000 fine. As part of her plea agreement, Gist-Savage 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 IRS-Criminal Investigation and the Gaston County Police Department. The prosecution for the government is being handled by Assistant United States Attorney Jenny Sugar of the U.S. Attorney’s Office in Charlotte.
Poachers Convicted by Federal JuryRead the Press Release
ASHEVILLE, N.C. – A federal jury sitting in Asheville convicted on Monday, September 8, 2014, Jerry Francis Parker, 63 and Walter Henry Stancil, 66, both of Rabun County, Georgia for their involvement in illegal bear hunting activities and related offenses, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The defendants are subject to one year in prison, a $100,000 fine, the loss of their hunting licenses for five years, and a period of banishment from the national forests.
According to evidence presented at trial and documents filed with the court, the defendants engaged in a number of illegal hunting activities in 2011, including using chocolate candy as bait at a site that one of the defendants described as “probably the most active bait site in the United States.” The defendants were convicted of violating the Lacey Act, which criminalizes the interstate transportation of wildlife taken in violation of state or federal hunting laws.
American black bears are a species of special concern warranting federal and state protection. The hunting of American black bears is illegal at any time within the National Parks. Hunting on Forest Service land is only permitted during open season and in compliance with federal and state law. The U.S. Attorney is committed to the protection of natural resources from illegal hunting activities, including baiting, spot-lighting and exceeding hunting limits.
The investigation was conducted by the US Fish and Wildlife Service, the US Forest Service, the NC Wildlife Resources Commission, and the Georgia Department of Natural Resources. The prosecution was handled by Assistant U.S. Attorney Richard Edwards of the U.S. Attorney’s Office in Asheville.
Three Hedge Fund Manangers Sentenced in Connection with $40 Million "Black Diamond" Ponzi SchemeRead the Press Release
CHARLOTTE, N.C. – On Wednesday, September 3, 2014, U.S. District Judge Robert J. Conrad, Jr. sentenced three hedge fund managers in connection with a $40 million investment fraud conspiracy, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Jeffrey M. Toft, 51, of Sioux Fall, S.D., was sentenced to 66 months in prison followed by two years of supervised release. Chad A. Sloat, 36, of Kansas City, Mo. was sentenced to 70 months in prison, followed by two years of supervised release, and Michael J. Murphy, 54, of Deep Haven, Minn., was sentenced to 48 months in prison, and two years of supervised release.
Judge Conrad also ordered the defendants to pay restitution to victims as follows: Toft in the amount of $2,172,666; Sloat in the amount of $3,747,130 and Murphy in the amount of $2,552,824.30. Sloat was also ordered to pay $93,727 in restitution to the Internal Revenue Service. A fourth codefendant, Jonathan D. Davey, 50, of Newark, N.J. is currently awaiting sentencing.
At sentencing, Judge Conrad noted that the callous greed displayed by the defendants caused devastating financial ruin to hundreds of elderly and vulnerable victims. Judge Conrad also stressed that the lengthy sentences were appropriate given the predatory nature of the scheme.
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 U.S. Attorney Tompkins in making today’s announcement.
According to filed court documents and court proceedings, the defendants operated “hedge funds” as part of a $40 million Ponzi scheme operating under the name Black Diamond Capital Solutions (Black Diamond). Court documents show that from 2007 to 2010, the defendants induced their investor victims to turn over their money by claiming, among other things, that they had done due diligence on Black Diamond and were operating legitimate hedge funds with significant safeguards, when, in reality, those claims were false. Court records also show that as Black Diamond began collapsing, the defendants and others created a new Ponzi scheme and used a series of separate bank accounts administered by Davey to further the scheme. Specifically, the defendants deposited new victim money into these bank accounts and used the money to make lulling payments to other victims and to fund the defendants’ lifestyles.
Toft pleaded guilty in November 2012 to securities fraud conspiracy, wire fraud conspiracy and money laundering conspiracy. Sloat pleaded guilty in October 2012 to securities fraud conspiracy and Murphy pleaded guilty to the same charge in January 2013. Davey was convicted at trial of securities fraud conspiracy, wire fraud conspiracy, money laundering conspiracy and tax evasion. He will be sentenced by the court at a later date.
Toft remains free on bond and will be transferred to the custody of the Federal Bureau of Prisons upon designation of federal facility. Murphy and Sloat have been in federal custody since their bonds were revoked due to bond violations in March 2012 and August 2013, respectively. All federal sentences are served without the possibility of parole.
The case is prosecuted by Assistant United States Attorneys Kurt W. Meyers and Mark T. Odulio of the Western District of North Carolina. The investigation was handled by the FBI and the IRS.
Charlotte Man Sentenced to 15 Years in Prison on Federal Gun OffenseRead the Press Release
CHARLOTTE, N.C. – On Wednesday, September 3, 2014, U.S. District Judge Robert J. Conrad, Jr. sentenced Reginald Lashawn Lockhart, 30, of Charlotte to serve to 180 months in prison to be followed by five years of supervised release for a federal gun offense, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.
U.S. Attorney Tompkins is joined in making today’s announcement by Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division and Chief Rodney D. Monroe of the Charlotte Mecklenburg Police Department (CMPD).
According to filed court documents and statements made in court, on September 12, 2012, CMPD police officers received information that Lockhart was in possession of two stolen firearms. Court records indicate that when law enforcement searched Lockhart’s Charlotte residence they found a Smith & Wesson, .40 caliber pistol, which was loaded with 15 rounds. According to court records and court proceedings, law enforcement later determined that the pistol was stolen. Court records show that Lockhart had six prior convictions for robbery with a dangerous weapon and two prior convictions for assault with a deadly weapon inflicting serious injury. Lockhart’s prior convictions prohibit him from carrying a firearm. Lockhart pleaded guilty in April 2013 to possession of a firearm by a convicted felon and he was sentenced as an armed career criminal.
Lockhart has been in federal custody since November 2012. He will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.
The investigation was handled by ATF and CMPD. The case was prosecuted by Assistant United States Attorney Robert J. Gleason of the U.S. Attorney’s Office in Charlotte.
Charlotte Man Sentenced to 15 Years in Prison on Federal Gun OffenseRead the Press Release
CHARLOTTE, N.C. – On Wednesday, September 3, 2014, U.S. District Judge Robert J. Conrad, Jr. sentenced Reginald Lashawn Lockhart, 30, of Charlotte to serve to 180 months in prison to be followed by five years of supervised release for a federal gun offense, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.
U.S. Attorney Tompkins is joined in making today’s announcement by Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division and Chief Rodney D. Monroe of the Charlotte Mecklenburg Police Department (CMPD).
According to filed court documents and statements made in court, on September 12, 2012, CMPD police officers received information that Lockhart was in possession of two stolen firearms. Court records indicate that when law enforcement searched Lockhart’s Charlotte residence they found a Smith & Wesson, .40 caliber pistol, which was loaded with 15 rounds. According to court records and court proceedings, law enforcement later determined that the pistol was stolen. Court records show that Lockhart had six prior convictions for robbery with a dangerous weapon and two prior convictions for assault with a deadly weapon inflicting serious injury. Lockhart’s prior convictions prohibit him from carrying a firearm. Lockhart pleaded guilty in April 2013 to possession of a firearm by a convicted felon and he was sentenced as an armed career criminal.
Lockhart has been in federal custody since November 2012. He will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.
The investigation was handled by ATF and CMPD. The case was prosecuted by Assistant United States Attorney Robert J. Gleason of the U.S. Attorney’s Office in Charlotte.
Former Company Controller Sentenced to 33 Months in Prison for Stealing More Than $600,000 from His EmployerRead the Press Release
CHARLOTTE, N.C. – Darren White, 49, of Mooresville, N.C. was sentenced on Tuesday, September 2, 2014, to serve 33 months in prison for stealing more than $600,000 from his former employer, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Chief U.S. District Judge Frank D. Whitney also imposed a $10,000 fine and two years of supervised release after White’s incarceration.
U.S. Attorney Tompkins 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 Rodney D. Monroe of the Charlotte-Mecklenburg Police Department (CMPD).
According to filed court documents and court proceedings, from 2008 to 2011, White was employed by an international labeling solutions company (the “company”) with offices in Charlotte, as the company’s controller and director of financial planning and analysis. In that capacity, White managed the company’s credit card program, which included overseeing his employer’s credit card accounts and related financial statements. Court records indicate that White was the only employee with administrative access to the accounting records related to the company’s credit card program.
According to documents filed in the case, over the course of his employment, White exploited his position and used the company’s corporate credit card to pay for more than $600,000 in personal expenditures. Court filings reflect that White used the company’s credit card to buy personal items such as firearms, diving equipment, clothing, and household goods and electronics, and to pay for personal expenditures including travel expenses and entertainment. As described in further court documents, White created a series of fraudulent accounting entries in the company’s books and records to conceal his scheme. Court records indicate that when White was initially confronted by his employer about the credit card transactions, White characterized them as legitimate business expenses authorized by the company’s management. White pleaded guilty in January 2014 to one count of wire fraud.
In handing down White’s sentence, Judge Whitney noted that White’s multi-year criminal scheme caused great harm to the victim company. Judge Whitney also stressed that general deterrence was an important factor in reaching his decision to imprison White for 33 months.
White will remain free 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.
The investigation was handled by the FBI and CMPD. The prosecution for the government is being handled by Assistant United States Attorneys Mark T. Odulio and Benjamin Bain-Creed of the U.S. Attorney’s Office in Charlotte.
Mexican Drug Trafficker Sentenced to 21 Years in PrisonRead the Press Release
CHARLOTTE, N.C. – Carlos Edgar Sandoval-Uriel, 31, of Mexico, was sentenced today by Chief District Judge Frank D. Whitney to serve 252 months in prison, for his role as the leader of the Charlotte cell of an international drug trafficking and money laundering conspiracy, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Judge Whitney also sentenced Sandoval-Uriel to five years of supervised release.
U.S. Attorney Tompkins is joined in making today’s announcement by Ryan L. Spradlin, Acting Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Atlanta and the Carolinas; Chief Rodney Monroe of the Charlotte-Mecklenburg Police Department, Chief Cleveland Spruill of the Huntersville Police Department; and Chief Bence Hoyle of the Cornelius Police Department.
According to filed documents and court proceedings, Sandoval-Uriel was the leader of the Charlotte cell of a transnational drug trafficking organization that shipped marijuana across the United States-Mexico border. Court records indicate that Sandoval-Uriel’s cell operated in and around Charlotte from 2008 to April 2012, and was responsible for trafficking over a ton of marijuana to the area. Court records show that on April 2, 2012, the drug organization transported into the United States 3,168 pounds of marijuana with an estimated value of more than $2.5 million. The marijuana was hidden inside industrial-sized metal farming equipment.
According to court records, on April 9, 2012, law enforcement agents conducted a controlled delivery of the marijuana to the organization’s initial staging location in Charlotte. On April 17, 2012, law enforcement in Charlotte arrested members of the local drug cell and executed search warrants at homes suspected to be involved in the conspiracy. While executing a search warrant at a local stash house, law enforcement recovered two kilograms of cocaine and a handgun. At Sandoval-Uriel’s house, law enforcement found $192,730 in cash, an automatic money counter, a computer with ledgers of prior drug-related transactions, and bank slips for deposits of drug proceeds that conspirators made on Sandoval-Uriel’s behalf. Sandoval-Uriel pleaded guilty in November 2013 to one count of conspiracy to distribute and to possess with intent to distribute marijuana, and one count of money laundering conspiracy.
This prosecution is part of an extensive investigation by the Organized Crime Drug Enforcement Task Force (OCDETF) that has resulted in the conviction of 12 defendants on marijuana trafficking and money laundering 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 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.
In addition to Sandoval-Uriel, the following convictions stem from this investigation:
• Jose Luis Sandoval-Godoy - 168 months in prison, followed by five years of supervised release.
• Victor Aurelio Guerra - 151 months in prison, followed by five years of supervised release.
• Andres G. Herbas - 121 months in prison, followed by five years of supervised release.
• Guillermo Garza-Sanchez - 121 months in prison, followed by five years of supervised release.
• Paul Isaac Ayala, Jr. - 70 months in prison, followed by two years of supervised release.
• Cesar Garcia: 57 months in prison, followed by two years of supervised release.
• Jose Alejandro Segovia - 57 months in prison, followed by five years of supervised release.
• Ricardo Munoz-Contreras - 57 months in prison, followed by two years of supervised release.
• Jose Zenteno - 30 months in prison, followed by three years supervised release.
• Carla Georgina Moscoso Romay - two years of probation (including with 6 months home detention) and a $3,000 fine.
• Rigoberto Pacheco-Carrillo - time-served sentence, followed by one year of supervised release.Sandoval-Uriel has been in custody since April 17, 2012. He will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.
The investigation was led by HSI, CMPD, Huntersville PD, and Cornelius PD, with assistance from the Pineville Police Department, North Carolina State Bureau of Investigation, North Carolina Alcohol Law Enforcement, North Carolina Highway Patrol, Concord Police Department, Gastonia Police Department, Rowan County Sheriff’s Office, and Iredell County Sheriff’s Office.
The prosecution for the government was handled by Assistant U.S. Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte.
President of Boggs Paving, Inc. Pleads Guilty to Conspiracy to Defraud the U.S. Government and Money Laundering Conspiracy in Connection with Disadvantaged Business Enterprise FraudRead the Press Release
CHARLOTTE, N.C. – The president and part-owner of Boggs Paving, Inc. (Boggs Paving) pleaded guilty in U.S. District Court today to federal charges stemming from a criminal investigation into the illegal use of a disadvantaged business enterprise to obtain government-funded construction contracts, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Carl Andrew Boggs, III, 50, of Waxhaw, N.C. pleaded guilty to one count of conspiracy to defraud the United States Department of Transportation (USDOT) and one count of money laundering conspiracy.
Marlies T. Gonzalez, Regional Special Agent in Charge, U.S. Department of Transportation, Office of Inspector General (DOT-OIG), Region IV; 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 (IRS-CI), join U.S. Attorney Tompkins in making today’s announcement.
The purpose of USDOT’s disadvantaged business enterprise (DBE) program is to increase the participation of disadvantaged business enterprises (DBEs), such as minority and women-owned businesses and small business enterprises (SBEs) in federally-funded public construction and transportation-related projects.
“Cheating to obtain publicly-funded construction contracts enriched Boggs Paving and its owners and undermined the goal of the DBE program, which helps small and minority-owned businesses thrive by ensuring their ability to work on federal construction and transportation projects. This illegal conduct prevented contractors who played by the rules and legitimate DBEs from getting a fair chance to obtain work and undermines public trust. Prime contractors and subcontractors who engage in this type of illegal activity will be prosecuted and will have to face the consequences of their fraudulent acts,” said U.S. Attorney Tompkins.
“It is disheartening to think anyone would defraud government programs designed to help hard-working Americans, essentially robbing worthy business men and women of the chance to achieve their dreams. The FBI will continue to work with our state and federal law enforcement partners to aggressively investigate, expose, and dismantle criminal enterprises that engage in this type of fraud,” said John Strong, Special Agent in Charge of the FBI in North Carolina.
