Western District of North Carolina

CHARLOTTE, N.C. – On Monday, July 8, 2013, a Charlotte federal jury convicted Antonio Donte Smith, 29, of Charlotte, of robbing a Rite Aid pharmacy in September 2012 and related firearms violations, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division and Chief Rob Merchant of the Pineville Police Department (PPD) join U.S. Attorney Tompkins in making today’s announcement.

On January 15, 2013, Smith was indicted by a federal grand jury on one count of Hobbs Act Robbery, one count of possession of a firearm in furtherance of a crime of violence, and one count of possession of a firearm by a convicted felon. After nearly three days of trial, Smith was found guilty of all charges.

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

On September 4, 2012, Smith entered a Rite Aid pharmacy located in Pineville, N.C. wearing a white hooded sweatshirt and a cut-off black tee-shirt sleeve across his face, and carrying a Ruger, .45 caliber pistol. Smith waited for a customer to leave the register counter, then pointed the firearm at the store clerk and demanded money from the cash register. The cashier opened the register and Smith took the money out of the drawer. While Smith was taking the money, a customer approached the register. Smith pointed his firearm at the customer, told the customer to get on his knees, and robbed the customer of his wallet. Smith then proceeded to the store’s office, where forced the store manager to give him all the money kept in the store’s safe.

Smith fled the scene, got into his get-away vehicle and led law enforcement officers on a high speed chase. After running two red lights and hitting another vehicle, Smith abandoned his damaged car and ran into a wooded area where he dropped the firearm, the white hooded sweatshirt, and the cloth he used as a mask. Police officers, assisted by the K-9 unit, tracked Smith who was hiding in a nearby apartment complex. Smith attempted to flee again at which time the K-9 handlers released the dog after Smith. Smith was apprehended by law enforcement, after he sustained a dog bite in his thigh. In the area where Smith was apprehended, officers found money and a receipt that belonged to the Rite Aid customer who Smith had robbed earlier.

At trial, the pharmacy customer Smith had robbed in the store testified that he was scared for his life during the robbery. Witnesses also testified that while Smith was in the office with the store manager, Smith pointed the firearm at her and began to count down from ten while she tried to open the safe. At trial, Smith claimed that it was his brother who had robbed the Rite Aid pharmacy.

In 2002, Smith was convicted in state court of four counts of robbery with a dangerous weapon. According to police reports and court documents from that case, Smith robbed three Charlotte-area Eckerd Drugs and a KFC restaurant and even shot a cashier working at one of the drug stores during one of the robberies.

Smith has been in local federal custody since he was arrested in February 2013 and will remain in custody until his sentencing date, which has not yet been set. At sentencing, Smith faces a faces a minimum of 22 years and a maximum of life in prison, a $250,000 fine or both.

The case was investigated by ATF and PPD. The prosecution is being handled by Assistant U.S. Attorney Jennifer Dillon.

CHARLOTTE, N.C. – Chief U.S. District Judge Frank D. Whitney sentenced a Charlotte armed career criminal to 20 years in prison for firearms violations, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Shirley Ingram, Jr., a/k/a Rahim, 56, of Charlotte, was also sentenced to three years of supervised release 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.

In January 2011, following a four-day trial, a Charlotte jury convicted Ingram for possessing a firearm in furtherance of a drug trafficking crime and for being a felon in possession of a firearm. According to evidence presented at trial and yesterday’s sentencing hearing, on August 8, 2009, law enforcement responded to a 911 emergency call involving domestic violence. Court records indicate that when law enforcement arrived at the scene and while investigating the call, they discovered that Ingram had a Glock, Model 27, .40 caliber pistol in a cooler in the trunk of a 2003 BMW vehicle he was driving. Along with the pistol in the car, law enforcement also found marijuana residue and a digital scale. Ingram’s prior felony convictions prohibit him from carrying a firearm.

At sentencing, Ingram was deemed an armed career criminal and received an enhanced sentence. Ingram had been previously convicted of over 20 crimes, including second degree kidnapping; breaking, entering and larceny; assault on a female; and possession of controlled substances. Ingram had been previously deemed an armed career criminal in 1993 and was sentenced to 235 months in prison in U.S. District Court in Charlotte. In that case, Ingram was observed by a Charlotte police officer walking down a street in Charlotte carrying a shotgun, which was later found to be stolen.

“Ingram’s 20-year prison sentence was warranted given the facts of this case and his extensive criminal history. Protecting our community by taking violent repeat offenders off the streets remains one of the cornerstone functions of this office,” said U.S. Attorney Tompkins.

Ingram has been in federal custody in the Western District of North Carolina since his arrest in April of 2010. Upon designation of a federal facility, he will be transferred into the custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole.

The ATF, assisted by the Charlotte-Mecklenburg Police Department, handled the investigation, as part of ATF’s ongoing commitment to reduce violent crime and other threats to public safety. The prosecution was handled by Assistant U.S. Attorney Ann Claire Phillips, of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – Three separate criminal indictments and a criminal complaint charging 30 men and women with conspiracy to distribute and to possess with intent to distribute synthetic drugs and related charges have been unsealed in U.S. District Court, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

The indictments and criminal complaint are the result of joint local, state and federal investigations into head shops operating in Mecklenburg, Buncombe, Henderson, Transylvania and Mitchell Counties. According to filed court documents and court proceedings, the head shops sold synthetic drugs, such as synthetic marijuana, commonly referred to as “K2” or “Spice” and/or synthetic cathinones, commonly referred to as “Bath Salts.”

The federal indictments and the criminal complaint remained sealed until the named defendants were arrested by law enforcement over a two-day period. (A list of each defendant’s individual charges and penalties is attached).

“Masking synthetic drugs with creative names and deceptive packaging does not change the fact that these substances are illegal, highly addictive and potentially deadly to those who use them. Whether such drugs are sold in Asheville, Spruce Pine or Charlotte, let it be known that the law enforcement community stands united in the fight against these harmful chemicals that wreak havoc in our communities and pose serious health risks, particularly among young people,” said U.S. Attorney Tompkins.

Harry S. Sommers, the Special Agent in Charge of the DEA Atlanta Field Division stated, “The rise of synthetic drug use in the United States alone has reached epidemic proportions and has resulted in a sustained rise in emergency room visits, deaths, and violence among teens and young adults. DEA and its law enforcement partners will continue to attack this issue aggressively. Many thanks to the joint efforts by all law enforcement personnel involved.”

“The sale of synthetic drugs has become a growing epidemic nationwide,” said Brock D. Nicholson, Special Agent in Charge of Homeland Security Investigations Atlanta, which oversees offices in North Carolina, South Carolina and Georgia. “These drugs are made from a variety of dangerous chemical compounds that are not meant for human consumption. These arrests send a clear message to synthetic drug distributors that HSI and our law enforcement partners will utilize every resource available to ensure these activities are thwarted.”

A criminal complaint charged the owners of High Life Smoke Shops and their co-conspirators with conspiracy to distribute and to possess with intent to distribute a quantity of a mixture and substance containing a detectable amount of synthetic cathinones. According to filed court documents, from the Spring of 2012 through the present, the co-conspirators sold synthetic marijuana and bath salts at six head shops throughout Charlotte and surrounding areas. The synthetic drugs were sold under brand names such as “Blue Kush, “Zombie Matter,” “Demon Free Ritual Sachet,” “Sonic Zero” and “Red Dragon.” At least two of the co-conspirators owned “Dark Matter, Inc.,” a company that manufactured synthetic substances containing “alpha-PVP,” which is a banned substance. Those drugs were labeled “Zumos,” “Velocity” and “Xantopia” and were marketed as dietary supplements sold at the head shops and over the internet, court records indicate. The defendants are:

• Sonia Sudhir Thaker, 35, of Charlotte.

• Imran Yaseen, 45, of Mooresville, N.C.

• Gautam Savla, 33, of Charlotte.

• Jeffrey B. Davies, II, 34, of Charlotte.

• Poojan Patel, 28, of Charlotte.

Court documents show that the drug conspirators stored and distributed the synthetic drugs from two Charlotte-area warehouses. Court records indicate that along with the illegal drugs, the co-conspirators stored at the warehouses other drug paraphernalia, such as glass pipes, which were also sold at the head shops.

“We have to protect our community, especially our youth, from being exposed to synthetic drugs in any way possible,” said Chief Rodney Monroe, Charlotte-Mecklenburg Police Department. “With regional operations, we’re sending a strong message that illegal activities like these will not be tolerated and thereby jeopardizing the well-being of our citizens.”

A criminal indictment charged the owner of the Octopus Garden Smoke Shops, seven store managers and seven employees with conspiracy to distribute and to possess with intent to distribute a quantity of a mixture and substance containing a detectable amount of synthetic marijuana and related charges. According to the indictment, the alleged conduct occurred between September 2011 and December 2012 in Buncombe, Henderson and Transylvania counties. The synthetic marijuana was sold at Octopus Gardens’ seven locations under brand names such as “Mind Eraser”, Caution-Chronic 20x”, “Crippler”, “Dead and Berry’d”, “Krypt Twilight Zone”, “Black Rain”, “Vesuvius”, “Bizzaro”, “Tales from the Krypt”, “Voo Doo Child”, “Zeus Gods of Aroma”, “F.U.B.A.R”, “7H Kush”, “O.G. Kush”, “O.G. Kush II”, “Avalanche”, “Hades”, “Gro-Hi”, “Poseiden”. “Head Hunter”, “Be Marley”, “Armageddon”, and “Defcon 5.” The named defendants are:

• Gregory Scott Casey, age 38, of Asheville, N.C.

• James Scott Covington, Jr., age 28, of Asheville.

• Patricia Davis, age 54, of Asheville.

• Richard William Delalio, Jr., age 31, of Asheville.

• George Coleman Freiberg, age 32, of Arden, N.C.

• Kristi Diane Key, age 41, of Asheville.

• Peter Andrew Kunza, age 26, of Weaverville, N.C.

• Gerald William Locklear, age 60, of Asheville.

• Muriel Annette Ring, age 32, of Maggie Valley, N.C.

• Zachary Adam Shuford, age 33, of East Flat Rock, N.C.

• Sidney David Tureff, age 85, of Asheville.

• Jeffery Shane Vendernick, age 44, of Asheville.

• Jessica Michelle Webb, age 27, of Candler, N.C.

• Timothy Gary Wilson, age 30, of Asheville.

All defendants except Delalio and Ring are also charged with selling or offering to sell drug paraphernalia, such as glass pipes, intended for use in inhaling a controlled substance. Casey and Locklear are also charged with money laundering. During the course of the investigation law enforcement seized over $700,000 in cash and 247 ounces of silver, four vehicles and drug paraphernalia. The indictment includes a notice of forfeiture, which gives notice that the defendants must forfeit to the United States all of the property, currency and monetary instruments involved in the offenses charged in the indictment, and all property, currency and monetary instruments which are proceeds of such offenses.

“We hope by pursuing these cases as well as the new synthetic drug law that will go into effect on July 1, 2013, we will be able to curtail the sale of these very dangerous substances,” stated Buncombe County Sheriff Van Duncan.

“I would like to commend all the agencies involved for their tireless work and cooperative efforts in disrupting the flow of synthetic drugs into the streets of Western North Carolina,” said Henderson County Sheriff Charles S. McDonald. “Anyone wishing to establish a ‘head shop’ or similar type of business should not look to Henderson County as a community where they will be welcome or overlooked by law enforcement,” Sheriff McDonald added.

“Synthetic marijuana has been a problem we have dealt with for some time. It has caused many problems for its users in Transylvania County. I appreciate the partnership we have enjoyed with HSI and the US Attorney's Office during this investigation. The results of this investigation demonstrate the success that great partnerships can bring and these results will make a big impact in Transylvania County,” said Transylvania County Sheriff David Mahoney.

The investigation into Octopus Garden was handled by the Department of Homeland Security (HSI), the Drug Enforcement Administration (DEA), the Henderson County Sheriff’s Office, the Buncombe County Sheriff’s Office, the Transylvania County Sheriff’s Office, the Buncombe County Anti-Crime Task Force, and the Transylvania County Narcotics Task Force.

A separate criminal indictment charged seven defendants with conspiracy to distribute and to possess with intent to distribute a quantity of a mixture and substance containing a detectable amount of synthetic cathinones and related charges. According to that indictment, the alleged conduct occurred in Mitchell and Mecklenburg Counties from July 2012 to May 2013. The Bath Salts were sold at Pandora’s Dreams head shop in Spruce Pine, N.C., under brand names such as “White Water Rapids”, “Snowman”, “Super Glass Cleaner”, “Anti Monkey Butt Powder”, “Dragon”, and “Bushman’s Repellant.” The named defendants are:

• Matt Davis, age 32, of Charlotte.

• Kelly Higgins, age 24, of Burnsville, N.C.

• John Newberry, age 40, of Spruce Pine, N.C.

• Albert Tomes, age 41, of Bakersville, N.C.

• Tina Tomes, age 43, of Bakersville.

• Kevin Vickers, age 22, of Bakersville.

• Lori Watts, age 46, of Spruce Pine.

Newberry, Watts, Albert Tomes and Tina Tomes are also charged with selling or offering to sell drug paraphernalia, such as glass pipes, intended for use in inhaling a controlled substance. Matt Davis and Tina Tomes are also charged with money laundering. The indictment includes a notice of forfeiture, which gives notice that the defendants must forfeit to the United States all of the property, currency and monetary instruments involved in the offenses charged in the indictment, and all property, currency and monetary instruments which are proceeds of such offenses, including over $45,000 in cash, a vehicle, and a firearm seized during the course of the investigation.

Mitchell County Sheriff Donald Street said, “I am very thankful for the assistance from the federal authorities on closing down these head shops. Our local head shop was creating a real nightmare for our county and was destroying many people’s lives along the way. The arrest of the individuals involved in these businesses will hopefully show them and others the consequences of selling these very dangerous substances. This investigation is perfect example of what can be accomplished when local, state and federal authorities work together to solve problems in our local communities.”

“Synthetic cathinones (bath salts) and synthetic cannabinoids are two of the most widely abused drugs in Yancey County. My office has seen a large increase in the number of users of these controlled substances over the past couple of years. I feel like this is directly related to the fact that these drugs were very easy to obtain in both Mitchell and Buncombe Counties. Also, typically users of these controlled substances had the impression that these substances were ‘legal’ to purchase and possess. I would like to thank everyone for their assistance in this investigation,” said Yancey County Sheriff Gary Banks.

The investigation into Pandora’s Dreams was handled by the DEA, the Mitchell County Sheriff’s Office, the Yancey County Sheriff’s Office and the Spruce Pine Police Department.

The third indictment filed in the Western District charged Scott Baddock, age 47, of Inman, S.C.; Isam Jaradat, age 40, of Mars Hill, N.C.; and Hermant Sahney, age 53, of Fletcher, N.C. with conspiracy to distribute and to possess with intent to distribute a quantity of a mixture and substance containing a detectable amount of synthetic cathinones and a quantity of a mixture and substance containing a detectable amount of synthetic marijuana. According to that indictment, the alleged conduct occurred in Buncombe and Henderson Counties between June 2012 and January 2013. The “Bath Salts” were sold at the Just Like That Smoke Shop in Weaverville, N.C. and elsewhere, under brand names such as “Snake Eyes”, “Eight Ballz”, “White Girl”, “White Angel”, “Ivory Wave Bath Salts”, Tran Quility Bath Salts”, “Diamond Dust”, “Loco Motion Bath Salts” and “Bang Bath Salts”. The “K2” was sold at Just Like That Smoke Shop and elsewhere, under brand names such as “Cool Beanz”, “Krypt”, “Purple Diesel Hydro”, “Nugz Hipnotic”, “Spectacular”, “Zero Gravity”, “Hydro Purple Haze”, “Mr. Nice”, “Zombie Breath”, “Super Kush”, “Mr. Kush”, “7H Hydro”, “Posh”, “K2 Super Kush”, “Route 69 Cherry”, “One Love”, “Smoke XXX”, “Woodstock”, “Platinum”, “Donkey”, “7H Kush 100% High”, “Diablo”, “Pure Evil”, “F.U.B.A.R.”, “Pure Fire”, and “Nightmare”.

Baddock and Jaradat are also charged with offering to sell drug paraphernalia, such as glass pipes, intended for use in inhaling a controlled substance. The indictment includes a notice of forfeiture, which gives notice that the defendants must forfeit to the United States all of the property, currency and monetary instruments involved in the offenses charged in the indictment, and all property, currency and monetary instruments which are proceeds of such offenses, including over $36,000 in cash, a vehicle, drug paraphernalia and three firearms seized during the course of the investigation.

The investigation was handled by HSI, the Buncombe County Anti-Crime Task Force, the Buncombe County Sheriff’s Office and the Henderson County Sheriff’s Office.

The defendants are scheduled to have initial appearances today in U.S. District Court in Charlotte. The charges contained in the indictments are allegations. The defendants are presumed innocent unless and until they proven guilty beyond a reasonable doubt in a court of law.

U.S. Attorney Tompkins thanked all the law enforcement agencies involved for their continued cooperation and assistance. The prosecution for the case is handled by Assistant U.S. Attorneys Dana Washington, Thomas Kent and Elizabeth Greene, of the U.S. Attorney’s Office in the Western District of North Carolina.

CHARLOTTE, N.C. – A former schoolteacher faces federal charges for orchestrating a Ponzi scheme that took over $1 million from investor victims, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. A criminal bill of information filed on Monday, June 24, 2013, in U.S. District Court charged C. David Wright, 52, of Iron Station, N.C. with one count of mail fraud in connection with the Ponzi scheme.

Greg McLeod, Director of the State Bureau of Investigation (SBI) and Keith Fixel, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS) join U.S. Attorney Tompkins in making today’s announcement.

The filed criminal bill of information alleges that Wright engaged in a scheme and artifice to defraud victims by making a series of false and fraudulent representations, omissions of material facts and deceptive half-truths. According to information contained in the charging document, beginning in August 2008 and continuing through March 2013, Wright executed a Ponzi scheme by inducing victims to invest in a “Commodity Investment Group” based in Cherryville, N.C., which Wright purportedly managed. According to court documents on the record, Wright collected over $1 million from investor victims through false and fraudulent misrepresentations. Court records show that Wright lied to investors by promising a 20-30% return on their investments, over a short period of time, when Wright knew that this return was not possible. Wright also misled his victims by falsely representing to his victims that his Commodities Investment Group would invest money in hedge funds, commodities and Quick Trip stores. Court records indicate that Wright falsely told his victims that the Commodities Investment Group owned a significant number of Quick Trip gas stations and had even sold one for $1.6 million.

According to court records, Wright did not invest the over $1 million he collected from investor victims as promised. Instead, Wright used the money to make Ponzi style payments to other victims and to fund his personal lifestyle, according to court records. In some instances, as filed documents show, Wright took a large percentage of victim money immediately upon the initial deposit. Court records show that Wright was known to carry a significant amount of cash in a black duffel bag. Court records also show that Wright required many victims to invest by cashier’s check. Many local victims would invest by meeting Wright in a parking lot in Cherryville, while out-of-state victims would mail money for investment to Wright’s post office box in Cherryville. According to court documents, over $500,000 in principle owed to the victims has been misappropriated by Wright, and as of March 2013, Wright had less than $1,000 left of the investors’ fund. Wright has agreed to plead guilty to the mail fraud charge.

Wright’s initial appearance and plea hearing have not been set yet by the Court. At sentencing, Wright faces a maximum of 20 years in prison and a $250,000 fine. As part of his plea agreement, Wright has agreed to pay full restitution to his victims, the amount of which will be determined by the Court at sentencing.

In a related action, yesterday the Commodities Futures Trading Commission (CFTC) also filed a civil enforcement action against Wright.

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

The case was investigated by USPIS and SBI. U.S. Attorney Tompkins also acknowledged the invaluable assistance of CFTC in this case.

The prosecution is being handled by Assistant U.S. Attorney Kurt W. Meyers of the Western District of North Carolina.

The President’s Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.stopfraud.gov.

Former Chief “Woody” Burgess Has Agreed To Plead Guilty

CHARLOTTE, N.C. – The former Police Chief for the City of Cherryville has been charged with one count of program embezzlement, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Woodrow Paul Burgess “Woody Burgess,” 60, of Cherryville, N.C. has agreed to plead guilty to the charge.

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

According to the criminal bill of information and plea agreement filed today in U.S. District Court, Burgess was the Chief of Police for the City of Cherryville until his retirement in October 2012. During the relevant time period, Bonny Alexander, was Cherryville’s Finance Director, and had authority to process payroll payments to Cherryville employees, direct payments for city expenses and issue checks on behalf of the city. According to court records and the filed plea agreement, Burgess embezzled and caused Alexander to embezzle approximately $11,048 of the city’s funds. Court records show that beginning in January 2007 through November 2008, Burgess instructed Alexander to issue approximately nine Cherryville city checks payable to “The Great Outdoors, Inc.” for the purchase of firearms for Burgess’ personal use. According to the charging document, Burgess told Alexander that the checks and the expenditure of the City’s funds for personal use had been authorized as a “cash-out” for “compensatory time.” Court records indicate that Alexander issued the checks as requested by Burgess and placed entries in the City’s accounting records that the expenditures were for a certain amount of “sick time” or “comp time” due to “Woody.” According to court documents, Burgess was aware that he was not entitled to cash payments for sick or vacation leave or compensatory time. In addition, Burgess knew that no hours were deducted from his sick or vacation leave balances for the City’s purchase of guns for his personal use.

The bill of information contains a notice of forfeiture, which gives notice that the defendant must forfeit to the United States all property and currency involved in the offense charged in the charging document, and all property and currency which are proceeds of such offense, including approximately $8,490 in cash, and three firearms seized during the course of the investigation.

“Woody Burgess was sworn to uphold the law but instead thought he was above the law. While prosecuting a law enforcement officer is always difficult, my Office will not allow the likes of Woody Burgess to dishonor the uniform proudly worn by all other Cherryville police officers who are dedicated to serving and protecting their community,” said U.S. Attorney Tompkins.

“It is both disappointing and disheartening to learn a senior law enforcement officer took advantage of his trusted position for his own profit. Public corruption is the number one criminal priority of the FBI and we will continue to work aggressively to hold public officials of all levels accountable, especially those who erode the public’s trust in those who have sworn to protect and serve others,” said Special Agent in Charge John A. Strong, of the FBI in Charlotte.

“Our agents are dedicated to finding the truth and bringing criminals to justice, and this case is an excellent example of the work that they do,” said SBI Director Greg McLeod. “We’ll continue our efforts to solve crime, root out public corruption, and protect the people of North Carolina.”

Burgess has agreed to plead guilty to one count of program embezzlement, which carries a maximum sentence of 10 years in prison, a $250,000 fine, or both. Burgess’ initial appearance and plea hearing have been set for Tuesday, June 25, 2013, at 2:00 p.m. According to the filed plea agreement, Burgess has also agreed to pay full restitution the amount of which will be determined by the Court at sentencing.

In January 2013, Alexander pleaded guilty to five counts of program embezzlement for stealing over $435,000 from the City of Cherryville. She faces a maximum term of 10 years in prison and a $250,000 fine per count. A sentencing date for Alexander has not been set yet.

The investigation is handled by the FBI and SBI. The prosecution is handled by Michael Savage, of the U.S. Attorney’s Office in Charlotte.

More Than 25 Defendants Face Tribal And State Drug Charges

ASHEVILLE, N.C. – A criminal indictment charging seven defendants with drug trafficking conspiracy and related charges was unsealed today in U.S. District court, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The federal indictment was returned by a grand jury sitting in Asheville on June 4, 2013, and remained sealed until today, following yesterday’s arrests of the named defendants by law enforcement.

U.S. Attorney Tompkins is joined in making today’s announcement by Harry S. Sommers, Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA), which oversees the Charlotte District Office; Jason O’Neal, Deputy Associate Director of the Bureau of Indian Affairs, Division of Drug Enforcement; Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division; Chief Ben Reed of the Cherokee Indian Police Department; Sheriff Curtis Cochran of the Swain County Sheriff’s Office; Sheriff Mickey Anderson of the Graham County Sheriff’s Office; Sheriff Greg Christopher of the Haywood County Sheriff’s Office; and Sheriff Jimmy Ashe of the Jackson County Sheriff’s Office.

The indictment is the result of a large scale two-year joint federal, tribal and state investigation targeting the distribution of narcotics, with a focus on prescription drugs, on and around the Cherokee Indian Reservation.

The defendants named in the indictment are charged with one count of conspiracy to possess with intent to distribute controlled substances, including oxycodone, cocaine, marijuana and alprazolam. According to the indictment, the alleged conduct took place between January 2007 and December 2012 in Swain and Jackson Counties. Those charged are:

• Jackie Lee Rattler, 54, of Cherokee, N.C.

• Jacob Hunter Rattler, 21, of Cherokee.

• Evan Thomas Norris, Jr., 54, of Robbinsville, N.C.

• Taryn Krista Elizabeth Toineeta Rattler, 25, of Cherokee.

• Timothy Leroy Rattler, 50, of Cherokee.

• Justina Nacole Rattler, 31, of Cherokee.

• Mark Allen Winstead, 26, of Cherokee.

Jackie Lee Rattler also faces six additional counts of possession with intent to distribute controlled substances, and one count of being a controlled substance user in possession of firearms. Jacob Hunter Rattler is also charged with one additional count of possession with intent to distribute a controlled substance.

The indictment includes a notice of forfeiture, which gives notice that the defendants must forfeit to the United States all of the property and currency involved in the offenses charged in the indictment, and all property and currency which are proceeds of such offenses, including approximately $48,900 in cash, 44 firearms, three vehicles and two Harley Davidson motorcycles seized during the course of the investigation.

Six of the seven defendants charged in the indictment are in custody. Taryn Rattler remains a fugitive. Those arrested will remain in custody pending their detention hearings, which have been scheduled for Friday, June 21, 2013. Each drug offense carries a maximum prison term of 20 years, a $1 million fine, or both. The user of narcotics in possession of firearms offense carries a maximum prison term of 10 years, a $250,000 fine, or both.

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

Tribal and state law enforcement officers have arrested and charged more than 25 defendants on tribal and state drug offenses.

Those facing tribal drug charges are: Deborah Smith, Charles Taylor, Austin Gunter, Humberto Corral, Deanna Smith (not arrested), Kevin Smith, Shenna Crowe, Lisa Toineeta, Sam Thompson, Mike Walkingstick (not arrested), Annie Cucumber, Robert Tramper, Ashley Keel (not arrested), Chadwick Feather, Walter Bradley, Thomas Rickman, Victoria Cucumber (not arrested), Delores Cabrera, Sally Bryson, Raymond Whitecotton, Rachel Taylor and Regan Parton.

Those facing state drug charges are: Alea Ohmart, James Murphy, Ceegee Bird (not arrested), Clyde Taylor, Rogelio Cabrera, Eric Dossett, Anthony Dossett (not arrested), Frankie Dyer and Christin Hodgins (Not arresged).

U.S. Attorney Tompkins thanked all the law enforcement agencies involved in this investigation for their continued cooperation and assistance. The prosecution for the case is handled by Special Assistant U.S. Attorney John Pritchard, of the U.S. Attorney’s Office in Asheville.

CHARLOTTE, N.C. – Chief U.S. District Court Judge Frank D. Whitney sentenced a Charlotte woman on Tuesday, June 18, 2103, to serve 60 months in prison and two years under court supervision for defrauding Medicaid of $650,000, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Charlotte Elizabeth Garnes, 39, of Charlotte, was also ordered to pay $792,184.52 in restitution.

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), and Derrick Jackson, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Atlanta Region.

In sentencing the defendant, Judge Whitney emphasized that the crime had numerous victims, including not only the federal and state governments who fund Medicaid, but also the children and patients whose names and identities were stolen. Judge Whitney observed, “Now they have medical records out there that are outright fraudulent” and noted that the defendant and her co-conspirators not only stole from the taxpayers “but also harm[ed] young men and young women.”

In February 2013, a Charlotte jury convicted Garnes of health care fraud conspiracy, obstruction of official proceedings and false statements relating to health care matters. According to evidence presented at trial and yesterday’s sentencing hearing, Garnes was a Licensed Professional Counselor approved by Medicaid to provide mental and behavioral health services to qualified individuals. Trial evidence established that Garnes claimed to have personally provided mental health services to Medicaid recipients when in fact she did not. Evidence showed that Garnes conspired with others to permit unqualified individuals to submit claims to Medicaid under Garnes’ Medicaid number for therapy services purportedly provided by those individuals. In reality, most of the services were never provided. At Garnes’ trial numerous Medicaid recipients or their parents testified that they or their children never received the therapy services Garnes claimed to have provided.

According to trial evidence, Garnes kept 30% of the paid out Medicaid reimbursements and distributed the remainder to her co-conspirators. From March 2009 to April 2011, Medicaid paid Garnes and her company, Charlotte’s Insight, Inc., approximately $740,349, and approximately 90% of that amount ($666,062) was based upon false claims for services that Garnes did not provide. During trial, the government established that for many of the claimed dates of services Garnes was outside of the country, including in Germany, working on a government contract. The evidence also established that Garnes routinely billed for more than 24 hours of therapy services in a single day, including providing 69 hours of individual therapy services in a single day in December 2009.

Trial evidence demonstrated that Garnes used the fraud proceeds to purchase a Mercedes-Benz vehicle and plastic surgery.

In making today’s announcement, U.S. Attorney Tompkins stated, “Garnes’ first mistake was to steal from Medicaid. Her second mistake was to think she would not get caught. Today’s sentence is a stark warning to those who believe that committing healthcare fraud will not land them in prison. Our District’s Health Care Fraud Task Force consists of a team of determined prosecutors and investigators committed to going after anyone who steals money from taxpayer supported programs put in place to cover the medical needs of needy North Carolinians.”

“Our attorneys and investigators are working closely with our federal partners to find Medicaid violators and make them pay,” Attorney General Roy Cooper said. “Medicaid fraud wastes taxpayers’ money, squanders funds that should go to needed care, and drives up health care costs for everyone. Cases like this one will help discourage other health care providers from cheating.”

Following the sentencing hearing, Garnes was remanded to the custody of the U.S. Marshals Service. She will be transferred into 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 HHS-OIG and MID. The prosecution of the case is handled by Assistant U.S. Attorneys Kelli Ferry and Jenny Grus Sugar of the U.S. Attorney’s Charlotte Office.

The investigation and charges are the work of the Western District’s joint Health Care Fraud Task Force. The Task Force is multi-agency team of experienced federal and state investigators, working in conjunction with criminal and civil Assistant United States Attorneys, dedicated to identifying and prosecuting those who defraud the health care system, and reducing the potential for health care fraud in the future. The Task Force focuses on the coordination of cases, information sharing, identification of trends in health care fraud throughout the region, staffing of all whistle blower complaints, and the creation of investigative teams so that individual agencies may focus their unique areas of expertise on investigations. The Task Force builds upon existing partnerships between the agencies and its work reflects a heightened effort to reduce fraud and recover taxpayer dollars.

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

CHARLOTTE, N.C. – Miguel Eduardo Silva, 20, of Charlotte, was sentenced on Tuesday, June 18, 2013, by U.S. District Judge Max O. Cogburn, Jr. to serve 127 months in prison, to be followed by three years of supervised release for drug trafficking and firearms offenses, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

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 Chief Rodney Monroe of the Charlotte-Mecklenburg Police Department (CMPD) join U.S. Attorney Tompkins in making today’s announcement.

In April 2012, a superseding criminal indictment charged Silva with one count of possession with intent to distribute marijuana, one count of attempt to distribute marijuana and one count of use of a firearm in furtherance of such drug trafficking crimes. According to evidence presented at Silva’s trial and yesterday’s sentencing hearing, Silva had arranged a drug deal involving the sale of $60 worth of marijuana to a buyer. Trial evidence established that on the evening of October 3, 2011, the defendant and the buyer met at the parking lot of an apartment complex in Charlotte. The buyer got into the rear seat of Silva’s vehicle, but instead of purchasing the marijuana, the buyer attempted to rob at gunpoint Silva and another front seat passenger of their drugs and money. Court records show that in response, Silva pulled a handgun and shot and killed the buyer. A federal jury convicted Silva on all counts, in September 2012.

In sentencing Silva, Judge Cogburn acknowledged the inherent danger that exists whenever guns and drugs are intertwined.

Silva has been in federal custody in the Western District of North Carolina since his arrest in January of 2012. Upon designation of a federal facility, he will be transferred into the custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole.

The federal investigation was led by HSI with the assistance of 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.

CHARLOTTE, N.C. – An investment fund owner and operator that defrauded investors of approximately $6 million has agreed to plead guilty to securities fraud charges filed today, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. A criminal bill of information filed in U.S. District Court charged James Alexander Shepherd, 58, of Vass, N.C. with one count of securities fraud. Shepherd has agreed to plead guilty to the charge.

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

According to filed court documents and court proceedings, beginning in 2006 and through the spring of 2013, Shepherd defrauded over 100 investors in Union County and elsewhere of approximately $6 million. Court documents indicate that Shepherd perpetrated the fraud by promising his victims returns on their investments in funds Shepherd owned and controlled, including “The Shepherd Major Play Option Fund, L.P.” (the “Major Play Fund”) and the “Shepherd’s Model Hedge Fund” (the “Hedge Fund”). In addition, Shepherd had some individual investors that invested their money independent of any particular investment vehicle. Court records show that in about 2006 and unbeknownst to his investors, Shepherd began misappropriating investor money from the Major Play Fund. Shepherd used the misappropriated funds for other purposes, including to pay investors of his hedge fund, to trade in his personal accounts, and to fund the operations of Shepherd’s newsletter which offered investment news and advice to thousands of subscribers. According to court records, Shepherd also used the money to fund his personal lifestyle. Documents indicate that Shepherd built a $2 million residence in Vass, N.C. and used investor money to make mortgage payments on the residence.

According to court records, Shepherd never informed his investors of the misappropriations. To conceal his fraudulent conduct, Shepherd sent to investors certified financial statements for the Major Play fund, accompanied by an Independent Auditor’s Report which assured the investors that an independent audit on the fund had been conducted in compliance with the rules of the U.S. Commodities Futures Trading Commission (“CFTC”). The false financial statements also misrepresented to investor victims the financial condition of the fund. For example, in December 31, 2012, Shepherd represented in a fraudulent statement that the fund had a $6,041,850 cash balance, when in reality the fund had less than $100,000 at the time.

According to filed documents, Shepherd was able to obtain the Independent Auditor’s Report each year by tricking the accountant who provided it. According to common practice at the time, the accountant would send a letter of inquiry to the bank the fund held its account, requesting the fund’s cash balance. On each occasion, the accountant sent the inquiry letter to the bank's P.O. Box address provided by Shepherd and to the attention of “Charles Fisher,” who was purportedly working at the bank. In each instance, records show that the accountant would then receive a letter or fax confirmation from “Charles Fisher” verifying the Major Play Fund’s bank balance, as well as a copy of the bank statement confirming the cash balance of the fund. In reality, court documents indicate, Charles Fisher was a fictitious bank employee. Shepherd would forge the name Fisher on a fake bank letter and send forged bank statements with fake balances. Shepherd generated the fraudulent bank statements using a version of Adobe Acrobat that enabled him to type false numbers over true bank statements. Shepherd also controlled the P.O. Box the accountant’s letters were mailed to and controlled the fax number that supposedly belonged to Charles Fisher at the bank.

According to court records, Shepherd’s scheme was uncovered when in March 2013 the accountant insisted on verifying the cash balance of fund’s bank account electronically, through the audit confirmation website www.confirmation.com, which is now the commonly used method of verification by accountants. Shepherd delayed and then refused to give the accountant authority to utilize the website to verify the cash balance of the Major Play Fund, court records show. On March 26, 2013, the accountant notified the National Futures Association (NFA) that his audit opinion could no longer be relied upon.

“For seven years Shepherd used his investment fund as his personal piggy bank and repeatedly lied to his investors who trusted him with their savings. This is not the case of a single bad investment. Shepherd used his investors’ money to fund his failing investment funds and his personal lifestyle, and prolonged the fraudulent scheme through trickery and lies. Prosecuting investment schemes is a priority for this office and we will continue to go after those who make false promises and steal people’s hard-earned money,” says U.S. Attorney Tompkins.

“James Shepherd went to great lengths to conceal his criminal scheme, even creating phantom bank employees in order to fool the auditors tracking his accounts. The FBI and our law enforcement partners will keep exposing those responsible for these crimes as long as innocent people are cheated out of their hard earned money,” said John A. Strong, Special Agent in Charge of the Charlotte Division of the FBI.

The bill of information filed against Shepherd includes a notice of forfeiture, which gives notice that the defendant must forfeit to the United States all of the property involved in the offenses charged in the information, and all property which is proceeds of such offenses.

Shepherd’s initial appearance and plea hearing have not been set yet by the Court. At sentencing, Shepherd faces a maximum of 20 years in prison and a $5 million fine. As part of his plea agreement, Shepherd has agreed to pay full restitution to his victims, the amount of which will be determined by the Court at sentencing.

In a related action, today the CFTC also filed a civil enforcement action against Shepherd.

The case was investigated by the FBI. U.S. Attorney Tompkins also acknowledges the invaluable assistance provided in this case by CFTC and NFA. The prosecution is handled by Assistant United States Attorney Kurt Meyers, of the U.S. Attorney’s Office in Charlotte.

The Sentences Are The Result Of A Four-Year, Multi-Agency Operation Targeting Illegal Hunting Of Wildlife In North Carolina And Georgia

BRYSON CITY, N.C. – Ten defendants were sentenced on Monday, June 10, 2013, in U.S. District Court for illegal hunting activities involving black bears and other wildlife and related offenses, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The sentences are the result of “Operation Something Bruin,” a multi-agency initiative focused on the illegal poaching of bears and other wildlife in North Carolina and Georgia.

U.S. Attorney Tompkins is joined in making today’s announcement by Steve Ruppert, Special Agent in Charge for the Southern Region of the U.S. Forest Service and Col. Dave Caveny, Chief of the Division of Law Enforcement for the North Carolina Wildlife Resources Commission.

In February 2013, state and federal wildlife officials in North Carolina and Georgia announced the results of a four-year undercover investigation focused on illegal activities involving black bears and other wildlife in North Carolina and Georgia. The multi-agency initiative was the largest of its kind in recent years and resulted in more than 80 wildlife violators and over 980 violations. Primary violations documented by Operation Something Bruin stem from illegal bear hunting and poaching in North Carolina and Georgia, but include an array of state and federal wildlife and game law charges. The agencies involved in this investigation include state wildlife agencies, the U.S. Forest Service, the U.S. Fish and Wildlife Service and the National Park Service.

Officers with the North Carolina Wildlife Resources Commission, U.S. Forest Service and the Georgia Department of Natural Resources infiltrated poaching circles to document violations including bear baiting, illegal taking of bears, deer and other wildlife, illegal use of dogs, operation of illegal bear enclosures in North Carolina, and guiding hunts on national forest lands without the required permits. For more information about Operation Something Bruin and its continued success please visit: www.operationsomethingbruin.org.

The following defendants were sentenced on June 10, 2013, before U.S. Magistrate Judge Dennis L. Howell:

• Chad Burchfield, 34, of Robbinsville, N.C., pleaded guilty to one count of hunting feral swine at night. He was sentenced to 30 days in prison. In addition, Judge Howell revoked Burchfield’s right to hunt or fish for a period of two years, and ordered the defendant to pay a $10.00 assessment fee and a $25.00 administrative fee.

• Patrick Burchfield, 24, of Robbinsville, pleaded guilty to one count of hunting feral swine at night. He was sentenced to 30 days in prison and ordered to pay a $10.00 assessment fee and a $25.00 administrative fee. In addition, the defendant’s right to hunt or fish was revoked for a period of two years.

• Jessie Jenkins, 23, of Robbinsville, pleaded guilty to hunting feral swine at night. He was sentenced to 30 days in prison, was ordered to pay a $10.00 assessment fee and a $25.00 administrative fee and is prohibited from hunting or fishing for a period of two years.

• Kenneth Collins, 44, of Robbinsville, pleaded guilty to providing a hunting guide service on National Forest land without a permit. Judge Howell sentenced Collins to 30 days in prison. He was also ordered to pay a $10.00 special assessment fee, a $25.00 administrative fee and restitution of $450.00 to the U.S. Forest Service. Collins’ hunting and fishing rights were also revoked for a period of two years.

• Casey Collins, 26 of Robbinsville, pleaded guilty to two counts of providing a hunting guide service on National Forest land without a permit. He was sentenced to 15 days in prison and was ordered to pay a $10.00 special assessment fee and a $25.00 administrative fee. His hunting and fishing rights were revoked for a period of two years.

• Michael Sellers, 20, of Robbinsville, pleaded guilty to one count of proving a hunting service without a permit. He was sentenced to one year of probation and was ordered to surrender his hunting license.

• Ricky Owens, 48, of Robbinsville, pleaded guilty to one count of failure to obtain a special use permit needed to operate a commercial activity on National Forest land. He was sentenced to 15 days in prison and was ordered to pay a $10.00 special assessment fee and a $25.00 administrative fee.

• Robert Watson, 46, of Morganton, N.C., pleaded guilty to one count of aid and abet the illegal taking of a black bear. He was sentenced to 30 days in prison and was ordered to pay a $10.00 special assessment fee and a $25.00 administrative fee.

• Terry Ratliff, 55, of Opelica, Alabama, was ordered to pay a collateral of $1,500 for driving on a closed U.S. Forest Service Road.

• Brian Quacca, 41, of Groesbeck, Texas, pleaded guilty to one count of using the National Forest Service for commercial purposes without the required permit. On May 25, 2013, he was ordered to pay a fine in the amount of $1500.00. In addition, he was ordered to pay a $10.00 special assessment fee and a $25.00 administrative fee.

On June 10, 2013, Brent Fox, entered a plea of guilty to one count of illegal taking of a black bear and is awaiting sentencing. The defendants committed the offenses within the Nantahala National Forest with the exception of Robert Watson who committed his offense within Pisgah National Forest.

In making today’s announcement U.S. Attorney Tompkins stated, “We anticipate that the success of Operation Something Bruin will send a strong message to poachers and would-be violators to think twice before they engage in illegal hunting activities. Together with our federal and state law enforcement partners we will combine forces to combat illegal hunting, protect our wildlife and conserve our natural resources. I commend the efforts of all involved in this investigation and I thank our law enforcement partners for their continued dedication to this important mission.”

“The continued success of Operation Something Bruin is a fine example of state and federal agencies coordinating efforts to protect the resources of our national forests,” said Steve Ruppert, Special Agent in Charge for the Southern Region of the U.S. Forest Service. “The Forest Service appreciates the hard work of its law enforcement officers, the North Carolina Wildlife Resources Commission, the U.S. Fish and Wildlife Service and the U.S. Attorney’s Office in bringing these individuals to justice.”

“These penalties reflect the seriousness of the crimes committed against conservation, our wildlife resources and the hunting heritage,” said Col. Dale Caveny, Chief of the Division of Law Enforcement for the N.C. Wildlife Resources Commission. “Operation Something Bruin documented hundreds of wildlife violations and the successful conclusion of these federal cases will make would-be violators think twice before breaking the law. Our long-term goal is to deter illegal wildlife activities from taking place in the future and serve notice to everyone that wildlife officers are ever vigilant in the service of conservation and public safety.”

The investigation was conducted by the United States Forest Service, the North Carolina Wildlife Resources Commission, the U.S. Fish and Wildlife Service the Georgia Department of Natural Resources and the National Park Service. The prosecution was handled by Assistant U.S. Attorney Richard Edwards of the U.S. Attorney’s Office in Asheville.

To report illegal hunting activities call the appropriate Law Enforcement contacts: The North Carolina State Wildlife Hotline at 1-800-662-7137, U.S. Fish and Wildlife Service, 1-828-258-2084 the National Forests at 1-828-231-0288 or The Great Smoky Mountains National Park at 1-865-436-1230.

The Sentences Are The Result Of A Four-Year, Multi-Agency Operation Targeting Illegal Hunting Of Wildlife In North Carolina And Georgia

BRYSON CITY, N.C. – Ten defendants were sentenced on Monday, June 10, 2013, in U.S. District Court for illegal hunting activities involving black bears and other wildlife and related offenses, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The sentences are the result of “Operation Something Bruin,” a multi-agency initiative focused on the illegal poaching of bears and other wildlife in North Carolina and Georgia.

U.S. Attorney Tompkins is joined in making today’s announcement by Steve Ruppert, Special Agent in Charge for the Southern Region of the U.S. Forest Service and Col. Dave Caveny, Chief of the Division of Law Enforcement for the North Carolina Wildlife Resources Commission.

In February 2013, state and federal wildlife officials in North Carolina and Georgia announced the results of a four-year undercover investigation focused on illegal activities involving black bears and other wildlife in North Carolina and Georgia. The multi-agency initiative was the largest of its kind in recent years and resulted in more than 80 wildlife violators and over 980 violations. Primary violations documented by Operation Something Bruin stem from illegal bear hunting and poaching in North Carolina and Georgia, but include an array of state and federal wildlife and game law charges. The agencies involved in this investigation include state wildlife agencies, the U.S. Forest Service, the U.S. Fish and Wildlife Service and the National Park Service.

Officers with the North Carolina Wildlife Resources Commission, U.S. Forest Service and the Georgia Department of Natural Resources infiltrated poaching circles to document violations including bear baiting, illegal taking of bears, deer and other wildlife, illegal use of dogs, operation of illegal bear enclosures in North Carolina, and guiding hunts on national forest lands without the required permits. For more information about Operation Something Bruin and its continued success please visit: www.operationsomethingbruin.org.

The following defendants were sentenced on June 10, 2013, before U.S. Magistrate Judge Dennis L. Howell:

• Chad Burchfield, 34, of Robbinsville, N.C., pleaded guilty to one count of hunting feral swine at night. He was sentenced to 30 days in prison. In addition, Judge Howell revoked Burchfield’s right to hunt or fish for a period of two years, and ordered the defendant to pay a $10.00 assessment fee and a $25.00 administrative fee.

• Patrick Burchfield, 24, of Robbinsville, pleaded guilty to one count of hunting feral swine at night. He was sentenced to 30 days in prison and ordered to pay a $10.00 assessment fee and a $25.00 administrative fee. In addition, the defendant’s right to hunt or fish was revoked for a period of two years.

• Jessie Jenkins, 23, of Robbinsville, pleaded guilty to hunting feral swine at night. He was sentenced to 30 days in prison, was ordered to pay a $10.00 assessment fee and a $25.00 administrative fee and is prohibited from hunting or fishing for a period of two years.

• Kenneth Collins, 44, of Robbinsville, pleaded guilty to providing a hunting guide service on National Forest land without a permit. Judge Howell sentenced Collins to 30 days in prison. He was also ordered to pay a $10.00 special assessment fee, a $25.00 administrative fee and restitution of $450.00 to the U.S. Forest Service. Collins’ hunting and fishing rights were also revoked for a period of two years.

• Casey Collins, 26 of Robbinsville, pleaded guilty to two counts of providing a hunting guide service on National Forest land without a permit. He was sentenced to 15 days in prison and was ordered to pay a $10.00 special assessment fee and a $25.00 administrative fee. His hunting and fishing rights were revoked for a period of two years.

• Michael Sellers, 20, of Robbinsville, pleaded guilty to one count of proving a hunting service without a permit. He was sentenced to one year of probation and was ordered to surrender his hunting license.

• Ricky Owens, 48, of Robbinsville, pleaded guilty to one count of failure to obtain a special use permit needed to operate a commercial activity on National Forest land. He was sentenced to 15 days in prison and was ordered to pay a $10.00 special assessment fee and a $25.00 administrative fee.

• Robert Watson, 46, of Morganton, N.C., pleaded guilty to one count of aid and abet the illegal taking of a black bear. He was sentenced to 30 days in prison and was ordered to pay a $10.00 special assessment fee and a $25.00 administrative fee.

• Terry Ratliff, 55, of Opelica, Alabama, was ordered to pay a collateral of $1,500 for driving on a closed U.S. Forest Service Road.

• Brian Quacca, 41, of Groesbeck, Texas, pleaded guilty to one count of using the National Forest Service for commercial purposes without the required permit. On May 25, 2013, he was ordered to pay a fine in the amount of $1500.00. In addition, he was ordered to pay a $10.00 special assessment fee and a $25.00 administrative fee.

On June 10, 2013, Brent Fox, entered a plea of guilty to one count of illegal taking of a black bear and is awaiting sentencing. The defendants committed the offenses within the Nantahala National Forest with the exception of Robert Watson who committed his offense within Pisgah National Forest.

In making today’s announcement U.S. Attorney Tompkins stated, “We anticipate that the success of Operation Something Bruin will send a strong message to poachers and would-be violators to think twice before they engage in illegal hunting activities. Together with our federal and state law enforcement partners we will combine forces to combat illegal hunting, protect our wildlife and conserve our natural resources. I commend the efforts of all involved in this investigation and I thank our law enforcement partners for their continued dedication to this important mission.”

“The continued success of Operation Something Bruin is a fine example of state and federal agencies coordinating efforts to protect the resources of our national forests,” said Steve Ruppert, Special Agent in Charge for the Southern Region of the U.S. Forest Service. “The Forest Service appreciates the hard work of its law enforcement officers, the North Carolina Wildlife Resources Commission, the U.S. Fish and Wildlife Service and the U.S. Attorney’s Office in bringing these individuals to justice.”

“These penalties reflect the seriousness of the crimes committed against conservation, our wildlife resources and the hunting heritage,” said Col. Dale Caveny, Chief of the Division of Law Enforcement for the N.C. Wildlife Resources Commission. “Operation Something Bruin documented hundreds of wildlife violations and the successful conclusion of these federal cases will make would-be violators think twice before breaking the law. Our long-term goal is to deter illegal wildlife activities from taking place in the future and serve notice to everyone that wildlife officers are ever vigilant in the service of conservation and public safety.”

The investigation was conducted by the United States Forest Service, the North Carolina Wildlife Resources Commission, the U.S. Fish and Wildlife Service the Georgia Department of Natural Resources and the National Park Service. The prosecution was handled by Assistant U.S. Attorney Richard Edwards of the U.S. Attorney’s Office in Asheville.

To report illegal hunting activities call the appropriate Law Enforcement contacts: The North Carolina State Wildlife Hotline at 1-800-662-7137, U.S. Fish and Wildlife Service, 1-828-258-2084 the National Forests at 1-828-231-0288 or The Great Smoky Mountains National Park at 1-865-436-1230.

STATESVILLE, N.C. – On Monday, June 10, 2013, U.S. District Judge Richard Voorhees sentenced Kelly McClain, 31, of Maiden, N.C. to serve 63 months in federal prison followed by four years of supervised release for trafficking in crack cocaine, 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 Sheriff David M. Carpenter, of the Lincoln County Sheriff’s Office.

According to filed court documents and court proceedings, on September 13, 2011, during a traffic stop of McClain’s vehicle, Lincoln County Sheriff’s deputies found 109.4 grams of crack cocaine under the mat at the driver’s side floorboard. In June 2012, McClain entered a plea of guilty to one count of possession with intent to distribute cocaine base, commonly referred to as crack cocaine. According to official court documents, Kelly McClain admitted the 109.4 grams of crack cocaine located in his vehicle belonged to him. McClain also admitted to supplying cocaine to other distributors in the area.

McClain has been in local federal custody in the Western District of North Carolina since his arrest in March of 2012. Upon designation of a federal facility he will be transferred into custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole.

The investigation was led by the Lincoln County Sheriff’s Office with the assistance of the Maiden Police Department. The prosecution for the government was handled by Special Assistant U.S. Attorney Erin Elizabeth Comerford of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – On Tuesday, June 4, 2013, Chief U.S. District Judge Frank D. Whitney sentenced two men on charges stemming from the 2011 armed robbery of a pawn shop located on Central Avenue, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division, and Chief Rodney D. Monroe of the Charlotte-Mecklenburg Police Department (CMPD) join U.S. Attorney Tompkins in making today’s announcement.

James Powell, IV, 23, of Mint Hill and Demontrez Lamont Dobie, 22, of Charlotte were sentenced to 162 months and 91 months in prison, respectively. Powell and Dobie were each also ordered to serve three years under court supervision upon release from prison.

According to court documents and yesterday’s sentencing hearing, Powell and Dobie robbed the Central Avenue Jewelry and Pawn on the morning of June 30, 2011, during business hours. Powell and Dobie, who wore wigs and sun glasses during the commission of the robbery, entered the pawnshop carrying two suit cases. Court records indicate that as Powell approached the counter, he pulled out a .380 caliber handgun and pointed it at the chest of one of the store employees. The defendants put the two employees of the store on the floor, and Dobie tied up the victims with shoe strings. According to court documents and court proceedings, while one of the victims was tied, Powell pistol whipped the victim in the head. Dobie struck the same victim in the ribs while the victim was tied up. During the robbery, Dobie stole the pawn shop employees’ .357 Magnum revolver, and brandished it. Powell then took cell phones and electronics belonging to the pawn shop and put them in the suitcases, all according to court documents. As law enforcement officers were responding to the scene, Powell and Dobie abandoned the suitcases, and, still armed, ran out the back door of the pawn shop. Law enforcement apprehended Powell and Dobie within a short distance from the pawn shop.

In June 2012, Dobie pleaded guilty to Hobbes Act robbery and aiding and abetting, and to possession and brandishing a firearm during and in relation to a crime of violence and aiding and abetting. Powell pleaded guilty in August 2012 to conspiracy to commit interference with commerce by threat or violence (Hobbes Act conspiracy), Hobbes Act robbery and aiding and abetting, possession of firearm by felon, and possession and brandishing a firearm during and in relation to a crime of violence and aiding and abetting.

In announcing the sentence, Judge Whitney stated that the robbery was a very violent offense and an egregious crime. Judge Whitney observed that Powell and Dobie were “lucky that [the robbery] did not lead to death or serious injury.”

The defendants have been in federal custody in the Western District of North. Upon designation of a federal facility, Powell and Dobie 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 ATF and CMPD. The prosecution for the government was handled by Assistant U.S. Attorney Robert Gleason of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – A Charlotte man has been sentenced to 15 years in prison for a firearms related offense announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. On Monday, June 3, 2013, Chief U.S. District Judge Frank D. Whitney sentenced Harvey Lee Mungro, Jr., 46, of Charlotte to serve 180 months in prison, followed by two years of supervised release. Mungro’s Mungro’s at least three prior felony convictions prohibit him from carrying a weapon and he was therefore sentenced by the Court as an armed career criminal.

U.S. Attorney Tompkins is joined in making today’s announcement by Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division, and Chief Rodney D. Monroe of the Charlotte Mecklenburg Police Department (CMPD).

In November 2011, a criminal bill of indictment charged Mungro with one count of possession of a firearm by a convicted felon. According to filed court documents and statements made in court, on August 9, 2011 Mungro possessed a Hi-Point, 9mm semiautomatic pistol and 18 rounds of ammunition in the car he was driving. Court records indicate that law enforcement officers recovered the firearm and ammunition when they conducted a traffic stop of Mungro’s vehicle. Mungro pleaded guilty to the charge in August 2012.

In announcing the sentence, Judge Whitney noted that it was the defendant’s criminal history that resulted in the elevated sentence and observed that the sentence would have a general deterrent effect.

Mungro has been in custody since August 2011. He will be transferred to the custody of the Federal Bureau of Prisons upon the designation of a federal facility. All federal sentences are served without the possibility of parole.

The investigation was handled by the ATF and CMPD. The case was prosecuted by Assistant United States Attorney Robert J. Gleason of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – A Charlotte man was sentenced in federal court on Monday, June 3, 2013, for being a felon in possession of a firearm, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Derek Lorenzo Covington, 47, of Marshville, N.C. was sentenced by Chief U.S. District Judge Frank D. Whitney to 180 months in prison, followed by two years of supervised release. In June 2012, Covington pleaded guilty to being a felon in possession of a firearm in violation of federal gun laws. Covington’s prior felony convictions prohibit him from carrying a weapon. Because Covington has three or more prior felony convictions, he qualifies as an “armed career criminal.”

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, Chief Rodney D. Monroe of the Charlotte Mecklenburg Police Department (CMPD) and Sheriff James E. Clemmons, Jr. of the Richmond County Sheriff’s Office.

According to the criminal indictment and statements made in court, on May 3, 2011, Covington went into a pawnshop in Charlotte and pawned a Springfield 20 gauge shot gun. Law enforcement officers obtained video footage from the pawn shop that showed Covington pawning the shotgun. Law enforcement also recovered a pawn slip for the shotgun with Covington’s name and signature. At the time of the offense, Covington was a convicted felon and was prohibited from possessing a firearm. Court records indicate that law enforcement later determined the shotgun was a stolen firearm.

Covington has been in federal custody since December 2011. He will be transferred to the custody of the Federal Bureau of Prisons upon the designation of a federal facility. All federal sentences are served without the possibility of parole.

The investigation was handled by ATF, CMPD and the Richmond County Sheriff’s Office. The case was prosecuted by Assistant United States Attorney Robert J. Gleason of the U.S. Attorney’s Office in Charlotte.

BRYSON CITY, N.C. – Nineteen members of a methamphetamine trafficking ring have been charged with conspiracy to possess with intent to distribute methamphetamine. Thirteen of those charged were arrested on Wednesday, May 29, 2013, during an early morning round-up conducted by federal, state and local law enforcement, 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 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 Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division.

The arrests are the result of a multi-agency investigation conducted by DEA, ATF, North Carolina State Bureau of Investigation, Macon County Sheriff’s Office, Jackson County Sheriff’s Office, Swain County Sheriff’s Office, Franklin Police Department, and Cherokee Indian Police Department to target and reduce the trafficking of methamphetamine in Western North Carolina.

In making today’s announcement, U.S. Attorney Tompkins stated, “Methamphetamine is harmful not only to those who create or use it but also to those who are exposed to it, often including young children. Together with our law enforcement partners we will continue our relentless pursuit of meth trafficking rings that operate in our communities, plague our neighborhoods and imperil our children.”

Harry S. Sommers, the Special Agent in Charge of the DEA Atlanta Field Division commented on the case, “The successful results of this investigation should let criminals who flood the drug market with methamphetamine know that DEA and its multi-level law enforcement partners will disrupt, dismantle and ultimately destroy their drug distribution networks.”

“Drug dealers are poison enough to our communities, but when you include a drug dealer who also deals in guns that have the high potential of being used in violent crimes, it becomes a top priority of ATF to stop them and hold them accountable for their criminal conduct.” said ATF Special Agent in Charge Wayne L. Dixie. “Anyone who deals in the illegal transfer of firearms and manufacture and distribution of illegal drugs can be assured that the full wrath and resources of the federal government will be used to remove them from our neighborhoods.”

According to allegations contained in the criminal indictment unsealed today in U.S. District Court, from in or about May of 2012 to in or about April of 2013, the nineteen defendants did knowingly conspire to possess with intent to distribute more than 50 grams of actual methamphetamine or more than 500 grams of a mixture or substance containing a detectable amount of methamphetamine, which has a street value of $100. The indictment alleges that the defendants carried out their drug conspiracy primarily in Jackson, Haywood, Macon, Swain and Buncombe counties in Western North Carolina.

The following individuals were named and charged in the methamphetamine conspiracy indictment.

• Cipriano Ramos Altamirano, 25, of Franklin, N.C. (arrested)

• Claude Gregory Coggins, 50, of Cullowhee, N.C. (arrested)

• Anne Harvey Cresswell, ¬¬¬¬42, of Franklin. (arrested)

• Joseph Daniel Denmark, 32, of Franklin. (arrest pending)

• Patricia Leigh Dreml, 48, of Bryson City, N.C. (arrested)

• Daniel Furman Gibson, 50, of Franklin. (arrested)

• Gerardo Beltran Llanas, 43, of Franklin. (arrested)

• Carlos Lopez, 28, of Canton, N.C. (arrest pending)

• Forest Shane Lynn, 42, of Robinsville, N.C. (arrested)

• Joshua Bryan Parker, 29, of Franklin. (arrested)

• Eddie Dwayne Potts, 42, of Cullowhee. (arrest pending)

• Gerardo Rodriquez-Aragon, 30, of Franklin. (arrested)

• Javier Serna-Trejo, 30, of Clayton, Ga. (arrested)

• Chad Keith Shuler, 36, of Franklin. (arrest pending)

• Paul Michael Swofford, 46, of Franklin. (arrest pending)

• Ronald Edward Swofford, 39, of Franklin. (arrested)

• James Homer Taylor, 52, of Franklin. (arrested)

• Heather Marie West, 24, of Canton. (arrest pending)

• Angela Leigh Wike, 39, of Bryson City. (arrested)

A separate indictment also unsealed today in U.S. District Court charged Taylor and David Carlton Martin, 57, of Franklin, with one count of dealing in firearms without a license. Martin was also arrested during the early morning round-up yesterday.

All 19 defendants in the methamphetamine trafficking ring have been charged with engaging in a narcotics conspiracy and they face a statutory minimum prison term of ten years and a maximum term of life imprisonment, and a $10 million fine. (See chart below for a breakdown of additional federal charges and maximum penalties for each defendant). Taylor and Martin face a maximum prison term of five years and a $250,000 fine for the firearms charge.

The 13 defendants arrested on May 29, 2013 will have their initial appearances this afternoon in U.S. District Court before U.S. Magistrate Judge Dennis L. Howell.

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

The investigation is being handled by the DEA and ATF, assisted by the North Carolina State Bureau of Investigation, Macon County Sheriff’s Office, Jackson County Sheriff’s Office, Swain County Sheriff’s Office, Franklin Police Department, and Cherokee Indian Police Department. The prosecution is being handled for the government by Assistant U.S. Attorney Thomas Kent of the U.S. Attorney’s Office in Asheville.

CHARLOTTE, N.C. – Donte Jamar Sims, 22, of Charlotte, was sentenced today to serve six months in prison and one year of supervised release for threatening the life of the President of the United States, 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 Russell F. Nelson, Special Agent in Charge of the United States Secret Service, Charlotte Field Division, and Chief Rodney D. Monroe of the Charlotte-Mecklenburg Police Department.

According to filed court documents and today’s sentencing hearing, in September 2012 a criminal indictment charged Sims with one count of knowingly and willfully making a threat to take the life of and to inflict bodily harm upon Barack H. Obama, President of the United States, specifically by making threats to assassinate President Obama in statements Sims posted on his Twitter account, @DestroyLeague_D. Sims pleaded guilty to the charge in October 2012.

Court records show that Sims was aware that President Obama would be in Charlotte during the week of September 3, 2012, in connection with the Democratic National Convention. Media outlets had also reported that the President would be making several public appearances in Charlotte during that time period, including making public speeches at the Time Warner Arena or the Bank of America Stadium.

On September 4, 2012, the U.S. Secret Service located the following statements on Twitter made using the Twitter user name “@DestroyLeague_D.”:

a) 09/03/12 @ 0606 hours: “Well Ima Assassinate president Obama this evening !... Gotta get this monkey off my chest while he’s in town -_-“ (https://twitter.com/DestroyLeague_D/status/242609574576803841)

b) 09/03/12 @ 0608 hours: “Ima hit president Obama with that Lee Harvey Oswald swag”

c) 09/03/12 @ 0612 hours: “The Secret Service is gonna be defenseless once I aim the Assault Rifle at Barack’s Forehead … F* the #DNC !”

d) 09/03/12 @ 0619 hours: “he wont even make it to the coliseum”

e) 09/03/12 @ 0620 hours: “*Plotting president Obama’s Murder”

The personal photograph on the profile associated with @DestroyLeague_D published on the Twitter website was that of Sims.

On September 5, 2012, agents with the U.S. Secret Service conducted an interview of Sims at his Charlotte residence. Court records indicate Sims acknowledged that he used Twitter and that his account was named @DestroyLeague_D. Sims also acknowledged using his Twitter account @DestroyLeague_D to publish the Tweets threatening the President, and also stated that he published the statements because he hated President Obama.

In handing down Sims’ sentence, Chief U.S. District Judge Robert J. Conrad, Jr. noted the seriousness of the offense and the need for the sentence to promote a respect for the law.

The defendant was ordered to self-report to the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.

The investigation was led by the U.S. Secret Service with the assistance of CMPD. The prosecution for the government was handled by Assistant U.S. Attorney Robert Gleason of the U.S. Attorney’s Office in Charlotte.

Defendant Allegedly Obtained Over $450,000 for Fraudulent and Non-Existent Services

CHARLOTTE, N.C. – A Charlotte man charged with defrauding Medicaid of at least $450,000 and stealing the identities of children and clinicians to commit the fraud was arrested in Charlotte today, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

A federal grand jury returned the criminal indictment against Calvin Cantrell Estrich, 31, of Charlotte on May 23, 2013. The indictment charges Estrich with one count of health care fraud conspiracy, four counts of health care fraud, four counts of false statements in connection with health care matters, eight counts of aggravated identity theft, one count of money laundering and one count of making false statements to investigators. The indictment also includes a forfeiture allegation seeking a money judgment in the amount of at least $462,178.

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).

“Rooting out health care fraud and bringing to justice those looking to scam taxpayer-funded health care programs is a priority for this office,” said U.S. Attorney Tompkins. “Since its inception in 2010, our District’s Health Care Fraud task force has prosecuted a significant number of criminals who sought to benefit financially by falsely billing Medicare and Medicaid. We will continue to fight health care fraud through concentrated and sustained efforts and to aggressively safeguard precious taxpayer dollars.”

“Cases like this one send a strong signal that we won’t tolerate health care fraud in North Carolina,” said Attorney General Roy Cooper. “Our investigators and attorneys will continue to work closely with their federal counterparts to stamp out health care fraud and abuse, save taxpayers’ money, and protect patients.”

According to allegations in the indictment, from October 2009 through November 2010 Estrich and his co-conspirator, Joye Strong, participated in a scheme to defraud Medicaid by submitting reimbursements for medically unnecessary services. Estrich’s company, Everyday’s Blessing, was approved by Medicaid to provide Intensive In-Home Community Intervention Services, which are mental and behavioral services designed to stabilize living arrangements and prevent out-of-home therapeutic treatment for children and youth. The indictment alleges that Estrich and Strong stole and misused the identities of a nurse practitioner and two therapists in order to complete the necessary paperwork for Medicaid to approve services for Medicaid recipients to receive these services. According to the indictment, once Medicaid approved Everyday’s Blessing to provide services to these recipients based upon the fraudulent paperwork, Estrich and Strong sought and received reimbursement from Medicaid through Everyday’s Blessing for the medically unnecessary services. The indictment also alleges that in many instances, the Medicaid recipients did not receive any services at all.

For example, the indictment alleges that Estrich, aided and abetted by others, fraudulently billed Medicaid for services supposedly provided to juvenile Medicaid recipient, identified in the indictment as “J.R.” when, in fact, J.R. did not receive any services. Estrich and Strong, through Everyday’s Blessing, received over $24,000 in payments from Medicaid for these false services. Furthermore, Estrich unlawfully used J.R.’s Medicaid recipient identification number in order to obtain reimbursement pursuant to the fraud scheme.

The indictment further alleges that Estrich and Strong stole the identity of a therapist, identified in the indictment as “J.O.,” in order to obtain approval from Medicaid for fraudulent and medically unnecessary services. According to the indictment, J.O. provided her name and credentials to co-conspirator Strong when J.O. sought employment at another company operated by Strong. Thereafter, Estrich and Strong stole and misused J.O.’s identity by forging J.O.’s signature on paperwork for diagnostic and therapeutic services which J.O. did not perform.

According the indictment, Estrich and Strong obtained $462,178 in fraudulent payments from Medicaid pursuant to the fraud scheme. During the relevant time period, the indictment alleges that Estrich laundered the proceeds of the fraud scheme through cash withdrawals and debit card purchases, including a cash withdrawal in the amount of $15,093 in November 2010. Furthermore, the indictment alleges that when investigators interviewed Estrich about the fraud scheme in December 2012, Estrich made materially false and fraudulent statements to investigators.

Co-conspirator Joye Strong pleaded guilty to eight counts of health care fraud and two counts of money laundering in October 2011. Strong is awaiting sentencing on those charges. U.S. Attorney Tompkins notes that the guilty plea of one any other person is not relevant to the guilt of any indicted person.

Estrich made his initial appearance today in U.S. District Court and was released on bond. If convicted, Estrich faces a maximum of ten years in prison for the health care fraud conspiracy count and for each of the four counts of health care fraud. He faces a maximum prison term of five years for each of the four counts of making false statements in connection with health care matters. He also faces a mandatory consecutive prison term of two years for the eight aggravated identity theft counts, ten years on the one count of money laundering and five years on the one count of making false statements to investigators in a federal health care fraud investigation. Each of the counts charged in the indictment carries a maximum fine of $250,000.

An indictment is merely an allegation and Estrich is presumed innocent unless and until proven guilty beyond reasonable doubt in a court of law.

The investigation into Estrich and Strong was handled by MID with assistance from the North Carolina Division of Medical Assistance. The prosecution is being handled by Special Assistant United States Attorney Laura Lansford and Assistant U.S. Attorney Kelli Ferry of the Western District of North Carolina.

Ms. Lansford is an Assistant Attorney General with the North Carolina Department of Justice Medicaid Investigations Division and was appointed to serve as a Special Assistant United States Attorney (SAUSA) with the U.S. Attorney’s Office in Charlotte in 2007. The SAUSA position is reflection of the partnership between the Medicaid Investigations Division and the United States Attorney that helps ensure the effective and vigorous prosecution of Medicaid fraud.

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 prosecutors, dedicated to identifying and prosecuting those who defraud the health care system, and reducing the potential for health care fraud in the future. The Task Force focuses on the coordination of cases, information sharing, identification of trends in health care fraud throughout the region, staffing of all whistle blower complaints, and the creation of investigative teams so that individual agencies may focus their unique areas of expertise on investigations. The Task Force builds upon existing partnerships between the agencies and its work reflects a heightened effort to reduce fraud and recover taxpayer dollars.

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

Defendant Operated $8.9 Million Ponzi Scheme Through Hedge Fund

CHARLOTTE, N.C. – Stephen E. Maiden, 40, of Charlotte, has pleaded guilty to securities fraud for carrying out an $8.9 million Ponzi scheme, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Maiden entered his guilty plea this morning before U.S. Magistrate Judge David C. Keesler.

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

A criminal bill of information filed on February 21, 2013, charged Maiden with conducting a Ponzi scheme through his hedge fund Maiden Capital Opportunity Fund (Maiden Capital) which was based in Charlotte. According to the bill of information, Maiden formed his hedge fund in October 2006 and touted his past educational and professional experience, which included stints at Chase Securities, Inc. as an investment banker and Mangan & McColl Partners as an investment analyst, to attract investors from Charlotte and elsewhere.

Based on information in court documents and court proceedings, beginning in at least February 2009, Maiden routinely transmitted bogus account statements to victims and to Maiden Capital’s fund administrator which falsely reported favorable returns both monthly and from the fund’s inception. For example, in June 2011, Maiden transmitted a bogus account statement which reported an estimated monthly net return of 1.3% and a 56 month inception-to-date net return of 81.3%. The account statement noted that in the same 30 month time period, the Russell 2000 and S&P 500 had gains of 24.5% and 11.3% respectively. In truth and fact, according to the charging document, Maiden completely fabricated these returns and by February 2009 had lost the majority of the fund’s assets in failed investments. To keep the scheme going, Maiden used money from new investors to satisfy withdrawal requests made by other fund investors, falsely characterizing the transactions as payments from Maiden Capital’s successful operations. As a result of his conduct, Maiden caused a total loss to victims of at least $8.9 million.

Maiden pleaded guilty to one count of securities fraud and was released on bond. He faces a maximum of 20 years in prison and a $250,000 fine, or both. Maiden 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 prosecutions were handled by Assistant United States Attorney Mark T. Odulio, of the U.S. Attorney’s Office in Charlotte.

This matter relates to the work of Charlotte’s Securities Fraud Task Force, a group made up of the FBI, the securities division of the N.C. Secretary of State’s office, the N.C. Attorney General’s Office, the IRS criminal division, the U.S. Postal Inspection Service, the Mecklenburg County District Attorney’s Office, the Securities and Exchange Commission, and the U.S. Attorney’s Office. The multi-agency Task Force promotes collaboration between the agencies in the fight against corporate fraud, insider trading, accounting fraud, market manipulation schemes, and other finance-related crimes.

CHARLOTTE, N.C. – A Charlotte man was sentenced to 135 months in prison today for possession and transportation of child pornography, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Robert Bove, 55, of Charlotte was also ordered to serve 20 years under court supervision following his prison sentence and to register as a sex offender.

Joining U.S. Attorney Tompkins in making today’s announcement are John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Rodney D. Monroe, of the Charlotte Mecklenburg Police Department (CMPD).

In April 2011, a federal criminal indictment charged Bove with one count of transportation and one count of possession of child pornography. According to filed court documents and today’s sentencing hearing, between September 2010 and February 2011, Bove transported and possessed videos and images depicting the sexual abuse of children. Bove pleaded guilty to the charges in September 2011.

According to information contained in court documents and yesterday’s sentencing hearing, in September 2010, Bove was chatting online using the screen name “luvsyourlittlegirl” with a Sargent of the Sturgeon Bay Police Department (SBPD) in Wisconsin who was posing as a 42-year-old female. Court records indicate that during the online exchange, Bove sent the undercover officer an image of child pornography. The Wisconsin detective was able determine that “luvsyourlittlegirl” had sent the image of child pornography from a residence in Charlotte, and he forwarded the investigative materials to the Charlotte Mecklenburg Police Department. According to court records, law enforcement obtained a search warrant for the residence, where they encountered Robert Bove, who admitted to police that he was “luvsyourlittlegirl” and that there was child pornography on his home computer. Filed documents indicate that law enforcement seized the computer and other electronic evidence, and a computer forensic examiner discovered videos and images of child pornography on Bove’s computer and flash drive. Court records indicate that the images and videos Bove possessed depicted children as young as toddlers engaged in sexual acts with adults.

In determining Bove’s sentence, Chief U.S. District Judge Robert J. Conrad, Jr. considered evidence presented at the sentencing hearing that Bove had been previously the subject of a child pornography investigation in Colorado. During that investigation, a detective in Colorado encountered Bove in a chat room where child pornography videos were being broadcasted and viewed by members of the chat room. Judge Conrad also considered chats between Bove and the undercover detective in Wisconsin, wherein Bove, posing as “luvsyourlittlegirl,” told the detective that he had seen child pornography videos in chat rooms five and six years ago, and that it was “very exciting” and “very hot.”

Bove has been in local federal custody since April 2011. He will be transferred into the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole. The case resulted from the collaborative efforts of the Sturgeon Bay, Wisconsin, Police Department, CMPD and the FBI, all of which are members of their state Internet Crimes Against Children task forces.

In making today’s announcement U.S. Attorney Tompkins thanked the Sturgeon Bay Police Department for their assistance in this case.

The prosecution for the government of Bove was handled by Assistant U.S. Attorney Kimlani Ford of the U.S. Attorney’s Office in Charlotte.

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

CHARLOTTE, N.C. – On Friday, May 10, 2013, a Charlotte federal jury convicted Jorge Molina-Sanchez, 24, of Mexico, of conspiring to distribute cocaine and heroin throughout North Carolina and related charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The jury returned the guilty verdict following a three-day trial which ended late Friday afternoon.

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, and Sheriff Kevin L. Auten of Rowan County Sheriff’s Office (RCSO).

A federal criminal indictment filed in October 2012 charged Molina-Sanchez with conspiracy to distribute and to possess with intent to distribute at least five kilograms of cocaine and at least one kilogram of heroin, conspiracy to launder proceeds of drug trafficking, possession with intent to distribute cocaine, and possession of a firearm in furtherance of drug trafficking. He was found guilty of all charges.

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

From in or about 2004 through 2011, Molina-Sanchez and his co-conspirators obtained hundreds of kilograms of cocaine from a supplier in California. The defendant and his co-conspirators transported the cocaine and redistributed it to other traffickers, who sold the cocaine throughout North Carolina. The street value of the cocaine was in excess of $30,000,000.

To avoid detection, Molina-Sanchez and his co-conspirators transported the cocaine and the drug proceeds hidden in compartments in vehicles. On one occasion, in March 2011, law enforcement found tens of thousands of dollars hidden in the air filter of a vehicle and in a void in the trunk of a car. In July 2011, law enforcement officers discovered and seized from a vehicle three kilograms of cocaine, a kilogram of heroin, and $138,460 in cash. Also in July 2011 while executing a search warrant, law enforcement discovered in Molina-Sanchez’s house a hand-drawn map of the location where the defendant’s sister had been stopped in Utah with eleven kilograms of cocaine in February 2011. Additional trial evidence included telephone conversations in September 2011, during which Molina-Sanchez asked a former co-conspirator to go to Las Vegas to inspect a vehicle and to transport cocaine back to North Carolina. When officers arrested Molina-Sanchez in October 2012, he was in possession of almost three ounces of cocaine, two handguns, and more than 100 rounds of ammunition.

Molina-Sanchez has been in local federal custody since he was arrested in October 2012 and will remain in custody until his sentencing date, which has not yet been set.

Molina-Sanchez faces a statutory mandatory minimum sentence of 15 years to life in prison, as well as a fine of up to $10,000,000, and at least five years of supervised release upon his release from prison. Federal sentences are served without the possibility of parole.

The case was investigated by HSI in Charlotte and RCSO, assisted by the Charlotte-Mecklenburg Police Department and its crime laboratory, the Iredell County Sheriff’s Office and its crime laboratory, and the North Carolina State Bureau of Investigation. The prosecution was handled by Assistant U.S. Attorney Steven R. Kaufman.

CHARLOTTE, N.C. – A Charlotte jury convicted four gang members of the United Blood Nation (“UBN”) of racketeering conspiracy and related charges following a six day trial which ended on Wednesday, May 8, 2013, 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 (FBI), Charlotte Division and Chief Monroe of the Charlotte Mecklenburg Police Department join U.S. Attorney Tompkins in making today’s announcement.

Jaimel Kenzie Davidson a/k/a “I-Shine,” 29, Nathaniel Graham a/k/a “Nasty”, 24, Kentrell Tyrone McIntyre a/k/a “Mustafa,” 33, and Perry Gorontent Williams a/k/a “P-Flame” or “Flame,” 27, were found guilty of engaging in racketeering conspiracy. Graham, McIntyre and Williams were also found guilty of conspiracy to commit murder in aid of racketeering activity.

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

From in or about June 2011 to in or about July 2011, the defendants carried out the conspiracy while they were incarcerated within the North Carolina Department of Corrections (NC DOC). The defendants used smuggled cellular telephones to communicate with UBN gang members who were incarcerated in various NC DOC facilities as well as gang members who were not incarcerated. The smuggled cellular telephones were used to facilitate gang activity both in the prisons as well as in communities throughout the state of North Carolina. Jurors heard cell phone conversations in which the defendants and others discussed criminal activities, including the conspiracy to commit murder of another inmate who was not a gang member, because the inmate refused to give into the demands of UBN gang members. Jurors also heard cell phone conversation in which the defendants and others discussed the distribution of controlled substances as well as violent assaults of family members of other incarcerated inmates who disrespected the UBN. In addition, the smuggled cellular telephones were used to conduct high level gang “management meetings,” during which high ranking gang members coordinated gang business activities and discussed the assignment of gang activities outside prison to low level gang members, known as “scraps.”

“Gang-related violent crimes plague our communities and spread fear and violence in our neighborhoods. This case is particularly troubling because these four gang members continued to carry out violent criminal gang activities and even planned a murder from behind bars. I commend our law enforcement partners for their hard work on this case and for their continued efforts to pursue dangerous gangs and dismantle their illegal activities in our state and elsewhere,” said U.S. Attorney Tompkins.

“The FBI is committed to dismantling the violent gangs that threaten the safety and stability of our neighborhoods. This three year investigation is an outstanding example of what federal, state, and local law enforcement can accomplish together when we attack the gangs that terrorize our communities,” said FBI’s Special Agent in Charge John Strong.

“The Charlotte-Mecklenburg Police Department and our partner agencies will continue to be diligent in letting criminals know that these neighborhoods are not a safe haven for their illegal activities,” said Chief Monroe of CMPD.

The defendants are currently in local federal custody. The racketeering conspiracy charge carries a maximum prison term of 20 years and a $250,000 fine. The conspiracy to commit murder in aid of racketeering conspiracy charge carries a maximum prison term of 10 years and a $250,000 fine. Sentencing dates for the defendants have not been set yet.

The case was investigated by the FBI and CMPD. The prosecution is handled by Assistant U.S. Attorney Jill Westmoreland Rose and Daniel Ryan of the U.S. Attorney’s Office in Charlotte.

Fifteen Others Convicted Of Related State And Federal Charges

STATESVILLE, N.C. – An Alleghany Co. woman was sentenced on Monday, May 6, 2013 to serve 40 months in prison and two years of supervised release for health care fraud conspiracy and money laundering, 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 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 Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).

Betty Ann Cook, 56, of Sparta, N.C., pleaded guilty on April 25, 2012, to one count of health care fraud conspiracy and one count of money laundering conspiracy. According to court documents and court proceedings, Cook was the owner of Families First Home Health Care, a home health care company located in Alleghany Co., N.C. Cook’s company was enrolled with Medicaid to provide personal care services (“PCS”) such as bathing, dressing, and eating to Medicaid recipients. These types of services are provided by a home health aide in the recipient’s home. According to filed documents, from December 2006 to about October 2010, Cook participated in a scheme to defraud Medicaid by submitting false and fraudulent claims to Medicaid seeking reimbursement for patient care services that were either not provided, not authorized by a physician, or were not based upon a valid in-home eligibility assessment performed by a qualified registered nurse, as required by Medicaid policy.

Court records indicate that during the relevant time period, Cook and her co-conspirators, which included PCS aides and Medicaid recipients, participated in a “fee-splitting” scheme. The scheme involved billing Medicaid for patient care services that were not rendered and then splitting the fraudulently obtained Medicaid reimbursements among the co-conspirators. As a result of the fee-splitting scheme, Cook received over $150,000 as payment to the fraudulent claims.

In addition to the fee-splitting scheme, court documents reveal that Cook also submitted fraudulent claims to Medicaid for patient care services allegedly provided to Medicaid recipients, even though the services were not approved by a physician. Cook copied, altered and falsified physician signatures on forms in order to justify the fraudulent billing. In some instances, Cook altered the forms approving PCS for a Medicaid recipient, despite a physician’s clear denial of such services. Similarly, Cook and her co-conspirators submitted fraudulent claims for PCS based upon false and fraudulent nurse assessments, by forging nurses’ signatures on PCS assessment forms.

At the sentencing hearing, U.S. District Judge Richard L. Vorhees also ordered Cook to pay $325,820.17 in restitution. Cook has been released on bond since entering her guilty plea. She will be ordered to report to a federal facility, at which time she will be transferred into the custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole.

Monday’s sentencing of Cook marks the conclusion of a multi-year investigation into Cook and her conspirators. In addition to Cook, 15 other individuals have been convicted in federal and state court in related charges. On April 8, 2013, Crystal Deleon Evans, 34, of Sparta, was sentenced to probation for one count of health care fraud conspiracy. Fourteen other individuals have pleaded guilty in the Allegheny County District Court to misdemeanor charges of conspiracy to commit Medicaid fraud. Those individuals, listed below, all were sentenced to probationary terms.

• Jessica Beth Absher-Shelton, 33, of Anderson, S.C. • Patricia Atkins, 62, of Low Gap, N.C. • Billie Jo Bingman, 34, of Sparta. • Crystal Brewster, 34, of Sparta. • Lisa Marie Cook, 35, of Sparta. • Rena Mahan, 32, of Sparta. • Desiree Payne, 22, of Sparta. • Dwana Sanchez, 36, of Sparta. • Tammy Williams, 43, of Laurel Springs, N.C. • Jessica Cook, 27, of Sparta. • Dietra Michelle Bottomley, 38, of Ennice, N.C. • Tammy Atkins, 43, of Mount Airy, N.C. • Amy Lyall, 39, of Sparta. • Deborah Aroche, 49, of Sparta.

The investigation into Cook and Evans was handled by MID, HHS-OIG and IRS-CI, assisted by the North Carolina Division of Medical Assistance and the Alleghany County Sherriff’s Office. The prosecution was handled by Special Assistant United States Attorney Laura Lansford and Assistant U.S. Attorney Kelli Ferry of the Western District of North Carolina.

Ms. Lansford is an Assistant Attorney General with the North Carolina Department of Justice Medicaid Investigations Division and was appointed to serve as a Special Assistant United States Attorney (SAUSA) with the U.S. Attorney’s Office in Charlotte in 2007. The SAUSA position is reflection of the partnership between the Medicaid Investigations Division and the United States Attorney that helps ensure the effective and vigorous prosecution of Medicaid fraud.

The investigation and charges are the work of the Western District’s joint Health Care Fraud Task Force. The Task Force is multi-agency team of experienced federal and state investigators, working in conjunction with criminal and civil Assistant United States Attorneys, dedicated to identifying and prosecuting those who defraud the health care system, and reducing the potential for health care fraud in the future. The Task Force focuses on the coordination of cases, information sharing, identification of trends in health care fraud throughout the region, staffing of all whistle blower complaints, and the creation of investigative teams so that individual agencies may focus their unique areas of expertise on investigations. The Task Force builds upon existing partnerships between the agencies and its work reflects a heightened effort to reduce fraud and recover taxpayer dollars.

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

Five Others Have Been Sentenced In Connection With The Investigation

STATESVILLE, N.C. – Norberto Rivera Aguilar, 26, of Mexico, was sentenced on Monday, May 6, 2013, to serve 10 years in prison to be followed by four years of supervised release for conspiracy to distribute and to possess with intent to distribute cocaine and methamphetamine, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Brock D. Nicholson, Special Agent in Charge of the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Georgia and the Carolinas; Greg McLeod, Director of the North Carolina State Bureau of Investigation (NC SBI); and Sheriff William R. Oliver, of the Yadkin County Sheriff’s Office, join U.S. Attorney Tompkins in making today’s announcement.

According to filed court documents and court proceedings, from in or about 2010 to in or about August 2011, Aguilar and five others were involved in a drug trafficking conspiracy that distributed cocaine and methamphetamine in Iredell County and elsewhere in North Carolina. Court records show that the drugs were smuggled in the U.S. from a Mexican supply source.

Five additional defendants previously pleaded guilty to one count of conspiracy to distribute and to possess with intent to distribute cocaine and methamphetamine and have been sentenced in connection with this case.

• Caritino Mujica-Vargas, 38, of Mexico, was sentenced in February 2013 to 10 years in prison and four years of supervised release. Mujica-Vargas had also pleaded guilty to a firearm violation.

• Francisco Javier Teodoro-Campuzano, 22, of Mexico, was sentenced in February 2013 to 43 months in prison and two years of supervised release.

• Marco Antonio Sosa-Caderilla, 26, of Mexico, was sentenced in December 2012 to 24 months in prison and one year of supervised release.

• Carolina Olivia Hernandez, 20, of Mexico, was sentenced in February 2013 to a time-served sentence of approximately 18 months in prison and two years of supervised release.

• Oscar Leal Martinez, 47, of Yadkinville, N.C. was charged in a separate indictment and pleaded guilty in February 2012 to one count of conspiracy to distribute and to possess with intent to distribute cocaine. He was sentenced in February 2013 to 60 months in prison and four years of supervised release.

According to filed court documents and court proceedings, Aguilar led the organization in the Statesville area, and Mujica-Vargas was the primary source of supply out of Winston-Salem. Law enforcement conducted a dozen purchases of narcotics totaling more than two kilograms of cocaine and approximately three ounces of methamphetamine from the organization. On the date of the arrests in August 2011, law enforcement searched Mujica-Vargas’ residence and seized a press for forming kilogram blocks of cocaine, a digital scale, $5,000 in U.S. currency, two handguns and a rifle. Mujica-Vargas kept one of the handguns in a flower pot in the living room near the entry to his home.

All defendants are currently in federal custody. They will be transferred to the custody of the Federal Bureau of Prisons upon designation of federal facilities. Federal sentences are served without the possibility of parole.

The case was investigated by HSI in Charlotte and Winston-Salem, NC SBI and the Yadkinville County Sheriff’s Office, assisted by the Davie County Sheriff’s Office, the Winston-Salem Police Department, and the Forsyth County Sheriff’s Office. The prosecution was handled by Assistant U.S. Attorney Steven R. Kaufman.

CHARLOTTE, N.C. – A former Charlotte resident pleaded guilty today before U.S. Magistrate Judge David S. Cayer for her role in a scheme involving stolen personally identifiable information (PII) and fraudulently-obtained consumer credit reports, 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 Keith Fixel, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS).

Nakia Monica Brown, 34, formerly of Charlotte, pleaded guilty to one count of wire fraud conspiracy and one count of aggravated identity theft. Brown’s co-conspirators, Tiffany Sherise Young, 30, of Charlotte and Trina Monique Young, 39, of Bronx, N.Y. have also agreed to plead guilty to one count of wire fraud conspiracy for their involvement in the scheme. Their plea hearings are scheduled for May 9th and May 10th, respectively, before Judge Cayer.

According to filed court documents and court proceedings, from 2009 through 2010, Brown and her co-conspirators used an unlawfully-acquired list of over 1,400 identity theft victims that contained stolen PII, including the victims’ names, social security numbers, and dates of birth. Court records show that the co-conspirators used the victim’s PII to obtain free consumer credit reports from credit reporting agencies and, in turn, used the consumer credit report information to manufacture fake identification documents and to purchase over $400,000 in merchandise from eleven (11) national retail chains.

According to the criminal bill indictment and plea documents, Brown defeated the credit reporting agencies’ online security systems and gained access to the victims’ consumer credit reports, including the victims’ credit scores, their existing credit card accounts, their available lines of credit and other biographical information, such as their residential addresses. In this manner, Brown fraudulently acquired a combined total of 370 credit reports from the three credit reporting agencies, according to plea documents.

Court documents indicate that Brown then used the identity theft victims’ information to manufacture counterfeit New York driver’s licenses. The counterfeit driver’s licenses contained the names, dates of birth and addresses of the identity theft victims, along with photographs and physical descriptions of Brown and her co-conspirators. Using the counterfeit New York driver’s licenses, Brown and her co-conspirators fraudulently purchased merchandise at national retail merchant stores based on the identity theft victims’ available credit or based on same-day, instant credit offered by the retail stores to new customers. Court records indicate that the fraudulently-purchased merchandise was then sold to pawnbrokers, “fences” and other end users. According to the plea agreement, the financial loss exceeds $400,000.

Brown and her co-conspirators have been released on bond since April 2012. They each face a maximum prison term of 20 years and a $250,000 for the wire fraud conspiracy charge. Brown faces a consecutive mandatory prison term of two years and a $250,000 fine for the aggravated identity theft charge. Sentencing dates for the defendants have not been set yet.

The investigation was handled by the USPIS, with assistance from the Charlotte-Mecklenburg Police Department. The prosecution was handled by Assistant U.S. Attorney Tom O’Malley of the U.S. Attorney’s Office in Charlotte.

If you believe that your personal information was compromised, there are numerous resources available online that can help you understand what steps to take to protect yourself against identify theft. This includes:

• A detailed list of resources from 11 different federal agencies, available at: http://idtheft.gov/takeaction.html • A guide from the Federal Trade Commission on what to do if your personal information has been compromised, but not yet misused: http://www.consumer.ftc.gov/features/feature-0014-identity-theft • Information on the different types of identity theft and additional resources available at: http://www.consumer.ftc.gov/features/feature-0014-identity-theft

 

Defendant and Co-Conspirators Used False Tax Identification Numbers to Seek more than $5 Million in Refunds

CHARLOTTE, N.C. – A Charlotte woman charged in a scheme to defraud the government by obtaining false and fraudulent income tax refunds pleaded guilty in U.S. District Court today, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Jeannine Hammett, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division joins U.S. Attorney Tompkins in making today’s announcement.

A criminal bill of indictment filed in December 2012, charged Ana Portillo, 42, of Charlotte (also known as Ana Portillo-Flores, Ana Flores-Portillo, Peladita Portillo or Lety Portillo), with one count of false claims conspiracy, for the filing of false tax returns seeking tax refunds based on fraudulently obtained Individual Taxpayer Identification Numbers (ITINs). According to court documents and today’s plea hearing, from in or about January 2012 and continuing to July 2012, Portillo and her co-conspirators agreed to defraud the U.S. Treasury Department by participating in a scheme to obtain false tax refunds. Court records show that the co-conspirators had obtained ITIN numbers for various individuals using Mexican birth certificates and other documents. The co-conspirators then used these ITIN numbers to prepare false federal tax returns seeking fraudulent refunds claiming false wage, income, and withholding information and claiming multiple dependents. According to court filings and court proceedings, part of the scheme was that the co-conspirators would rent apartments at complexes featuring centralized mailboxes and use addresses at the apartment complexes as the addresses on the fraudulent tax returns. Court documents indicate that the co-conspirators then caused the Treasury Department to mail the false tax refund checks to these specially chosen addresses.

According to the charging documents and information presented in court, at least 1,104 fraudulent tax returns have been associated with the conspiracy, claiming $5.1 million in refunds. Of this amount, the IRS issued refunds totaling approximately $1.6 million. Court records show that the co-conspirators would arrange for the refund checks to be cashed and would then deposit that cash into bank accounts or hold it in safety deposit boxes and wire it to Mexico.

Portillo entered her guilty plea before U.S. Magistrate Judge David S. Cayer. Her co-conspirators, Cathy Cisneros, 30, and Candida Figueroa, 42, both of Charlotte, previously pleaded guilty to one count of false claims conspiracy for the same scheme, in October and November 2012, respectively.

Portillo has been released on bond pending sentencing. Both Figueroa and Cisneros have been in local federal custody since August 2012. A sentencing date for Portillo and her co-conspirators has not been set. Each defendant faces a maximum prison term of 10 years, a $250,000 fine, or both.

The investigation was handled by IRS-Criminal Investigations Division with substantial assistance from the U.S. Postal Service. The prosecution is being handled for the government by Assistant U.S. Attorney Jenny Grus Sugar of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – The owner of a North Carolina investment firm has been charged with securities fraud for orchestrating a Ponzi scheme that solicited victims to invest millions in the foreign currency market (“FOREX”), 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.

On April 18, 2013, a federal criminal indictment charged James H. Mason, 66, of Graham, N.C., with one count of securities fraud in connection with a $4.7 million foreign currency Ponzi scheme. According to allegations contained in the indictment, beginning in 2010 and continuing through March 28, 2013, Mason executed the Ponzi scheme by inducing victims to invest with his investment companies, JHM Forex Only Pool and Forex Trading at Home Association, and other related entities, for the supposed purpose of investing in Over-the-Counter (“OTC”) foreign currency exchange.

The indictment alleges that Mason engaged in a scheme and artifice to defraud victims by making a series of false and fraudulent representations, omissions of material facts and deceptive half-truths. Specifically, Mason falsely claimed to victims that he had over 35 years of experience in commodity futures and options trading, when in fact, Mason had no such experience at all, according to the indictment. Also, Mason lulled his victims into a false sense of security by falsely projecting substantial returns of their investments. Mason solicited at least 500 victims to invest over $4.7 million. According to allegations in the indictment, rather than investing it as promised, Mason simply deposited victim money into various bank accounts he controlled and used a substantial amount of investor money to pay for personal and business expenses, real estate, cars and other expenses unrelated to any foreign exchange. In addition, the indictment alleges that Mason diverted most of the rest of his victims’ money to make “Ponzi” payments to other victims.

The criminal indictment also alleges that, throughout the course of this scheme, Mason put only a portion of investor money into foreign currency exchange. According to allegations contained in the indictment, Mason lost essentially all the money he did invest while conducting FOREX trading, thus losing even the minority of funds that he did trade. Mason failed to disclose his actual trading results to his victims, and instead made false oral representations and provided bogus statements to clients, fraudulently reporting profits. The indictment alleges that in order to induce individuals to further invest in his fraudulent foreign currency commodity pool, Mason established a website so that investors could access their accounts online. These online investor accounts depicted that investors were making money through successful FOREX trading and had, in many cases, significant amounts of money in their accounts. As alleged in the indictment, profits stated on individual investor accounts were false and, in many cases, there was no actual money in the victims’ accounts.

Mason has been in local federal custody since April 15, 2013. He has been charged with one count of securities fraud which carries a maximum prison term of 20 and a $5 million fine, plus restitution to investor victims of the scheme.

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

The case was investigated by the North Carolina Secretary of State, Securities Division with assistance from the FBI, Charlotte Division. U.S. Attorney Tompkins also acknowledges the invaluable assistance of the Commodities Futures Trading Commission in this case.

The prosecution is being handled by Special Assistant United States Attorney Kevin M. Harrington and Assistant U.S. Attorney Kurt W. Meyers of the Western District of North Carolina.

Mr. Harrington is an Enforcement Attorney with the North Carolina Department of Secretary of State, Securities Division, and was appointed to serve as a Special Assistant United States Attorney (SAUSA) with the U.S. Attorney’s Office in Charlotte in September 2011. The SAUSA position is reflection of the partnership between the North Carolina Securities Division and the United States Attorney that helps ensure the effective and vigorous prosecution of white collar criminals, particularly in the area of securities fraud.

The President’s Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.stopfraud.gov.

ASHEVILLE, N.C. – A former North Carolina probation officer was sentenced on Thursday, April 25, 2013, in U.S. District Court to serve 17 months in prison for extortion and drug trafficking offenses involving persons under his supervision, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. James David Franklin, 46, of Lenoir, was also sentenced to three years of supervised release following his prison term.

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 Director Gregory McLeod of the North Carolina State Bureau of Investigations (NC SBI).

According to court documents and court proceedings, from April 2001 through July 2010, Franklin, was employed as a Surveillance Officer by the North Carolina Department of Correction’s Division of Community Corrections (DCC) and supervised probationers on intensive supervision in Burke and Caldwell Counties. According to filed documents, Franklin primarily conducted curfew checks and compliances searches and had arrest power over probationers and parolees. Court records indicate that from in or about July 2009 to in or about July 2010, Franklin used his position on multiple occasions to extort drugs from an individual who had been under Franklin’s supervision (“Probationer #2”). Specifically, court records show that Franklin, via text messages and other communications, repeatedly asked Probationer #2 to supply him with narcotics, including methamphetamine and hydrocodone.

Court records show that Franklin would arrange to retrieve the narcotics from Probationer #2’s driveway in exchange for cash. Law enforcement officers were alerted to Franklin’s conduct when Probationer #2 complained to his federal probation officer and to his primary North Carolina probation officer. Subsequently, Franklin was placed on desk duty. While on desk duty, Franklin sent a text message to Probationer #2 asking him to sell hydrocodone pills in exchange for a portion of the proceeds from the sale. Specifically, Franklin told Probationer #2 he would pay him “3 dollars a piece” for 125 hydrocodone pills. According to court records, Franklin was apprehended by law enforcement officers when he went to Probationer #2’s house to deliver the hydrocodone pills in exchange for $375 in cash.

In December 2011, Franklin pleaded guilty to one count of extortion under color of official right and one count of possession with intent to distribute hydrocodone.

vWhen announcing the sentence, U.S. District Judge Martin Reidinger noted that the sentence imposed was more than minimally required under the Federal Sentencing Guidelines because the defendant was “A person who by reason of his position had taken actions that undermine the integrity of the legal system.”

Franklin has been in custody since April 2011. 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 the FBI and SBI. The case was prosecuted by Assistant United States Attorney Michael Savage of the U.S. Attorney’s Office in Charlotte.

ASHEVILLE, N.C. – Gary Michael Hilton was sentenced to four life sentences today in U.S. District Court for the kidnapping and murder of John D. Bryant and Irene W. Bryant and to 15 years in prison for a related robbery offense, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Hilton pleaded guilty to the murdering the couple in March 2012. He also pleaded guilty to robbery, kidnapping and firearms offenses.

In June 2011, a federal grand jury returned a five-count criminal indictment charging Hilton, 66, with the October 2007 kidnapping, robbery and murder of John and Irene Bryant on national forest lands. According to filed court documents and today’s sentencing hearing, Hilton admitted killing John Bryant within the Nantahala National Forest in Macon County, N.C. using a firearm. Hilton also admitted killing John Bryant’s spouse, Irene Bryant, within the Pisgah National Forest in Transylvania County, N.C.

“Our thoughts and prayers are with the family and friends of the victims and while today’s outcome cannot bring back John and Irene Bryant, it is our sincere hope that everyone impacted by Hilton’s heinous crime can finally have some closure,” said U.S. Attorney Tompkins. “I also want to thank the prosecutors and our law enforcement partners who worked on this case for their hard work, professionalism and integrity.”

In April 2011, Hilton was convicted and received a death sentence for the murder of Cheryl Dunlap in Leon County, Florida. Hilton is also serving a life sentence for his conviction related to the 2008 murder of Meredith Emerson in Northern Georgia. At today’s sentencing hearing, U.S. District Judge Martin Reidinger ordered that Hilton’s federal life sentences be served consecutively with the sentences he received for the state convictions in Florida and Georgia.

All federal sentences are served without the possibility of parole.

The prosecution was handled by Don Gast of the U.S. Attorney’s Office in Asheville. U.S. Attorney Tompkins thanked the FBI, SBI, the U.S. Forest Service, the Transylvania County Sheriff’s Office and the Macon County Sheriff’s Office for their assistance in this investigation.

CHARLOTTE, N.C. – The former owner of Wilkesboro Clinical Laboratory (“WCL”) pleaded guilty today in U.S. District Court for his involvement in a health care fraud scheme in which he and his company billed Medicare for services which were not rendered, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Louis Francis Curte, 49, also admitted he filed false tax returns from 2007 to 2010.

In a separate civil settlement with the U.S. Attorney’s Office, Curte also agreed to pay $300,000 to resolve civil fraud allegations that he and his company violated the Physician Self-Referral Act or “Stark Law.”

U.S. Attorney Tompkins is joined in making today’s announcement by Derrick Jackson, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Atlanta Region; Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI); and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division.

Curte appeared before U.S. Magistrate Judge David C. Keesler today and pleaded guilty to four counts of health care fraud and one count of filing a false tax return. According to court documents and today’s plea hearing, Curte was the owner and operator of Wilkesboro Clinical Laboratory (“WCL”), which was enrolled with the Medicare program and provided microbiology and other laboratory services. Court records show that from at least 2007 to in or about 2009, Curte defrauded Medicare by submitting false and fraudulent claims for microbiology services which were never rendered.

Court documents indicate that Curte and WCL used another company (“Company #1”) for certain types of microbiology testing that could not be performed by WCL in-house. Court records show that WCL generally submitted specimens to Company #1 to test for the presence of infection-causing bacteria. If an infection was present in a specimen, Company #1 then typically performed one or two additional tests to identify the type of pathogen present (“identification test”) and the type of antibiotic to which the pathogen was susceptible (“susceptibility test”).

Pursuant to the scheme to defraud, Curte routinely billed Medicare for identification and susceptibility tests, when, in fact, no such tests were performed and even when the initial testing indicated that no pathogen was actually present in the specimen. According to the plea agreement, the intended loss to Medicare by the defendant was between $10,000 and $30,000.

At today’s hearing, Curte also pleaded guilty to filing false tax returns for the years 2007 through 2010. According to filed documents and court proceedings, Curte filed false tax returns which substantially understated his gross income, and therefore, the tax owed to the United States. Court records indicate that Curte maintained false books in an attempt to mask a prohibited business relationship with a physician, identified in court documents as Dr. T.M. According to the plea agreement, the amount of tax loss was more than $30,000 but less than $50,000.

At sentencing, Curte faces a maximum term of 10 years in prison and a $250,000 fine for the health care fraud charges and a maximum term of three years in prison and a $250,000 fine for the tax fraud charge. In his plea agreement, Curte agreed to pay full restitution to Medicare and to IRS for any losses. The final restitution amount will be determined by the Court at Curte’s sentencing hearing, which has not been scheduled yet. Curte has been released on bond pending sentencing.

Curte’s prohibited relationship with Dr. T. M. forms the basis for Curte’s civil settlement agreement. According to the civil settlement agreement, from January l, 2006 through April 30, 2009 Curte and WCL violated the Stark Law by knowingly having a prohibited financial relationship with Dr. T.M.

Dr. T.M. owned and operated a billing company, now defunct, which submitted all of WCL’s reimbursement claims to Medicare. Dr. T.M.’s billing company was paid on a “per claim” basis for the reimbursement claims submitted to Medicare on behalf of WCL. As an owner of the billing company, Dr. T.M. benefitted directly from WCL’s payments to his billing company. Investigators also found that Dr. T.M. referred blood and tissue specimens to WCL for pathology testing.

The Stark Law forbids a medical provider from billing Medicare and Medicaid for certain services referred by physicians who have a financial relationship with the medical provider. A prohibited financial relationship includes an agreement between the medical provider and a physician to compensate the physician based on the volume of the physician’s referrals or the revenue realized through those referrals.

Under the terms of the settlement agreement, Curte is required to reimburse the government for the amount he wrongfully received from Medicare in violation of the Stark Law and to pay penalties back to the program, for a total of $300,000.

The investigation into Curte was handled by HHS-OIG and IRS, with the assistance of the FBI. The criminal prosecution was handled by Assistant U.S. Attorney Kelli Ferry. Assistant U.S. Attorney Don Caldwell handled the civil settlement.

The investigation and charges are the work of the Western District’s joint Health Care Fraud Task Force. The Task Force is multi-agency team of experienced federal and state investigators, working in conjunction with criminal and civil Assistant United States Attorneys, dedicated to identifying and prosecuting those who defraud the health care system, and reducing the potential for health care fraud in the future. The Task Force focuses on the coordination of cases, information sharing, identification of trends in health care fraud throughout the region, staffing of all whistle blower complaints, and the creation of investigative teams so that individual agencies may focus their unique areas of expertise on investigations. The Task Force builds upon existing partnerships between the agencies and its work reflects a heightened effort to reduce fraud and recover taxpayer dollars.

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

ASHEVILLE, N.C. – Lawrence Salvatore Hutson, 41, of Cantler, N.C. was sentenced on Wednesday, April 24, 2013, by U.S. District Judge Martin Reidinger to serve 432 months in federal prison for transporting child pornography, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Hutson was also placed on a lifetime of supervised release and was ordered to register as a sex offender.

Joining U.S. Attorney Tompkins in making today’s announcement are John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and Sheriff Van Duncan, of the Buncombe County Sheriff’s Office.

In January 2012, Hutson pleaded guilty to one count of transportation of visual depictions of minors engaging in sexually explicit conduct. According to filed court documents and court proceedings, the conduct took place in August 2010. During the investigation, authorities seized a USB thumb drive, which belonged to Hutson, that contained over 4,000 images of child pornography, including many videos. Court records indicate that Hutson’s child pornography collection contained images of prepubescent children, including infants and toddlers. According to court records and yesterday’s sentencing hearing, Hutson also held two separate previous convictions in Pennsylvania for sexual contact offenses upon minors. Hutson’s sentence was enhanced because of the prior state convictions.

Hutson has been in local federal custody in the Western District of North Carolina since September 2011. Upon designation of a federal facility, he will be transferred into custody of the Federal Bureau of Prisons. All federal sentences are served without the possibility of parole.

The investigation was handled by the Buncombe County Sheriff’s Office assisted by the FBI and the Wheaton Police Department in Illinois. The case was prosecuted by Assistant United States Attorneys David Thorneloe and Don Gast of the U.S. Attorney’s Office in Asheville.

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.

Two Others To Plead Guilty On Related Charges
A Total of 92 Defendants Have Been Charged To Date in Operation Wax House

CHARLOTTE, N.C. – A federal superseding indictment unsealed today in U.S. District Court charged nine additional defendants in Charlotte and elsewhere with racketeering, investment fraud, mortgage fraud, bank bribery and money laundering, announced the U.S. Attorney’s Office for the Western District of North Carolina. This latest round of criminal charges resulting from Operation Wax House, a mortgage fraud investigation which began in the Western District of North Carolina in 2007, brings the total number of defendants charged to date to 92, of which 66 have pleaded guilty.

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation, Charlotte Division, Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI) and Elaine Marshall, North Carolina Secretary of State join the U.S. Attorney’s Office in making today’s announcement.

The superseding federal racketeering indictment was returned by a federal grand jury sitting in Charlotte on April 18, 2013 and remained sealed until today. The superseding indictment adds nine defendants to the existing charges, bringing to 26 the total number of individuals currently charged as part of a criminal organization (the “Enterprise”) that operated principally in the cities of Charlotte and Waxhaw, N.C., and stole more than $75 million from investors and mortgage lenders.

According to allegations contained in the unsealed indictment:

The Enterprise, which operated from about 2005 through 2012, engaged in an extensive pattern of racketeering activities, consisting of investment fraud, mortgage fraud, bank fraud, money laundering and distribution of illegal drugs. Members of the Enterprise also bribed bank officials. In the investment fraud portion of the racketeering activities, the co-conspirators targeted professional athletes and doctors as well as their personal and professional acquaintances and convinced them to invest in a series of sham corporations controlled by the Enterprise. For example, members of the Enterprise told potential investors that one of the sham corporations, PEI, was a commodities trading company that would broker deals for the supposed export-import of various commodities like rice-trading and gold and diamond mining in Africa. In truth and fact, instead of investing the victims’ money as promised, the Enterprise used the funds obtained through PEI to support its members’ lifestyles and to make Ponzi-style payments to other victims. The co-conspirators stole over $27 million from more than 50 investor victims, including monies that the investor victims were induced to obtain as loans from financial institutions.

The Enterprise’s mortgage fraud operations involved acquiring luxury homes in neighborhoods in Charlotte and Waxhaw. One member of the Enterprise would agree with a builder to purchase a property at the “true price.” The Enterprise would then arrange for a buyer to purchase the property at an inflated price. In most circumstances, the buyer would agree to purchase the property in his or her own name and sign whatever documents were necessary, in exchange for a hidden monetary kickback. The builder would sell the property at the inflated price, the lender would make a mortgage loan on the basis of that inflated price, and the difference between the inflated price and the true price would be extracted at closing by the Enterprise.

The vast majority of the houses purchased as part of the Enterprise’s mortgage fraud operations subsequently fell into foreclosure, resulting in losses of hundreds of thousands of dollars in most instances. Over the course of the conspiracy, members of the Enterprise purchased four condos in one building for inflated prices, resulting in an aggregate loss on those units of approximately $2 million.

Members of the Enterprise also engaged in bank bribery conspiracies, by bribing bank employees to cash checks received from fraudulent mortgage transactions carried out by the Enterprise, and to deposit checks in a manner designed to further conceal the true distribution of the proceeds, and to supply false letters of credit in the names of local banks in an attempt to obtain financing from other financial institutions. In one instance a bank employee was paid a $55,000 bribe for preparing and providing a false letter of credit.

The racketeering activities of the Enterprise also included distribution of illegal drugs. For example, members of the Enterprise transported truckloads of marijuana from Texas and elsewhere to North Carolina, using companies utilized in both the drug trafficking and mortgage fraud operations and trucks controlled by members of the Enterprise and others.

Defendants added in this superseding indictment are:

• William Brown, 34, of Matthews, N.C. is charged with racketeering conspiracy and mortgage fraud. Role: Promoter and buyer. Status: In custody, pending release on conditions, following arrest and initial appearance.

• Benjamin Clarke, 40, of Smyrna, Ga. is charged with mortgage fraud. Role: Buyer. Status: Released following arrest and initial appearance.

• Frank DeSimone, 40, of Charlotte is charged with racketeering conspiracy, securities fraud, wire fraud to defraud investors and money laundering. Role: Promoter. Status: To appear for an initial appearance pursuant to a summons.

• Lorie Dooley, 48, of Washington, D.C. is charged with racketeering conspiracy, mortgage fraud and bank bribery. Role: Promoter. Status: To appear for an initial appearance pursuant to a summons.

• James E. Fink, 43, of Waxhaw is charged with racketeering conspiracy and mortgage fraud. Role: Builder. Status: To appear for an initial appearance pursuant to a summons.

• Ralph Johnson, 35, of Charlotte is charged with racketeering conspiracy and mortgage fraud. Role: Promoter. Status: In custody.

• Denetria Myles, 41, of Charlotte is charged with racketeering conspiracy and mortgage fraud. Role: Promoter. Status: To appear for an initial appearance pursuant to a summons.

• Matthew Newland, 39, of Coralville, Iowa is charged with racketeering conspiracy and mortgage fraud. Role: Promoter and seller. Status: Released following arrest and initial appearance.

• Nazeere Saddig, 40, formerly of Charlotte is charged with racketeering conspiracy and mortgage fraud. Role: Promoter and buyer. Status: Fugitive.

• Additionally, Steve Jones, 44, of Waxhaw, previously charged with securities fraud, wire fraud to defraud investors and money laundering conspiracy has now also been charged with racketeering conspiracy. Role: Promoter. Status: To appear pursuant to a summons.

Today, the U.S. Attorney’s Office also announced charges filed against two additional promoters in the mortgage and investment fraud scheme. They acknowledge taking part in the conspiracy and have agreed to plead guilty. They are:

• Waylon Long, 40, of Texas is charged with mortgage fraud conspiracy and money laundering conspiracy. Role: Promoter. Status: To appear for initial appearance upon a summons.

• Melvin Moye, 34, of Charlotte is charged with investment or securities and mortgage or bank fraud conspiracy. Role: Promoter. Status: Pleaded guilty and is awaiting sentencing.

Additionally, the U.S. Attorney’s Office announced that three of the original 17 defendants who were charged with racketeering conspiracy have pleaded guilty to those racketeering charges. They are:

• Travis Bumpers, 36, of Charlotte pleaded guilty to racketeering conspiracy to commit securities fraud, mortgage fraud, wire fraud and money laundering conspiracy. Role: Promoter. Status: In custody pending sentencing.

• Victoria Hunt, 36, of Rockville, Maryland, pleaded guilty to racketeering conspiracy, securities fraud, mortgage fraud, wire fraud to defraud investors, and money laundering. Role: Leader and promoter. Status: On house arrest pending sentencing.

• Purnell Wood, 41, of Holly Springs, N.C. pleaded guilty to racketeering conspiracy to commit mortgage fraud and money laundering. Role: Promoter. Status: Released pending sentencing.

The conspiracy to participate in the racketeering activities 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 bank fraud charge carries a maximum term of 30 years in prison and a $1 million 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. And, the bank bribery conspiracy charge carries a maximum term of five years in prison and a $250,000 fine.

An indictment is merely an allegation, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. In addition, the guilty plea of any other person is not relevant to the guilt of any indicted person.

Operation Wax House in the Western District of North Carolina is being handled by the Charlotte Division of the FBI, the Criminal Division of the IRS for the Financial Fraud Enforcement Task Force, and the Securities Division of the North Carolina Secretary of State. The prosecution for the government is being handled by Assistant United States Attorneys Kurt W. Meyers and Maria K. Vento and Special Assistant United States Attorney Kevin M. Harrington.

The President’s Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.stopfraud.gov.

The names and case numbers of the all the defendants charged to date in Operation Wax House are listed below, organized by their alleged role in the scheme.

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
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 Public
Willis, Anthony, 3:09cr218

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

CHARLOTTE, N.C. – A Charlotte neurologist has agreed to pay $2 million plus interest to the United States to settle civil fraud allegations, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Hemanth P. Rao, MD, is the owner of and principal neurologist at The Neurological Institute in Charlotte, formerly known as Neurological Consultants of the Carolinas.

U.S. Attorney Tompkins is joined in making today’s announcement by Derrick Jackson, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Atlanta Region.

The settlement was reached following a multi-year investigation by HHS-OIG into Dr. Rao’s practices associated with the administration of intravenous immunoglobulin (IVIG) therapy. Government investigators found that from October 13, 2003 to May 26, 2006, Dr. Rao failed to meet the Medicare supervision regulations associated with IVIG therapy. IVIG is the delivery of healthy immunoglobulins directly into the bloodstream of patients suffering from immunodeficiency and autoimmune disorders. IVIG therapy involves the injection of a thick, viscous fluid into the veins of patients throughout a period of several hours. The Medicare program requires that the patient’s physician directly supervise the administration of this treatment in order to ensure the safety of the patient. Investigators found that Dr. Rao sought and obtained reimbursement for his IVIG therapy services from Medicare even though he was not present in the building with his patients when they were receiving IVIG treatment, as required by Medicare.

The Settlement Agreement also requires that Dr. Rao pay an additional $500,000 to Medicare upon the sale of his real estate holdings. Furthermore, Dr. Rao entered into a five-year Integrity Agreement with HHS-OIG to promote compliance with the statutes, regulations, program requirements, and written directives of Medicare, Medicaid, and all other federal health care programs.

In making today’s announcement U.S. Attorney Tompkins stated, “Dr. Rao’s actions not only compromised the integrity of the Medicare program, but exposed his patients to potential danger. I commend HHS-OIG for their thorough investigation and for their continued efforts to protect Medicare, an important health care program seniors rely upon to cover their health care needs.”

“Dr. Rao allowed his staff to practice a potentially hazardous procedure on Medicare patients, without his supervision, then blatantly charge taxpayers,” said Derrick Jackson of the HHS-OIG region including North Carolina. “Citizens of this State can continue to look toward U.S. Attorney Tompkins to vigorously pursue providers who shortcut Medicare regulations in exchange for profit.”

The investigation was conducted by HHS-OIG in Greensboro. Assistant United States Attorney Don Caldwell handled the case for the United States Attorney’s Office.

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.

SPARTANBURG, S.C. – A husband and wife from Greer, S.C. were sentenced on Thursday, April 11, 2013 for filing false tax returns, 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); David A. Thomas, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Columbia Division in South Carolina; and James Ward, Special Agent in Charge, Department of Homeland Security, Office of the Inspector General in Atlanta join U.S. Attorney Tompkins in making today’s announcement.

U.S. District Court Judge Mary G. Lewis sentenced Julie Greene Tucker, 52, of Greer to 33 months in prison, to be followed by three years of supervised release. Tucker’s husband, James Dean Tucker, 54, also of Greer, was sentenced to eight months of house arrest and five years of probation. The Tuckers were ordered to pay $191,049 restitution to IRS, jointly and severally. Julie Tucker was ordered to pay an additional $590,128 as restitution to her former employer.

“For approximately 15 months the Tuckers used stolen money to fund a luxurious lifestyle way above their means. Today’s sentence sends a clear message that my office will work with our law enforcement partners to hold accountable those who break the law and to ensure the only rewards crooks get are stiff penalties and prison sentences,” said U.S. Attorney Tompkins.

“The IRS fosters confidence in the American tax system through the prosecution and conviction of individuals who intentionally conceal income and evade taxes. We should not expect the honest taxpayer to foot the bill for those who hide income from the IRS,” stated Jeannine A. Hammett, Special Agent in Charge of the Charlotte Field Office.

“The Tuckers funded their lavish lifestyle of luxury cars and expensive vacations with embezzled money. The FBI and our law enforcement partners remain committed to holding those accountable who abuse their positions for their own personal profit,” said David A. Thomas, Special Agent in Charge of the Columbia Division of the FBI.

In November 2012, James and Julie Tucker pleaded guilty to a criminal bill of information charging them with two counts of filing false tax returns. In addition, Julie Tucker pleaded guilty to one count of wire fraud. According to filed court documents and yesterday’s sentencing hearing, from in or about 1996 through in or about July 2011, Julie Tucker was employed at Trendset, Inc. (“Trendset”), a freight audit business, located in Greenville, S.C. Her last position at Trendset was Director of Administration. Court records show that in that capacity, Julie Tucker had access to Trendset bank accounts and had the authority to write checks and initiate wire transfers from these accounts on behalf of Trendset. From April 1986 through July 2012, James Tucker was employed with the Department of Homeland Security and stationed in Greenville, S.C.

According to filed documents and court proceedings, beginning in or about 2010 and continuing until her resignation in July 2011, Julie Tucker embezzled money from Trendset bank accounts. Unbeknownst to Trendset, Julie Tucker used her access to the company’s bank accounts to wire money to her name and into accounts held jointly by her and her husband. Court records indicate that Julie Tucker also wired funds and wrote checks from these accounts to make direct payments on several automobile loans and a credit card in the couple’s name.

Based on filed court documents and statements made in court, Julie and James Tucker used the embezzled funds to perform major home renovations, purchase a second home, and buy three luxury vehicles for themselves and an additional vehicle for the daughter of a Trendset co-worker. Court records indicate that the couple joined a local country club where they hosted a lavish Christmas party for family and friends. The couple also used the embezzled funds to pay for several personal vacation trips. According to yesterday’s sentencing hearing, Julie Tucker also spent well over $100,000 in jewelry purchases. The couple failed to include taxable income derived from Julie Tucker’s embezzlement scheme in their joint tax 2010 and 2011 tax returns, court records show.

Court records indicate that James Tucker lied to co-workers when he was asked about the couple’s lifestyle improvements and spending. Court records indicate that James Tucker sometimes would say that the couple received the money from James Tucker’s father, after a profitable sale of Hormel stock. Other times, James Tucker would say his wife had received a big promotion at Trendset and that she was making a lot more money than he was, court records indicate.

Julie Tucker was ordered to self-report to 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 IRS, FBI, and DHS-OIG. The prosecution was handled by Assistant U.S. Attorney Don Gast, of the U.S. Attorney’s Office in Asheville.

The Defendant Entered A Guilty Plea Following Nearly Two Days of Trial Testimony

CHARLOTTE, N.C. B On Wednesday, April 10, 2013, a South Carolina man on trial in U.S. District Court in Charlotte entered a guilty plea for kidnapping, possession of a firearm and witness tampering offenses after nearly two days of trial testimony, 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, Chief Debra Duncan of the Monroe Police Department and Sheriff Kip Kiser of the Chesterfield County Sheriff’s Office in South Carolina.

On March 22, 2012, Lonnie Cecil Buchanan, Jr., 44, of Pageland, S.C., was indicted by a federal grand jury on one count of kidnapping, one count of possession of firearm by a convicted felon, and one count of possession of a firearm in furtherance of kidnapping. Court records indicate that following his arrest and while in federal custody, Buchanan began to call the kidnapping victim in an attempt to persuade the victim to recant the statements the victim made to law enforcement and the federal grand jury. As a result of that conduct, in December 2012, a federal grand jury added two charges of tampering with a witness, victim, or an informant in a superseding bill of indictment.

According to filed court documents and evidence presented at trial, on February 26, 2012 Buchanan, while holding a firearm, approached the victim in the Hilltop shopping center parking lot in Monroe, N.C. Witnesses at trial described the victim’s “blood curdling screams” as she ran to her vehicle in an attempt to get away from Buchanan. Buchanan chased the victim and jumped into her car. Witnesses also testified at trial that Buchanan and the victim violently struggled in the car until the victim was knocked unconscious. According to trial proceedings, Buchanan then went to the passenger side of the car and dragged the victim over to a van that he had parked nearby. Witnesses stated at trial that Buchanan stood over the victim with his hand on her throat and when he noticed other people around him, he started to tell the victim that he “was going to take her to the hospital.” Witnesses testified that Buchanan lifted the victim from the ground and placed her on the floor of the van. Witnesses also testified that Buchanan passed the hospital and drove the victim into Chesterfield County in South Carolina. According to court documents and trial proceedings, Buchanan repeatedly hit the victim and told her he would kill her. After 30 hours of being held captive, the Chesterfield County Sherriff’s Office located the van at a vacant house in the woods with both Buchanan and the victim inside. Buchanan was arrested and the victim was taken to the hospital for treatment, according to court records. Witnesses said that Buchanan left the .38 special revolver in the victim’s vehicle at the scene of the kidnapping, along with one of his shoes. During the investigation, law enforcement recovered a loaded .38 special revolver in the victim’s vehicle.

The defendant has been in local federal custody in the Western District of North Carolina since April 2012 and will remain in custody until his sentencing date, which has not been set yet. He faces a maximum of life in prison, a $250,000 fine or both.

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

ASHEVILLE, N.C. – U.S. Magistrate Judge Dennis L. Howell sentenced a Robbinsville, N.C. man to five months in prison on Wednesday, April 10, 2013 for killing an American Black Bear cub in Nantahala National Forest in October 2011, announced today Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Kristin Bail, Forest Supervisor for the National Forests of North Carolina joins U.S. Attorney Tompkins in making today’s announcement.

According to filed court documents and yesterday’s sentencing hearing, in October 2011 Tyler Micaiah Colvin, 20, of Robbinsville used a .50 caliber muzzleloader to kill a Black Bear cub in the Wayah Bear Sanctuary in the Nantahala National Forest, in Macon County. Court records indicate that Colvin had fired three shots, one of which fatally wounded the bear cub. Bear season was not open at the time Colvin killed the cub, it is illegal to kill a bear weighing less than 50 pounds at any time and killing bears within a bear sanctuary is prohibited even during bear hunting season. Court documents and court proceedings indicate that Colvin shot the bear cub, skinned it and removed the paws and some meat. Colvin left the remainder of the carcass and the entrails in the forest. Forest agents apprehended Colvin and retrieved the bear parts from his vehicle, all according to court records. Colvin pleaded guilty in December 2012 to one count of transporting wildlife that had been taken in violation of federal laws and regulations, which is a violation of the Lacey Act.

“The Lacey Act is an important arsenal in our fight against those who illegally kill endangered and threatened species,” said U.S. Attorney Tompkins. “It is important for all of us to follow the law when hunting protected species. Colvin’s conduct was outrageous, inhumane and illegal and anyone involved in the illegal killing of Black Bears will be vigorously prosecuted by this office.”

“This case is a positive example of how important partnerships between Forest Service and the North Carolina Wildlife Resources Commission can produce maximum results in the protection of our resources. Officers are faced with bad odds when dealing with poaching in such vast areas, so we urge the public to report all big game violations. These types of results definitely send a message to those who steal from the public,” said Steve Ruppert, Special Agent in Charge for the U.S. Forest Service, Southern Region.

“I commend the U.S. Forest Service agents and officers of their work on this case, and I believe the sentence sends a message that illegal hunting will not be tolerated in the national forests,” said Kristin Bail, forest supervisor of the U.S. Forest Service’s National Forests in North Carolina. “Working with a wide variety of local, state and federal partners, the Forest Service is committed to protecting wildlife to ensure these and other natural resources are available for the next generation of forest visitors.”

“The thin Green Line formed by the U.S. Forest Service, the U.S. Fish and Wildlife Service and the North Carolina Wildlife Resources Commission is all that stands between our state’s precious wildlife resources and those who take game illegally in our state. If it were not for the support of our Judges, the U.S. Attorney’s Office and the public for whom we serve, all efforts would be lost. This is a fine example of how things should work, from the execution and case development of the officers in the field to the handling of the case when it gets to court,” said Captain Greg Daniels, of the North Carolina Wildlife Resources Commission’s 9th District.

In addition to the prison sentence, Judge Howell ordered Colvin to one year of supervised release and to surrender his hunting license while he is under court supervision. Colvin is also prohibited from engaging in any hunting activities during that year. Colvin was also ordered to pay $2,232 as restitution to the North Carolina Wildlife Resources Commission for the killing of the Black Bear cub and was ordered to forfeit the muzzleloader rifle, a powder horn, and a deer call device.

The U.S. Attorney’s Office reminds the public that American Black Bears are a species of special concern warranting federal and state protection on the Blue Ridge Parkway and the Great Smoky Mountains National Park. Hunting is illegal at any time within the National Parks. Hunting on Forest Service land is only permitted during open season and in compliance with federal and state law.

To report Lacey Act violations, including the illegal hunting of American Black Bears, within National Parks and National Forests, please call the Law Enforcement Desk of the Great Smoky Mountains National Park at 1-865-436-1230, The North Carolina State Wildlife Hotline at 1-800-662-7137, U.S. Fish and Wildlife Service, 1-828-258-2084 or the National Forests at 1-828-231-0288.

The investigation was conducted by the United States Forest Service. The prosecution was handled by Assistant U.S. Attorney Richard Edwards of the U.S. Attorney’s Office in Asheville.

CHARLOTTE, N.C. – Two defendants were sentenced to lengthy prison terms on Tuesday, April 9, 2013, for their role in a mortgage fraud conspiracy that primarily targeted neighborhoods in Union and Mecklenburg counties, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Joining U.S. Attorney Tompkins in making today’s announcement is Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).

Kenneth Egri, 55, of Charlotte was sentenced to 78 months in prison and his co-defendant Dean Huffman, 57, formerly of Charlotte, was sentenced to 65 months in prison. U.S. District Court Judge Frank D. Whitney also ordered both defendants to serve two years of supervised release following their prison terms.

“Mortgage fraudsters like Egri and Huffman harm more than just the affected financial institutions; they wreak havoc on neighborhoods by virtue of the foreclosures resulting from their scheme” said U.S. Attorney Tompkins. “The defendants exploited the American Dream of home ownership in order to satisfy their own selfish greedy interests and they now have years of federal prison to contemplate their shameful conduct.”

“Individuals who commit mortgage fraud may be prosecuted on several charges including failure to file income tax returns. The law is crystal clear: people must pay their taxes. There is no gray area on this issue,” stated Jeannine A. Hammett, Special Agent in Charge of the Charlotte Field Office.

In July 2011, Egri and Huffman pleaded guilty to conspiracy to commit wire fraud in connection with their operation of a mortgage fraud cell that primarily targeted the neighborhood of Providence Downs. In addition, Egri pleaded guilty to two counts of failing to file income tax returns for the 2005 and 2006 tax years.

According to filed court documents and yesterday’s sentencing hearing, from in or about 2001 through in or about 2006, Egri and Huffman owned and operated Direct Home Services (DHS) in Charlotte. Egri and Huffman utilized DHS to generate over $37.4 million in fraudulent loans and to funnel over $5.4 million in fraudulent loan proceeds to themselves. To promote their scheme, Egri and Huffman would agree with a builder to purchase a property at the “true price.” Egri and Huffman would then arrange for a buyer to purchase the property at an inflated price—usually between $100,000 and $300,000 above the true price. In most circumstances, the buyer would agree to purchase the property in his or her own name and sign whatever documents were necessary, in exchange for a hidden kickback. The builder would sell the property at the inflated price, the lender would make a mortgage loan on the basis of that inflated price, and the difference between the inflated price and the true price would be extracted at closing by Egri and Huffman. To induce lenders to make mortgage loans, Egri and Huffman caused fraudulent loan packages to be submitted which included lies and misrepresentations about, among other things, buyers’ income and assets, place of employment, intent to occupy the homes as their primary residence, and true source of cash at closing.

In addition, according to the filed court documents and yesterday’s sentencing hearing, from 2003 through 2006, Egri failed to file income tax returns reporting $1,288,604 of income from the mortgage fraud scheme.

In pronouncing the sentence, Judge Whitney noted that both defendants were “integral players in the mortgage fraud scheme” and emphasized the harm their unlawful conduct caused to the community. Judge Whitney ordered Egri and Huffman to pay restitution to Bank of America in the amount of $1,335,744 and ordered Egri to pay restitution to the IRS in the amount of $257,721.

Egri and Huffman were ordered to self-report to 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 IRS. The prosecution was handled by Assistant U.S. Attorney Mark T. Odulio, of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – A Charlotte woman was sentenced in U.S. District Court today to 21 months in prison for her involvement in a tax refund fraud scheme, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Joining U.S. Attorney Tompkins in making today’s announcement is Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).

Leeora Anderson, also known as “Leeora Robinson” and “Lou Robinson,” 42, of Charlotte was sentenced to 21 months in prison and three years of supervised release by U.S. District Court Judge Frank D. Whitney.

U.S. Attorney Tompkins said, “Tax fraudsters like Anderson pocket money by defrauding the government and leave the rest of us to pick up the tab for their illegal tax schemes. Today we are sending a clear message: tax fraud will not be tolerated and we will make sure tax fraudsters pay the price for their actions, both financially and in prison time.”

“IRS-CI is determined to stop these false tax refund schemes. The message this case sends is that participation in refund fraud schemes does not pay and those who do will be prosecuted,” stated IRS Special Agent in Charge Jeannine A. Hammett, Charlotte Field Office Criminal Investigation.

In February 2012, Anderson pleaded guilty to one count of false claims conspiracy. According to filed court documents and today’s sentencing hearing, from in or about 2005 through in or about 2009, Anderson participated in a false tax refund conspiracy by obtaining, or helping others obtain, fraudulent tax refunds from IRS based upon false tax returns. Court records show that Anderson recruited individuals to file fraudulent federal income tax returns using their own names and social security numbers. To perpetrate the fraud, according to court documents and court proceedings, Anderson created fictitious W-2 forms for the recruited individuals, which contained fictitious names of employers and fabricated amounts of wages and withholdings. Anderson then caused legitimate tax preparers to prepare and file false tax returns based on the fraudulent information on behalf of the individuals recruited by the defendant.

Court records show that in some instances Anderson accompanied the recruited individuals to the tax preparers’ offices where the individuals had tax returns prepared and filed electronically. The recruited individuals would then file for refund anticipation loans (“RAL”) through the tax preparer, which allowed the recruited individuals to receive cash advances on their false tax refunds from the financial institutions within three to five days after the fraudulent returns were electronically filed. Anderson then accompanied the recruited individuals to pick up the RAL checks and to cash them at check cashing services, all according to court records. Anderson and others would then keep a portion of loan proceeds. Court records indicate that Anderson’s scheme resulted in the filing of 57 false tax returns, falsely claiming approximately $331,949 as refunds from the U.S. government.

In pronouncing the sentence, Judge Whitney emphasized the importance of general deterrence in tax cases since the tax code is based on honesty and noted that serious punishment was necessary because tax fraud victimizes honest taxpayers. Judge Whitney ordered Anderson to pay restitution to IRS in the amount of $202,577.

At the sentencing hearing, Anderson was ordered to self-report to 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 IRS. The prosecution was handled by Assistant U.S. Attorney Jenny G. Sugar, of the U.S. Attorney’s Office in Charlotte.

STATESVILLE, N.C. – A former Hickory, N.C. resident was sentenced to 65 months in prison on Monday, April 8, 2013, for wire fraud and money laundering offenses, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. U.S. District Court Judge Richard Voorhees also ordered Andrew Geiger, 48, of South Amboy, N.J., to serve two years of supervised release following his prison term.

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

In March 2012, Geiger pleaded guilty to one count of wire fraud and one count of money laundering for carrying out an eight-year scheme to defraud his employer, Bernhardt Furniture Company, Inc. (“Bernhardt”) of over $563,000. The stolen money represented a 41% increase in the legitimate compensation he received from Bernhardt in the same time period.

According to filed court documents and yesterday’s sentencing hearing, from approximately June 1996 until January 2008, Geiger was employed by Bernhardt as the Director of Manufacturing, Casegoods-Bernhardt Contract Division. In that capacity, Geiger had the authority to negotiate and enter into contracts with third party manufacturers on behalf of Bernhardt. Court records show that in approximately December 1999, Geiger negotiated an agreement with a Canadian company for the manufacture of an office furniture line for Bernhardt and negotiated an agreement to pay the Canadian company a rate of 34% of the product’s list price.

Court documents indicate that shortly after thereafter, and unbeknownst to Bernhardt, Geiger created a company, Furniture Works International (“FWI”), and directed the Canadian manufacturer to ship the office furniture products to FWI. In reality, FWI was a sham entity that was owned and controlled by Geiger and utilized solely to advance his fraud scheme. Court records show that in fraudulent communications, Geiger told the Canadian manufacturer that the product would be sent to FWI so it could be “re-packaged.” According to filed documents, Geiger falsely advised the Canadian company that Bernhardt had authorized an increase in its payment from 34% to 39%, with the additional difference being paid to FWI and then later funneled to Geiger. To further his scheme, Geiger caused the Canadian company to receive bogus correspondence from FWI asserting, among other things, Bernhardt approved FWI’s involvement in the transaction and that Bernhardt approved the payment of FWI’s fee to be paid from the proceeds of the Bernhardt’s payment to the Canadian company. Moreover, beginning in approximately October 2006, Geiger directed all shipments directly to Bernhardt’s factory in Lenoir but he still collected the bogus fees through FWI. Geiger’s fraud scheme was discovered by Bernhardt when he left the company for another position in the furniture industry, court records show.

In pronouncing the sentence, Judge Voorhees noted the “very egregious nature of the offense” and ordered Geiger to pay restitution to Bernhardt in the amount of $563,164.

Geiger was ordered to self-report to 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. The prosecution was handled by Assistant U.S. Attorneys Mark T. Odulio and Maria K. Vento, of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – On Monday, April 8, 2013, U.S. District Court Judge Frank D. Whitney sentenced Jonquease Lydell Walker, 24, of Charlotte, to 42 months in prison on identity theft related charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Walker was also ordered to serve five years under court supervision following his prison term and to pay restitution in the amount of $48,736.

U.S. Attorney Tompkins is joined in making today’s announcement by Keith Fixel, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS).

According to filed court documents and court proceedings, from 2008 through 2011 Walker engaged in an identity theft fraud scheme in which he used credit cards accounts of identity theft victims to fraudulently purchase goods and to obtain U.S. currency. Court documents show that Walker obtained personally identifiable information (“PII”) – including names, dates of birth and social security numbers – of six victims of identity theft, and used – or attempted to use – the PII to, among other things, gain access to the victims’ pre-existing credit card accounts, to receive replacement cards or to open new credit card accounts in the names of the ID theft victims.

Court records indicate that Walker contacted multiple credit card issuers and used the victims’ PII to convince the issuers he was the legitimate credit card account holder. Walker then caused the issuers to issue duplicate credit cards in the names of the ID victims, or to add Walker to the account as an authorized user and to issue credit cards in Walker’s name, or variations of Walker’s name. Walker then used the fraudulently acquired credit cards to purchase goods and obtained U.S. currency for a total value exceeding $50,000.

Walker pleaded guilty in September 2011 to one count of mail fraud and one count of aggravated identity theft. He has been in local federal custody since May 2011and will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of Parole.

The investigation was handled by the USPIS, with assistance from the Charlotte-Mecklenburg Police Department. This prosecution was handled by Assistant U.S. Attorney Tom O’Malley of the U.S. Attorney’s Office in Charlotte.

If you believe that your personal information was compromised, there are numerous resources available online that can help you understand what steps to take to protect yourself against identify theft. This includes:

• A detailed list of resources from 11 different federal agencies, available at: http://idtheft.gov/takeaction.html • A guide from the Federal Trade Commission on what to do if your personal information has been compromised, but not yet misused: http://www.consumer.ftc.gov/features/feature-0014-identity-theft • Information on the different types of identity theft and additional resources available at: http://www.consumer.ftc.gov/features/feature-0014-identity-theft

 

Taxpayers Also Cautioned About Tax Preparer Fraud and Other Illegal Tax Schemes

CHARLOTTE, NC - With the deadline for filing income tax returns rapidly approaching, 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-CID), jointly announce recent tax fraud prosecutions and sentencings, and deliver a powerful warning to those who are thinking about breaking the law by committing tax crimes.

“As April 15th approaches, honest taxpayers should rest assured: our office will work diligently to investigate and prosecute those individuals who try to cheat the tax system,” said U.S. Attorney Tompkins. “Whether dishonest taxpayers fail to report all of their income, attempt to obtain fraudulent refunds, or prepare bad tax returns for others,” Tompkins continued, “they face lengthy sentences and large fines.” Tompkins noted the importance of deterring others from committing tax crimes stating, “Our tax system is built on voluntary compliance, and tax criminals hurt all Americans by increasing the tax burden on honest taxpayers and refusing to pay their fair share.”

“The IRS fosters confidence in the American tax system through the investigation and prosecution of individuals and corporations who intentionally conceal income and evade taxes,” stated Charlotte Field Office Special Agent in Charge Jeannine A. Hammett, IRS Criminal Investigation. “Tax evasion is not a victimless crime. Honest, hardworking Americans pay the price when others choose to evade their tax obligations.”

In the last year, the U.S. Attorney’s Office, with the assistance of the IRS-CID, has prosecuted numerous individuals for criminal tax violations. Case highlights from the Western District of North Carolina’s tax enforcement prosecutions over the last year include:

Charles A. Davis - On September 10, 2012, Charles A. Davis, formerly of Mooresville, N.C., was sentenced to 10 years in prison for tax fraud. Davis, who was a pilot for U.S. Airways from 1983 through 2011, was convicted following trial of ten counts of filing false tax returns and one count of corruptly impeding the due administration of the IRS. Davis did not file timely income tax returns for 1996 through 2007 despite receipt of wages ranging from $129,950 to $190,510. Davis subsequently filed fraudulent amended income tax returns for 1996 through 2000, falsely claiming that he earned little or no adjusted gross income, and he later filed five fraudulent individual income tax returns for 2004 through 2008, reporting false amounts of federal income tax withheld for each of those years and requesting fraudulent refunds from the IRS in amounts up to approximately $1.5 million. (Case No. 5:11-cr-32)

Candida Figueroa, et al. - On October 24 and November 5, 2012 respectively, Cathy Cisneros and Candida Figueroa, both of Charlotte, pleaded guilty to a false claims conspiracy for their roles in a scheme to defraud the government by obtaining false and fraudulent income tax refunds. According to the superseding indictment, the co-conspirators obtained false tax refunds using fraudulently obtained Individual Taxpayer Identification Numbers. The co-conspirators directed that fraudulent tax refunds be sent to addresses at various apartment complexes in Charlotte. The total attempted fraudulent tax refunds associated with the scheme was more than $3.8 million. No sentencing dates have been set. Figueroa and Cisneros each face a maximum sentence of 10 years in prison. (Case No. 3:12-cr-260)

Cynthia Garris - On May 15, 2012, Cynthia Garris, of Wadesboro, N.C., pleaded guilty to one count of filing a false tax return. Beginning in 2008, Garris was the owner of Wadesboro Home Care, Inc. in Charlotte. From 2008 through 2010, Garris concealed some of her personal earnings from the IRS by diverting funds from Wadesboro Home Care to pay for personal expenditures and failing to provide her return preparer with information about all of her earnings. For tax years 2008 through 2010, Garris had total unreported income of more than $400,000. No sentencing date has been set. Garris faces a maximum of three years in prison. (Case No. 3:12-cr-150)

Yolanda Tiess Kitson – On April 2, 2013, Yolanda Tiess Kitson of Augusta, Ga. was indicted on charges of false claims conspiracy and aggravated identity theft. According to the bill of indictment filed, Kitson, who is the sister of Senita Birt Dill (listed below), stole identifying information from patients at the Eisenhower Army Medical Center in Augusta and provided them to her sister Dill for use in her stolen identity tax refund scheme. Kitson is awaiting her initial appearance in federal court in Asheville. (Case No. 1:13-cr-31)

Ronald Jeremy Knowles and Senita Birt Dill – On October 29, 2012, Ronald Jeremy Knowles and Senita Birt Dill, both residents of Mill Spring in Polk County, N.C., pleaded guilty to charges of false claims conspiracy, access device fraud, and aggravated identity theft. According to the bill of information filed, Knowles and Dill used stolen identities to file over $5 million in fraudulent tax refund claims. Both are in custody awaiting sentencing, but no sentencing date has been set. Dill faces a maximum of 17 years in prison; Knowles is facing a maximum of 15 years in prison. (Case No. 1:12-cr-105)

Anthony Nguyen - On May 30, 2012, Anthony Nguyen, of Charlotte, pleaded guilty to tax evasion. Nguyen was the owner of Empress of China II, a Chinese restaurant in Charlotte. For tax years 2006 through 2008, Nguyen diverted cash receipts from his business to his personal bank accounts and failed to provide his tax return preparer full information about his earnings. For 2006 through 2008, Nguyen failed to report approximately $421,751 in income on his tax returns. No sentencing date has been set. Nguyen faces a maximum sentence of five years in prison. (Case No. 3-12-cr-155)

Nelson Rodriguez – On November 26, 2012, Nelson Rodriguez, of Morganton, N.C. pleaded guilty to tax evasion. Rodriguez, a dentist, failed to file income tax returns from 2005 through 2010 despite receipt of more than $1.7 million in income for those years. According to the superseding indictment, Rodriguez used nominee entities including Practice Promoters, LLC to receive his dental income. Additionally, Rodriguez purchased assets in nominee names and used bank accounts in nominee names. No sentencing date has been set. Rodriguez faces a maximum of five years in prison. (Case No. 1-12-cr-41)

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 maximum of 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 and to be vigilant in protecting themselves against a wide range of tax schemes. The IRS has issued its annual “Dirty Dozen” listing, which identifies common scams that taxpayers may encounter, particularly during filing season. Taxpayers are urged look out for, and to avoid, the following common schemes:

• Identity theft
• Phising
• Return Preparer Fraud
• Hiding Income Offshore
• “Free Money” from IRS & Tax Scams Involving Social Security
• Impersonation of Charitable Organizations
• False/Inflated Income and Expenses
• False Form 1099 Refund Claims
• Frivolous Arguments
• Falsely Claiming Zero Wages
• Disguised Corporate Ownership
• 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.

Woman Steals Identity of Therapist to Submit False Claims to Medicaid and Attempts to Sell Mercedes-Benz to Prevent Law Enforcement Officers from Seizing Vehicle

CHARLOTTE, N.C. – A Charlotte woman pleaded guilty today in U.S. District Court for her involvement in a health care fraud scheme that attempted to defraud Medicaid of $4.8 million for sham mental and behavioral health services, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Rodnisha Sade Cannon, 26, of Charlotte, also pleaded guilty to stealing a therapist’s identity to commit the fraud, money laundering conspiracy and attempting to sell her Mercedes-Benz in order to prevent law enforcement agents from seizing the vehicle.

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); Roger A. Coe, Acting Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division; Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI); and Derrick Jackson, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Atlanta Region.

Cannon appeared this morning before U.S. Magistrate Judge David Cayer and pleaded guilty to one count of health care fraud conspiracy, one count of aggravated identity theft, and one count of money laundering conspiracy. Cannon also pleaded guilty to a single count of attempting to remove property subject to seizure, namely a 2010 Mercedes-Benz CLS550, in a related case. At today’s plea hearing, Cannon admitted that from 2010 to 2012, she and others submitted in excess of $4.8 million in false claims to Medicaid. According to filed court documents and statements made in court, Cannon and her co-conspirators operated after-school and summer childcare programs in Gastonia and Shelby, N.C. Although therapists initially performed some services at these programs, Cannon and others devised a scheme to defraud Medicaid by using the Medicaid provider numbers assigned to other companies and individual therapists for all therapy services supposedly provided at their programs regardless of whether those companies and individuals actually provided the claimed services. In many instances, the claimed mental and behavioral health services were never provided at all. Cannon and others accomplished this scheme by re-directing Medicaid payments away from the Medicaid providers’ bank accounts and to bank accounts controlled by Cannon and her co-conspirators.

According to the criminal bill of information and court documents, Cannon was not licensed or qualified to provide mental and behavioral health services and she was not approved by Medicaid. Instead, Cannon and others stole the identity of Medicaid-approved providers who had some relationship with the programs in order to accomplish the fraud. For example, court documents indicate that Cannon hired M.B. to work for her company in or about May 2012 and M.B. worked there for a single day. Cannon stole M.B.’s Medicaid provider information and redirected all Medicaid payments to M.B. be deposited into a bank account controlled by Cannon and others. Cannon and others then billed claims to Medicaid in excess of $800,000 for services that M.B. never provided, including claims for dates of service before M.B. worked for Cannon and her co-conspirators. In total, from 2010 to 2012, pursuant to the scheme to defraud, Cannon and her co-conspirators submitted approximately $4.8 million in false and fraudulent claims to Medicaid, resulting in payments of over $2.5 million to Cannon and her co-conspirators.

According to documents filed in court, Cannon also worked with Victoria Brewton, who pleaded guilty in January 2013 to carrying out a similar $8 million Medicaid fraud scheme in Shelby. Cannon assisted Brewton by providing and selling Medicaid beneficiary identification numbers and information to be used in Brewton’s fraud scheme. Brewton’s sentencing date has not been set yet.

As part of her plea, Cannon also admitted that she used the proceeds of her scheme to defraud Medicaid to purchase a 2010 Mercedes-Benz CLS550 for the purchase price of $59,500. In September 2012, law enforcement agents sought and obtained a warrant to seize this vehicle as the proceeds of Cannon’s health care fraud scheme. According to court documents, when Cannon learned that agents had a seizure warrant for the vehicle, she attempted to sell the Mercedes-Benz in order to avoid seizure of the vehicle. Cannon has agreed to forfeit the Mercedes-Benz as part of her plea today.

“Stealing money from Medicaid degrades the integrity of our health care system and victimizes those who rely on this important health care program for legitimate patient care,” said U.S. Attorney Tompkins. “The money that Cannon stole through her health care fraud scheme was intended to cover patient needs, not to purchase luxury items. Cannon will be held accountable for her actions,” Tompkins added.

Attorney General Roy Cooper stated, “Cheating Medicaid hurts needy patients, wastes taxpayer money, and drives up health care costs. Our Medicaid Investigations Division attorneys and investigators will continue to work closely with federal officials to root out fraud in North Carolina and make wrongdoers pay.”

“Money gained through illegal sources, such as healthcare fraud, is part of the untaxed, underground economy. This untaxed underground economy poses a threat to our voluntary tax compliance system and undermines the overall public confidence in our American system of taxation,” stated Charlotte Field Office Special Agent in Charge Jeannine A. Hammett, IRS Criminal Investigation.

At sentencing, Cannon faces a mandatory two years in prison consecutive to any other term of imprisonment and a $250,000 fine for the aggravated identity theft charge, a maximum term of 10 years in prison and a $250,000 fine for the health care fraud charge, a maximum term of ten years in prison and a $250,000 for the money laundering conspiracy charge and maximum term of imprisonment of five years and a $250,000 fine for the attempted removal of property to prevent seizure. In her plea agreement, Cannon has agreed to pay full restitution to Medicaid for any losses resulting from her criminal scheme. The final restitution amount will be determined by the Court at Cannon’s sentencing hearing, which has not been scheduled yet.

Cannon has been in local federal custody since her arrest on the attempted removal of property to prevent seizure charge on September 28, 2012.

The investigation into Cannon was handled by the FBI, MID, IRS, and HHS-OIG. The prosecution was handled by Assistant U.S. Attorney Kelli Ferry of the U.S. Attorney’s Office in Charlotte.

The investigation and charges are the work of the Western District’s joint Health Care Fraud Task Force. The Task Force is multi-agency team of experienced federal and state investigators, working in conjunction with criminal and civil Assistant United States Attorneys, dedicated to identifying and prosecuting those who defraud the health care system, and reducing the potential for health care fraud in the future. The Task Force focuses on the coordination of cases, information sharing, identification of trends in health care fraud throughout the region, staffing of all 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.

ASHEVILLE, N.C. – A criminal bill of information was filed on Tuesday, March 26, 2013, in U.S. District Court charging the former Property Evidence Technician with the Asheville Police Department (“APD”) with embezzling between $10,000 and $30,000 of controlled substances from the police department’s evidence room, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

William Ledessie Smith, III, 49, of Spartanburg, S.C., pleaded guilty today before U.S. Magistrate Judge Dennis Howell to a federal charge stemming from a joint federal and state investigation into the misappropriation of property from APD’s evidence room.

Roger A. Coe, Acting Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Greg McLeod, Director of the North Carolina State Bureau of Investigation (NC SBI), join U.S. Attorney Tompkins in making today’s announcement.

According to the criminal bill of information, the filed plea agreement, and statements made at today’s plea hearing, up until April 2011 Smith was a civilian employed for over twenty years by APD as the police department’s Property Evidence Technician. In that capacity, Smith oversaw APD’s evidence room and had access to items including cash, firearms and controlled substances, which were stored in the room as evidence. According to the charging document and today’s plea hearing, Smith surreptitiously opened envelopes containing controlled substances after their return from the SBI lab, where they had been analyzed. Smith then removed some or all of the controlled substances, then resealed the envelopes with a new layer of tape, carefully re-applied directly over the layer of tape that the SBI chemist had used to seal the envelope, with the chemist’s signature or initials. An analysis by the FBI lab revealed that in many instances, Smith’s fingerprints were found on the underside, or sticky side, of the new tape layer. Filed documents indicate that Smith embezzled between $10,000 and $30,000 of controlled substances from the police department’s evidence room.

“Mr. Smith betrayed the trust placed in him by the Asheville Police Department and the citizens of Buncombe County,” said U.S. Attorney Tompkins. “Instead of fulfilling his duties and safeguarding the evidence room, Mr. Smith pilfered controlled substances and, in the process, compromised the integrity and good name of the Asheville Police Department. My office will continue to work with our law enforcement partners to root out public corruption and prosecute those who abuse their positions of trust for their own benefit.”

“Not only did Mr. Smith treat items inside the Asheville Police Department’s evidence room as his own property, he put countless criminal cases in jeopardy. The success of this case was due in great part to our strong relationship with the SBI. We look forward to continuing our partnership with the SBI to see that corrupt public officials are brought to justice,” said Roger Coe, Acting Special Agent in Charge of the Charlotte Division of the FBI.

“I’m proud of our SBI agents’ excellent work in this case, which once again demonstrates our strong partnership with federal prosecutors in rooting out public corruption,” said SBI Director Greg McLeod.

Smith pleaded guilty to one count of federal program fraud. As the criminal information alleges, federal jurisdiction is based on the fact that the Asheville Police Department received over $10,000 in federal funds in the one year period that includes April 1, 2011. At sentencing, Smith faces a maximum term of 10 years in prison and a $250,000 fine. He has also agreed to pay restitution, the amount of which will be determined by the Court at sentencing. The defendant has been released on bond and a sentencing hearing has not been set yet.

The investigation into Smith was handled by the SBI and FBI. U.S. Attorney Tompkins also thanked the Asheville Police Department and the Buncombe County District Attorney’s Office for their invaluable assistance with the investigation.

Buncombe County District Attorney Ronald L. Moore stated, “I appreciate the hard work and diligence of the SBI, the FBI and the U.S. Attorney’s Office. I also want to thank Mike Wright, the owner of Blueline Systems and Services, who conducted a meticulous audit of APD’s evidence room.”

The prosecution is handled by Richard Edwards, of the U.S. Attorney’s Office in Asheville.

CHARLOTTE, N.C. – An Indian national pleaded guilty in U.S. District Court on Wednesday, March 20, 2013, for his role in a conspiracy to violate U.S. laws by filing fraudulent immigration documents and related offenses, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

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 Richard L. Walker, Special Agent in Charge for the Atlanta, Georgia Region of the U.S. Department of Labor’s Office of Inspector General (DOL-OIG), Office of Racketeering and Fraud Investigations join U.S. Attorney Tompkins in making today’s announcement.

Phani Raju Bhima Raju, 41, of Charlotte, pleaded guilty to five federal charges ranging from conspiracy to violate U.S. laws to money laundering conspiracy for his participation in a fraudulent scheme to obtain false H-1B immigration visas for foreign workers. The H-1B visa program allows U.S. employers to temporarily employ foreign workers in designated specialty occupations.

According to filed court documents and yesterday’s plea hearing, beginning in 2006 and through November 2012, Raju executed a fraudulent scheme to defraud the United States by submitting materially false documents to obtain H-1B immigration visas for foreign nationals seeking employment in the U.S. According to filed documents and statements made in court, Raju was the president of iFuturistics, a Delaware company with headquarters in Pineville, N.C. Court records show that Raju and others falsely represented to the U.S. Department of Labor (“DOL”) and the Department of Homeland Security’s U.S. Citizenship and Immigration Services (“USCIS”) that iFuturistics was hiring H-1B visa holders to work directly for the company. Contrary to the statements made on DOL and USCIS forms submitted by iFuturistics, when the applicants were granted H-1B visas they were placed in work locations with various companies throughout the U.S. In fact, as court records show, iFuturistics had entered into lucrative contracts with staffing agencies prior to submitting the fraudulent forms claiming the skilled IT workers would be employed at iFuturistics’ headquarters in Pineville. Court documents show that as a result of Raju’s illegal visa scheme iFuturistics received $13.2 million as payment from staffing companies in the U.S.

As part of his plea agreement, Raju has admitted that he submitted false documentation to DOL and USCIS and that he made materially false statements on the relevant forms in order to obtain approval of the H-1B immigration visas. In addition to filing fraudulent paperwork, Raju and others engaged in an illegal scheme to recruit, solicit, entice and hire individuals outside the U.S. to apply for H-1B visas and to obtain work in the U.S. Court records show that Raju gave the H-1B visa applicants a “cheat sheet” of questions and answers to assist them during their interview process to obtain the H-1B visas.

Court records indicate that Raju and his co-conspirators at times failed to find employment for the H-1B visa workers the company had recruited to work in the U.S. On those occasions, court records indicate, these workers were “benched” in the U.S. while waiting for another job assignment. While they were benched, and contrary to the salary claims made in the application forms, these workers received little or no pay from iFuturistics. On one occasion, court documents show, a foreign national H-1B visa holder had paid $2,500 to iFuturistics as a security deposit for processing her H-1B visa. According to the contract between iFuturistics and the employee, the employee was promised an annual salary of $60,000 and had agreed to the company’s request to market her services for employment throughout the U.S. In the end, iFuturistics never provided the worker with any work assignments and failed to pay her any wages, court records show.

Filed documents also indicate that in November 2009, Raju and others attempted to hide their fraudulent activities from law enforcement and immigration agents during a scheduled inspection visit of the company’s Pineville offices. In anticipation of the visit, court documents show that Raju and others had set up work stations, moved in furniture and recruited several persons to pretend to be iFuturistics workers for the duration of the inspection visit, when, in fact, the office space prior to the site visit had been empty and unoccupied. When law enforcement and immigration agents returned to the company’s offices a month after the site visit, the office space was dark and unoccupied, as it had been prior to the planned inspection.

Raju was charged with and pleaded guilty to one count of conspiracy to violate United States laws, which carries a maximum prison term of five years and a $250,000 fine; one count of presenting fraudulent immigration documents, which carries a maximum prison term of 10 years and a $250,000 fine; one count of hiring at least 10 unauthorized aliens within a one year period, which carries a maximum prison term of five years and a $250,000 fine; one count of hiring recruiting, and referring for a fee for employment an unauthorized alien, which carries a maximum prison term of six months and a $100,000 fine; and one count of money laundering conspiracy, which carries a maximum term of 20 years in prison and a fine not to exceed the value of the funds involved. In addition, Raju has agreed to pay restitution to any victims harmed by his fraudulent conduct. The final restitution amount will be determined by the Court.

Raju has been in local federal custody since December 2012. A sentencing date has not been set.

The investigation was handled by ICE-HIS and DOL. The prosecution is being handled by Assistant U.S. Attorney Kenneth Smith of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – A Hickory, N.C. man has been charged with methamphetamine trafficking near an elementary school and gun related offenses 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; Greg McLeod, Director of the North Carolina State Bureau of Investigation; and Sheriff Coy Reid, of the Catawba County Sheriff’s Office.

A federal grand jury sitting in Charlotte returned a seven-count criminal indictment against Gary Carroll, 57, of Hickory, on Tuesday, March 19, 2013. According to allegations contained in the indictment, beginning in 2010 and through March 2013, Carroll did knowingly conspire to distribute and to possess with intent to distribute methamphetamine. According to the indictment and filed court documents, Carroll was involved in a drug trafficking conspiracy that involved more than 500 grams of methamphetamine. According to a filed criminal complaint, upon execution of a search warrant at Carroll’s residence in January 2013, law enforcement recovered 67 grams of methamphetamine, other drug paraphernalia, cash, four firearms – including an assault rifle – and a large quantity of ammunition and ammunition magazines. The indictment, criminal complaint, and court proceedings allege that Carroll’s trafficking activities took place from, among other places, his home, which is within 1,000 feet of a public elementary school.

Carroll is charged with one count of conspiracy to distribute and to possess with intent to distribute at least 500 grams of methamphetamine, which carries a mandatory minimum of 10 years and a maximum of life in prison and a $10 million fine; one count of possession with intent to distribute methamphetamine which carries a maximum of 20 years in prison and a $1 million fine; one count of possession with intent to distribute methamphetamine within 1,000 feet of a public elementary school which carries a maximum of 40 years in prison and a $2 million fine; one count of possession with intent to distribute at least 50 grams of methamphetamine which carries a minimum of five years and a maximum of 40 years in prison and a $5 million fine; one count of possession with intent to distribute at least 50 grams of methamphetamine within 1,000 feet of a public elementary school which carries a minimum of five years and a maximum of 80 years in prison and a $10 million fine; one count of possession of firearms in furtherance of drug trafficking which carries a minimum of five years and a maximum of 80 years in prison and a $10 million fine; and, possession of firearms after conviction for domestic violence offense which carries a minimum of 10 years and a maximum of life in prison and a $250,000 fine.

Carroll was arrested in February 2013 and has been released on bond. The charges contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond reasonable doubt in a court of law.

The investigation was handled by ICE-HSI, SBI, and CCSO. The case was prosecuted by Assistant U.S. Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – A Gaston County man was sentenced to 204 months in prison today for possession and transportation of child pornography, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Bobby Clarence Byrd, Jr., 44, of Lowell, N.C. was also ordered to serve 15 years under court supervision following his prison sentence and to register as a sex offender.

Joining U.S. Attorney Tompkins in making today’s announcement are Roger A. Coe, Acting Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and Chief Stacy Conley, of the Gastonia Police Department.

In November 2011, a federal criminal indictment charged Byrd with one count of possession and one count of transportation of child pornography. According to filed court documents and today’s sentencing hearing, in or about January 2011, Byrd transported or possessed 59 videos and 342 images depicting the sexual abuse of children as young as two years old. Byrd pleaded guilty to the charges in April 2012. During the course of the investigation, law enforcement discovered that Byrd had sexually abused a young child in 2006. Byrd pleaded guilty to state charges and was sentenced to 16-20 months in state prison for his criminal conduct.

Byrd has been in local federal custody since December 2011. He will be transferred into the custody of the federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole. The investigation was handled by the FBI and Gastonia Police Department.

***

In a separate case involving child pornography, on Monday, March 11, 2013, Judge Whitney sentenced Paul Durfee, 45, of Charlotte, to 70 months in prison, followed by five years of supervised release for possession of child pornography. Durfee was also ordered to register as a sex offender. According to filed documents and yesterday’s sentencing hearing, from February 2007 to December 2010, Durfee participated in a website that was being used to share child pornography internationally. Agents tracked Durfee to his home in Charlotte and executed a search warrant in December 2010. A forensic examination of a computer seized during the search located images of children being sexually abused and exploited.

Durfee has been in local federal custody since April 2012, and will be transferred into the custody of the Federal Bureau of Prisons upon designation of a federal facility where he will serve his sentence without the possibility of parole. Durfee’s investigation was handled by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

The prosecution for the government of Byrd and Durfee was handled by Assistant U.S. Attorney Cortney Escaravage of the U.S. Attorney’s Office in Charlotte.

Both cases were 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.

Defendant ordered to pay more than $31 million in restitution for his role in the Queen Shoals Ponzi scheme

CHARLOTTE, N.C. – A former North Carolina resident was sentenced today in U.S. District Court for his involvement in the $32.5 million Queen Shoals Ponzi scheme, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Chief U.S. District Judge Robert J. Conrad, Jr. sentenced Gary D. Martin, 61, of St. Augustine, Fla. to 10 years in prison to be followed by two years of supervised release. Judge Conrad also ordered the defendant to pay $31,707,038 as restitution to the victims of the Ponzi scheme and ordered defendant liable to forfeit and repay the Government for the approximate $28,500,000 in proceeds of the scheme.

Joining U.S. Attorney Tompkins in making today’s announcement are Roger A. Coe, Acting Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and the North Carolina Secretary of State Elaine F. Marshall.

In February 2012, Martin pleaded guilty to one count of a money laundering conspiracy in connection with the Queen Shoals Ponzi scheme. According to court documents and court proceedings, on or about December 2007, Martin formed Queen Shoals Consultants, LLC (QSC) in North Carolina. Martin and others induced victims to invest over $28.5 million in the Queen Shoals Ponzi scheme operated by Sidney Hanson. Court records show that although Hanson never directly told Martin that Queen Shoals was a Ponzi scheme, Martin induced victims to invest in the Queen Shoals Ponzi scheme through a series of false and fraudulent representations. Specifically, Martin falsely claimed that QSC had over 20 years’ experience in financial services and international finance and that he had a vast background in financial services, including the silver, gold and foreign currency trading markets. In fact, Martin had no such experience, held no professional licenses related to finance or investments and had never engaged in any silver, gold or foreign currency trading.

According to court documents, Martin, through the QSC web site and other means, also made false claims about QSC’s financial expertise in “Self-Directed IRA Strategies and Fixed Rate Accounts.” Martin held QSC out as “leaders in Professional Private Placement Retirement Planning” and falsely claimed that QSC had a “proven method of diversification [that] spreads the risk nicely for a balanced portfolio,” when, in fact, QSC offered no such diversification and funneled victim funds solely into the Queen Shoals Ponzi scheme. Court records show that Martin routinely vouched for the success and reliability of Queen Shoals by claiming to have personally invested a significant amount of his own money into Queen Shoals when, in fact, Martin personally invested only $4,000.

According to filed documents and today’s sentencing hearing, Martin engaged in money laundering transactions by utilizing the referral fees he received from Hanson to pay commissions to himself and the so-called QSC consultants. From in or about 2007 to in or about 2009, Martin received over $1.9 million in referral fees from Hanson and paid the consultants over $1.5 million during the relevant time period in return for inducing victims to invest in the Queen Shoals Ponzi scheme. These payments caused QSC consultants to induce additional victims to invest in the Queen Shoals Ponzi scheme, thereby perpetuating the scheme.

In announcing today’s sentence, Judge Conrad described the impact of the Ponzi scheme on the victims. “This Ponzi scheme had devastating results,” Judge Conrad said. “People in their 60’s, 70’s, 80’s and even 90’s lost everything because Hanson and Martin defrauded them.” Judge Conrad also noted that Martin, “went into homes, got people to rely on him and told them things that weren’t true, and based on false representations, many lost their life savings…He is seriously culpable.”

Martin was released on bond and was ordered to self-report to the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.

Sidney Hanson, the mastermind of the Queen Shoals Ponzi scheme, was convicted of securities fraud and wire fraud and is currently serving a 22-year federal sentence. He was also ordered to pay over $31,000,000 in restitution. To date, over $9,000,000 has been paid to the Clerk of Court to pay victims of the Ponzi scheme. In addition, other assets, including federally forfeited precious metals and federally forfeited real estate, will be liquidated and the net sale proceeds will be paid to victims.

U.S. Attorney Tompkins thanked the Justice Department’s Asset Forfeiture and Money Laundering Section, the CFTC, and the North Carolina Secretary of State for their invaluable assistance in recovering assets, thereby ensuring that Hanson’s victims receive restitution money owed to them. U.S. Attorney Tompkins commended the quick asset seizures before the collapse of Queen Shoals, which will result in the return of nearly 30 percent of victims’ losses. The U.S. District Court has begun issuing restitution payments of the recovered funds to identified victims of the Ponzi scheme.

Martin’s case was investigated by the FBI with assistance from the Securities Division of the North Carolina Department of the Secretary of State. U.S. Attorney Tompkins also acknowledged the invaluable assistance provided by the Commodities Futures Trading Commission and the Florida Office of Financial Regulation, Bureau of Financial Investigations in this case. The prosecution is handled by Assistant United States Attorney Mark T. Odulio, of the U.S. Attorney’s Office in Charlotte.

 

STATESVILLE, N.C. – U.S. District Court Judge Richard Voorhees sentenced today Elisa Annette Baker, 44, of Hickory, N.C., to serve 120 months in prison for conspiracy with intent to distribute prescription drugs, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Baker was also ordered to serve three years under court supervision once she serves her prison term.

U.S. Attorney Tompkins is joined in making today’s announcement by Harry S. Sommers, Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA), which oversees the Charlotte District Office; Greg McLeod, Director of the North Carolina State Bureau of Investigation (SBI); and Chief Tom Adkins of the Hickory Police Department.

According to filed documents and court proceedings, from 2006 to October 2010, Baker conspired with others to distribute and possess with intent to distribute the controlled substances oxycodone, hydrocodone and alprazolam. Baker also maintained residences in Granite Falls, Hudson and Hickory, N.C. for the purpose of distributing the prescription drugs. According to plea documents and today’s sentencing hearing, Baker possessed approximately 12,000 dosage units of oxycodone, 10,000 dosage units of hydrocodone, and 29,000 dosage units of alprazolam. Filed documents indicate that Baker distributed prescription drugs to one of the co-conspirators, a relative, and several of his high school friends, when he was 16 years old. According to court documents, Baker obtained the prescription drugs through multiple prescriptions from physicians and from other unidentified sources in Catawba County. In January 2012, Baker pleaded guilty to one count of conspiracy to distribute and possess with intent to distribute a controlled substance.

Baker is currently serving an 18-year state sentence for second degree murder in the death of Zahra Baker. At today’s sentencing hearing, Judge Voorhees ordered that Baker completes her state sentence before she begins serving her federal sentence. Federal sentences are served without the possibility of parole.

The investigation was handled by the DEA, NC SBI and the Hickory Policy Department. The prosecution was handled by Assistant United States Attorneys Dana O. Washington and Cortney S. Escaravage.

CHARLOTTE, N.C. – Chief U.S. District Judge Robert J. Conrad, Jr. sentenced today Awni Shauaib Zayyad, 56, of Wilson, N.C. to two years in prison for five federal offenses related to the possession and sale of counterfeit Viagra and Cialis pills, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Judge Conrad also ordered Zayyad to serve two years under court supervision following his release from prison and to pay a $10,000 fine and $500 special assessment fee.

U.S. Attorney Tompkins is joined in making today’s announcement by Brock D. Nicholson, Special Agent in Charge of the U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) in Atlanta and the Carolinas, Chief Rodney D. Monroe, of the Charlotte-Mecklenburg Police Department (CMPD), and Dr. Duane Satzger, Acting Forensic Chemistry Center Director of the U.S. Food and Drug Administration, Cincinnati Office.

In February 2012, a federal jury convicted Zayyad of one count of conspiracy to traffic in counterfeit prescription medications containing counterfeit trademarks, two counts of trafficking in counterfeit prescription medications bearing counterfeit trademarks, and two counts of selling and holding for sale counterfeit prescription medications with intent to defraud and mislead. Viagra and Cialis, manufactured respectively by Pfizer and Eli Lilly, are prescription medications for the treatment of erectile dysfunction (ED) that lawfully may be distributed to the public only through licensed pharmacies based upon a doctor’s prescription. Trial evidence established that the counterfeit Viagra and Cialis pills Zayyad distributed contained active pharmaceutical ingredients (API) of the ED medications, although in unknown strength and with unknown non-API additives.

Evidence presented at Zayyad’s trial showed that Zayyad sold over 500 counterfeit Viagra pills on June 24, 2010, at a convenience store in Charlotte. According to trial records, on August 23, 2010, Zayyad was en route to Charlotte in a vehicle registered in his wife’s name to sell more counterfeit pills at the same Charlotte convenience store. Law enforcement agents stopped Zayyad’s vehicle in Mecklenburg County before Zayyad could arrive at his destination. Court evidence indicated that law enforcement found 500 counterfeit Viagra pills and over 200 counterfeit Cialis pills hidden in the vehicle.

Evidence from court proceedings established that Zayyad had possessed and/or distributed over 2,000 counterfeit Viagra pills and almost 400 counterfeit Cialis pills during the course of the investigation in 2010. The counterfeit Viagra and Cialis pills had a combined wholesale value exceeding $40,000. Evidence introduced also established that there is a risk of great bodily injury to consumers who purchase and use counterfeit prescription medications outside of a doctor’s care and outside of licensed pharmacies, especially where counterfeit prescription medications contain active pharmaceutical ingredients of unknown strengths, with unknown additives, manufactured in unknown and untraceable clandestine facilities.

The defendant was ordered to self-report to the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.

The investigation was led by ICE-HSI, with assistance from CMPD and FDA. The case was prosecuted by Assistant United States Attorney Tom O’Malley of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – Two men were sentenced on Wednesday, February 27, 2013, in U.S. District Court for their part in a cocaine trafficking conspiracy, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. U.S. District Judge Max O. Cogburn, Jr., sentenced Ildefonso Madrid Flores, 28, of Mexico, to 151 months in prison, to be followed by four years of supervised release. David Kennedy, 37, of Charlotte, was sentenced to 30 months in prison and will serve four years under court supervision following his prison term.

U.S. Attorney Tompkins is joined in making today’s announcement by Harry S. Sommers, Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA), which oversees the Charlotte District Office; Greg McLeod, Director of the North Carolina State Bureau of Investigation (SBI); Chief Rodney D. Monroe of the Charlotte-Mecklenburg Police Department (CMPD); and Chief Tim W. Ledford of the Mint Hill Police Department (MHPD).

In May 2012, following a three day trial, a federal jury found Flores guilty of conspiracy to possess with intent to distribute cocaine. According to evidence presented at trial, law enforcement seized two kilograms of cocaine from a vehicle in which the drug transaction occurred. Flores expected to receive $70,000 as payment for the drugs. Also, according to trial evidence, Flores possessed two cell phones. One of the cell phones was subscribed in Flores’ name for his personal use. Flores used the second cell phone to coordinate drug trafficking with his co-conspirators. That phone was subscribed under the name “Tony Montana,” the infamous character from the movie “Scarface.” Trial evidence showed that the co-conspirators had distributed a total of approximately 26 kilograms of cocaine.

Kennedy pleaded guilty to one count of conspiracy to possess with intent to distribute cocaine in April 2012. The third co-defendant, Robert Shanley, 34, of Charlotte, pleaded guilty to the same charge in December 2011. Shanley was sentenced in July 2012 to 57 months in prison, to be followed by four years of supervised release. In November 2011, a fourth co-conspirator, Joshua Poulin, 34, of Clover, S.C., pleaded guilty to two counts of conspiracy to possess with intent to distribute cocaine and was sentenced to 133 months in prison, to be followed by 10 years of supervised release.

Flores and Kennedy have been in local federal custody and will be transferred to 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 DEA, SBI, CMPD, and MHPD. The case was prosecuted by Assistant U.S. Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte.