Western District of North Carolina

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.

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.

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.

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

 

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, 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, 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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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, 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, 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.

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, 3:08cr264

Bank Insiders
Brown, Jamilia, 3:10cr124
Eason, Danyelle, 3:10cr116
Henson, Vic. F., 3:10cr124
Jackson, Mitzi, 3:11cr374
Ramey, Bonnie Sue, 3:10cr124

Builders 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, 3:09cr208

Facilitators 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, 3:09cr161

Buyers
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, 3:12cr333

Notary Publics
Willis, Anthony, 3:09cr218
Myles, Denetria, 3:12cr239

Appraiser
Darden, Clinton 3:10cr108

Mortgage 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, 3:09cr178

Real 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, 3:09cr208

Promoters
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, 3:12cr239

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 Case

According 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 Settlement

In 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.

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 Case

According 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 Settlement

In 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.

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.

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.

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.

COLUMBIA, S.C. – Joenathan Shelly Chaplin, an attorney in Columbia, S.C. appeared in federal court today before U.S. District Judge Margaret B. Seymour and pleaded guilty to making a false statement to a federal agent, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI); Harry S. Sommers, 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 today’s plea hearing, Chaplin, 47, admitted to knowingly and willfully making a materially false, fictitious, and fraudulent statement and representation to the government. Specifically, court documents indicate, Chaplin told a special agent from the Department of Treasury that he was not aware of the reporting requirements of Form 8300. Form 8300 (“Report of Cash Payments Over $10,000 Received in a Trade or Business”) 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.

Chaplin has been released on bond. At sentencing, he faces a maximum prison term of five years, a $250,000 fine, or both. A sentencing date has not yet been set.

The case was investigated by IRS-CI, DEA and ATF. The prosecution is being handled for the government 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.

ASHEVILLE, N.C. – A Jackson County woman was sentenced on Tuesday, June 3, 2014, to serve 210 months in a federal prison for producing, receiving, possessing and distributing child pornography, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. In addition to the prison term, U.S. District Judge Martin Reidinger also ordered Kimberly Rachael Moore, 31, of Tuckasegee, N.C. to serve under court supervision the rest of her life upon release from prison and to register as a sex offender.

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 and Sheriff Jimmy Ashe of the Jackson County Sheriff’s Office join U.S. Attorney Tompkins in making today’s announcement.

In December 2012, a federal criminal indictment charged Moore with one count of production of child pornography, one count of possession of child pornography, one count of receipt of child pornography and four counts of distribution of child pornography. Moore pleaded guilty to the charges in May 2013. According to court filings and proceedings, during the investigation detectives discovered an extensive collection of child pornography, as well as a computer hard drive, an email account, and online photo sharing accounts.

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

The investigation into Moore was handled by HSI and the Jackson County Sheriff’s Office.

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

Trafficker’s Wife Receives A Two And A Half Year Sentence For Laundering Drug Proceeds

STATESVILLE, N.C. – Manuel Ocampo, Jr., 39, of Anaheim, Calif., was sentenced today to 210 months in prison for his role as a supplier of methamphetamine, cocaine, heroin, marijuana and other narcotics, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. In addition to the prison term, U.S. District Judge Richard L. Voorhees ordered Ocampo to serve five years of supervised release. Judge Voorhees also sentenced today Manuel Ocampo’s wife, Yulisma Ocampo, 37, to 30 months in prison and three years of supervised release, for conspiring to launder the proceeds of drug trafficking.

U.S. Attorney Tompkins is joined in making today’s announcement by 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; Greg McLeod, Director of the State Bureau of Investigation (NC SBI); Chief Tom Adkins of the Hickory Police Department and Sheriff Coy Reid of the Catawba County Sheriff’s Office.

According to court documents and proceedings, the drug conspiracy lasted from 2011 to September 18, 2012. During that time, the Ocampos travelled from California to the Hickory, N.C. area to deliver a variety of narcotics, including methamphetamine, cocaine, heroin, and marijuana, among others. On May 4, 2012, law enforcement in Hickory N.C. seized over four pounds of 97% pure methamphetamine, more than one and half pounds of black tar heroin and over two pounds of powder heroin from a hidden compartment in the roof of the Ocampos’ minivan. During Manuel Ocampo’s arrest on that date, Yulisma Ocampo hid her husband’s cell phone and she subsequently picked-up drug proceeds from customers, until she was arrested in July 2012.

Two other conspirators involved in the drug scheme, Joey Carroll and Peter Anthony Sanders, were previously sentenced. Carroll was sentenced to 113 months in prison and five years of supervised release. Sanders was sentenced to 36 months in prison and four years of supervised release.

Both Manuel and Yulisma Ocampo will remain 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.

This investigation into the case was led by HSI and SBI, with the assistance of several other law enforcement agencies, to include the Hickory Police Department and the Catawba County Sheriff’s Office. The prosecution for the government is being handled by Assistant U.S. Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – Mauricio Mario Baltazar, 21, of Lake City, Ga. was sentenced today to 169 months in prison for his role as a supplier of more than three pounds of methamphetamine, 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 U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Georgia and the Carolinas.

According to court documents and court proceedings, from 2012 until the time of his arrest in April 2013, Baltazar established an extensive methamphetamine trafficking network that spanned from Georgia to North Carolina and beyond. According to court records, on the day of his arrest, Baltazar was traveling from Georgia transporting approximately 250 grams of methamphetamine (approx. 1,000 dosage units) and was on his way to conduct a drug transaction at a hotel in Boone, N.C. Law enforcement seized the drugs from Baltazar during a traffic stop and Baltazar was arrested. Court records indicate that when law enforcement executed a search warrant at Baltazar’s residence in Georgia, they found a 12-gauge shotgun, a rifle with scope, a ballistic vest, as well as other weapons. Court records indicate that law enforcement also found a cell phone which contained numerous photographs of Baltazar holding an assault rifle, handguns with high-capacity magazines and tactical lights, high-powered rifles and a pump action shotgun. Baltazar also had pictures of bulk currency fanned out with stacks of $100, $50, and $20 bills. According to court records, inside Baltazar’s residence, law enforcement also found “Sur13” gang graffiti consistent with gang-related tattoos on Baltazar’s body. Sur 13, also known as “Sureños” or “Southside,” are loosely affiliated gangs that pay tribute to the Mexican Mafia.

Baltazar will remain 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.

This investigation was led by HSI with the assistance of the North Carolina State Bureau of Investigation, the Boone Police Department, the Ashe County Sheriff’s Office and the Caldwell County Sheriff’s Office. The prosecution for the government is being handled by Assistant U.S. Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte.

Patrick Cannon Admitted To Carrying Out A Bribery Scheme And Accepting At Least $50,000 In Exchange For Using His Official Position To Benefit His Payors

CHARLOTTE, N.C. – Former Charlotte Mayor Patrick D. Cannon pleaded guilty today to one count of honest services wire fraud, 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.

A federal criminal bill of information charging the former mayor and a filed plea agreement were unsealed on Monday, June 2, 2014. Cannon, 47, appeared in court today and formally pleaded guilty to the charge before U.S. Magistrate Judge David S. Cayer.

“Former Mayor Cannon used his elected official position to enrich himself at the expense of the City of Charlotte,” said U.S. Attorney Tompkins in making today’s announcement. “Through his actions, Cannon betrayed the trust of his constituents and his peers, compromised the integrity of our local government and damaged Charlotte’s good reputation as a city that does business the honest way. Cannon will now be held accountable for depriving the citizens of Charlotte of their right to his honest and faithful services and for putting personal gain over the greater good. As we move forward, let one message be clear: My office will continue to investigate allegations of public corruption and go after anyone who uses public office as a means of getting rich. Charlotte has no room for corrupt politicians.”

“This nearly four year investigation was complex and required a great deal of diligence and dedication from the FBI Special Agents and prosecutors involved. By its very nature, public corruption is conducted in a shroud of secrecy and can be difficult to detect. Fortunately, the FBI has the capability to use a number of lawful, sophisticated tools and techniques to capture key evidence. The criminal actions of Patrick Cannon brought undeserved shame and embarrassment upon the city of Charlotte. As the city begins to heal, citizens should be reassured, this investigation does not end with today’s guilty plea. FBI agents will continue to follow the trail of evidence in this case and look into related allegations as the investigation moves forward,” said John A. Strong, Special Agent in Charge of the FBI in North Carolina.

According to the criminal bill of information to which Cannon pleaded guilty, other documents filed in this case and statements made in court:

I. Background

Beginning in on or about December 7, 2009, and continuing through March 26, 2014, Cannon devised a bribery scheme and used his official position to enrich himself. During the course of the scheme, Cannon was an elected official serving as a member of the City Council, and/or Mayor Pro Tem or Mayor of the City of Charlotte. During the relevant time period, Cannon solicited and accepted gifts, payments and other things of value in exchange for a pattern of official actions favorable to the persons who secretly paid him. Specifically, Cannon accepted a total of at least $50,000 from a Charlotte business owner and two undercover agents posing as investors interested in opening businesses in Charlotte. Cannon accepted the bribes in exchange for use of his official position on an “as needed” basis, including communicating with City and County officials and others to assist his payors’ projects and intervening with any zoning, permitting and transportation issues, among others. Cannon’s actions and fraudulent bribery scheme defrauded the citizens and the government of Charlotte and deprived them of their right to Cannon’s honest and faithful services.

II. The Scheme to Defraud

a. The Scheme to Solicit and Accept Things of Value from Businessman No. 1 (“BM1”)

The criminal bill of information identifies BM1 as the owner of a company that owns and operates a live adult entertainment club in the Charlotte area (the “Club”). During the relevant time period, Cannon secretly solicited, accepted and agreed to accept periodic payments and checks from or on behalf of BM1 in exchange for Cannon’s use of his elected offices to exert influence over City zoning, planning and transportation officials, as needed or required by BM1. Specifically, in and around January 2013, Cannon accepted approximately $2,000 in cash from BM1 in exchange for Cannon’s influence in relocating the Club away from the proposed LYNX Blue Line Extension (BLE), thereby enabling BM1 to keep his establishment open as an adult club.

b. The Scheme to Solicit and Accept Things of Value from Undercover Employee No. 1 (“UCE1”)

UCE1 was an FBI undercover agent who Cannon believed to be a business manager for a Chicago-based venture capital company interested in opening a nightclub/bar in Charlotte at a property identified as the “Firehouse.” The selected location had numerous zoning and parking issues. Beginning no later than December 12, 2012 through on or about March 26, 2014, Cannon secretly solicited, accepted and agreed to accept $12,500 in cash and the occasional use of an apartment in exchange for Cannon’s influence and intervention as needed to assist UCE1 in dealing with City and County officials and working out any zoning, licensing and permit issues associated with the selected property.

c. The Scheme to Solicit and Accept Things of Value from Undercover Employee No. 2 (“UCE2”)

UCE2 was an FBI undercover agent, who Cannon believed to be a Las Vegas real estate developer looking to secure foreign investors to finance commercial real estate developments in Charlotte. Beginning no later than May 21, 2013 through on or about March 26, 2014, Cannon secretly solicited, accepted and agreed to accept a total of $36,000 in cash, a trip to Las Vegas and the occasional use of an apartment in exchange for use of his elected position to create and make false representations on behalf of UCE2 to individuals Cannon believed to be foreign investors. Specifically, at the request of UCE2, Cannon traveled to Las Vegas, and in his official capacity as Charlotte’s Mayor Pro Tem delivered a presentation to purported investors during which Cannon falsely told them that he had successfully used his position in the past to assist with a similar project in Charlotte. Over the course of his dealings with UCE2, Cannon promised to use his new position as Mayor to make contacts and exert his official influence over City and County officials to secure federal financing for transportations projects that would benefit UCE2’s company; offered to use and used the Mayor’s office to persuade one of UCE2’s purported skeptical investors to invest in UCE2’s company; and promised to give UCE2’s company preferential treatment over other potential developers.

During the relevant time period, Cannon never disclosed to any City and County employees whom he contacted his relationship with BM1, UCE1 and UCE2 or that he was receiving cash, gifts and other things of value from them in exchange for use of his official position.

III. The Charged Offense and Penalties

Cannon has pleaded guilty to one count of honest services wire fraud. In pleading guilty, Cannon has admitted to defrauding and depriving the citizens of Charlotte and the Charlotte government of their right to Cannon’s honest and faithful services through bribery and the concealment of material information.

The charge carries a maximum prison term of 20 years, a $250,000 fine or both. According to the terms of the plea agreement, Cannon has also agreed to pay restitution. Cannon’s final sentence and restitution amount will be determined by a federal judge at sentencing. Cannon is currently released on bond and a date for his sentencing hearing has not been set.

The case is being prosecuted by Assistant United States Attorneys Michael E. Savage and Craig D. Randall of the U.S. Attorney’s Office in Charlotte. The ongoing investigation is being handled the FBI.

A copy of this press release and related documents can be found at:

http://www.justice.gov/usao/ncw/calendar.html

CHARLOTTE, N.C. – Chief U.S. District Judge Frank D. Whitney sentenced today Tony Humphrey, 20, of Charlotte, to 471 months in prison, followed by five years of supervised release on charges stemming from an April 2012 armed robbery spree of several area businesses and a bank, 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 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.

According to court documents and today’s sentencing hearing, on two occasions, Humphreys committed armed robberies at two different branches of Regional Finance Corporation (Regional Finance). On April 3, 2012, Humphrey robbed the Regional Finance located on Tryon Street in Charlotte, stealing $2,000 in cash. Then, on April 16, 2012, Humphrey robbed a second Regional Finance branch located on E. Independence Boulevard, also in Charlotte. $3,400 was stolen from that location. On both occasions, Humphrey pointed a firearm at employees while he demanded money.

Also according to court documents and today’s sentencing hearing, Humphrey and his co-conspirator, Corey Miller, 25, attempted to commit two armed robberies. On April 6, 2012, Humphrey and Miller attempted to rob a Charlotte-area Sonic restaurant. Court records show that the two men placed an order at the drive through window and then Humphrey entered the restaurant armed with a handgun and demanded money. According to court records, when a restaurant employee stated that she could not give him money, Humphrey pointed the gun at the employee’s head and pulled the trigger. The gun did not fire. Miller waited outside in the getaway car and drove Humphrey away from the scene. On April 14, 2012, Humphrey and Miller attempted to rob the Crown Auto Sales and Finance office located in Charlotte. Both Humphrey and Miller possessed and brandished firearms during that attempted robbery.

On April 13, 2012, Humphrey and Adonte Young, 28, robbed a PNC Bank branch located on East Boulevard in Charlotte. According to filed court documents and related court hearings, Humphrey and Young entered the bank and demanded cash. At least one of the two men was armed with and brandished a handgun. As they were leaving the bank with over $9,000 in cash, one of robbers fired two shots. Young and Humphrey fled the bank in a stolen vehicle which they abandoned. Police recovered a handgun, as well as a disguise worn by Young, from the stolen getaway car.

In January of 2013, Humphrey pleaded guilty to two counts of Hobbs Act robbery, two counts of attempted Hobbs Act robbery, one count of armed bank robbery, and two counts of possessing and brandishing a firearm during and in relation to a crime of violence.

In January of 2013, Corey Miller pleaded guilty to the April 6, 2012 attempted Hobbs Act Robbery of the Sonic Restaurant and to the April 14, 2012 attempted Hobbs Act robbery of the Crown Auto Sales. He also pleaded guilty to possessing and brandishing a firearm during the attempted Hobbs Act robbery of the Crown Auto Sales. On February 3, 2014, Chief U.S. District Judge Frank D. Whitney sentenced Corey Miller to serve 11 years in prison, to be followed by 5 years of supervised release.

In January 2013, Adonte Young pleaded guilty to possessing and discharging a firearm and aiding and abetting the same, in relation to the April 13, 2012 robbery of the PNC Bank on East Boulevard. On March 31, 2014, Chief U.S. District Judge Frank D. Whitney sentenced Young to 10 years in prison, to be followed by 5 years of supervised release.

Humphrey remains in federal custody and will be turned to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.

The investigation was handled by the FBI’s Safe Streets Task Force and CMPD. The prosecution for the government was handled by Assistant U.S. Attorney Elizabeth F. Greene of the U.S. Attorney’s Office in Charlotte.

ASHEVILLE, N.C. - U.S. Attorney Anne M. Tompkins announced that two men have been convicted and sentenced in U.S. District Court for the illegal harvesting of ginseng. Joining U.S. Attorney Tompkins in making today’s announcement is Deborah Flowers, Acting Chief Ranger of the Blue Ridge Parkway.

Daniel Mizell, 26, of Green Mountain, N.C. was sentenced today to serve 30 days in jail for engaging in business operations on the Blue Ridge Parkway and entering a closed area on the Blue Ridge Parkway during the federal government shutdown in October 2013. His co-defendant, Derek Vann Whitson, 33, of Mars Hill, N.C. was sentenced on March 27, 2014, to 90 days in jail for conspiring to harvest ginseng.

According to court documents and statements made in court:

On October 13, 2013, Whitson and Mizell called 9-1-1 for assistance after they became lost in the Asheville Watershed which borders the Blue Ridge Parkway. During the course of a search and rescue mission, approximately 35 individuals from various local, state and federal agencies responded to assist in finding the two missing men. On October 14, 2013, Asheville Watershed employees located Whitson and Mizell, who were found to be in possession of three pounds of freshly dug ginseng (147 roots). Whitson admitted ownership of two pounds of ginseng roots and stated Mizell dug the other one pound. Mizell and Whitson also admitted to entering the Watershed from the Parkway. At sentencing, U. S. Magistrate Judge Dennis L. Howell took particular note of the amount of public resources used during the search to locate two individuals, who became lost while engaged in criminal activity for personal profit.

American ginseng is on the list of the Convention on International Trade of Endangered Species (CITES). The Division of Scientific Authority, U.S. Fish & Wildlife Service is the regulatory agency that evaluates the biological and management status of wild American ginseng throughout its native range. The Division issues an annual or biennial report detailing if any harvest conditions need to be modified to ensure the sustainable harvest of wild native ginseng.

National Park, U.S. Forest Service and Asheville Watershed lands have been severely impacted by ginseng poachers in Western North Carolina. Permits to collect ginseng root in National Forests are issued annually through the U.S. Forest Service from September 1 to September 15. Permits are not available in National Park lands such as the Blue Ridge Parkway and Great Smoky Mountains National Park where even the possession of American ginseng is prohibited. Permits to collect ginseng roots are also unavailable for the Asheville Watershed and that area is closed to entry by the public.

The investigation of the cases was handled by the rangers of the Blue Ridge Parkway and officers and employees of the City Of Asheville. The prosecution was handled by the U.S. Attorney’s Office in Asheville.

CHARLOTTE, N.C. – Chief U.S. District Judge Frank D. Whitney sentenced today Christian Zorrilla, 31, of Charlotte to 15 months in prison for stealing $143,680 from a bank vault, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. In addition to the prison term, Zorrilla was also ordered to serve two years under court supervision and to pay $143,680 as restitution. Zorrilla pleaded guilty in March 2013 to one count of bank theft.

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 joins U.S. Attorney Tompkins in making today’s announcement.

According to charging documents and statements made during the sentencing hearing, from 2005 through May 2012, Zorrilla was employed by an armored car service as a driver, messenger, and vault custodian. According to court records, between December 2011 and April 2012 and while working as vault custodian, Zorrilla stole a total of $143,680 from the armored car service. Court records indicate that Zorrilla’s responsibilities as vault custodian included coordinating cash storage at the bank’s vault and changing out security tapes. According to court documents, Zorrilla used the delay between the changing of security tapes to take cash out of sealed bags in the vault and to reseal the bags. Zorrilla stole funds in this manner on approximately six occasions, court records show. According to information contained in filed documents and statements made during the sentencing hearing, Zorrilla used the stolen money to pay for vehicles and to pay off a second mortgage on his home.

Zorrilla remains released on bond and upon designation of a federal facility he will be ordered to report to the Federal Bureau of Prisons to begin serving his sentence. All federal sentences are served without the possibility of parole.

The investigation into Zorrilla was handled by HSI. The case was prosecuted by Assistant U.S. Attorney Jenny Grus Sugar of the U.S. Attorney’s Office in Charlotte.

Defendant Used Vehicle He Carjacked That Morning To Commit Bank Robbery

STATESVILLE, N.C. – A federal jury sitting in Statesville returned a guilty verdict on Thursday, May 15, 2014, against Darius Donneal Freeman, 32, and Wincy Joseph, 29, both of Charlotte, for armed bank robbery and possession of a firearm in furtherance of a crime of violence charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The jury also found Freeman guilty of carjacking and a second possession of a firearm in furtherance of a crime of violence.

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, Chief Matthew A. Selves of the Troutman Police Department and Chief Rodney D. Monroe of the Charlotte-Mecklenburg Police Department.

According to filed court documents and trial proceedings:

In or about May 20, 2013, at approximately 5:15 a.m. Freeman carjacked a victim at gunpoint at a Circle K gas station located on South Boulevard in Charlotte. Later that morning, Freeman and Joseph used the carjacked vehicle to rob a Bank of America branch in Troutman, N.C. Soon after the bank opened, Freeman entered the bank wearing a black cap, sunglasses, gloves and brandishing a silver handgun. Freeman jumped on the tellers’ counter and demanded cash. Joseph entered the bank behind Freeman, dressed in a black sweatshirt with the hood pulled over his head, sunglasses and gloves, and demanded cash from another bank employee. The defendants then fled the scene with approximately $5,100 in cash, driving off in the car Freeman had jacked earlier that day. Law enforcement later found the car abandoned on Interstate-77 in Iredell County. The defendants were identified five days later, following a tip from a concerned citizen. Freeman was arrested on June 6, 2013. Joseph was arrested on June 13, 2013.

The armed bank robbery charge carries a maximum prison term of 25 years and a $250,000 fine. The possession of a firearm in furtherance of a crime of violence offense carries a minimum of 7 consecutive years and a maximum of life in prison. Freeman also faces a maximum prison term of 15 years and a $250,000 for the carjacking charge. He also faces a minimum of 32 years and a maximum of life in prison for the possession of a firearm in furtherance of a crime of violence (carjacking). Both defendants remain in custody. Sentencing dates for the defendants have not yet been set.

The investigation was led by the FBI, the Troutman Police Department and CMPD. U.S. Attorney Tompkins also thanked the Mooresville Police Department, the Iredell County Sheriff’s Office and the Statesville Police Department for their assistance in the investigation.

The prosecution was handled by Assistant U.S. Attorney Elizabeth Greene and Special Assistant U.S. Attorney Rebecca McNerney. Ms. McNerney is a state prosecutor with the Iredell County District Attorney’s Office, and was assigned by District Attorney Sarah M. Kirkman to serve as a Special Assistant United States Attorney (SAUSA) with the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – This week, communities across the United States will gather during National Police Week to remember law enforcement officers who made the ultimate sacrifice in the line of duty, to share their stories of courage and sacrifice and to honor their memory.

“Police week is a time of remembrance of fallen officers who gave their lives to protect ours,” said Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. “Together with our fallen heroes’ families, friends and comrades we come together to grieve for their tragic loss, to celebrate their lives and to carry on the legacy they left behind.”

This year, the names of 286 officers killed in the line of duty will be added to the National Law Enforcement Officers Memorial in Washington, D.C., including the names of 100 officers who made the ultimate sacrifice during 2013, and 186 officers who died earlier in history but whose sacrifice had not been previously documented. With the addition of the 286 names this year, a total of 20,267 officers’ names are engraved on the Memorial. The names represent fallen law enforcement officers from all 50 states, the District of Columbia, U.S. territories, federal law enforcement, and military police agencies. Among those added this year will be:

• Robert Austin Bingaman, of the Asheville Police Department. Officer Bingaman died in October 2013.
• Jerry L. Scantling, of the Onslow County Sheriff’s Office, who died in August 2008.
• Ronald Lee Yeazel, of the Hope Mills Police Department, who was killed in September 1994.
• John Cook, of the Mecklenburg County Sheriff’s Office, who was killed in October 1804.

Since January 2014, two more officers in North Carolina have fallen in the line of duty. Alexander Thalmann, of the New Bern Police Department, died in March 2014 from a gunshot wound he sustained during a traffic stop. Forest Service law enforcement officer Jason Crisp and his K-9 partner, Maros, were shot and killed in March 2014 while pursuing a suspect, who hours earlier had killed his own father and step-mother. Officers Thalmann and Crisp will be honored in next year’s ceremony at the Memorial.

U.S. Attorney Tompkins noted that, “Police Week is an opportunity to honor and recognize all law enforcement officers in our communities, who bravely stand on the front lines of violence, each day. These officers are part of a long line of courageous men and women who have taken an oath to protect our neighborhoods, our homes and our loved ones from harm. I am thankful for their service, their courage and their willingness to answer the ultimate call of duty.” There are approximately 900,000 law enforcement officers currently serving in communities across the United States. Each year, nearly 60,000 assaults against law enforcement officers are reported, resulting in approximately 16,000 injuries.

The names of all 286 fallen officers nationwide will be formally dedicated on the National Law Enforcement Officers Memorial during the 26th Annual Candlelight Vigil, which will be held on the evening of May 13, 2014, in Washington, D.C. U.S. Attorney General Eric Holder will deliver the keynote address and lead the candle lighting and reading of the names of the fallen officers.

The ceremony will be webcast live beginning at 8:00 p.m. (EDT). To register for this free online event, please visit www.LawMemorial.org/webcast. http://www.LawMemorial.org/webcast

ASHEVILLE, N.C. – A Burke County man was sentenced on Thursday, April 24, 2014, to serve 90 months in a federal prison for possession, receipt, and distribution of child pornography, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. U.S. District Judge Martin Reidinger also ordered the defendant to register as a sex offender and serve the rest of his life under court supervision after he is released from prison.

Greg McLeod, Director of the North Carolina State Bureau of Investigation (NC SBI) and Sheriff Steve E. Whisenant of the Burke County Sheriff’s Office join U.S. Attorney Tompkins in making today’s announcement.

In November 2012, a federal criminal indictment charged Eddie Wayne Lane, Jr, 27, of Connelly Springs, N.C. with one count of possession of visual depictions of minors engaging in sexually explicit conduct, one count of receiving such images, and one count of distributing them. Lane pleaded guilty to the charges in April 2013. According to court filings and proceedings, during the investigation, detectives discovered an extensive collection of child pornography including a computer hard drive and multiple email accounts. Lane’s investigation led to the prosecution of Michael John Jones who was sentenced to 25 years in prison for producing child pornography. The U.S. Attorney’s Office for the Northern District of West Virginia handled Jones’ prosecution. For information on that case is available at: http://www.justice.gov/usao/wvn/news/2012/august/jones.html and http://www.justice.gov/usao/wvn/news/2012/august/jones.html.

Lane is in local federal custody and will be transferred into custody of the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.

The investigation into Lane was handled by the SBI and the Burke County Sheriff’s Office. Both agencies are members of the North Carolina Internet Crimes Against Children Task Force (ICAC). Assistant U.S. Attorneys David A. Thorneloe and Cortney S. Randall of the U.S. Attorney’s Office for the Western District of North Carolina prosecuted the case.

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

 

 

 

CHARLOTTE, N.C. – Mexican drug kingpin, Carlos Ramon Castro-Rocha, appeared before U.S. Magistrate Judge David C. Keesler today and pleaded guilty to conspiracy to import and conspiracy to possess with intent to distribute heroin, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Castro-Rocha, a/k/a “Cuate,” 40, of Sinaloa, Mexico, was the head of a Mexican drug trafficking organization (DTO) responsible for producing and distributing into the United States vast quantities of heroin between 2005 and 2008.

Harry S. Sommers, Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA), which oversees the Charlotte District Office and Chief Rodney D. Monroe of the Charlotte-Mecklenburg Police Department (CMPD), join U.S. Attorney Tompkins in making today’s announcement.

According to court documents and court proceeds, as the DTO’s leader, Castro-Rocha ran an extensive drug trafficking network and oversaw all aspects of the drug operation, from production in Mexico to distribution in cities throughout the U.S. The Department of Justice designated Castro-Roca as a Consolidated Priority Organization Target, or “CPOT,” a designation reserved for command and control level drug traffickers, who run organizations that smuggle large quantities of narcotics into the United States.

Castro-Rocha was first charged by the U.S. government via a criminal complaint filed in the Western District of North Carolina in January 2009. He was formally indicted in this district on federal drug trafficking charges in June 2009. The indictment remained sealed until Castro-Rocha was arrested by Mexican authorities on May 30, 2010, pursuant to extradition proceedings initiated the U.S. Department of Justice. Following Castro-Rocha’s several unsuccessful appeals in the Mexican judicial system, his final extradition order to the United States was granted in October 2012, and Castro-Rocha arrived in the U.S. later that month. In addition to the charges against him in Western North Carolina, Castro-Rocha faces separate federal drug trafficking and related charges in the District of Arizona.

U.S. Attorney Tompkins stated, “Castro-Rocha’s guilty plea speaks of our determination to dismantle organized drug networks and take down their bosses, no matter how long it takes. Drug kingpins hiding in foreign countries think they are beyond our reach, either too powerful to go after or too well-hidden to find. But as this case shows, we will take the fight abroad and overcome all hurdles, until those responsible for flooding our streets with drugs face the American justice system.”

“DEA and its law enforcement partners delivered a major assault against a well-established Mexican DTO group which was led by Carlos Ramon Castro-Rocha. This Mexican-based DTO was a pipeline for black tar heroin and other dangerous drugs being shipped from Mexico to our country. Because of the dedication and hard work of all law enforcement agencies involved, Castro-Rocha and those he led will no longer distribute the destructive and deadly substances that wreak havoc in our neighborhoods,” stated Harry S. Sommers, the Special Agent in Charge of the DEA Atlanta Field Division.

“The outcome of this case will have a significant impact on the distribution of illegal drugs across our nation and within the City of Charlotte,” said Chief Rodney Monroe, Charlotte-Mecklenburg Police Department. “Dismantling a drug ring of this magnitude only could have been accomplished through the cooperation of all partner agencies involved. Our message is clear: illegal drug trafficking will not be tolerated or condoned in our community.”

Castro-Rocha’s guilty plea stems from “Operation Dirty Girl II,” which is the local portion of a national anti-drug initiative, “Project Deliverance,” aimed at stemming the flow of illegal narcotics into the U.S. Led by the DEA and other members of the Western District’s Organized Crime Drug Enforcement Task Force (OCDETF), Dirty Girl II focused on disrupting and dismantling the infrastructure of Castro-Rocha’s drug trafficking network, which was responsible for producing and smuggling in the U.S. vast quantities of heroin, including a highly dangerous form, black tar heroin. “Dirty Girl” is the street name for black tar heroin.

Filed court documents indicate that Castro-Rocha’s drug organization produced the heroin in Mexico, smuggled it across the border and distributed it throughout the United States, including the Charlotte area. According to court records, in September 2007, law enforcement in Charlotte seized more than two and a half kilograms (approx. six pounds) of black tar heroin that had been trafficked to Charlotte through Castro-Rocha’s drug distribution network. More than $110,000 in cash and a handgun were also seized. Court records indicate that in August 2008, law enforcement made two additional seizures of approximately one kilogram of black tar heroin. According to court records, between 2005 and 2008, Castro-Rocha’s network trafficked up to ten kilograms of black tar heroin in the Charlotte area alone, with an approximate street value of $1.2 million.

In addition to the organization’s leader, a total of 11 defendants associated with Castro-Rocha’s DTO have been prosecuted in Western North Carolina.

Castro-Rocha pleaded guilty to one count of conspiracy to import heroin and one count of conspiracy to possess with intent to distribute heroin in Charlotte and elsewhere. He faces a mandatory minimum prison sentence of 10 years and a maximum of life in prison, and a $10,000,000 fine. A sentencing date has not been set yet. Following Castro-Rocha’s sentencing in this district, he will be transferred to Arizona to face the federal drug charges pending against him there.

In making today’s announcement U.S. Attorney Tompkins praised the DEA agents and CMPD officers who worked tirelessly to build a successful case against Castro-Roca. She also thanked the FBI, the Gastonia Police Department and the Union County Sheriff’s Office for their invaluable assistance and commended Assistant United States Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte for his prosecution of the case.

ASHEVILLE, N.C. – U.S. District Judge Martin Reidinger sentenced a Polk Co. couple to prison on Thursday, April 24, 2014, for filing over 1,000 false tax returns and collecting more than $3.5 million in fraudulent tax refunds, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) and Keith Fixel, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service join U.S. Attorney Tompkins in making today’s announcement.

Senita Birt Dill, 46, and Ronald Jeremy Knowles, 42, both of Mill Spring, N.C. were sentenced to 324 and 70 months in prison, respectively. In addition to the prison terms, Judge Reidinger ordered the defendants to serve three years under court supervision and to pay $3,978,211 as restitution to IRS. Dill ato nd Knowles pleaded guilty in October 2012 false claims conspiracy and access device fraud. Dill also pleaded guilty to aggravated identity theft.

According to filed court documents and yesterday’s sentencing hearings, from 2009 to 2012, Dill and Knowles used fraudulently-obtained personal identification information (including names, dates of birth and social security numbers) to file false tax returns claiming tax refunds. Court documents indicate that the pair used tax preparation software programs to file and submit these fraudulent federal and state tax returns. According to court records, the tax returns contained fictitious information, such as the filer’s income and the amount of federal tax withheld. Court records show that the defendants were careful to use fictitious figures that maximized the amount of the claimed refund, while minimizing the risk of detection.

According to court records, the pairs’ elaborate tax scheme included renting a property on a lake which was surrounded by numerous vacation homes in the neighborhood. Court records show that Dill and Knowles used the neighboring addresses to fill out the fraudulent tax returns, and since the neighboring homes were not occupied daily, the couple was able to check the homes’ mailboxes frequently and retrieve the fraudulent refund checks upon delivery. According to court records, in addition to the addresses of lake homes, the defendants also used addresses in Greenville and Greer, S.C. on the fictitious tax returns, which is where Knowles’ business is located. Court records indicate that once they retrieved the refunds, the defendants deposited the refund checks directly into their bank accounts. On some occasions, the defendants received tax refunds in the form of pre-paid debit cards, court records show.

According to court records, Dill and Knowles filed over 1,000 false tax returns using the fraudulently obtained personal identification information. They also made fraudulent tax refund claims in excess of $5 million and actually received tax refunds totaling over $3.5 million.

The defendants have been in federal custody since October 2012. They 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 of the case was handled by IRS and USPIS, with the assistance of the Polk County Sheriff’s Office. The prosecution of the case is handled by Assistant U.S. Attorney Don Gast of U.S. Attorney’s Office in Asheville.

CHARLOTTE, N.C. – U.S. District Judge Graham Mullen sentenced a Spruce Pine man, who was an attorney, engineer and appraiser, to 27 months in prison for making false statements on his tax returns, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Randy Alan Carpenter, 56, was also ordered to serve one year under court supervision and to pay $507,995 as restitution to IRS.

Joining U.S. Attorney Tompkins in making today’s announcement are Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service - Criminal Investigation Division (IRS-CI), John A Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI) and Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation, Office of the Inspector General (FDIC-OIG).

According to court records and today’s sentencing hearing, Carpenter received over $1.2 million in professional fees in 2005 and 2006 from his work at a failed real estate development near Spruce Pine, N.C., known as the “Villages of Penland.” Carpenter pleaded guilty to the tax charges in May 2013. As a condition of his plea agreement, Carpenter was also ordered to cooperate with the IRS in filing amended tax returns. When announcing his sentence, Judge Mullen noted that although Carpenter’s sentencing was not intentionally set for April 15th, the court agreed with the prosecution’s argument that Carpenter’s sentence should be a general deterrent to those might be tempted to intentionally file false tax returns.

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

The investigation was handled jointly the FBI, IRS and FDIC-OIG. The case is being prosecuted by Assistant United States Attorneys Michael E. Savage and Courtney Bumpers of the U.S. Attorney’s Office in Charlotte and Trial Attorney Gregory Bailey of the U.S. Department of Justice’s Criminal Tax Division.

CHARLOTTE, N.C. – The former Chief Finance Officer (CFO) of a Mint Hill-based company has admitted to stealing approximately $4 million from his former employer and has pleaded guilty to mail fraud, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Nathan Thomas Mroz, 39, of Charlotte, entered his formal guilty plea on Monday, April 14, 2014, before U.S. Magistrate Judge David S. Cayer.

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.

According to filed court documents and court proceedings, from 2005 to 2013, Mroz was employed by an HVAC company as financial controller and later as CFO and had access to the company’s funds and books and records. Court documents show that over the course of his employment, Mroz exploited his position to create fake accounts payable invoices and to generate corresponding payments, which Mroz directed to himself or mailed to various credit cards he maintained. According to court documents, to cover up his scheme, Mroz fraudulently categorized the bogus company payments as legitimate business expenses in the company’s books and records. Court filings reflect that Mroz spent the stolen money on a wide array of personal expenditures, including vacations to Disneyland and Europe, luxury vehicles, private school tuition, jewelry and to purchase a $115,000 home for his nanny. In all, court documents indicate that Mroz stole approximately $4 million from his former employer.

Mroz pleaded guilty to one count of mail fraud and was released on bond. At sentencing, he faces a maximum prison term of 20 years and a $250,000 fine. As part of his plea agreement, Mroz has agreed to pay restitution, the amount of which will be determined by the Court at sentencing. A sentencing date for the defendant has not been set yet.

The investigation was handled by the FBI. The prosecution for the government is being handled by Assistant United States Attorney Mark T. Odulio of the U.S. Attorney’s Office in Charlotte.

April is National Financial Literacy Month

In 2004, April was officially designated National Financial Literacy Month, to raise public awareness on the importance of personal financial education and to promote access to tools and information so individuals can better protect themselves from financial fraud.

The U.S. Attorney’s Office for the Western District of North Carolina reminds the public that financial scams come in different forms: Ponzi schemes, mortgage fraud, corporate fraud, investor fraud, credit card fraud, identity theft, telemarketing scams and fraudulent charity solicitations are some of the most common schemes. Prosecuting financial fraud continues to be a priority for the U.S. Attorney’s Office however, becoming educated consumers and investors is the public’s first line of defense against predatory schemes and financial scams.

Additional information on common financial schemes and financial literacy resources are available at:

• U.S. Department of Justice – Financial Fraud Enforcement Task Force www.stopfraud.gov

• Federal Bureau of Investigation – Common Fraud Schemes www.fbi.gov/scams-safety/fraud

• U.S. Department of Treasury - Financial Literacy and Education Commission www.mymoney.gov

• U.S. Department of Justice – U.S. Trustee Program www.justice.gov

CHARLOTTE, N.C. – Seven Charlotte men were sentenced on Thursday, April 10, 2014, on federal drug conspiracy charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The sentencings stem from a joint six-month investigation conducted by the Drug Enforcement Administration and the Charlotte Mecklenburg Police Department, targeting drug trafficking and violent crime in Mecklenburg County, with special emphasis placed on Enderly Park neighborhood in northwest Charlotte.

Harry S. Sommers, Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA), which oversees the Charlotte District Office and Chief Rodney D. Monroe, of the Charlotte-Mecklenburg Police Department (CMPD), join U.S. Attorney Tompkins in making today’s announcement.

According to the January 2013 criminal indictment, from 2006 through 2013, the 10 defendants engaged in a drug trafficking conspiracy. According to court documents and yesterday’s sentencing hearings, between July 2012 and January 2013, law enforcement made approximately 30 undercover drug buys from the defendants at or near a residence located on Karendale Avenue, in Enderly Park. In addition to charging the defendants, court documents show that the government has sought forfeiture of the residence that was used to facilitate the drug sales and that action is still pending.

Chief U.S. District Judge Frank D. Whitney sentenced the following seven of the 10 defendants:

• Maurice Crawford, 32, was sentenced to 49 months in prison and three years of supervised release. • Theodore Falls, 39, was sentenced to 40 months in prison and three years of supervised release. • Aaron Ligon, 49, was sentenced to 40 months in prison and three years of supervised release. • Mario Wilson, 24, was sentenced to 40 months in prison, followed by three years of supervised release. • Lavar Rodgers, 32, was sentenced to 30 months in prison, followed by three years of supervised release. • Curtis Smith, 37, was sentenced to 30 months in prison, followed by three years of supervised release. • Nathaniel Washington, 31, was sentenced to 24 months in prison and three years of supervised release.

The three remaining three defendants, Derrick Lowery, Derrick Owens and Cadaryl Drayton are awaiting sentencing.

In issuing the sentences, Judge Whitney noted the devastating effect that drug trafficking has had in communities. Judge Whitney called the repeated drug sales by these individuals a “poison” to the other residents of Enderly Park, who have a right to live in a safe and crime-free neighborhood.

The seven defendants have been in federal custody since January 2013. They 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 is being handled by the DEA and CMPD. The prosecution for the government is being handled by Assistant U.S. Attorney Dana Washington of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – Two women who defrauded Medicaid of millions of dollars using stolen therapists’ identities in related health care fraud schemes have been sentenced to prison by a federal judge in Charlotte, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

On Wednesday, April 9, 2014, Chief U.S. District Judge Frank D. Whitney sentenced Victoria Finney Brewton, 39, of Shelby, N.C. to 111 months in prison, to be followed by three years of supervised release for defrauding Medicaid of $8 million in false reimbursement claims for sham mental and behavioral health services. Judge Whitney also ordered Brewton to pay $7,070,426.52 as restitution to Medicaid and $573,392.80 to IRS.

On Tuesday, April 8, 2014, Judge Whitney sentenced one of Brewton’s conspirators, Rodnisha Sade Cannon, 27, of Charlotte to 102 months in prison for a similar scheme also involving sham mental and behavioral health services. Judge Whitney also ordered Cannon to serve three years under court supervision and to pay restitution in the amount of $2,541,306.36.

Cannon initially worked as a patient recruiter for Brewton, providing Brewton with the personal information of Medicaid recipients, which Brewton then used to file fraudulent reimbursement claims with Medicaid. Cannon later began running her own similar health care fraud scheme, that attempted to defraud Medicaid of $4.8 million in fraudulent reimbursement claims using the stolen identities of patients and therapists.

Victoria Brewton

According to court documents and court proceedings, from 2008 to 2012, Brewton operated a series of after-school and summer childcare programs in Shelby. Brewton recruited juvenile Medicaid beneficiaries through their families to sign up for these programs, promising the programs would be free for Medicaid recipients. Court records show that Brewton stole the Medicaid recipient numbers of some of the children and families who had signed up for the programs and fraudulently billed Medicaid for mental and behavioral health services which were never provided. Brewton was not licensed or qualified to provide mental and behavioral health services nor was she a Medicaid-approved provider, court documents show. According to court records, Brewton submitted the fraudulent reimbursement claims through other Medicaid-approved providers, some of whom did not know their information had been compromised.

Court records show that one such provider was a licensed therapist (“K.S.M.”) hired by Brewton to provide mental and behavioral health services for her company, Healing Hearts. Brewton submitted false and fraudulent claims to Medicaid using K.S.M.’s Medicaid provider number far in excess of the services actually provided by K.S.M, and continued to submit fraudulent claims even after K.S.M. was no longer employed by Brewton. According to court documents, Brewton also misused the Medicaid provider numbers of other therapists employed by her company and submitted false claims to Medicaid through their numbers. Court records indicate that Brewton also failed to report to IRS the income derived from her fraudulent scheme. In January 2013, Brewton pleaded guilty to health care fraud and health care fraud conspiracy, aggravated identity theft and filing false tax returns.

Rodnisha Sade Cannon

According to court documents and court proceedings, beginning in 2010 to 2012, Cannon created two companies, (“2nd Chances” and “A Chance for Change, Inc.”), and began operating after-school and summer childcare programs in Gastonia and Shelby. Although therapists initially performed some services at these programs, Cannon and others used the Medicaid provider numbers of other companies and individual therapists to submit fraudulent claims to Medicaid for therapy services supposedly provided at Cannon’s programs. Court records reflect that in many instances, the claimed mental and behavioral health services were never provided at all.

Court documents indicate that Cannon, who was not licensed or qualified to provide mental and behavioral health services and was not approved by Medicaid, stole the identities of Medicaid-approved providers who had some relationship with her programs. For example, court documents indicate that in May 2012, Cannon hired “M.B.,” who was a licensed clinical social worker, to work for her company. M.B. worked for Cannon’s company for a single day. Court records show that Cannon and her conspirators stole M.B.’s Medicaid provider information and used it to file more than $800,000 in fraudulent claims for services that M.B. never provided, including claims for dates of service before M.B. worked for Cannon.

According to court records, after opening her own companies, Cannon continued to provide and sell to Brewton Medicaid beneficiary identification numbers and information to be used in Brewton’s fraud scheme. In total, Cannon and her conspirators submitted approximately $4.8 million in false claims and received over $2.5 million as payment on those claims from Medicaid. Cannon pleaded guilty in April 2013 to health care fraud conspiracy, aggravated identity theft and money laundering conspiracy. Cannon also pleaded guilty to attempting to remove property subject to seizure, namely a 2010 Mercedes-Benz CLS550.

According to court records, Cannon purchased the Mercedes-Benz for $59,500 with the proceeds of her fraud scheme. When law enforcement obtained a warrant to seize the Mercedes-Benz, Cannon attempted to sell the vehicle to avoid its seizure. Cannon has been in local federal custody since her arrest on the attempted removal of property to prevent seizure charge in September 2012 and will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility.

Brewton has been released on bond and will be ordered to self-report to the Federal Bureau of Prisons to begin serving her sentence. All federal sentences are served without the possibility of parole.

In making today’s announcement U.S. Attorney Tompkins thanked North Carolina’s Medicaid Investigations Division (MID) under the direction of Attorney General Roy Cooper, the Charlotte Division of the FBI, under the direction of Special Agent in Charge John A. Strong, the Internal Revenue Service, Criminal Investigation Division (IRS-CI) under the direction of Special Agent in Charge Jeannine A. Hammett, and the Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Atlanta Region, under the direction of Special Agent in Charge Derrick Jackson, for their investigation leading to Brewton and Cannon’s prosecutions. She also thanked the North Carolina Division of Medical Assistance, Program Integrity Section for their invaluable assistance in Brewton’s case.

The prosecution was handled by Assistant U.S. Attorneys Kelli Ferry and Jenny Grus Sugar 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 whistleblower complaints, and the creation of investigative teams so that individual agencies may focus their unique areas of expertise on investigations. The Task Force builds upon existing partnerships between the agencies and its work reflects a heightened effort to reduce fraud and recover taxpayer dollars.

If you suspect Medicare or Medicaid fraud please report it by phone at 1-800-447- 8477 (1-800-HHS-TIPS), or E-Mail at [email protected]. To report Medicaid fraud in North Carolina, call the North Carolina Medicaid Investigations Division at 919-881-2320.

Tax Preparer Fraud, Identity Theft Among The 12 Most Common Tax Scams

CHARLOTTE, NC - With the deadline for filing income tax returns less than a week away, Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina and Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division (IRS-CI), jointly announce recent tax fraud prosecutions and caution potential tax fraudsters to think twice before they commit tax crimes.

“Prosecuting those who cheat the tax system remains a priority for my Office,” said U.S. Attorney Tompkins in making today’s announcement. “Taxes help pay for important services our communities rely on and tax cheats increase the burden on honest taxpayers who each year file accurate and timely tax returns and pay their tax obligations.” Ms. Tompkins urged tax payers to be vigilant in safeguarding their personal identities and to avoid being victims of tax scams by selecting reliable tax preparers and reporting suspected tax fraud. U.S. Attorney Tompkins also said, “Our experienced tax prosecutors and IRS criminal investigators work hand-in-hand to uncover tax fraud and hold tax cheats accountable for their actions.”

“During tax filing season, return preparers and taxpayers should be aware of the serious consequences facing those who aid or assist in the filing of fraudulent tax returns,” said IRS-CI Special Agent in Charge Hammett. “Those who fly in the face of the tax laws face investigation, prosecution, and if convicted, significant prison sentences and substantial fines.”

Tax Preparer Pleads Guilty to Tax Fraud

Reginald B. Landrum, a Charlotte-area tax return preparer, pleaded guilty today to one count of aiding in the preparation of false tax returns. Court records show that between 2006 and 2010 Landrum prepared and submitted to IRS 58 false tax returns using false information, resulting in larger tax refunds for his clients. Court records show that Landrum used false Schedule C income and expenses, false Schedule A deductions, false wages, false dependents and other false items to prepare the fraudulent tax returns. The total tax loss associated with the 58 fraudulent tax returns Landrum prepared and filed is $229,691. At sentencing, Landrum faces up to three years in prison and a $250,000 fine. A sentencing date has not been set yet. (3:14-cr-46).

Other 2013 Tax Prosecutions

In the last year, the U.S. Attorney’s Office, with the assistance of IRS-CI, has prosecuted numerous individuals for criminal tax violations. Tax enforcement prosecutions include:

Isaac H. Birch - On August 15, 2013, Isaac Birch, of Franklin, N.C., pleaded guilty to filing false and fraudulent statements with the U.S. Treasury. According to court documents, Birch filed false tax returns in 2007, 2008 and 2009 using fictitious IRS 199OID forms, through which he fraudulently obtained a refund in excess of $480,000. Birch is awaiting sentencing and faces a maximum prison term of three years and a $100,000 fine. (2:13-cr-00020).

Tega Burns - On January 14, 2014, Tega Burns, a/k/a Tega Foy, of Charlotte, was sentenced to 24 months in prison and two years of supervised release and was ordered to pay $306,972.43 as restitution, for committing tax fraud and mortgage fraud. Court records show that from 2007 to 2011, Burns was the owner of Family Homecare Services, which provided in-home care services in the Charlotte area. Court documents show that Burns did not pay a large part of the employment taxes owed for the relevant tax years and used nominees, including her son and her step-father, to hide funds from the IRS. Burns pleaded guilty to failure to account for and pay over employment tax and to making a false statement on a loan application. (3:12-cr-00198).

Candida Figueroa and Cathy Cisneros – On November 7, 2013, Candida Figueroa and Cathy Cisneros, both of Charlotte, were sentenced to prison time for obtaining false and fraudulent income tax refunds. Figueroa was sentenced to 30 months in prison and two years of supervised release, and Cisneros was sentenced to 37 months in prison and three years of supervised release. Figueroa and Cisneros pleaded guilty false claims conspiracy and were ordered to pay $1,658,477.67 as restitution. Court documents indicate that from January to July 2012, the defendants used fraudulent Individual Taxpayer Identification Numbers (ITINs), Mexican birth certificates and other false documents to file at least 1,104 fraudulent tax returns seeking refunds. IRS issued refunds totaling approximately $1.6 million, of which $136,334 has been recovered. (3:12-cr-00260). A third co-conspirator, Ana Portillo, of Charlotte, pleaded guilty to false claims conspiracy in May 2013 for participating in the same tax fraud scheme and is awaiting sentencing. Portillo faces a maximum prison term of 10 years, a $250,000 fine, or both. (3:12-cr-00389).

Teodoro Felix Hernandez – On November 10, 2013, Teodoro Felix Hernandez pleaded to false claims conspiracy. According to filed court documents, from February 2012 to May 2013, Hernandez conspired with others and defrauded the U.S. Treasury by obtaining false tax refunds using fraudulently obtained ITINs. The conspirators prepared and filed false returns using the ITINs and false wage, income, and withholding tax information and claiming multiple dependents, causing the U.S. Treasury to issue tax return checks. The checks were mailed to rural addresses in North Carolina, South Carolina and Georgia, at which the purported taxpayer did not live. According to the documents, Hernandez cashed approx. 109 fraudulent tax return checks with various money service businesses, the value of which totaled $428,065 in false refunds. Hernandez is currently released on bond and awaiting sentencing. He faces a maximum of 10 years in prison and a $250,000 fine. (3:12-cr-158).

James Wesley Hills, II – On March 3, 2014, James Wesley Hills, II, of Asheville, pleaded guilty to making false claims against the United States and aggravated identity theft. According to court documents, Hills gained access to personal identifying information of customers of Primerica, a financial products company, and between 2010 and 2011, he used the stolen information to file fraudulent tax returns. Hills filed at least 38 false tax returns in this manner and collected over $50,000 of stolen U.S. Treasury funds. Hills is awaiting sentencing. He faces a maximum prison term of five years for making false claims and a mandatory term of two years in prison for the aggravated ID theft charge, and a $250,000 fine. (1:14-cr-05).

Jacqueline Pucheta Juarez – On January 7, 2014, Jacqueline Pucheta Juarez pleaded to false claims conspiracy. According to filed court documents, from January 2012 to May 2013, Juarez and others conspired to defraud the U.S. Treasury by participating in a scheme to obtain false tax refunds, using fraudulently obtained ITINs. Juarez and others used these ITINs to prepare fraudulent federal tax returns seeking refunds based on false wage, income, and withholding tax information and by claiming multiple dependents. Based on the fraudulent tax returns, the U.S. Treasury issued tax return checks and mailed them to addresses in rural addresses in North Carolina, South Carolina and Georgia, at which the purported taxpayer did not live. Juarez cashed approx. 350 fraudulent tax refund checks at various money service businesses, the value of which totaled $1,271,377 in false refunds. Juarez is currently in federal custody and awaiting sentencing. She faces a maximum prison term of 10 years, a $250,000 fine, or both. (United 3:12-cr-157).

Yolanda Tiess Kitson - On October 28, 2013, Yolanda Tiess Kitson, of Augusta, Ga., pleaded guilty to false claims conspiracy. Court records show that Kitson conspired with Senita Dill and Ronald Jeremy Knowles to file fraudulent tax returns using stolen personal identifying information. Through her job as a contractor at the Eisenhower Army Medical Center at Fort Gordon in Augusta, Ga., Kitson stole personal information from patient records and passed it her sister, Dill, who used it to file false tax returns. The conspirators filed more than 1,000 false tax returns and received over $3.5 million of stolen U.S. Treasury funds. Dill and Knowles also pleaded guilty to similar charges. All three defendants are awaiting sentencing and face up to 10 years in prison and $250,000 in fines. (1:13-cr-31).

Nghia Ly – On October 2, 2013, Nghia Ly, of Waxhaw, N.C., pleaded guilty to tax evasion for the 2011 calendar year. According to court records, Ly owned half of Kim Sen Jewelry, Inc., d.b.a. KS Nail Supply (KSJ) in Charlotte. From 2007 through 2011, Ly concealed from the IRS some of his personal earnings from KSJ. Court records show that Ly failed to provide bank records and hid a large part of the gross receipts of KSJ from his tax return preparer. For years 2007 through 2011, KSJ earned additional gross receipts totaling more than $4.8 million which Ly failed to report on KSJ corporate tax returns. As a result of the unreported gross receipts, Ly had additional taxable income of $820,396. A sentencing has not been set. Ly faces a maximum sentence of five years in prison and a maximum fine of $250,000. (3:13-cr-00235).

Jessica Ordonez – On March 31, 2014, Jessica Ordonez, of Morganton, N.C., was charged with tax evasion and aiding and abetting the preparation and presentation of a false tax return. Beginning in 2002, Ordonez was the owner of Tax Pros (a/k/a “Ordonez Tax Services”), which offered tax preparation services, among other things. Court documents show that between 2004 and 2012 Ordonez prepared at least 100 false tax returns for 23 taxpayers, using fraudulent ITINs which entitled her clients to large fraudulent tax refunds, with an associated tax loss of at least $202,217. Ordonez also failed to report her own income on her individual tax returns for tax years 2009 to 2011, with a corresponding tax loss between $81,000 and $122,000. Ordonez’s formal plea hearing is scheduled for April 11, 2014. At sentencing, she faces five years in prison and a $250,000 fine for the tax evasion charge and three years in prison and a $250,000 fine for aiding and abetting the preparation and presentation of a false tax return. (3:14-cr-00071).

Edward Rosner – On September 12, 2013, Edward Rosner, of Charlotte pleaded guilty to tax evasion. According to the court records, from 2005 through 2009, Rosner concealed his personal earnings from the IRS by directing funds obtained from his employer to himself through bank accounts in the name a nominee company, New Start LLC, and by directing the transfer of funds to accounts in the name of another individual. During this same time period, Rosner failed to file tax returns, despite obtaining income totaling approximately $2.9 million. Rosner awaits sentencing and faces a maximum prison sentence of five years and a $250,000 fine. (3:13-cr-00172).

Nkhenge Shropshire – On October 15, 2013, Nkhenge Shropshire, a/k/a Konjay Shropshire, of Charlotte, pleaded guilty to conspiracy to defraud the IRS and to making false statements on a loan application. Court records show that from 2009 through 2012, Shropshire owned Tax Connections, a Charlotte tax return preparation business. From 2009 to 2011, Shrophsire aided and assisted in the preparation of more than 600 tax returns for clients which were e-filed with the IRS. Many of the tax returns prepared by Shropshire falsely included Schedule C losses and refundable education credits, which decreased the clients’ tax liabilities, therefore resulting in larger tax refunds and false Earned Income Tax Credits. The tax loss associated with the false education credits is more than $580,000. Shropshire directed that many of the fraudulent tax refunds be deposited into a business bank account she controlled, and kept a portion of the refund as payment for her services. On some occasions, Shropshire did not provide her clients with copies of their completed tax returns or gave them incomplete copies, so clients could know their returns contained false information. The defendant is awaiting sentencing, and faces a maximum sentence of five years in prison and a maximum fine of $250,000 for the conspiracy count and a maximum sentence of 30 years in prison and a $1 million fine for the false statement on a loan application charge. (3:13-cr-00248).

Kenneth Sumner – On January 16, 2014, Kenneth Sumner, of Charlotte, pleaded guilty to filing a false tax return. Court documents indicate that Sumner was the owner of a Charlotte sales company, Ken B. Sumner and Associates. From 2006 through 2010, Sumner failed to file timely tax returns with the IRS despite having the requisite income to file tax returns. In June 2010, Sumner filed his 2006 federal income tax return which omitted gross receipts from Sumner’s business totaling approximately $106,808. For tax years 2007 and 2008, Sumner failed to file timely income tax returns even though he earned approximately $318,433 and $337,090, respectively. A sentencing date has not been set. Sumner faces a maximum sentence of three years in prison and a $250,000 fine. (3:13-cr-00257).

Denise Swanson – On August 22, 2013, Denise Swanson, of Lenoir, N.C., pleaded guilty to tax evasion for tax year 2010. Court documents show that Swanson was the owner and operator of Bottomline Accounting, a tax preparation and bookkeeping business. From 2006 to 2012, Swanson performed tax preparation services for J.W. and K.W., and their business, C.B. (“the Clients”), and was responsible for making tax payments on their behalf. Swanson received money from the Clients to pay various tax obligations to the IRS and other state agencies. But instead of making the payments, Swanson embezzled the money and used it to pay for personal expenses. In total, Swanson embezzled approximately $839,830. Also, Swanson failed to report the embezzled income on her own individual tax returns for tax years 2006 through 2011. Swanson awaits sentencing and faces a maximum sentence of five years in prison and a $250,000 fine. (5:13-cr-61).

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

The U.S. Attorney’s Office and the IRS remind tax payers to exercise caution during tax season to protect themselves against a wide range of tax schemes ranging from identity theft to return preparer fraud. The IRS has issued its annual “Dirty Dozen” which lists common tax scams that taxpayers may encounter, particularly during filing season. Taxpayers are urged look out for, and to avoid, the following common schemes:

• Identity theft • Pervasive Telephone Scams • Phishing • False Promises of “Free Money” from Inflated Refunds • Return Preparer Fraud • Hiding Income Offshore • Impersonation of Charitable Organizations • False Income, Expenses or Exemptions • Frivolous Arguments • Falsely Claiming Zero Wages or Using False Form 1099 • Abusive Tax Structures • Misuse of Trusts

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

To Date, 14 Defendants Have Been Sentenced For Conducing “Clean Scans”

CHARLOTTE, N.C. – A licensed vehicle emissions inspector was sentenced today to serve two months in prison for his role in providing fraudulent passing emissions scores for more than 200 vehicles, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. In addition to the prison term, U.S. District Judge Max O. Cogburn, Jr. also sentenced Pedro Salmeron, 37, of Charlotte, to two years of supervised release, the first four months of which he must spend under home confinement. Salmeron was also ordered to perform 50 hours of community service and to a pay a $5,000 fine.

U.S. Attorney Tompkins is joined in making today’s announcement by Special Agent in Charge Maureen O’Mara of the U.S. Environmental Protection Agency, Criminal Investigation Division (EPA-CID), Atlanta Area Office; Greg McLeod, Director of the North Carolina State Bureau of Investigation (NC SBI); and Steven M. Watkins, Director of the North Carolina Division of Motor Vehicles License and Theft Bureau (NC DMV L&T).

According to court records and today’s sentencing hearing, Salmeron was employed as a technician for “Carolina Inspections” – also known as “Carolinas Auto Inspection” – located in Charlotte, and was also a vehicle emissions inspector licensed by the state of North Carolina. As a state-licensed emissions inspector, Salmeron was responsible for ensuring the emissions of vehicles he tested met federally mandated emissions requirements. Court records show that from February 2010 through January 2011, Salmeron conducted 201 illegal vehicle emissions inspection and falsely passed vehicles that would have failed emissions inspection. Court records indicate that Salmeron performed these fraudulent tests by entering the information of the vehicle being tested into the state database at Carolinas Auto Inspection, but then connecting the testing equipment to “surrogate” vehicles at the repair shop. The illegal practice of utilizing substitute vehicles for emissions testing is referred to in the industry as “clean scanning.” Salmeron pleaded guilty in August 2012 to one count of conspiracy to violate the Clean Air Act by conducting false vehicle emissions inspections.

The Clean Air Act requires vehicle emission inspections in geographic regions that exceed national ambient air quality standards. According to the EPA, the Charlotte metropolitan area exceeds the 8-hour standard set for Ozone, a potent irritant that can cause lung damage and other types of respiratory problems.

Salmeron was 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.

Salmeron is the latest defendant to be sentenced resulting from an investigation of Charlotte-area vehicle emissions inspectors involved in conducing “clean scans.” The multi-agency investigation has netted 14 prosecutions, with defendants serving sentences ranging from 18 months in prison to probation, in addition to home confinement, community service and monetary fines:

1. Jassim Juburi: sentenced to 18 months in prison, three years of supervised release, and a $15,000 fine. (3:12-cr-84). 2. Jose Manuel Cabrera: sentenced to one year and one day in prison, three years of supervised release that includes 100 hours of community service and a $10,000 fine. (3:12-cr-240). 3. Jack Haney: sentenced to six months in prison, one year of supervised release that includes 6 months of home confinement, 50 hours community service, and a $10,000 fine. (3:11-cr-342). 4. Ronald Kinard: sentenced to six months in prison, one year of supervised release that includes 6 months of home detention, and a $10,000 fine. (3:11-cr-340). 5. Mohammed Hafeez Awan: sentenced to six months in prison, three years of supervised release that includes six months of home detention, 50 hours of community service, and a $1,000 fine. (3:12-cr-79). 6. Michel Jule Fernald: sentenced to five months in prison, two years of supervised release that includes five months of home confinement, and a $1,000 fine. (3:12-cr-90). 7. Chucky Cheung: sentenced to five months in prison and three years of supervised release that includes 5 months of home detention. (3:11-cr-160). 8. Tanveer Anwar: sentenced to four months in prison, two years of supervised release that includes four months of home confinement and 50 hours of community service. (3:11-cr-241). 9. Erick Chicas: sentenced to three months in prison, two years of supervised release that includes three months of home confinement, 50 hours of community service, and a $7,500 fine. (3:11-cr-240). 10. Alexander Edwards: sentenced to 60 days in prison, four months of home while serving two years of supervised release, and a $1,000 fine. (3:11-cr-102). 11. Thanh Long Quoc Nguyen: sentenced to two months of home confinement while serving two years of probation, 50 hours of community service, and a $2,000 fine. (3:11-cr-175). 12. Jin Sung Chang: sentenced to two years of probation to include six months of home detention, and a $400 special assessment. (3:11-cr-163). 13. Stephen Dickinson: sentenced to two years of probation and a $1,000 fine. (3:11-cr-101).

U.S. Attorney Tompkins thanked the EPA’s Criminal Investigation Division, NC SBI’s Diversion and Environmental Crimes Unit, and NC DMV License and Theft Bureau, with assistance from the North Carolina Division of Air Quality, Mobile Sources Compliance Branch, for their investigation leading to the 14 prosecutions.

Assistant U.S. Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte prosecuted the cases.

Defendant Netted over $650,000 in Illegal Profits from College Friend’s Insider “Tips”

CHARLOTTE, N.C. – A Maryland man who received insider “tips” of confidential trading information from his college friend, John Femenia, has been charged with insider trading conspiracy, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

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

The charges against Walter Donald Wagner, 33, of Rockville, Md. stem from “Operation Insider Out,” an FBI investigation into insider trading activities in the Charlotte area. The investigation, which began in early 2012, has resulted in the prosecution of nine other conspirators involved in the illegal trading ring, five of which have already been sentenced, and all of whom have pleaded guilty. John Femenia, who orchestrated the conspiracy, and three other conspirators are awaiting sentencing. According to filed court documents, Femenia was an investment banker with Wells Fargo, who lived in Charlotte and later in New York. Court documents indicate that from March 2010 through December 2012, Femenia stole material nonpublic information from Wells Fargo and its clients about potential and upcoming mergers and acquisitions. Femenia and Wagner were college friends, and around April 2012 Femenia recruited Wagner to participate in the insider trading conspiracy. Court records show that Femenia tipped off Wagner and other conspirators about upcoming mergers, who then traded on that information. Court records reflect that when one of the mergers went through and news of the merger became public, the company’s stock price increased by 64% and the conspirators collectively realized over $7.5 million in profits. Wagner specifically made over $650,000 in profit from the fraudulent insider tips he received from Femenia.

A criminal bill of information filed today in U.S. District Court charges Wagner with one count of insider trading conspiracy. Wagner has agreed to plead guilty to the charge and will appear in U.S. District Court to formally accept the plea when the hearing is scheduled. At sentencing, Wagner faces a maximum prison term of five years and a $250,000 fine for the conspiracy to commit insider trading offense.

In December 2012, a separate criminal indictment charged John W. Femenia, Sawn C. Hegedus, Danielle C. Laurenti, Matthew J. Musante, Aaron W. Wens, Roger A. Williams, Kenneth M. Raby, Frank M. Burgess, Jr. and James A. Hayes for their involvement in the insider trading conspiracy. Femenia, Hegedus, Laurenti and Musante have pleaded guilty and are awaiting sentencing. The remaining five defendants have been already sentenced:

• Roger A. Williams, was sentenced in January 2014 to 24 months in prison and one year of supervised release. • Kenneth M. Raby, was sentenced in January 2014 to 18 months in prison and one year of supervised release. • Frank M. Burgess, Jr., was sentenced in January 2014 to six months in prison, six months of home detention, and one year of supervised release. • Aaron M. Wens,was sentenced in February 2014 to six months in prison, six months of home detention, and one year of supervised release. • James A. Hayes, Jr., was sentenced in January 2014 to one year of probation with a condition of eight months home detention.

In a related action today, the United States Securities & Exchange Commission filed civil charges against Wagner in federal court in Charlotte. U.S. Attorney Tompkins thanked the U.S. Securities & Exchange Commission, Division of Enforcement for its assistance in this investigation.

Operation Insider Out in the Western District of North Carolina is being handled by the Charlotte Division of the FBI. The prosecution for the government was handled by Assistant United States Attorney Kurt W. Meyers.

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 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 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

CHARLOTTE, N.C. – On Tuesday, April 1, 2014, Chief U.S. District Judge Frank D. Whitney sentenced Gerald Wayne Hairston to serve 120 months in prison for a federal firearms violation, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Hairston, 30, of Charlotte, was also sentenced to five years of supervised release.

Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division joins U.S. Attorney Tompkins in making today’s announcement.

According to court records and yesterday’s sentencing hearing, in April 2012, Hairston was a patron at a restaurant located on Pineville Mathews Road, in Pineville, N.C. Court records indicate that Hairston got into fight with at least one other patron at the restaurant. Following that fight, records show that Hairston retrieved a firearm from his car, pointed the gun at a group of patrons outside the restaurant and fired two to four shots. According to court records, Hairston then fled the scene and was later arrested by law enforcement. Officers found a Ruger, model P-5, 9 millimeter pistol with ammunition and drugs in Hairston’s car. Hairston pleaded guilty to one count of discharging a firearm in furtherance of a drug trafficking crime in May 2013.

Hairston 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 ATF. The prosecution for the government was handled by Assistant U.S. Attorney Ann Claire Phillips of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – Tommie Lee Williams, 43, of Atlanta, Ga. was sentenced on Monday, March 30, 2014 to serve 184 months in prison for federal firearms violations, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Chief U.S. District Judge Frank D. Whitney also sentenced Williams to serve five years under court supervision following his prison term.

Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division joins U.S. Attorney Tompkins in making today’s announcement.

Williams pleaded guilty in January 2013 to one count of brandishing a firearm during and in relation to a drug trafficking crime and one count of felon in possession of a firearm. According to court documents and yesterday’s sentencing proceedings, in October 2011 Williams brandished a firearm during a drug transaction with an undercover officer. In November 2011, while conducting a traffic stop of the vehicle in which Williams was a passenger, law enforcement recovered an Uzi .45 caliber assault rifle and ammunition from a backpack that belonged to Williams. At the time of the offenses, Williams was a convicted felon and was prohibited from possessing a firearm.

Williams has been in federal custody since February 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. The prosecution for the government was handled by Assistant U.S. Attorney Ann Claire Phillips of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – Charlotte Mayor, Patrick DeAngelo Cannon, was arrested today by FBI agents for alleged violations of federal public corruption laws, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The federal criminal complaint filed in U.S. District Court, charges Cannon, 47, of Charlotte, with theft and bribery concerning programs receiving federal funds, honest services wire fraud and extortion under color of official right.

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

According to allegations contained in the charging document and the affidavit filed in support of the criminal complaint, during the course of a separate criminal investigation, the FBI received reliable information that Cannon was potentially involved in illegal activities associated with his position as an elected official, and began an undercover investigation in or about August 2010. The complaint and affidavit allege that during the course of that investigation, Cannon allegedly solicited and accepted money bribes and things of value from undercover FBI agents, posing as commercial real estate developers and investors wishing to do business in Charlotte. As alleged in the filed documents, Cannon solicited and accepted such bribes and things of value in exchange for the use of his official position as Charlotte Mayor, Mayor Pro Tem and/or as a City Council Member.

The complaint and law enforcement affidavit allege that Cannon accepted the bribes from the undercover FBI agents on five separate occasions. On the last occasion, on February 21, 2014, Cannon allegedly accepted $20,000 in cash in the Mayor’s office. According to the complaint and the affidavit, between January 2013 and February 2014, Cannon allegedly accepted from the undercover agents over $48,000 in cash, airline tickets, a hotel room, and use of a luxury apartment in exchange for the use of his official position.

Cannon had his initial appearance today and has been released on bond, pending indictment. The charge of theft and bribery concerning programs receiving federal funds carries a statutory maximum sentence of 10 years in prison and a $250,000 fine; the charge of honest services wire fraud carries a statutory maximum sentence of not more than 20 years in prison and a $1,000,000 fine; and the charge of extortion under color of official right carries a statutory maximum sentence of not more than 20 years in prison and a $250,000 fine.

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

The case is being prosecuted by Assistant United States Attorney Michael E. Savage of the U.S. Attorney’s Office for the Western District of North Carolina. The case is being investigated by the Federal Bureau of Investigation.

A copy of this press release and the filed complaint as well as case updates can be found on the website of the United States Attorney’s Office for the Western District of North Carolina at: Case Calendar.

cannon_complaint.pdf

 

 

 

 

CHARLOTTE, N.C. – Former employee with the City of Cherryville, Jennifer Neal Hoyle, was sentenced to serve 12 months and a day in prison today for embezzling over $92,900 in city funds, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. In January 2013, Hoyle, 36, of Cherryville, pleaded guilty to three felony charges of program fraud, stemming from a joint federal and state investigation into misappropriated city funds.

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, Greg McLeod, Director of the State Bureau of Investigation (NC SBI), and Chief James W. Buie of the Gaston County Police Department join U.S. Attorney Tompkins in making today’s announcement.

U.S. District Judge Robert J. Conrad, Jr. presided over the sentencing and ordered Hoyle to serve three years of supervised release upon completion of her sentence and to pay $92,922.55 as restitution to the city.

According to filed court documents and court proceedings, Hoyle was a Senior Customer Service Representative/Utility Supervisor for the City of Cherryville, responsible for collecting and posting utility payments made by customers. Court records indicate that beginning in January 2008 through May 2011, Hoyle embezzled approximately $92,922 from the City of Cherryville by stealing some cash payments made by utilities customers paying their bills. Court records show that Hoyle took the customers’ cash payments, issued paper receipts, credited the customers’ accounts with the payment and kept the cash. Then, using her supervisory override privileges, Hoyle deleted the transaction from the computer system. Court records also show that, in order to avoid any potential customer complaints, Hoyle created entries in the “extra charge” journal, in which she “wrote off” the cash amount the customers had paid, so that when bills were generated they would not include the embezzled amount. According to court records, Hoyle’s fraud was uncovered when a customer questioned the duplicate charges on her bill and brought in her paper receipt as proof of payment, after Hoyle had failed to convert the customer’s cash payment as a “write off” in the “extra charge” journal. Hoyle was terminated from her position in May 2012.

Hoyle was ordered to self-report to the Federal Bureau of Prisons to begin serving her sentence upon designation of a federal facility. All federal sentences are served without the possibility of parole.

The investigation into Hoyle was handled by the FBI, SBI and the Gaston County Police Department. The prosecution is handled by Michael Savage, of the U.S. Attorney’s Office in Charlotte.