“DBE fraud harms the integrity of the DBE program and law-abiding contractors, including many small businesses, by defeating efforts to ensure a level playing field in which all firms can compete fairly for contracts,” said Marlies Gonzalez, Regional Special Agent-in-Charge of the U.S. Department of Transportation, Office of Inspector General. “Our agents will continue to work with the Secretary of Transportation, and other federal, state, and local law enforcement and prosecutorial colleagues to expose and shut down DBE fraud schemes that adversely affect public trust and DOT-assisted transportation programs throughout North Carolina and elsewhere.”
“When individuals and businesses attempt to conceal their criminal profits, complex financial transactions and money laundering schemes will exist. IRS Criminal Investigation and our law enforcement partners will be present as well, unraveling such schemes in order to bring those responsible to justice” stated Thomas J. Holloman, Special Agent in Charge, IRS Criminal Investigation.
Drew Boggs is the latest defendant to plead guilty in this case. According to documents filed in the case and statements made in court, from 2003 through 2013, Drew Boggs, Boggs Paving and the other defendants fraudulently obtained federally and state funded construction contracts by falsely certifying that a DBE or an SBE would perform and be paid for portion of the work on those contracts. As described in court documents, the conspirators used Monroe-based Styx Cuthbertson Trucking Company, Inc. (“Styx”), a road construction hauler and a certified DBE and SBE, to obtain the lucrative government-funded construction contracts. Court documents indicate that the conspirators took steps to conceal their fraud, including running payments for the work performed through a nominee bank account in Styx’s name and using magnetic decals bearing the “Styx” company logo to cover the “Boggs” logo on company trucks, among others. According to court records, the money was funneled back to Boggs Paving and its affiliates, and John Cuthbertson, owner of Styx, received kickbacks for allowing his company’s name and DBE status to be used by Boggs Paving.
Court records show that from June 2004 to July 2013, Boggs Paving was the prime contractor on 35 federally-funded contracts, and was a subcontractor for two additional contracts, worth over $87.6 million. Boggs Paving claimed DBE credits of approximately $3.7 million on these contracts for payments purportedly made to Styx. Styx only received payments of approximately $375,432 for actual work on these contracts, court records show.
To date, six defendants have pleaded guilty to charges stemming from this investigation. Greg Miller, 60, of Matthews, N.C., Arnold Mann, 55, of Fort Mill, S.C., Greg Tucker, 41, of Oakboro, N.C., and John Cuthbertson, 69, of Monroe have each plead guilty to one count of conspiracy to defraud USDOT. Kevin Hicks, 43, of Monroe has pleaded guilty to one count of conspiracy to defraud USDOT and one count of money laundering conspiracy. Charges against Boggs Paving, Inc. remain pending.
Drew Boggs has been released on bond and will be sentenced by the Court at a later date. The conspiracy to defraud USDOT charge carries a maximum of five years in prison and $250,000 fine. The money laundering conspiracy charge carries a maximum of 20 years in prison and a $500,000 fine or twice the value of the property involved in the transaction.
The investigation of the case was handled by USDOT-OIG, FBI and IRS. The case is being prosecuted by Assistant United States Attorneys Jenny G. Sugar and Michael E. Savage of the U.S. Attorney’s Office in Charlotte.
Ginseng Root Poacher Sentenced to Jail TimeRead the Press Release
Another Poacher Sentenced To Jail For The Illegal Harvesting Of 298 Ginseng Roots
ASHEVILLE, N.C. – U.S. Magistrate Judge Dennis L. Howell sentenced Billy Joe Hurley, 46, of Bryson City, N.C. to serve five months and fifteen days in jail for the illegal possession or harvesting of American ginseng from the Great Smoky Mountains National Park, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.
Steve Kloster, Acting Chief Ranger of the Great Smoky Mountains National Park and Cindy MacLeod, Acting Superintendent of the Great Smoky Mountains National Park join U.S. Attorney Tompkins in making today’s announcement.
“Illegally harvesting American ginseng from federally protected land areas poses a serious danger to a plant that is part of our national heritage. It is also a crime, and my office will continue to work closely with National Park Service Rangers to prosecute poachers who profit from the illegal harvesting and sale of this endangered national resource,” said U.S. Attorney Tompkins.
“Our rangers remain committed to protecting ginseng which is now locally threatened by poaching and recently placed on the North Carolina watch list for plants in peril due to exploitation,” said Acting Chief Ranger Steve Kloster. “We are hopeful that this conviction will serve as a deterrent to others considering illegally taking this special resource.”
“I am proud of the rangers who work to protect ginseng from poachers,” said Acting Superintendent Cindy MacLeod. “Ginseng is a precious resource, a difficult plant to grow, and one that we have been using losing to illegal and unsustainable harvests as the forests are being robbed of younger and younger plants.”
According to today’s sentencing hearing and filed documents, on June 28, 2014, Hurley admitted to illegally possessing 83 American ginseng roots he had illegally dug from areas in the Great Smoky Mountains National Park. Hurley pleaded guilty to the poaching charge, which marked his fourth such conviction. Staff of the National Park Service replanted the recovered viable roots but estimate that at best, 50% of the replanted roots are likely to survive.
At today’s sentencing hearing, a National Park Service botanist testified that the American ginseng species is under severe pressure from poachers in the Great Smoky Mountains National Park and may not be sustainable if it continues to be harvested illegally. During the hearing, a special agent with of the U.S. Fish and Wildlife Service also testified that financial gain is likely to continue to drive poachers and that fresh ginseng can bring up to $200 per pound on the black market.
In a separate case, on August 6, 2014, Christopher Ian Jacobson, 31, of Cosby, Tenn. was sentenced to 80 days in prison and was ordered to pay a $1,000 fine. Jacobson pleaded guilty to the illegal possession of 298 roots of ginseng.
American ginseng is a native plant in the Smoky Mountains. These wild roots are also a highly prized tonic, particularly in Asian markets. Dried ginseng roots are used in medicines, teas, and other health products. American ginseng was recently placed in North Carolina’s Watch Category 5B, which includes generally widespread species that are in commercial demand and are often collected and sold in high volume. This category was created to bring attention to the issue, since such high volume collection is unsustainable in the long run.
Ginseng harvest in the park has always been illegal. It is legal to harvest ginseng outside the park on private lands or with a permit in certain Forest Service areas during the harvesting season. Park scientists have realized these slow-growing native plants could disappear because harvesting means taking the entire ginseng root. Each year law enforcement rangers seize between 500 and 1000 illegally poached ginseng roots. Over the years, park biologists have marked and replanted over 15,000 roots seized by law enforcement. Monitoring indicates that many of these roots have survived and are again thriving in these mountains.
The U.S. Attorney’s Office and the National Park Service remind the public that gathering ginseng on federal lands, such as the Great Smoky Mountains National Park, is a federal crime. The Smokies are the largest fully protected reserve known for wild ginseng. This plant was formerly abundant throughout the eastern mountains, but due to overharvesting, populations have been significantly reduced to isolated patches. The roots poached in this park are usually young, between the ages of 5 and 10 years, and have not yet reached their full reproductive capacity. In time, the park’s populations might recover if poaching ceased.
The investigation of the case was handled by Park Rangers of the Great Smoky Mountains National Park assisted by special agents with the U.S. Fish and Wildlife Service. The U.S. Attorney’s Office in Asheville handled the prosecution.
To report illegal harvesting activities of American ginseng within the Smokies, please call the Law Enforcement Desk of the Great Smoky Mountains National Park at 1-865-436-1230.
Two California Residents Sentenced to Prison for Computer Theft from Charlotte-Based Online Mortgage BrokerRead the Press Release
CHARLOTTE, N.C. – U.S. District Judge Robert J. Conrad, Jr. sentenced two California residents to prison on Tuesday, August 26, 2014, for their role involving computer theft from a nation-wide online mortgage broker (the “company”), announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Brian Matthew Rich, 40, of Laguna Beach, Calif., was sentenced to 24 months in prison, followed by two years of supervised release. Marcus Alan Avritt, 42, of Seal Beach, Calif. was sentenced to 15 months in prison and two years of supervised release. Judge Conrad also ordered both defendants to pay restitution to the company, the amount of which will be determined by the court at a later date.
John A. Strong, Special Agent in Charge for the Federal Bureau of Investigation, Charlotte Division, joins U.S. Attorney Tompkins in making today’s announcement.
According to filed court documents and court proceedings, Rich and Avritt were the co-owners of Chapman Capital, Inc., a California-based mortgage broker firm also doing business as “Home Loan Consultants.” Court records show that Rich and Avritt purchased unauthorized access to the victim company’s database, which contained data on consumers who had used the company’s online mortgage lending exchange network to apply for new and refinanced mortgage loans, from 2007 until January 2008. According to court records, Rich and Avritt purchased the unauthorized access from another California-based mortgage broker and co-defendant, Steve Kenneth Rosene. Court records indicate that Rosene had obtained the unauthorized computer access from the fourth member of the conspiracy, Jarrod Beddingfield, who was a former employee of the victim company.
According to court records, the victim company’s online mortgage lending exchange network facilitated millions of consumer loan requests for new and refinanced mortgages. Mortgage loan consumers used the internet to access the company’s network and to complete online mortgage application forms containing contact, non-public financial data and other information necessary to the mortgage application process. Court records indicate that the information submitted through this online process comprised the company’s mortgage referral information, known individually as “mortgage leads.” According to court documents, the mortgage referral information, which contained thousands of such individual mortgage leads, was valuable information because it consisted of mortgage loan consumers who were ready, willing and financially-able to close on mortgage loans, refinancing loans and home equity loans, court records show. By obtaining this information without paying the requisite fees and dues, Rich and Avritt avoided paying the victim company an estimated $745,152 for the stolen mortgage leads.
Avrit and Rich pleaded guilty in August and September 2013, respectively, to one count of conspiracy to illegally access and use the company’s customer database. The other two co-defendants, Rosene and Beddingfield, have also pleaded guilty to the same charge. Rosene has also pleaded guilty to one count of unauthorized computer access/exceeded authorized access for commercial advantage and financial gain. Rosene and Beddingfield will be sentenced by the court at a later date.
Avritt and Rich have been released on bond and will be ordered to the report to the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.
The investigation was handled by the FBI. This prosecution is handled by Assistant United States Attorneys Tom O’Malley and Ben Bain-Creed of the U.S. Attorney’s Office in Charlotte.
Bank of America to Pay $16.65 Billion in Historic Justice Department Settlement for Financial Fraud Leading up to and During the Financial CrisisRead the Press Release
WASHINGTON - Attorney General Eric Holder and Associate Attorney General Tony West announced today that the Department of Justice has reached a $16.65 billion settlement with Bank of America Corporation – the largest civil settlement with a single entity in American history ¬— to resolve federal and state claims against Bank of America and its former and current subsidiaries, including Countrywide Financial Corporation and Merrill Lynch. As part of this global resolution, the bank has agreed to pay a $5 billion penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) – the largest FIRREA penalty ever – and provide billions of dollars of relief to struggling homeowners, including funds that will help defray tax liability as a result of mortgage modification, forbearance or forgiveness. The settlement does not release individuals from civil charges, nor does it absolve Bank of America, its current or former subsidiaries and affiliates or any individuals from potential criminal prosecution.
“This historic resolution - the largest such settlement on record - goes far beyond ‘the cost of doing business,’” said Attorney General Holder. "Under the terms of this settlement, the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers and communities affected by the bank’s conduct. This is appropriate given the size and scope of the wrongdoing at issue.”
This settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force and its Residential Mortgage-Backed Securities (RMBS) Working Group, which has recovered $36.65 billion to date for American consumers and investors.
“At nearly $17 billion, today’s resolution with Bank of America is the largest the department has ever reached with a single entity in American history,” said Associate Attorney General West. “But the significance of this settlement lies not just in its size; this agreement is notable because it achieves real accountability for the American people and helps to rectify the harm caused by Bank of America’s conduct through a $7 billion consumer relief package that could benefit hundreds of thousands of Americans still struggling to pull themselves out from under the weight of the financial crisis.”
The Justice Department and the bank settled several of the department’s ongoing civil investigations related to the packaging, marketing, sale, arrangement, structuring and issuance of RMBS, collateralized debt obligations (CDOs), and the bank’s practices concerning the underwriting and origination of mortgage loans. The settlement includes a statement of facts, in which the bank has acknowledged that it sold billions of dollars of RMBS without disclosing to investors key facts about the quality of the securitized loans. When the RMBS collapsed, investors, including federally insured financial institutions, suffered billions of dollars in losses. The bank has also conceded that it originated risky mortgage loans and made misrepresentations about the quality of those loans to Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA).
Of the record-breaking $16.65 billion resolution, almost $10 billion will be paid to settle federal and state civil claims by various entities related to RMBS, CDOs and other types of fraud. Bank of America will pay a $5 billion civil penalty to settle the Justice Department claims under FIRREA. Approximately $1.8 billion will be paid to settle federal fraud claims related to the bank’s origination and sale of mortgages, $1.03 billion will be paid to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $135.84 million will be paid to settle claims by the Securities and Exchange Commission. In addition, $300 million will be paid to settle claims by the state of California, $45 million to settle claims by the state of Delaware, $200 million to settle claims by the state of Illinois, $23 million to settle claims by the Commonwealth of Kentucky, $75 million to settle claims by the state of Maryland, and $300 million to settle claims by the state of New York.
Bank of America will provide the remaining $7 billion in the form of relief to aid hundreds of thousands of consumers harmed by the financial crisis precipitated by the unlawful conduct of Bank of America, Merrill Lynch and Countrywide. That relief will take various forms, including principal reduction loan modifications that result in numerous homeowners no longer being underwater on their mortgages and finally having substantial equity in their homes. It will also include new loans to credit worthy borrowers struggling to get a loan, donations to assist communities in recovering from the financial crisis, and financing for affordable rental housing. Finally, Bank of America has agreed to place over $490 million in a tax relief fund to be used to help defray some of the tax liability that will be incurred by consumers receiving certain types of relief if Congress fails to extend the tax relief coverage of the Mortgage Forgiveness Debt Relief Act of 2007.
An independent monitor will be appointed to determine whether Bank of America is satisfying its obligations. If Bank of America fails to live up to its agreement by Aug. 31, 2018, it must pay liquidated damages in the amount of the shortfall to organizations that will use the funds for state-based Interest on Lawyers’ Trust Account (IOLTA) organizations and NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development. The organizations will use the funds for foreclosure prevention and community redevelopment, legal assistance, housing counselling and neighborhood stabilization.
As part of the RMBS Working Group, the U.S. Attorney’s Office for the District of New Jersey conducted a FIRREA investigation into misrepresentations made by Merrill Lynch to investors in 72 RMBS throughout 2006 and 2007. As the statement of facts describes, Merrill Lynch regularly told investors the loans it was securitizing were made to borrowers who were likely and able to repay their debts. Merrill Lynch made these representations even though it knew, based on the due diligence it had performed on samples of the loans, that a significant number of those loans had material underwriting and compliance defects - including as many as 55 percent in a single pool. In addition, Merrill Lynch rarely reviewed the unsampled loans to ensure that the defects observed in the samples were not present throughout the remainder of the pools. Merrill Lynch also disregarded its own due diligence and securitized loans that the due diligence vendors had identified as defective. This practice led one Merrill Lynch consultant to “wonder why we have due diligence performed” if Merrill Lynch was going to securitize the loans “regardless of issues.”
“In the run-up to the financial crisis, Merrill Lynch bought more and more mortgage loans, packaged them together, and sold them off in securities – even when the bank knew a substantial number of those loans were defective,” said U.S. Attorney Paul J. Fishman for the District of New Jersey. “The failure to disclose known risks undermines investor confidence in our financial institutions. Today’s record-breaking settlement, which includes the resolution of our office’s imminent multibillion-dollar suit for FIRREA penalties, reflects the seriousness of the lapses that caused staggering losses and wider economic damage.”
This settlement also resolves the complaint filed against Bank of America in August 2013 by the U.S. Attorney’s Office for the Western District of North Carolina concerning an $850 million securitization. Bank of America acknowledges that it marketed this securitization as being backed by bank-originated “prime” mortgages that were underwritten in accordance with its underwriting guidelines. Yet, Bank of America knew that a significant number of loans in the security were “wholesale” mortgages originated through mortgage brokers and that based on its internal reporting, such loans were experiencing a marked increase in underwriting defects and a noticeable decrease in performance. Notwithstanding these red flags, 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. A related case concerning the same securitization was filed by the SEC against Bank of America and is also being resolved as part of this settlement.
“Today’s settlement attests to the fact that fraud pervaded every level of the RMBS industry, including purportedly prime securities, which formed the basis of our filed complaint,” said U.S. Attorney Anne M. Tompkins for the Western District of North Carolina. “Even reputable institutions like Bank of America caved to the pernicious forces of greed and cut corners, putting profits ahead of their customers. As we deal with the aftermath of the financial meltdown and rebuild our economy, we will hold accountable firms that contributed to the economic crisis. Today’s settlement makes clear that my office will not sit idly while fraud occurs in our backyard.”
The U.S. Attorney’s Office for the Central District of California has been investigating the origination and securitization practices of Countrywide as part of the RMBS Working Group effort. The statement of facts describes how Countrywide typically represented to investors that it originated loans based on underwriting standards that were designed to ensure that borrowers could repay their loans, although Countrywide had information that certain borrowers had a high probability of defaulting on their loans. Countrywide also concealed from RMBS investors its use of “shadow guidelines” that permitted loans to riskier borrowers than Countrywide’s underwriting guidelines would otherwise permit. Countrywide’s origination arm was motivated by the “saleability” of loans and Countrywide was willing to originate “exception loans” (i.e., loans that fell outside of its underwriting guidelines) so long as the loans, and the attendant risk, could be sold. This led Countrywide to expand its loan offerings to include, for example, “Extreme Alt-A” loans, which one Countrywide executive described as a “hazardous product,” although Countrywide failed to tell RMBS investors that these loans were being originated outside of Countrywide’s underwriting guidelines. Countrywide knew that these exception loans were performing far worse than loans originated without exceptions, although it never disclosed this fact to investors.
“The Central District of California has taken the lead in the department’s investigation of Countrywide Financial Corporation,” said Acting U.S. Attorney Stephanie Yonekura for the Central District of California. “Countrywide’s improper securitization practices resulted in billions of dollars of losses to federally-insured financial institutions. We are pleased that this investigation has resulted in a multibillion-dollar recovery to compensate the United States for the losses caused by Countrywide’s misconduct.”
In addition to the matters relating to the securitization of toxic mortgages, today’s settlement also resolves claims arising out of misrepresentations made to government entities concerning the origination of residential mortgages.
The U.S. Attorney’s Office for the Southern District of New York, along with the Federal Housing Finance Agency’s Office of Inspector General and the Special Inspector General for the Troubled Asset Relief Program, conducted investigations into the origination of defective residential mortgage loans by Countrywide’s Consumer Markets Division and Bank of America’s Retail Lending Division as well as the fraudulent sale of such loans to the government sponsored enterprises Fannie Mae and Freddie Mac (the “GSEs”). The investigation into these practices, as well as three private whistleblower lawsuits filed under seal pursuant to the False Claims Act, are resolved in connection with this settlement. As part of the settlement, Countrywide and Bank of America have agreed to pay $1 billion to resolve their liability under the False Claims Act. The FIRREA penalty to be paid by Bank of America as part of the settlement also resolves the government’s claims against Bank of America and Countrywide under FIRREA for loans fraudulently sold to Fannie Mae and Freddie Mac. In addition, Countrywide and Bank of America made admissions concerning their conduct, including that they were aware that many of the residential mortgage loans they had made to borrowers were defective, that many of the representations and warranties they made to the GSEs about the quality of the loans were inaccurate, and that they did not self-report to the GSEs mortgage loans they had internally identified as defective.
“For years, Countrywide and Bank of America unloaded toxic mortgage loans on the government sponsored enterprises Fannie Mae and Freddie Mac with false representations that the loans were quality investments,” said U.S. Attorney Preet Bharara for the Southern District of New York. “This office has already obtained a jury verdict of fraud and a judgment for over a billion dollars against Countrywide and Bank of America for engaging in similar conduct. Now, this settlement, which requires the bank to pay another billion dollars for false statements to the GSEs, continues to send a clear message to Wall Street that mortgage fraud cannot be a cost of doing business.”
The U.S. Attorney’s Office for the Eastern District of New York, together with its partners from the Department of Housing and Urban Development (HUD), conducted a two-year investigation into whether Bank of America knowingly made loans insured by the FHA in violation of applicable underwriting guidelines. The investigation established that the bank caused the FHA to insure loans that were not eligible for FHA mortgage insurance. As a result, HUD incurred hundreds of millions of dollars of losses. Moreover, many of Bank of America’s borrowers have defaulted on their FHA mortgage loans and have either lost or are in the process of losing their homes to foreclosure.
“As a Direct Endorser of FHA insured loans, Bank of America performs a critical role in home lending,” said U.S. Attorney Loretta E. Lynch for the Eastern District of New York. “It is a gatekeeper entrusted with the authority to commit government funds earmarked for facilitating mortgage lending to first-time and low-income homebuyers, senior citizen homeowners and others seeking or owning homes throughout the nation, including many who live in the Eastern District of New York. In obtaining a payment of $800 million and sweeping relief for troubled homeowners, we have not just secured a meaningful remedy for the bank’s conduct, but have sent a powerful message of deterrence.”
“Bank of America failed to make accurate and complete disclosure to investors and its illegal conduct kept investors in the dark,” said Rhea Kemble Dignam, Regional Director of the SEC’s Atlanta Office. “Requiring an admission of wrongdoing as part of Bank of America’s agreement to resolve the SEC charges filed today provides an additional level of accountability for its violation of the federal securities laws.”
“Today’s settlement with Bank of America is another important step in the Obama Administration’s efforts to provide relief to American homeowners who were hurt during the housing crisis,” said U.S. Department of Housing and Urban Development (HUD) Secretary Juliàn Castro. “This global settlement will strengthen the FHA fund and Ginnie Mae, and it will provide $7 billion in consumer relief with a focus on helping borrowers in areas that were the hardest hit during the crisis. HUD will continue working with the Department of Justice, state attorneys general, and other partners to take appropriate action to hold financial institutions accountable and provide consumers with the relief they need to stay in their homes. HUD remains committed to solidifying the housing recovery and creating more opportunities for Americans to succeed.” “Bank of America and the banks it bought securitized billions of dollars of defective mortgages,” said Acting Inspector General Michael P. Stephens of the FHFA-OIG. “Investors, including Fannie Mae and Freddie Mac, suffered enormous losses by purchasing RMBS from Bank of America, Countrywide and Merrill Lynch not knowing about those defects. Today’s settlement is a significant, but by no means final step by FHFA-OIG and its law enforcement partners to hold accountable those who committed acts of fraud and deceit.”
The attorneys general of California, Delaware, Illinois, Kentucky, Maryland and New York also conducted related investigations that were critical to bringing about this settlement. In addition, the settlement resolves investigations conducted by the Securities and Exchange Commission (SEC) and litigation filed by the Federal Deposit Insurance Company (FDIC).
The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis. The RMBS Working Group brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, 10 U.S. Attorneys’ Offices, the FBI, the Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than 10 state attorneys general offices around the country.
The RMBS Working Group is led by Director Geoffrey Graber and five co-chairs: Assistant Attorney General for the Civil Division Stuart Delery, Assistant Attorney General for the Criminal Division Leslie Caldwell, Director of the SEC’s Division of Enforcement Andrew Ceresney, U.S. Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman.
Investigations were led by Assistant U.S. Attorneys Leticia Vandehaar of the District of New Jersey; Dan Ryan and Mark Odulio of the Western District of North Carolina; George Cardona and Lee Weidman of the Central District of Carolina; Richard Hayes and Kenneth Abell of the Eastern District of New York; and Pierre Armand and Jaimie Nawaday of the Southern District of New York.
Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at:www.stopfraud.gov.
Related Material:
DV Conference Training Announcement & Registration Form
Settlement Agreement
Annex 1 - Statement of Facts
Annex 2 - Consumer Relief
Annex 3 - Tax Fund
Annex 3 - Transaction List
Exhibit A - FDIC
Exhibit B - SEC Documents
Man Sentenced to 10 Years in Prison on Child Pornography ChargesRead the Press Release
CHARLOTTE, N.C. – On Wednesday, August 13, 2014, Chief U.S. District Judge Frank D. Whitney sentenced Charles Kevin Bridges to 121 months in prison on federal child pornography charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Bridges was ordered to register as a sex offender and to serve the rest of his life under court supervision after he is released from prison. Judge Whitney also ordered Bridges to pay $3,000 as restitution to a child pornography victim.
U.S. Attorney Tompkins is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation, Charlotte Division and Chief Stacy Conley of the Gastonia Police Department.
In March 2014, Bridges, 56, of Kings Mountain, N.C. pleaded guilty to one count of receiving child pornography and one count of possession of child pornography. According to filed documents and statements made in court, in January 2013, a law enforcement officer conducting an investigation downloaded images and videos containing child pornography from Bridges’ computer, using a peer-to-peer network. Law enforcement executed a search warrant at Bridges’ residence and seized a laptop computer and a USB drive. Court records indicate that a forensic examination revealed that Bridges possessed an extensive collection of images and videos depicting children as young as toddlers engaging in sexual acts with adults.
Bridges has been in federal custody since his bond was revoked in March 2013. He will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.
The investigation was handled by the FBI and Gastonia Police department with assistance from the Cleveland County Sheriff’s Office. Assistant U.S. Attorneys Cortney S. Randall and David A. Thorneloe of the U.S. Attorney’s Office handled the prosecution.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice, aimed at combating the growing online sexual exploitation of children. By combining resources, federal, state and local agencies are better able to locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue those victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Man Sentenced to 10 Years in Prison on Child Pornography ChargesRead the Press Release
CHARLOTTE, N.C. – On Wednesday, August 13, 2014, Chief U.S. District Judge Frank D. Whitney sentenced Charles Kevin Bridges to 121 months in prison on federal child pornography charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Bridges was ordered to register as a sex offender and to serve the rest of his life under court supervision after he is released from prison. Judge Whitney also ordered Bridges to pay $3,000 as restitution to a child pornography victim.
U.S. Attorney Tompkins is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation, Charlotte Division and Chief Stacy Conley of the Gastonia Police Department.
In March 2014, Bridges, 56, of Kings Mountain, N.C. pleaded guilty to one count of receiving child pornography and one count of possession of child pornography. According to filed documents and statements made in court, in January 2013, a law enforcement officer conducting an investigation downloaded images and videos containing child pornography from Bridges’ computer, using a peer-to-peer network. Law enforcement executed a search warrant at Bridges’ residence and seized a laptop computer and a USB drive. Court records indicate that a forensic examination revealed that Bridges possessed an extensive collection of images and videos depicting children as young as toddlers engaging in sexual acts with adults.
Bridges has been in federal custody since his bond was revoked in March 2013. He will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.
The investigation was handled by the FBI and Gastonia Police department with assistance from the Cleveland County Sheriff’s Office. Assistant U.S. Attorneys Cortney S. Randall and David A. Thorneloe of the U.S. Attorney’s Office handled the prosecution.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice, aimed at combating the growing online sexual exploitation of children. By combining resources, federal, state and local agencies are better able to locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue those victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Charlotte Man Sentenced to 12 Years in Prison on Gun and Drug ChargesRead the Press Release
CHARLOTTE, N.C. – U.S. District Judge Max O. Cogburn, Jr. sentenced Timothy Massey, 32, of Charlotte to serve to 144 months in prison to be followed by two years of supervised release for federal gun, drug and supervision violations, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.
U.S. Attorney Tompkins is joined in making today’s announcement by Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division; Greg Forest, Chief Probation Officer of the U.S. Probation Office (USPO); and Chief Rodney D. Monroe of the Charlotte Mecklenburg Police Department (CMPD).
According to filed court documents and statements made in court, in May 2012, CMPD police officers conducted a traffic stop of the vehicle Massey was driving. Over the course of the traffic stop, law enforcement found a gun and marijuana in a backpack stored in the vehicle’s trunk. Massey’s prior convictions prohibit him from carrying a weapon. Massey pleaded guilty in November 2013 to possession of a firearm by a convicted felon and possession with intent to distribute marijuana.
Massey has been in federal custody since August 2013. He will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.
The investigation was handled by ATF, USPO and CMPD. The case was prosecuted by Assistant United States Attorney Robert J. Gleason of the U.S. Attorney’s Office in Charlotte.
Lincoln Co. Man Sentenced to Prison on Federal Arson ChargesRead the Press Release
CHARLOTTE, N.C. – Zulfiqar Ali Kacho, 40, of Vale, N.C. was sentenced today to serve 33 months in prison on a federal arson charge, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. U.S. District Judge Max O. Cogburn, Jr. also sentenced Kacho to serve one year under court supervision.
U.S. Attorney Tompkins is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation, Charlotte Division.
According to court documents and today’s court proceedings, in or about March 2013, Kacho solicited an undercover law enforcement agent to burn down the home of a man who, according to Kacho, had purportedly wronged him. Court records show that during a meeting on March 8, 2013, Kacho showed the undercover agent images of the victim’s home, located in South Carolina. At that meeting, Kacho told the undercover agent that he wanted the victim’s home to burn “to the ground,” and provided details to the undercover agent about using gas or petroleum in the crawl space to carry out the arson, court records indicate. On March 13, 2013, Kacho and the undercover agent met again, and over the course of that meeting, Kacho told the undercover agent he would pay him $1,000 to commit the arson, of which $300 would be paid in advance. Law enforcement arrested Kacho on March 15, 2013. He pleaded guilty in July 2013, to one count of solicitation to commit a crime of violence (arson), affecting interstate commerce.
Kacho has been in custody since March 2013 arrest, and will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.
The investigation was handled by the FBI. Assistant U.S. Attorney Craig D. Randall of the U.S. Attorney’s Office in Charlotte prosecuted the case.
Hickory Man Handed Down 30 Month Prison Sentence in Connection with Multi-Million Dollar Mortgage and Consumer Fraud SchemeRead the Press Release
STATESVILLE, N.C. B Roger Dean Bailey, Jr., 41, or Hickory, N.C. was sentenced to 30 months in prison today for his role in a mortgage and consumer fraud conspiracy involving manufactured and modular homes, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. U.S. District Judge Richard L. Voorhees also ordered Bailey to serve two years under court supervision and to pay restitution, the amount of which will be determined at a later date. Bailey pleaded guilty in October 2011 to conspiracy and fraud charges related to his and his conspirators’ lies to buyers of manufactured and modular homes, to lenders who financed the home sales, and to the U.S. Department of Housing and Urban Development, which guaranteed the loans.
U.S. Attorney Tompkins is joined in making today’s announcement by Nadine Gurley, Special Agent in Charge, Office of the Inspector General, Office of Investigation of the Department of Housing and Urban Development (HUD-OIG); Karen Citizen-Wilcox, Special Agent in Charge, Office of the Inspector General, Office of Investigation of the U.S. Department of Agriculture (USDA-OIG); Thomas L. Noyes, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS); North Carolina Attorney General Roy Cooper; and Ray Grace, North Carolina Commissioner of Banks (NCCOB).
According to filed documents and statements made in court today, Bailey was a former sales manager with Homes America in Hudson, N.C. Homes America was a sales branch of manufactured housing retailer Phoenix Housing Group (PHG), previously headquartered in Greensboro, N.C. Court records indicate that from 2004 to 2008 Bailey was involved with the origination of up to 154 fraudulent HUD/FHA-insured mortgage loans worth over $16 million. As a sales manager, court records show that Bailey convinced customers to purchase manufactured and modular homes which they could not afford by misrepresenting the financing terms, including that Homes America had a rent-to-own program, when it did not. Court records indicate that Bailey was able to secure mortgage loans for unqualified consumers by providing lenders with documents that contained fraudulent customer information, including false income, false assets, and false credit. According to court records, in some instances Bailey also obtained inflated appraisals, misrepresented the source of down payment funds, and coerced consumers to sign closing documents. On some occasions, Bailey also collected down payment money for which borrowers received no credit.
In imposing the 30 month sentence on Bailey, Judge Voorhees emphasized that Bailey, who was the first defendant to plead guilty in the case, provided “exceptional cooperation.” However, in describing the customers defrauded during the scheme—many of whom were not familiar with the home buying process – Judge Voorhees cited that the fraud “visited losses on impecunious people.”
According to court records, of the 154 loans issued based on the false information provided by Bailey, 74 of those loans (totaling more than $9 million) were originated by a single loan officer, Marina McCuen. McCuen worked in the Asheville office of W.R. Starkey Mortgage (WRSM), a mortgage loan company approved to originate loans insured by the FHA or guaranteed by USDA. McCuen, 50, was sentenced on August 4, 2014 to 50 months in prison and to one year of supervised release for her role in the conspiracy.
In addition to Bailey and McCuen, five other conspirators in this case have pleaded guilty and are awaiting sentencing:
• Dennis Wayne Parris, 56, of Pinehurst, N.C. was a Senior Vice President at PHG. He pleaded guilty in April 2014 to conspiracy to make false statements to a federal agency, submit false statements to HUD, and destroy records in a federal investigation.
• Fabian Sparrow, 36, of Burlington, N.C. was a sales manager at PHG’s sales center in Burlington. He pleaded guilty in June 2014 to conspiracy to make false statements to a federal agency and submit false statements to HUD.
• Andrew B. McKeown, 40, of Asheboro, N.C. was a sales manager at PHG’s sales center in Asheboro. He pleaded guilty in January 2014 to concealing the conspiracy to defraud the government and consumers.
• Isaac “Ike” A. Vinson, IV, 47, of Pawley’s Island, S.C. pleaded guilty in November 2013 to conspiracy to make false statements to a federal agency, submit false statements to HUD, and destroy records in a federal investigation. Vinson was a WRSM branch manager and loan officer in Myrtle Beach, S.C. He also supervised McCuen.
• Joseph Klakulak, 37, of Charlotte, was a loan officer for WRSM’s Charlotte office. He pleaded guilty in August 2013 to conspiracy to make false statements to a federal agency and submit false statements to HUD.Court records show that Parris, Sparrow, McKeown, and Bailey sold over 1,100 homes to North Carolina consumers from PHG stores in Burlington, Asheboro, Granite Falls, and elsewhere, financed with more than $158 million in government-insured loans. The fraudulent loans resulted in hundreds of mortgage insurance claims totaling more than $24 million and net losses to the United States exceeding $16 million at the time that charges were filed. In January 2011, PHG ceased business operations as part of a settlement with the Consumer Protection Division of the North Carolina Attorney General’s office.
The prosecution for the case was handled by Assistant United States Attorneys Michael Savage and Benjamin Bain-Creed, of the U.S. Attorney’s Office in Charlotte. The investigation is being handled by HUD-OIG and USDA-OIG, investigators with North Carolina’s State Bureau of Investigation, the NCCOB, the Consumer Fraud Divisions of the North Carolina Attorney General’s Office, and USPIS. In making today’s announcement, U.S. Attorney Tompkins noted that substantial assistance in financial analysis was provided by the United States Marshals Service. Tompkins also thanked the U.S. Department of State for their assistance in the apprehension of Sparrow, who fled the United States for Doha, Qatar.
North Carolina Man Convicted in Connection with Sex Trafficking EnterpriseRead the Press Release
CHARLOTTE, N.C. – A federal jury returned a verdict today convicting Shahid Hassan Muslim, aka “Sharp,” of two counts of sex trafficking, one count of kidnapping, one count of production of child pornography, one count of witness tampering and five counts of promoting a prostitution business enterprise. The verdict was announced by Acting Assistant Attorney General Molly Moran for the Civil Rights Division, U.S. Attorney Anne M. Tompkins for the Western District of North Carolina, Special Agent in Charge John A. Strong of the Federal Bureau of Investigation’s Charlotte Division and Special Agent in Charge Brock Nicholson of ICE’s Homeland Security Investigations Atlanta Division.
Evidence presented during the four-day trial, including the testimony of five victims, revealed that Muslim had operated an extensive sex trafficking enterprise in Charlotte, North Carolina and other cities between at least 2010 and the time of his arrest in November 2013. Muslim recruited young women and girls from the Charlotte area, some as young as 16 years old, and advertised them for prostitution on the internet. He recruited them using the idea that they would be part of a family when they had none. Muslim demanded all of their money and used extreme violence to control the young women and girls. As one witness explained, Muslim never hit the victims in the face because it would damage his “merchandise.”
The evidence further showed that Muslim kidnapped one of the victims and brutally beat her after she left and reported him to the police. Witnesses testified that he lured her to a hotel pretending to be a prostitution customer. When she arrived, Muslim attacked her while dressed in black and wearing a mask in the shape of a skull. He shoved her into a trunk and had her transported to his house, where he handcuffed her and bound her feet and continued to beat her. Muslim then put the victim in the shower, while still handcuffed, turned on the cold water, and left her overnight. Ultimately, she managed to escape and flee to a neighbor’s home for help.
Muslim’s control over the women and girls extended to when he was in custody on both state and federal charges. He convinced the victim involved in the kidnapping to submit a false affidavit declaring his innocence to state authorities, which resulted in the dismissal of those charges. He further harassed a victim in the federal case to submit a false affidavit taking ownership of a sexually explicit video that he produced of her when she was only 16 years old.
“This defendant targeted vulnerable young women and girls and exploited them for his own profit, using a brutal scheme of power and control” said Acting Assistant Attorney General Moran. “This disregard of the rights and dignity of some of the most vulnerable members of our community is intolerable in a nation founded on freedom and individual rights, and the Civil Rights Division is committed to bringing human traffickers to justice.”
“Muslim preyed upon young and vulnerable women, and with the promise of a better life, he lured them into his criminal enterprise,” said U.S. Attorney Tompkins. “Once in, Muslim used unspeakable violence to control and exploit these women and girls for his financial gain. We will continue to aggressively prosecute those who engage in this illegal business that dehumanizes women and strips them of their dignity.”
“Shahid Hassan Muslim promised his victims the loving support of a family, instead he controlled them through beatings, fear, and intimidation,” said Special Agent in Charge Strong. “Sex trafficking victims are traumatized and may be unsure of where to turn for help. The FBI devotes a significant amount of resources to recovery efforts and to hold those accountable who sacrifice another person’s civil rights and freedom for their own profit.”
“This defendant is one of the most violent and inhumane human traffickers we have ever encountered in North Carolina,” said Acting Special Agent in Charge Ryan L. Spradlin of ICE Homeland Security Investigations in Atlanta. “Thankfully, by working with the FBI we were able to get this monster off of the streets and begin the process of repairing the damage he has inflicted on these victims’ lives.”
After deliberating for two and a half hours the jury found the defendant guilty on all counts. The defendant faces a statutory maximum sentence of life in prison.
This case was investigated by the Federal Bureau of Investigation and Homeland Security Investigations, with assistance from the Charlotte-Mecklenburg County Police Department. It is being prosecuted by Assistant U.S. Attorney Kimlani M. Ford for the Western District of North Carolina and Trial Attorney Benjamin J. Hawk of the Civil Rights Division’s Human Trafficking Prosecution Unit.
North Carolina Man Convicted in Connection with Sex Trafficking EnterpriseRead the Press Release
CHARLOTTE, N.C. – A federal jury returned a verdict today convicting Shahid Hassan Muslim, aka “Sharp,” of two counts of sex trafficking, one count of kidnapping, one count of production of child pornography, one count of witness tampering and five counts of promoting a prostitution business enterprise. The verdict was announced by Acting Assistant Attorney General Molly Moran for the Civil Rights Division, U.S. Attorney Anne M. Tompkins for the Western District of North Carolina, Special Agent in Charge John A. Strong of the Federal Bureau of Investigation’s Charlotte Division and Special Agent in Charge Brock Nicholson of ICE’s Homeland Security Investigations Atlanta Division.
Evidence presented during the four-day trial, including the testimony of five victims, revealed that Muslim had operated an extensive sex trafficking enterprise in Charlotte, North Carolina and other cities between at least 2010 and the time of his arrest in November 2013. Muslim recruited young women and girls from the Charlotte area, some as young as 16 years old, and advertised them for prostitution on the internet. He recruited them using the idea that they would be part of a family when they had none. Muslim demanded all of their money and used extreme violence to control the young women and girls. As one witness explained, Muslim never hit the victims in the face because it would damage his “merchandise.”
The evidence further showed that Muslim kidnapped one of the victims and brutally beat her after she left and reported him to the police. Witnesses testified that he lured her to a hotel pretending to be a prostitution customer. When she arrived, Muslim attacked her while dressed in black and wearing a mask in the shape of a skull. He shoved her into a trunk and had her transported to his house, where he handcuffed her and bound her feet and continued to beat her. Muslim then put the victim in the shower, while still handcuffed, turned on the cold water, and left her overnight. Ultimately, she managed to escape and flee to a neighbor’s home for help.
Muslim’s control over the women and girls extended to when he was in custody on both state and federal charges. He convinced the victim involved in the kidnapping to submit a false affidavit declaring his innocence to state authorities, which resulted in the dismissal of those charges. He further harassed a victim in the federal case to submit a false affidavit taking ownership of a sexually explicit video that he produced of her when she was only 16 years old.
“This defendant targeted vulnerable young women and girls and exploited them for his own profit, using a brutal scheme of power and control” said Acting Assistant Attorney General Moran. “This disregard of the rights and dignity of some of the most vulnerable members of our community is intolerable in a nation founded on freedom and individual rights, and the Civil Rights Division is committed to bringing human traffickers to justice.”
“Muslim preyed upon young and vulnerable women, and with the promise of a better life, he lured them into his criminal enterprise,” said U.S. Attorney Tompkins. “Once in, Muslim used unspeakable violence to control and exploit these women and girls for his financial gain. We will continue to aggressively prosecute those who engage in this illegal business that dehumanizes women and strips them of their dignity.”
“Shahid Hassan Muslim promised his victims the loving support of a family, instead he controlled them through beatings, fear, and intimidation,” said Special Agent in Charge Strong. “Sex trafficking victims are traumatized and may be unsure of where to turn for help. The FBI devotes a significant amount of resources to recovery efforts and to hold those accountable who sacrifice another person’s civil rights and freedom for their own profit.”
“This defendant is one of the most violent and inhumane human traffickers we have ever encountered in North Carolina,” said Acting Special Agent in Charge Ryan L. Spradlin of ICE Homeland Security Investigations in Atlanta. “Thankfully, by working with the FBI we were able to get this monster off of the streets and begin the process of repairing the damage he has inflicted on these victims’ lives.”
After deliberating for two and a half hours the jury found the defendant guilty on all counts. The defendant faces a statutory maximum sentence of life in prison.
This case was investigated by the Federal Bureau of Investigation and Homeland Security Investigations, with assistance from the Charlotte-Mecklenburg County Police Department. It is being prosecuted by Assistant U.S. Attorney Kimlani M. Ford for the Western District of North Carolina and Trial Attorney Benjamin J. Hawk of the Civil Rights Division’s Human Trafficking Prosecution Unit.
Two Men Sentenced to Prison for Producing and Selling False Identification DocumentsRead the Press Release
STATESVILLE, N.C. – Two men involved in a ring that produced and sold false identification documents were sentenced to prison today by U.S. District Judge Richard L. Voorhees in Statesville, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The ring leader, Crescencio Lopez-Cruz, 28, of Newton, N.C. was sentenced to 48 months in prison, followed by one year of supervised release. His brother, Wilber Lopez-Cruz, 25, also of Newton was sentenced to 24 months in prison, followed by one year of supervised release.
U.S. Attorney Tompkins is joined in making today’s announcement by Brock D. Nicholson, Special Agent in Charge of Brock D. Nicholson, Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Georgia and the Carolinas; Guy Fallen, Special Agent in Charge of the Social Security Administration, Office of the Inspector General (SSA-OIG), Atlanta Field Division; Greg McLeod, 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 Coy Reid of the Catawba County Sheriff’s Office and Chief Bob Lane of the Sparta Police Department.
Crescencio and Wilber Lopez-Cruz pleaded guilty in July 2013 to conspiracy to produce and transfer fraudulent identification documents, producing fraudulent identification documents and aggravated identity theft. Crescencio Lopez-Cruz also pleaded guilty to transferring fraudulent identification documents, falsely representing a Social Security number and making false immigration documents.
Three other members involved in the conspiracy have already been sentenced. The defendants’ brother, Sixto Lopez-Cruz, 20, of Newton pleaded guilty to conspiracy to produce and transfer fraudulent identification documents and was sentenced in May 2014 to time-served and to one year of supervised release. The defendants’ sister, Rosalba Lopez-Cruz, 21, of Newton, pleaded guilty to conspiracy to produce and transfer fraudulent identification documents and falsely representing a social security number. She was sentenced in May 2014 to time-served plus one year of supervised release. The defendants’ brother-in-law, Mario Tercero-Cruz, 34, also of Newton, pleaded guilty to conspiracy to produce and transfer fraudulent identification documents and was sentenced in May 2014 to time-served and to one year of supervised release.
According to filed documents and today’s sentencing hearings, in September 2012, law enforcement began investigating the conspirators for their involvement in an illegal scheme to produce and sell false identification documents, in Newton and elsewhere. The false documents included alien registration cards, immigration residency cards, Social Security cards, and State licenses, among others. According to court records, some of the false identification documents contained fictitious information and some contained “real” information of individuals whose identities had been stolen. Court records show that, typically, the defendants took photographs of their customers and incorporated them into the counterfeit documents. Depending on the type and quality of documents, customers paid anywhere from $200 to $650 per transaction. According to court records, while executing a search warrant at Crescencio and Wilber Lopez-Cruz’s residence, law enforcement seized equipment used to produce the fraudulent documents, including a computer, a printer and a laminator.
Crescencio and Wilber Lopez-Cruz have been in custody since March 2013. Upon designation to a federal facility they will be transferred to the custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole.
The investigation was handled by HSI, SSA-OIG, NC SBI, NC DMV L&T, the Catawba County Sheriff’s Office and Sparta Police Department. The prosecution was handled by Assistant United States Attorney Kenneth M. Smith.
Community Health Systems Inc. to Pay $98.15 Million to Resolve False Claims Act AllegationsRead the Press Release
WASHINGTON B The Justice Department announced today that Community Health Systems Inc. (CHS), the nation’s largest operator of acute care hospitals, has agreed to pay $98.15 million to resolve multiple lawsuits alleging that the company knowingly billed government health care programs for inpatient services that should have been billed as outpatient or observation services. The settlement also resolves allegations that one of the company’s affiliated hospitals, Laredo Medical Center (LMC), improperly billed the Medicare program for certain inpatient procedures and for services rendered to patients referred in violation of the Physician Self-Referral Law, commonly known as the Stark Law. CHS is based in Franklin, Tennessee, and has 206 affiliated hospitals in 29 states.
“Charging the government for higher cost inpatient services that patients do not need wastes the country’s health care resources,” said Assistant Attorney General Stuart Delery for the Justice Department=s Civil Division. “In addition, providing physicians with financial incentives to refer patients compromises medical judgment and risks depriving patients of the most appropriate health care available. This department will continue its work to stop this type of abuse of the nation’s health care resources and to ensure patients receive the most appropriate care.”
The United States alleged that from 2005 through 2010, CHS engaged in a deliberate corporate-driven scheme to increase inpatient admissions of Medicare, Medicaid and the Department of Defense’s (DOD) TRICARE program beneficiaries over the age of 65 who originally presented to the emergency departments at 119 CHS hospitals. The government further alleged that the inpatient admission of these beneficiaries was not medically necessary, and that the care needed by, and provided to, these beneficiaries should have been provided in a less costly outpatient or observation setting. CHS agreed to pay $89.15 million to resolve these allegations. The settlement does not include hospitals that CHS acquired from Health Management Associates (HMA) in January 2014.
In addition, the government alleged that from 2005 through 2010, one of CHS’s affiliated hospitals, LMC in Laredo, Texas, presented false claims to the Medicare program for certain cardiac and hemodialysis procedures performed on a higher cost inpatient basis that should have been performed on a lower cost outpatient basis. The government also alleged that from 2007 through 2012, LMC improperly billed Medicare for services referred to LMC by a physician who was offered a medical directorship at LMC, in violation of the Stark Law. The Stark Law prohibits a hospital from submitting claims for patient referrals made by a physician with whom the hospital has an improper financial relationship, and is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives, and is instead based on the best interests of the patient. CHS agreed to pay $9 million to resolve the allegations involving LMC.
“Health care providers should make treatment decisions based on patients’ medical needs, not profit margins,” said U.S. Attorney Anne M. Tompkins for the Western District of North Carolina. “We will not allow this type of misconduct to compromise the integrity of our health care system.”
“This significant settlement reaffirms this office's promise to investigate and pursue health care fraud of all kinds,” said U.S. Attorney David Rivera for the Middle District of Tennessee. “CHS is headquartered in this district. It engaged in a scheme to admit more inpatients to increase its profits, not because those beneficiaries needed a higher level of care. Our office is committed to ensuring that all companies billing government healthcare programs are responsible corporate citizens and appropriately bill for care that is medically necessary.”
“This settlement demonstrates our commitment to working with our law enforcement partners and with the Department of Justice to protect the integrity of our nation’s health care system,” said U.S. Attorney Kenneth Magidson of the Southern District of Texas. “Put simply, these types of fraudulent practices will not be tolerated and the investigation and resolution of such claims will continue to be a high priority of this office.”
As part of today’s agreement, CHS entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services - Office of Inspector General (HHS-OIG), requiring the company to engage in significant compliance efforts over the next five years. Under the agreement, CHS is required to retain independent review organizations to review the accuracy of the company’s claims for inpatient services furnished to federal health care program beneficiaries.
“In an effort to ensure the company’s fraudulent past is not its future, CHS agreed to a rigorous multi-year Corporate Integrity Agreement requiring that the company commit to compliance with the law,” said Inspector General Daniel R. Levinson, of the U.S. Department of Health and Human Services. “The dedicated work of OIG’s investigators, auditors, and attorneys, in concert with our law enforcement partners, has again resulted in the recovery of taxpayer dollars and better protection against fraud in the future.”
The settlement resolves lawsuits filed by several whistleblowers under the qui tam provisions of the False Claims Act, which permit private parties to file suit on behalf of the government and obtain a portion of the government’s recovery. Those relators are Kathleen Bryant, former Director of Health Information Management at CHS’s Heritage Medical Center in Shelbyville, Tennessee; Rachel Bryant, former nurse at CHS’s Dyersburg Hospital in Dyersburg, Tennessee; Bryan Carnithan, former Emergency Medical Services Coordinator at CHS’ Heartland Hospital in Marion, Illinois; Amy Cook-Reska, former coder for CHS’ LMC in Laredo; Sheree Cook, former nurse at CHS’s Heritage Medical Center in Shelbyville; James Doghramji, former internal medicine and emergency room physician at CHS’s Chestnut Hill Hospital in Philadelphia; Thomas L. Mason, former emergency room physician at Lake Norman Regional Medical Center in Mooresville, North Carolina; Scott Plantz, former emergency room physician at CHS’s Longview Regional Medical Center in Longview, Texas; and Nancy Reuille, former nurse and Supervisor of Case Management at CHS’s Lutheran Hospital in Fort Wayne, Indiana. The relators’ share of the settlement has not yet been determined.
The allegations against CHS were filed in the Western District of North Carolina by Relator Thomas L. Mason in April 2011. Dr. Mason had previously filed a qui tam lawsuit against another hospital chain, Health Management Associates (HMA). On April 18, 2011, Dr. Mason added allegations and claims against CHS to this previously filed qui tam. Allegations against the two different hospital chains were subsequently severed and the case against HMA was transferred, along with eight other qui tam cases filed against HMA, to the United States District Court in Washington, D.C. for consolidated pre-trial practice.
“We thank relator Dr. Mason for his insight and assistance in this case,” said U.S. Attorney Tompkins. “He and his lawyers have been available to assist the United States multiple times in this case.” Tompkins added that “information from citizens like Dr. Mason and the work of their legal representatives is essential to detecting and stopping fraud against government health care programs and recovering public funds.”
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $20.2 billion through False Claims Act cases, with more than $14 billion of that amount recovered in cases involving fraud against federal health care programs.
This settlement was the result of a coordinated effort by the U.S. Attorney=s Offices for the Middle District of Tennessee, Southern District of Texas, Northern and Southern Districts of Illinois, Northern District of Indiana and Western District of North Carolina; the Civil Division’s Commercial Litigation Branch; HHS-OIG; DOD’s Defense Health Agency - Program Integrity Office and the FBI.
The lawsuits are captioned United States ex rel. Bryant v. Community Health Systems, Inc., et al., Case No. 10-2695 (S.D. Tex.); United States ex rel. Carnithan v. Community Health Systems, Inc., et al., Case No. 11-cv-312 (S.D. Ill.); United States ex rel. Cook-Reska v. Community Health Systems, Inc., et al., Case No. 4:09-cv01565 (S.D. Tex.); United States ex rel. James Doghramji; Sheree Cook; and Rachel Bryant v. Community Health Systems Inc., et al., Case No. 3-11-cv-00442 (M.D. Tenn.); United States ex rel. Mason v. Community Health Systems, Inc., et al., Case No. 3:12-cv-817 (W.D.N.C.); United States ex rel. Plantz v. Community Health Systems, Inc., et al., Case No. 10C-0959 (N.D. Ill.); United States ex rel. Reuille v. Community Health Systems Professional Services Corporation, et al., Case No. 1:09-cv-007RL (N.D. Ind.). The claims resolved by this agreement are allegations only and there has been no determination of liability.
Drug Trafficker Sentenced to Prison on Money Laundering Conspiracy ChargesRead the Press Release
Six Others Have Been Sentenced For Their Roles In The Conspiracy
CHARLOTTE, N.C. – On Wednesday, July 30, 2014, U.S. District Judge Max O. Cogburn, Jr. ordered Jesus Ibarra-Quen, 30, of Calif., to serve 30 months in prison for his role in a cocaine trafficking and money laundering conspiracy, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Ibarra-Quen previously pleaded guilty to conspiracy to commit money laundering for his participation in a 2012 bulk money pick-up of $430,874 in cocaine proceeds.
Harry S. Sommers, Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA), which oversees the Charlotte District Office joins U.S. Attorney Tompkins in making today’s announcement.
Ibarra-Quen is one of seven defendants prosecuted in connection with an Organized Crime Drug Enforcement Task Force (OCDETF) investigation code-named “Biscoe Kidd.” According to court records, the investigation began in December of 2011 and was led by DEA’s High Intensity Drug Trafficking Areas Task Force. Court records indicate that the multi-jurisdictional, multi-agency operation focused on a cocaine trafficking and money laundering organization that was selling large quantities of cocaine in the Western District and transferring the drug proceeds back to Mexico. The local group was part of international money laundering organization involved in the collection, transportation, and delivery of drug proceeds in bulk cash and wire transfers to Mexico, court records show.
To date, six other defendants have charged and sentenced:
• Ruben Perez-Ruiz a/k/a Sarco, 32, of Greensboro, N.C. was sentenced on July 2, 2014 to 200 months in prison, followed by five years of supervised release. Perez-Ruiz was the local cell leader in the organization.
• Isidoro Ochoa, 33, of Jackson Springs, N.C. was sentenced on July 2, 2014 to 150 months in prison followed by five years of supervised release.
• Nancy Sanchez, 32, of Greensboro was sentenced on July 2, 2014 to 24 months in prison followed by one year of supervised release.
• Joaquin Tostado-Barraza, 40, of Ellervee, N.C. was sentenced on June 25, 2014, to 120 months in prison, followed by five years of supervised release.
• Ysrael Ayalla-Garcia, 43, of Monroe, N.C. was sentenced on June 5, 2014 to 30 months in prison.
• Macario Leal, 47, of Monroe was sentenced on April 10, 2014 to 60 months in prison, followed by four years of supervised release.According to information contained in court documents and the defendants’ sentencing hearings, from about 2011 to February 2013, Perez-Ruiz was the local cell leader of the Mexican-based organization responsible for trafficking more than 150 kilograms of cocaine from Mexico to the United States, with a total street value of over $5,000,000. According to evidence presented at court proceedings, the cocaine was driven to the Charlotte area hidden in car parts.
Court records show that Perez-Ruiz was responsible for distributing the cocaine to mid-level distributors, including Leal and Ayalla-Garcia. According to court records, Perez-Ruiz was also responsible for collecting and arranging the bulk pick-ups of the drug proceeds to be delivered back to Mexico. For example, court records show that in 2012 Sanchez participated in a bulk money pick-up of $700,000 in cocaine trafficking proceeds. Just in the month of January 2012, the drug ring coordinated the bulk money transfer of over $1,000,000 of cocaine proceeds.
The defendants will serve their sentences without the possibility of parole. The investigation was led by the DEA, assisted by the Charlotte-Mecklenburg Police Department, the North Carolina State Bureau of Investigation, the Monroe Police Department, the Union County Sheriff’s Office, the Gastonia Police Department, the Matthews Police Department, the Montgomery County Sheriff’s Office and the North Carolina Highway Patrol.
The prosecution for the government was handled by Assistant U.S. Attorney Elizabeth F. Greene of the U.S. Attorney’s Office in Charlotte.
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.
Mortgage Fraud Conspirators Operating in the Charlotte Area Sentenced to PrisonRead the Press Release
CHARLOTTE, N.C. – Two defendants involved in a mortgage fraud conspiracy that targeted Charlotte-area homes were sentenced to prison late Tuesday, July 29, 2014, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Gregory D. Anderson, 47, of Kingstree, S.C. was sentenced to 15 years (180 months) in prison and his co-defendant Anthony C. Carrothers, 49, of Charlotte, was sentenced to 10 months. U.S. District Judge Max O. Cogburn, Jr. also ordered Anderson to serve three years of supervised release and Carrothers two years supervised release following their prison terms.
In August 2012, Anderson pleaded guilty to bank fraud conspiracy and bank fraud, HUD fraud, concealment of money laundering, and assaulting and causing bodily harm to a person assisting the United States. In October 2012, a federal jury found Carrothers guilty of bank fraud conspiracy and bank fraud.
U.S. Attorney Tompkins is joined in making today’s announcement by Nadine Gurley, Special Agent in Charge, Office of the Inspector General, Office of Investigation of the Department of Housing and Urban Development (HUD-OIG) and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation, Charlotte Division.
According to filed court documents and today’s sentencing hearings, from 2006 to 2009, the defendants were involved in a mortgage fraud conspiracy that generated over $1.7 million in fraudulent loans. Court records indicate that Anderson was the operator and promoter of the scheme and facilitated the conspiracy using a network of straw buyers, real estate professionals and mortgage loan processors, among others. Court records indicate that Anderson executed the scheme by purchasing homes at inflated prices, either in his name or in the name of “straw” buyers. Straw buyers are individuals who agree to purchase targeted properties in their names in exchange for a kickback. Court records indicate that some of Anderson’s straw buyers were individuals he recruited through his temporary employment agency.
According to court records, Anderson executed the scheme by arranging with the sellers to purchase their homes at inflated prices. Then, using fraudulent documents and false information on loan applications, he caused lenders to issue loans in Anderson’s name or in the straw buyers’ names at the inflated home prices. At closing, Anderson would profit by keeping the difference between the homes’ original and inflated prices.
According to filed documents and statements made in court, the proceeds sometimes went directly to Anderson after closing on a home. Other times, the money was funneled to Anderson through the shell “remodeling companies” Anderson had created solely for the purpose of perpetuating the scheme, according to court records. Additionally, as court records reflect, Anderson used other individuals, including Carrothers, who were willing use their own bank accounts in exchange for a kickback. Court documents show that Carrothers received approximately $1,000 for each of the fraudulent transactions in which he was involved. In all, over the course of the conspiracy Anderson obtained over $647,943 and three houses from the fraudulently obtained loans. The houses have been subsequently foreclosed. Carrothers received over $8,900 in kickbacks from Anderson for his role in the conspiracy.
In pronouncing the sentence, Judge Cogburn noted that Anderson’s offenses were especially aggravated by his past criminal record and his conduct in the charged scheme including being a leader/organizer of the scheme and recklessly endangering others in his attempt to flee arrest by Charlotte-Mecklenburg Police Department Officers, several of whom were injured attempting to arrest Anderson. Judge Cogburn ordered Anderson to pay restitution in the amount of $2,189,641.28. In sentencing CSarrothers, a former Charlotte fireman, Judge Cogburn accepted a joint recommendation from the defense and the government to sentence him to a lower term based on his acceptance of responsibility and work with disabled persons after his jury conviction on two felony counts. Carrothers was also order to pay $184,344.02 in restitution and to pay a forfeiture money judgment in the amount of $62,000.
A third named defendant, Maria Mejia Herrera, 45, of Rock Hill, S.C. pleaded guilty in August 2012 to one count of bank fraud conspiracy. Herrera was one of Anderson’s straw buyers and was sentenced to one year of probation in August 2013. She was also ordered to pay $632,289 as restitution.
Anderson has been in federal custody since April 2011. He will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. Carrothers has been released on bond and will be ordered to self-report. Federal sentences are served without the possibility of parole.
The investigation was handled by HUD-OIG and FBI. U.S. Attorney Tompkins also thanked the Charlotte-Mecklenburg Police Department for the assistance in the case. The prosecution was handled by Assistant U.S. Attorneys Michael E. Savage and Jennifer L. Dillon, of the U.S. Attorney’s Office in Charlotte.
Mexican National Trafficking Cocaine Worth over $10 Million Is Sentenced to Life in PrisonRead the Press Release
CHARLOTTE, N.C. – Today, Chief U.S. District Judge Frank D. Whitney sentenced Freddie Andaya, a/k/a “Raymond Garcia,” 42, of Mexico to serve life plus five years in prison on drug trafficking conspiracy, money laundering and gun charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.
U.S. Attorney Tompkins is joined in making today’s announcement by Brock D. Nicholson, Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Georgia and the Carolinas and Sheriff Kevin L. Auten of the Rowan County Sheriff’s Office.
According to court documents and proceedings, Andaya was the leader of a drug conspiracy that operated in Mecklenburg, Iredell, Union and Rowan Counties and elsewhere between 2010 and August 2011, and trafficked more than 300 kilograms of cocaine, with a street value of over $10 million. Court records indicate that Andaya had a stash house in Concord, N.C., from which law enforcement seized 3.5 kilograms of cocaine, 62 kilogram-sized wrappers, $342,000 in cash and an AK-47 assault rifle. Law enforcement also recovered from the stash house notebook ledgers, which accounted for more than $9 million in drug transactions in just a three-month period, from April to July 2011. According to court records and today’s sentencing hearing, during the investigation law enforcement seized a total of 11 kilograms of cocaine, more than $600,000 in cash and three firearms. Also according to court records, during Andaya’s prosecution the defendant obstructed justice by threatening a co-defendant and by producing false exculpatory documents to authorities.
Andaya has been in custody since his arrest in August 2011. He was indicted on federal charges in January 2012 and pleaded guilty in March 2012 to drug trafficking conspiracy, money laundering and possession of a firearm in furtherance of drug trafficking. Andaya will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.
This prosecution is part of an extensive Organized Crime Drug Enforcement Task Force (OCDETF) investigation that has resulted in the conviction of 14 defendants for cocaine trafficking, money laundering, and firearms violations. OCDETF is a joint federal, state and local cooperative approach to combat drug trafficking and it 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.
In addition to Andaya, the following prosecutions stem from the same investigation:
• Marlon Twain Scott (3:11-cr-363) – Sentenced to 120 months in prison, followed by 5 years of supervised release.
• Brandon Antowine Barnette (3:12-cr-20) – Sentenced to 37 months in prison, followed by 2 years of supervised release.
• Juan Antonio Molina-Sanchez (3:12-cr-25) – Sentenced to 57 months in prison, followed by 3 years of supervised release.
• Bautista Medrano Andaya (3:12-cr-27) – Sentenced to 210 months in prison, followed by 5 years of supervised release.
• Luis Alberto Castrejon (3:12-cr-28) – Sentenced to 180 months in prison, followed by 5 years of supervised release.
• Vonita Alberto Mondragon (3:12-cr-29) – Sentenced to 50 months in prison, followed by 2 years of supervised release.
• Freddie Delgado-Mercado (3:12-cr-31) – Sentenced to 78 months in prison, followed by 3 years of supervised release.
• Levaric Samuel Johniken (3:12-cr-34) – 168 months imprisonment followed by 5 years of supervised release.
• Eric Lewis Feimster (3:12-cr-38) – Sentenced to 108 months in prison, followed by 3 years of supervised release.
• Matthew Thomas Jones (3:12-cr-48) – Sentenced to 211 months in prison, followed by 5 years of supervised release.
• Lloyd Avery Allen (3:12-cr-88) – Sentenced to 78 months in prison, followed by 5 years of supervised release.
• Christopher Cortez Coleman (3:12-cr-140) – Sentenced to 108 months in prison, followed by 4 years of supervised release.
• Jorge Molina-Sanchez (3:12-cr-316) – Pending sentencing.The investigation was led by HSI and Rowan County Sheriff’s Office. U.S. Attorney Tompkins also thanked the Sheriff’s Offices for Cabarrus, Iredell, Union and Mecklenburg Counties and the Charlotte-Mecklenburg Police Department for their assistance with the investigation. Assistant U.S. Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte prosecuted the case.
Ponzi Scheme Operator Pleads Guilty to Securities FraudRead the Press Release
Defendant Spent Nearly $1.2 Million Of Investors’ Funds On Personal Expenses
CHARLOTTE, N.C. – Claude Darrell McDougal, 55, formerly of Charlotte, appeared before U.S. Magistrate Judge David S. Cayer today and pleaded guilty to securities fraud for orchestrating a Ponzi scheme that defrauded his investor victims of over $2.5 million dollars, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.
North Carolina Secretary of State Elaine F. Marshall and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division join U.S. Attorney Tompkins in making today’s announcement.
According to court documents and today’s plea 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, but his company was never registered as a dealer of securities in North Carolina or elsewhere, court records reflect. 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.
According to court documents, McDougal induced his victims to invest with Financial Alliance by “guaranteeing” fixed rates of return between 6% and 15% annually. Court records show that often McDougal’s victims were elderly and the funds they invested – and McDougal squandered – were most, if not all, of their life savings. During the course of the fraud, 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, court records show that these payments were not based on profits, but came from funds contributed by new investors, commonly referred to as “Ponzi” payments.
Today, McDougal admitted in court that he 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 has been released on bond. At sentencing, he faces a maximum of 20 years in prison for the securities fraud offense a fine of $5,000,000. A sentencing date has not been set.
The case was investigated by the North Carolina Secretary of State, Securities Division, with assistance from the FBI, Charlotte Division.
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 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.
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.
Former Chief Financial Officer for Boggs Paving Inc. Pleads Guilty in Connection with $87 Million Fraud Scheme Involving Government Funded Construction ProjectsRead the Press Release
CHARLOTTE, N.C. – Kevin Hicks, 43, of Monroe, N.C. and former Chief Financial Officer (CFO) for Boggs Paving Inc. (Boggs Paving) entered a plea of guilty today before U.S. Magistrate Judge David S. Cayer for his role in an $87 million fraud scheme involving government-funded construction projects, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.
Hicks is one of the eight named defendants charged with government procurement fraud and related offenses. During the relevant time period, Hicks served as the CFO for Boggs Paving and Boggs Group, and was in charge of Boggs Paving’s accounts payable and receivable, job cost accounting, human resources and information technology. Today, Hicks pleaded guilty to one count of conspiracy to defraud the United States Department of Transportation (USDOT) and one count of money laundering conspiracy.
Marlies T. Gonzalez, Regional Special Agent in Charge, U.S. Department of Transportation, Office of Inspector General (DOT-OIG), Region IV; 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 U.S. Attorney Tompkins in making today’s announcement.
According to documents filed in the case and statements made in court, from 2003 through 2013, Boggs Paving and the defendants conspired and fraudulently obtained federally and state funded construction contracts by falsely certifying that a disadvantaged business enterprise (DBE) or a small business enterprise (SBE) would perform and be paid for portion of the work on those contracts. The purpose of USDOT’s DBE program is to increase the participation of DBEs and SBEs in federally-funded public construction and transportation-related projects. Styx Cuthbertson Trucking Company, Inc. (“Styx”) is a road construction hauler owned by John Cuthbertson and based in Monroe, N.C. The company is also a certified DBE and SBE. According to filed court documents, Boggs Paving and the defendants used Styx as a “pass through” entity to obtain the lucrative government-funded construction contracts.
Court records indicate that to conceal the fraud and to appear as if Styx was doing and being paid for the necessary work, the conspirators ran payments through a nominee bank account in Styx’s name, and then funneled the money back to Boggs Paving and its affiliates. According to court documents, John Cuthbertson allegedly received kickbacks for allowing his company’s name and DBE status to be used by Boggs Paving. Court documents reflect that the defendants took additional steps to conceal their fraud, which included using magnetic decals bearing the “Styx” company logo to cover the “Boggs” logo on company trucks to create the appearance that Styx was the company performing the work.
According to filed court documents and court proceedings, from June 2004 through July 2013, Boggs Paving was the prime contractor on 35 federally-funded contracts, and was a subcontractor for two additional contracts, worth over $87.6 million. Boggs Paving claimed DBE credits of approximately $3.7 million on these contracts for payments purportedly made to Styx. Styx only received payments of approximately $375,432 for actual work on these contracts, court records show.
A superseding indictment filed in October 2013 also brought criminal charges against Arnold Mann, 55, of Fort Mill, S.C. Mann was a project manager, estimator and area manager for Boggs Paving, and his duties included bidding and managing municipal, commercial, military, and North and South Carolina Department of Transportation projects. Mann pleaded guilty in June 2014, to one count of conspiracy to defraud USDOT. Greg Tucker, 41, of Oakboro, N.C. and Boggs Paving’s project manager, estimator and vice president in charge of bidding on federal construction projects in North Carolina, has also agreed to plead guilty to one count of conspiracy to defraud USDOT. Tucker’s plea agreement was filed today and he is scheduled to appear tomorrow before Judge Cayer to enter a formal plea.
The remaining defendants in the case are Boggs Paving Inc., Carl Andrew Boggs, III, 50, of Waxhaw, N.C., Greg Miller, 60, of Matthews, N.C., John Cuthbertson, 69, of Monroe, and Styx Cuthbertson Trucking Company, Inc., of Wingate, N.C. They face multiple charges including conspiracy to defraud USDOT, wire fraud and mail fraud conspiracy, wire fraud, mail fraud, money laundering and money laundering conspiracy. John Cuthbertson and Styx Cuthbertson Trucking are also charged with one count of making a false statement on a loan application.
Both Hicks and Mann have been released on bond and will be sentenced by the Court at a later date. The conspiracy to defraud USDOT charge carries a maximum of five years in prison. The money laundering conspiracy charge carries a maximum of 20 years in prison. Each of the charges also carries a $250,000 fine.
The investigation of the case was handled by USDOT-OIG, FBI and IRS. The case is being prosecuted by Assistant United States Attorneys Jenny G. Sugar and Michael E. Savage of the U.S. Attorney’s Office in Charlotte.
Charlotte Jury Finds Former Chief Accounting Officer for Beazer Homes USA, Inc. Guilty of Accounting Fraud and Obstruction of Justice in Second TrialRead the Press Release
CHARLOTTE, N.C. – A federal jury sitting in Charlotte has convicted the former Chief Accounting Officer for Beazer Homes USA, Inc. (“Beazer”) of conspiracy and obstruction of justice charges stemming from a federal investigation into a seven-year accounting fraud conspiracy at Beazer. The jury returned the guilty verdict today against Michael T. Rand, 52, of Alpharetta, Ga., following a two-week trial. This was the second trial for the defendant, who was previously found guilty in October 2011. That verdict was later vacated due to juror misconduct and the Honorable Robert J. Conrad, Jr. ordered a re-trial.
The charges arise from a government investigation involving Beazer and its employees that began in March 2007. In July 2009, a federal bill of information was filed in U.S. District Court charging Beazer 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.
“The U.S. Attorney’s Office is committed to safeguarding the integrity of our financial markets from corporate executives like Rand, who put profits ahead of duty. Rand’s actions breached his obligation to the investors and the public and jeopardized the stability of the housing industry. Today’s verdict is a warning and a reminder that our office will continue to pursue corporate corruption to protect our economy,” said First Assistant U.S. Attorney Jill W. Rose, in making today’s announcement.
“The FBI makes it a high priority to protect shareholders and help to uphold the integrity of our financial markets. Today’s verdict should send a clear message that corporate fraud, in this case cooking the books, will not be tolerated and you engage in such frauds at the risk of your freedom,” stated John A. Strong, Special Agent in Charge for the Charlotte Division of the FBI.
The federal jury convicted Rand of five counts related to his conduct while serving as Beazer’s Chief Accounting Officer. Specifically, Rand was convicted of directing 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 earnings at Beazer. According to 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.
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. Rand was also convicted of engaging in a wire fraud conspiracy.
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 conducted by the Charlotte FBI and the U.S. Attorney’s Office in the Western District of North Carolina, 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.
The securities fraud conspiracy charge carries a maximum sentence of five years in prison and a $250,000 fine. Wire fraud conspiracy carries a maximum sentence of 20 years in prison and a $250,000 fine. The obstruction of justice charge carries a penalty of 20 years in prison and a $250,000 fine. The charge of misleading conduct to hinder an investigation carries a maximum prison term of 20 years and a $250,000 fine, and the obstruction of official proceedings charge carries a maximum prison term of 20 years and a $250,000 fine. Rand’s actual sentence will be determined by the U.S. District Court at sentencing. Rand has been released on bond until his sentencing hearing, which has not been set yet.
The U.S. Attorney’s Office credited the FBI for conducting an investigation which resulted in today’s conviction. Assistant U.S. Attorneys Kurt W. Meyers and Maria K. Vento of the U.S. Attorney’s Office in Charlotte prosecuted the case.
Charlotte Man Sentenced to 235 Months in Prison for Series of Bank Robberies in CharlotteRead the Press Release
CHARLOTTE, N.C. – Anthony Watson, 55, of Charlotte was sentenced today to serve 235 months in prison on bank robbery and related charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. U.S. District Judge Max O. Cogburn, Jr. also sentenced Watson to three years of supervised release and ordered him to pay $54,314 as restitution to the victim banks, Sun Trust and BB&T.
John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Chief Rodney D. Monroe of the Charlotte-Mecklenburg Police Department (CMPD) join U.S. Attorney Tompkins in making today’s announcement.
Court documents show that over the course of a three-month period in the summer of 2012, Watson committed four bank robberies stealing a total of $54,314 in cash. According to court documents and today’s sentencing hearing, on June 11, 2012, Watson entered a Sun Trust Bank branch located on Galleria Boulevard in Charlotte, approached a bank teller and asked for change to a $20 bill. Watson then handed the teller a small duffel bag and told the teller that he wanted “all of the money.” Court documents indicate that the teller complied and Watson fled the scene with more than $26,700 in cash. On July 20, 2012, Watson returned to the same Sun Trust branch and robbed the bank again, this time fleeing with more than $16,300 in cash, according to court records. Continuing his bank robbery spree, on July 30, 2012, Watson entered a BB&T branch on West Arbors Drive in Charlotte and, using the same method, demanded money from the bank teller. Filed documents show that the teller complied and Watson fled the bank with approximately $3,900 in cash. Then on August 3, 2012, Watson entered a BB&T branch located on Sardis Road in Charlotte, approached a bank teller and demanded “everything.” Watson also showed the teller the handle of a sawed-off .22 caliber rifle. According to filed documents, the teller complied and Watson left on foot with more than $7,300 in cash. Law enforcement arrested Watson three days later and seized, among other things, the .22 caliber sawed-off rifle Watson used in the bank robbery.
.In handing down the sentence, Judge Cogburn noted “that while still serving a sentence of probation related to other prior bank robberies, Watson committed a series of new bank robberies that put people in danger.” Judge Cogburn emphasized that Watson’s “continuing recidivism” and the need to protect the community from further crimes of the defendant were important factors in determining Watson’s sentence.
Watson pleaded guilty in April 2013 to four counts of bank robbery and one count of possession of a firearm by a convicted felon. Watson has been in federal custody in the Western District of North Carolina since his arrest. Upon designation of a federal facility they will be transferred into custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole.
The investigation was handled by the FBI’s Safe Streets Task Force and CMPD. The prosecution for the government was handled by Assistant U.S. Attorney J. George Guise of the U.S. Attorney’s Office in Charlotte.
Jury Convicts Charlotte Man of Federal Racketeering and Related ChargesRead the Press Release
Defendant Was Among 91 Charged In Operation Wax House
CHARLOTTE, N.C. – A federal jury delivered a guilty verdict on Thursday, June 26, 2014 against a Charlotte man in connection with a $75 million racketeering conspiracy, announced the U.S. Attorney’s Office for the Western District of North Carolina. Following a three-day trial, Steven Jones, 46, was convicted of racketeering conspiracy, securities fraud, wire fraud scheme to defraud investors and money laundering conspiracy.
This conviction is the latest in Operation Wax House, an investigation which began in 2007 and has netted 91 defendants to date, 86 of which have pleaded guilty or been convicted following a trial.
The United States 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) and North Carolina Secretary of State Elaine F. Marshall.
The federal criminal trial began on Monday, June 23, 2014, before Senior U.S. District Judge Graham C. Mullen. According to evidence introduced at trial, the criminal enterprise operated from about 2005 until 2012, and engaged in an extensive pattern of racketeering activities, which included investment or securities fraud, mortgage fraud in the form of wire fraud and bank fraud, and money laundering.
According to trial evidence, Jones was a promoter in the enterprise’s investment fraud operations, bringing in multiple investors, including an attorney, who Jones and his co-conspirators defrauded out of $3.7 million. Trial evidence established that throughout a seven year period the enterprise created a series of sham corporations to convince individuals to invest money. When investors would become aware of the problems with one corporation the enterprise would start a new corporation with new officers on paper to continue to defraud still further investors, court records show. Trial evidence also showed that Jones and others defrauded victims not of just money they had, but also caused the victims to take out expensive loans and to invest those loan proceeds based on false promises. According to evidence presented at trial, Jones and his co-conspirators used the investors’ money for personal expenditures, including private jets, high profile offices, entertaining themselves and others, and supporting their luxurious lifestyles. In total, the enterprise’s investment fraud operations took approximately $48 million from investors.
Following the jury’s conviction, Jones was released on home detention with electronic monitoring pending the scheduling of his sentencing hearing.
The racketeering conspiracy charge carries a maximum term of 20 years in prison and a $250,000 fine or twice the gross profits or other proceeds. The securities fraud charge carries a maximum term of 20 years in prison and a $250,000 fine. The wire fraud charge carries a maximum term of 20 years in prison and a $250,000 fine. The money laundering conspiracy charge carries a maximum term of 20 years in prison and a $500,000 fine or twice the amount of criminally derived proceeds. A sentencing date for the defendant has not been set yet.
Five defendants have charges pending in the case, two of which are international fugitives. Each remaining defendant and his or her status are listed below.
• Ramin Amini, 45, of Tehran, Iran, is charged with racketeering conspiracy, mortgage fraud and money laundering conspiracy. Role: Leader and promoter in the scheme. Status: International fugitive. • Kurosh Mehr, 52, of Charlotte is charged with racketeering conspiracy, mortgage fraud and money laundering. Role: Promoter and buyer. Status: On bond; Scheduled for trial September 2014. • Ann Tyson Mitchell, 62, of Charlotte, is charged with racketeering conspiracy, mortgage fraud and money laundering. Role: Facilitator. Status: On bond; Scheduled for trial September 2014. • John Wayne Perry, Jr., 32, of Charlotte, is charged with racketeering conspiracy and money laundering conspiracy. Role: Promoter. Status: On bond; Scheduled for trial after September 2014. • Nazeere Saddig, 41, formerly of Charlotte, is charged with racketeering conspiracy and mortgage fraud. Role: Promoter and buyer. Status: International Fugitive.
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. The case was tried by Assistant United States Attorney Maria K. Vento and Special Assistant United States Attorney Kevin Harrington, of the Securities Division of the North Carolina Secretary of State.
Today’s announcement is part of an effort by President Obama’s Financial Fraud Enforcement Task Force (FFETF), created in November 2009, to combat financial fraud crimes by waging aggressive, coordinated and proactive investigations and prosecutions. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, the task force is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force,www.stopfraud.gov.
The names and case numbers of the defendants charged to date in Operation Wax House are listed below, organized by their alleged role in the scheme.
Attorneys and Paralegals
Crawford/Mallard, Michelle 3:11cr374
Gates, Christine 3:09cr100
Norwood, Kelli, 3:09cr162
Rainer, Demetrius 3:08cr239/241
Smith, Troy, 3:08cr264Bank Insiders
Brown, Jamilia, 3:10cr124
Eason, Danyelle, 3:10cr116
Henson, Vic. F., 3:10cr124
Jackson, Mitzi, 3:11cr374
Ramey, Bonnie Sue, 3:10cr124Builders and Sellers
Fink, James, 3:11cr374; 3:12cr239
Jackson, Jennifer, 3:09cr241
Smith, Kelvis, 3:12cr238
Viegas, Jeffrey, 3:12cr298
Wittig, Mark, 3:12cr335
Wood, Gary, 3:09cr208Facilitators and Financiers
Hickey, Denis, 3:09cr103
McClain, Landrick, 3:10cr124
Mitchell, Ann Tyson, 3:12cr239
Panayoton, Sherrill, 3:11cr176
Taylor, Alicia Renee, 3:10cr124
Wilson, Willard, 3:09cr161Buyers
Banks, Arketa, 3:12cr297
Clark, Benjamin, 3:12cr239
Hillian, Kirk, 3:12cr83
Mathis, Charles, 3:10cr1
Mobley, Sarena, 3:10cr124
Moore, George, 3:12cr337
Richards, Dan, 3:10cr119
Smith, Kevin, 3:12cr341
Tyler, Glenna, 3:11cr200
Vaughn, Mary, 3:12cr329
Wallace, Jamaine, 3:12cr330
Wellington, William, 3:12cr333Notary Publics
Willis, Anthony, 3:09cr218
Myles, Denetria, 3:12cr239Appraiser
Darden, Clinton 3:10cr108Mortgage Brokers
Bradley, Bonnette, 3:12cr299
Clarke, Linda, 3:10cr120
Flood, Ericka, 3:10cr124
Goodson-Hudson, Crystal, 3:12cr339
Mahaney, Robert, 3:12cr34-0
Scagliarini, Coley, 3:11cr374
Staton, Walter, 3:10cr113
Vaughn, Danielle, 3:12cr329
Williams, Marcia, 3:12cr334
Williams, Sean, 3:12cr336
Woods, Joseph, 3:09cr178Real Estate Agents
Belin, Chris, 3:11cr374
Clark, Christina, 3:09cr44
Lee, Shannon, 3:12cr338
Pasut, Holly Hardy, 3:12cr331
Wolf, Nathan Shane, 3:12cr239
Wood, Gary, 3:09cr208Promoters
Amini, Ramin, 3:12cr239
Barnes, Vonetta Tyson, 3:12cr239
Brown, William, 3:12cr239
Bumpers, Travis, 3:12cr239
Carr, Stephen, 3:10cr124
Clarke, Benjamin, 3:12cr239
Clarke, Reuben, 3:10cr120
Coleman, Gregory, 3:10cr118
DeSimone, Frank, 3:12cr239
Dooley, Lorie, 3:12cr239
Hitchcock, Jimmy, 3:11cr374
Hubbard, Glynn, 3:12cr239
Hunt, Victoria, 3:12cr239
Hunter, Toby, 3:12cr239
Johnson, Ralph, 3:12cr239
Jones, Steven, 3:12cr239
Jones, Tyree, 3:10cr230
Long Waylon, 3:12cr239
Marshall, Michael, 3:07cr283
McDowell, John, 3:12cr239
McPhaul, Elizabeth, 3:10cr114
Mehr, Kurosh, 3:12cr239
Mitchell, Ann Tyson, 3:12cr239
Moye, Melvin, 3:12cr239
Myles, Denetria, 3:12cr239
Newland, Matthew, 3:12cr239
Perry, John Wayne, Jr., 3:12cr239
Perry, Kim, 3:10cr25
Phillips, Rick, 3:10cr115
Saddig, Nazeere, 3:12cr239
Sharreff-El, Drew, 3:10cr124
Sherald, Kiki, 3:10cr117
Simmons, Aaron, 3:09cr240
Snead, Todd, 3:10cr124
Staton, Lisa, 3:10cr113
Thorogood, Donte, 3:12cr239
Tyson, Carrie, 3:12cr239
Tyson, James, Jr. 3:12cr239
Tyson, James, Sr., 3:12cr239
Wellington, Phillip, 3:12cr332
Wood, Purnell, 3:12cr239Huntersville Physician Pleads Guilty to Health Care Fraud and Tax Fraud and Agrees to Pay $6.2 Million to Settle Civil Fraud ClaimsRead the Press Release
Former Owner Of Northcross Medical Center Hid $2.4 Million In Income Used To Build 8,000-Square Foot Home On Lake Norman
CHARLOTTE, N.C. – Mark Tuan Le, an internal medicine physician and former owner of Northcross Medical Center, pleaded guilty today to federal criminal charges in connection with a healthcare fraud scheme that billed health insurers for services that were not performed and for evading over $800,000 in taxes in 2009 and 2010, announced Anne M. Tompkins U.S. Attorney for the Western District of North Carolina.
Earlier this month, Le, 55 of Huntersville, N.C., also agreed to pay $6.2 million to the United States to settle civil fraud allegations that Le and his medical center defrauded Medicare and Medicaid by submitting claims for medically unnecessary diagnostic test and procedures. The $6.2 million settlement is the Western District’s largest ever against a single physician.
U.S. Attorney Tompkins is joined in making today’s announcement by Attorney General Roy Cooper, who oversees the North Carolina Medicaid Investigations Division (MID); Derrick Jackson, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Atlanta Region; and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).
In making today’s announcement U.S. Attorney Tompkins stated, “Dr. Le exploited his medical license to carry out a criminal scheme involving fraudulent billings for services that were not needed or not given. Then, Dr. Le took his criminal conduct a step further and covered up the additional income to avoid the tax liability. As this case shows, we will use all of the tools and resources in our disposal to prosecute fraud, including pursuing parallel criminal and civil proceedings.” U.S. Attorney Tompkins further urged anyone with information of instances involving fraudulent medical billing or other practices involving health care fraud to report them to law enforcement.
“Illegal schemes like this one waste tax dollars and divert funds that are supposed to go toward needed medical care. Our investigators and attorneys will continue to work closely with federal officials to fight health care fraud and recover the public’s money,” said North Carolina Attorney General Roy Cooper.
“Le cheated Americans twice. First by settling health fraud charges to the tune of $6.2 million, and then through $800,000 in tax evasion, said Derrick L. Jackson, Special Agent in Charge for Office of Inspector General of the U.S. Department of Health and Human Services Atlanta region including North Carolina. “Working shoulder to shoulder with our law enforcement partners, we will pursue and prosecute criminals like Dr. Mark Tuan Le.”
“Dr. Le’s exploitation of Medicare and Medicaid, in concert with his tax evasion, made the burden heavier for every American taxpayer” said Thomas J. Holloman, Special Agent in Charge, IRS Criminal Investigation. “This type of criminal activity carries with it serious consequences. IRS Criminal Investigation and our law enforcement partners are committed to the pursuit of those that would engage in this type of fraud.”
Criminal CaseAccording to filed documents and statements made in court, from at least 2009 to 2013, Le and others defrauded Medicare, Medicaid and private health insurers by submitting false claims for certain procedures – namely hemorrhoidectomies and Enhanced External Counterpulsation (EECP) therapy – when those services were never actually provided. Le owned and operated Northcross Medical Center and employed numerous family members at that practice and related businesses. Le and others conspired to defraud health insurers by billing for EECP treatments that were never performed and, if performed, were not medically necessary. Court documents explain that EECP treatments are recommended for patients with chronic disabling angina and insurance companies typically require that diagnosis as a condition of reimbursing claims for EECP treatments.
Court records indicate that after Le and his practice obtained an EECP machine in or about late 2008, Northcross Medical Center’s claims for EECP treatment skyrocketed. According to court documents, most patients did not qualify for EECP treatment and Le falsified the diagnosis code in order to obtain reimbursement. Information contained in filed court documents indicates that Le most frequently claimed to have performed these treatments upon his or his employees’ relatives when the procedures were not actually performed. Court documents also indicate that Le further defrauded insurance programs, including Medicare and a private insurer, by submitting false and fraudulent claims for hemorrhoidectomies (the removal of hemorrhoids) which did not occur.
According to court documents, in or about 2009 and 2010, Le committed tax evasion by hiding approximately $2.4 million in personal income from the IRS by falsely claiming that certain payments were Northcross Medical Center’s business expenses. In reality, court records indicate, Le used these funds to purchase and construct a $2.4 million, 8000-square foot residence on Lake Norman in Cornelius. Plea documents indicate that Le reported to IRS that his taxable income for 2010 was $40,142, resulting in a tax liability of $832.00. Le significantly underreported his income also in 2009, by fraudulently misclassifying personal income as business expenses. In reality, Le had an additional income of approximately $1.2 million in 2010 and another $1.2 million in 2009 and, as a result of his tax scheme, Le evaded a total of $844,367 of personal income taxes, court records show.
Le pleaded guilty today before U.S. Magistrate Judge David S. Cayer to one count of conspiracy to commit health care fraud, seven counts of health care fraud and one count of tax evasion. At sentencing, Le faces a maximum prison term of 10 years and a $250,000 fine for the health care fraud charges and a maximum prison term of five years and a $250,000 fine for the tax evasion charge. As part of his plea agreement, Le has agreed to pay full restitution to Medicare, Medicaid, private insurers and to IRS for any losses. The final restitution amount will be determined by the court at Le’s sentencing hearing. Le is currently released on bond. A sentencing date has been set yet.
Civil SettlementIn addition to criminal charges to which Le pleaded guilty today, Le and Northcross Medical Center have agreed to a $6.2 million settlement to resolve allegations stemming from a federal civil complaint filed on June 4, 2014 by the United States, pursuant to the False Claims Act. According to the civil complaint, from December 2007 through March 2013, Le and his practice billed Medicare and Medicaid for services that were not medically necessary, not provided, and/or provided to immediate family members, and otherwise failed to comply with Medicare and Medicaid rules and regulations. A final judgment in favor of the United States was entered on June 9, 2014. Le and Northcross Medical Center have paid $2.1 million already to resolve these claims and must pay the remainder within 18 months.
The investigation into Le was handled by HHS-OIG, IRS and MID. The criminal prosecution is handled by Assistant U.S. Attorney Kelli Ferry. Assistant U.S. Attorney Jonathan Ferry handled the civil settlement. U.S. Attorney Tompkins also thanked the North Carolina Medical Board for their assistance in the investigation.
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.
Huntersville Physician Pleads Guilty to Health Care Fraud and Tax Fraud and Agrees to Pay $6.2 Million to Settle Civil Fraud ClaimsRead the Press Release
Former Owner Of Northcross Medical Center Hid $2.4 Million In Income Used To Build 8,000-Square Foot Home On Lake Norman
CHARLOTTE, N.C. – Mark Tuan Le, an internal medicine physician and former owner of Northcross Medical Center, pleaded guilty today to federal criminal charges in connection with a healthcare fraud scheme that billed health insurers for services that were not performed and for evading over $800,000 in taxes in 2009 and 2010, announced Anne M. Tompkins U.S. Attorney for the Western District of North Carolina.
Earlier this month, Le, 55 of Huntersville, N.C., also agreed to pay $6.2 million to the United States to settle civil fraud allegations that Le and his medical center defrauded Medicare and Medicaid by submitting claims for medically unnecessary diagnostic test and procedures. The $6.2 million settlement is the Western District’s largest ever against a single physician.
U.S. Attorney Tompkins is joined in making today’s announcement by Attorney General Roy Cooper, who oversees the North Carolina Medicaid Investigations Division (MID); Derrick Jackson, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Atlanta Region; and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).
In making today’s announcement U.S. Attorney Tompkins stated, “Dr. Le exploited his medical license to carry out a criminal scheme involving fraudulent billings for services that were not needed or not given. Then, Dr. Le took his criminal conduct a step further and covered up the additional income to avoid the tax liability. As this case shows, we will use all of the tools and resources in our disposal to prosecute fraud, including pursuing parallel criminal and civil proceedings.” U.S. Attorney Tompkins further urged anyone with information of instances involving fraudulent medical billing or other practices involving health care fraud to report them to law enforcement.
“Illegal schemes like this one waste tax dollars and divert funds that are supposed to go toward needed medical care. Our investigators and attorneys will continue to work closely with federal officials to fight health care fraud and recover the public’s money,” said North Carolina Attorney General Roy Cooper.
“Le cheated Americans twice. First by settling health fraud charges to the tune of $6.2 million, and then through $800,000 in tax evasion, said Derrick L. Jackson, Special Agent in Charge for Office of Inspector General of the U.S. Department of Health and Human Services Atlanta region including North Carolina. “Working shoulder to shoulder with our law enforcement partners, we will pursue and prosecute criminals like Dr. Mark Tuan Le.”
“Dr. Le’s exploitation of Medicare and Medicaid, in concert with his tax evasion, made the burden heavier for every American taxpayer” said Thomas J. Holloman, Special Agent in Charge, IRS Criminal Investigation. “This type of criminal activity carries with it serious consequences. IRS Criminal Investigation and our law enforcement partners are committed to the pursuit of those that would engage in this type of fraud.”
Criminal CaseAccording to filed documents and statements made in court, from at least 2009 to 2013, Le and others defrauded Medicare, Medicaid and private health insurers by submitting false claims for certain procedures – namely hemorrhoidectomies and Enhanced External Counterpulsation (EECP) therapy – when those services were never actually provided. Le owned and operated Northcross Medical Center and employed numerous family members at that practice and related businesses. Le and others conspired to defraud health insurers by billing for EECP treatments that were never performed and, if performed, were not medically necessary. Court documents explain that EECP treatments are recommended for patients with chronic disabling angina and insurance companies typically require that diagnosis as a condition of reimbursing claims for EECP treatments.
Court records indicate that after Le and his practice obtained an EECP machine in or about late 2008, Northcross Medical Center’s claims for EECP treatment skyrocketed. According to court documents, most patients did not qualify for EECP treatment and Le falsified the diagnosis code in order to obtain reimbursement. Information contained in filed court documents indicates that Le most frequently claimed to have performed these treatments upon his or his employees’ relatives when the procedures were not actually performed. Court documents also indicate that Le further defrauded insurance programs, including Medicare and a private insurer, by submitting false and fraudulent claims for hemorrhoidectomies (the removal of hemorrhoids) which did not occur.
According to court documents, in or about 2009 and 2010, Le committed tax evasion by hiding approximately $2.4 million in personal income from the IRS by falsely claiming that certain payments were Northcross Medical Center’s business expenses. In reality, court records indicate, Le used these funds to purchase and construct a $2.4 million, 8000-square foot residence on Lake Norman in Cornelius. Plea documents indicate that Le reported to IRS that his taxable income for 2010 was $40,142, resulting in a tax liability of $832.00. Le significantly underreported his income also in 2009, by fraudulently misclassifying personal income as business expenses. In reality, Le had an additional income of approximately $1.2 million in 2010 and another $1.2 million in 2009 and, as a result of his tax scheme, Le evaded a total of $844,367 of personal income taxes, court records show.
Le pleaded guilty today before U.S. Magistrate Judge David S. Cayer to one count of conspiracy to commit health care fraud, seven counts of health care fraud and one count of tax evasion. At sentencing, Le faces a maximum prison term of 10 years and a $250,000 fine for the health care fraud charges and a maximum prison term of five years and a $250,000 fine for the tax evasion charge. As part of his plea agreement, Le has agreed to pay full restitution to Medicare, Medicaid, private insurers and to IRS for any losses. The final restitution amount will be determined by the court at Le’s sentencing hearing. Le is currently released on bond. A sentencing date has been set yet.
Civil SettlementIn addition to criminal charges to which Le pleaded guilty today, Le and Northcross Medical Center have agreed to a $6.2 million settlement to resolve allegations stemming from a federal civil complaint filed on June 4, 2014 by the United States, pursuant to the False Claims Act. According to the civil complaint, from December 2007 through March 2013, Le and his practice billed Medicare and Medicaid for services that were not medically necessary, not provided, and/or provided to immediate family members, and otherwise failed to comply with Medicare and Medicaid rules and regulations. A final judgment in favor of the United States was entered on June 9, 2014. Le and Northcross Medical Center have paid $2.1 million already to resolve these claims and must pay the remainder within 18 months.
The investigation into Le was handled by HHS-OIG, IRS and MID. The criminal prosecution is handled by Assistant U.S. Attorney Kelli Ferry. Assistant U.S. Attorney Jonathan Ferry handled the civil settlement. U.S. Attorney Tompkins also thanked the North Carolina Medical Board for their assistance in the investigation.
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.
Anderson, S.C. Attorney Sentenced to Five Months in Prison on Obstruction ChargesRead the Press Release
Defendant Pleaded Guilty To Making False Statements To Federal Authorities During Investigation Of Client Indicted On Drug Conspiracy Charges
GREENVILLE, S.C. – Charles Anderson, an attorney in Anderson, S.C. and a former Anderson city council member, was sentenced today by U.S. District Judge Michelle Childs to serve five months in prison on obstruction charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. In addition to the prison term, Judge Childs also sentenced Anderson to three years of supervised release with the condition that the first five months of which Anderson will spend in home confinement with location monitoring. Anderson was also ordered to perform 100 hours of community service or to complete a week-long community service project, as a condition of his supervised release. Anderson, 44, pleaded guilty in January 2014, to one count of making materially false statements to a department or agency of the United States.
Harry S. Sommers, Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA), which oversees the Greenville District Office, and Brock D. Nicholson, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Georgia and the Carolinas join U.S. Attorney Tompkins in making today’s announcement.
According to information contained in court documents and today’s sentencing hearing, Anderson represented Lonnie Maddox on federal drug charges in South Carolina in connection with a large-scale cocaine conspiracy. Court records indicate that from February 21 to March 15, 2013, and on five different occasions, Anderson lied to federal agents concerning his knowledge of the whereabouts of two of Maddox’s vehicles. Maddox had purchased the vehicles with the illegal proceeds of his drug dealings. According to court records, Anderson knew where Maddox’s Yukon Denali sport utility vehicle was located, but repeatedly denied this fact when questioned by DEA and HSI agents. Court records also show that Anderson lied to law enforcement about his participation in moving the Denali, which law enforcement ultimately retrieved from Anderson’s law partner’s residence. According to today’s sentencing hearing, when law enforcement agents recovered the Denali, they found one kilo of cocaine hidden in a concealed compartment inside the vehicle.
In addition to the Denali, Anderson also initially lied to federal agents about possessing another one of Maddox’s vehicles, a classic Chevrolet Chevelle, court records indicate. And despite Anderson later admitting to law enforcement that he had in fact possessed the Chevelle, Anderson lied about the location from where he had obtained the vehicle.
Anderson, who remains free on bond, 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 jointly by the DEA and HSI. The prosecution is being handled for the government by Assistant U.S. Attorney J. George Guise of the U.S. Attorney’s Office for the Western District of North Carolina in Charlotte, upon recusal of the U.S. Attorney’s Office for the District of South Carolina.
Armed Career Criminal Sentenced to 15 Years in Prison for Federal Firearms ViolationRead the Press Release
ASHEVILLE, N.C. – A South Carolina man was sentenced in federal court on Tuesday, June 10, 2014, for being a felon in possession of a firearm, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Lawrence Doe, Jr., 30, of Beaufort, S.C. was sentenced by Chief U.S. District Judge Martin Reidinger to 180 months in prison, followed by three years of supervised release.
Chief Chris Beddingfield of the Columbus Police Department joins U.S. Attorney Tompkins in making today’s announcement.
According to the criminal indictment and statements made in court, on or about August 10, 2012, Columbus PD conducted a traffic stop of a vehicle in which Doe was a passenger. During the traffic stop, law enforcement found a loaded Smith & Wesson .357 magnum revolver inside the car. Doe’s foot had been resting on the firearm until law enforcement ordered Doe out of the vehicle. At the time of the offense, Doe was a convicted felon and was prohibited from possessing a firearm. In August 2013, Doe pleaded guilty to the gun charge. Court records indicate that Doe had four prior burglary convictions in South Carolina and at sentencing he qualified as an armed career criminal.
Doe has been in federal custody since January 2013. He will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.
The investigation was handled by Columbus PD. The case was prosecuted by Assistant United States Attorney Richard Edwards of the U.S. Attorney’s Office in Asheville.
California Drug Trafficker Sentenced to Life in Prison on Drug Conspiracy and Related ChargesRead the Press Release
CHARLOTTE, N.C. – Corvain T. Cooper, 34, of Inglewood, Calif., was sentenced today to life in prison by U.S. District Judge Robert J. Conrad, Jr., for his role as a source of supply in a drug conspiracy involving marijuana trafficking and financial crimes, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.
U.S. Attorney Tompkins is joined in making today’s announcement by Brock D. Nicholson, Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Atlanta and the Carolinas and Chief Rodney D. Monroe of the Charlotte-Mecklenburg Police Department.
According to court documents and court proceedings, from in or about 2004 through January 2013, Cooper was involved in a drug conspiracy that trafficked marijuana from California to the Charlotte area. Court records show that Cooper was charged with conspiracy to distribute and to possess with intent to distribute at least one thousand kilograms of marijuana as well as money laundering conspiracy and structuring financial transactions through banking institutions to avoid IRS reporting requirements. Cooper, along with two co-defendants, Evelyn LaChapelle and Natalia Wade, were convicted of all charges on October 18, 2013, following a three-day trial.
According to filed documents and evidence presented at trial, the marijuana was shipped to the Charlotte area in commercial crate shipments and overnight packages. Trial evidence established that the conspiracy involved more than 35 tons of marijuana being shipped to Charlotte and millions of dollars of laundered proceeds funneled back to the sources of supply in California. Cooper, who possessed firearms during some drug-related transactions, received a mandatory life sentence because of the drug amount involved and two prior felony drug convictions in California.
Cooper has been in custody since his arrest in California on January 28, 2013. He will be transferred to the custody of the Federal Bureau of Prisons upon designation to a federal facility. All federal sentences are served without the possibility of parole.
LaChapelle and Wade have been in custody since their October 2013 conviction and are currently awaiting sentencing.
This prosecution is part of an extensive Organized Crime Drug Enforcement Task Force (OCDETF) investigation code-named “Goldilocks” that has resulted in the conviction of more than 55 defendants for marijuana trafficking, money laundering, and firearms violations over the past five years. OCDETF is a joint federal, state and local cooperative approach to combat drug trafficking and is the nation’s primary tool for disrupting and dismantling major drug trafficking organizations, targeting national and regional level drug trafficking organizations and coordinating the necessary law enforcement entities and resources to disrupt or dismantle the targeted criminal organization and seize their assets.
The investigation was led by HSI and CMPD, assisted by the Gastonia Police Department, the Concord Police Department, the Mooresville Police Department, the Pineville Police Department, the Huntersville Police Department, the Kannapolis Police Department, the Cornelius Police Department, the Waxhaw Police Department, North Carolina Alcohol Law Enforcement, North Carolina State Bureau of Investigation, the Iredell County Sheriff’s Office, the Union County Sheriff’s Office, and the Beverly Hills and Culver City, California Police Departments.
The prosecution for the government was handled by Assistant U.S. Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte.