District of Nevada
Press releases recorded for this federal judicial district.
Men Charged in $3.5 Million Grant Fraud SchemeRead the Press Release
LAS VEGAS, Nev. – Three Las Vegas men have been indicted by the federal grand jury on charges that they fraudulently obtained more than $3.5 million from small business owners for grant funding and services which were never provided and never intended to be provided, announced U.S. Attorney Daniel G. Bogden for the District of Nevada and Laura A. Bucheit, Special Agent in Charge of the FBI for Nevada.
Michael Jones, 35, Jason Demko, 38, and Mike Guariglia, 47, all of Las Vegas, are charged with one count of conspiracy to commit mail fraud and wire fraud, four counts of wire fraud, and criminal forfeiture. They are scheduled to appear before U.S. Magistrate Judge Cam Ferenbach at 3:00 p.m. today for an initial appearance and arraignment.
“Advance fee fraud schemes are common and perpetrated for the sole purpose of enriching the fraudsters,” said U.S. Attorney Bogden. “We are currently prosecuting a number of these cases in which the defendants prey on unsuspecting business owners who are seeking grants for their businesses. If you think you have been victimized by persons committing this sort of crime, please contact the FBI.”
“These indictments highlight the FBI’s unrelenting commitment to investigate financial crimes and serve as a reminder for consumers to be vigilant and protect themselves,” said Special Agent in Charge Bucheit.
According to the indictment, from about December 2010 to the spring of 2013, the defendants and their coconspirators allegedly induced small business owners to give them money in exchange for services, such as business plans and other paperwork that would help them obtain grant funding. The defendants knew that the services were not necessary or likely to produce grants, and knew that the true purpose of the money was to personally enrich the defendants. The defendants and coconspirators received numerous complaints from the clients. In order to prevent and delay the clients from reporting them to law enforcement, the defendants made false promises and representations, told them their funding was forthcoming, operated under several business names, including Summit Business Consultants Inc., Inner Circle Corporation LLC, Sierra Investment Group, Inc. and Valley Business Development, and changed the physical locations of the businesses. Using this fraud scheme, the defendants allegedly fraudulently obtained more than $3.5 million from the victims.
If convicted, the defendants face a maximum of 20 years in prison and a $250,000 fine on all counts.
The case is being investigated by the FBI, and prosecuted by Assistant U.S. Attorney Sarah E. Griswold.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The 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 about the task force visit: www.stopfraud.com.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
California Man Sentenced to 10 Years in Prison for Coercing 15-Year-Old Reno Girl for SexRead the Press Release
RENO, Nev. – A California man who used internet chat rooms to solicit a 15-year-old Reno girl for sex, and then traveled to Reno where he was arrested after attempting to have sex with her, was sentenced today to 10 years in federal prison, 15 years of supervised release and ordered to pay a $5,000 fine, announced U.S. Attorney Daniel G. Bogden, for the District of Nevada.
Nicholas Ponh Suon, 41, of Norwalk, Calif., was sentenced in Reno by U.S. District Judge Miranda M. Du. Suon pleaded guilty in January to one count of enticement of a minor to engage in illegal sexual activity and agreed to the forfeiture of his property used in the crime, including his vehicle and cellular telephone.
“There are persons trolling the Internet 24 hours-a-day looking for innocent children to harm,” said U.S. Attorney Bogden. “This case demonstrates that criminals will travel across state lines to physically harm children, and are not only having online conversations or trading sexually explicit photographs. Thanks to the dedication and skills of these investigators and prosecutors, we are able to identify, arrest and successfully prosecute these dangerous predators.”
According to the court records, beginning as early as November 2013 and continuing until August 2014, Suon engaged in a series of internet chat and text message conversations with a 15-years-old Reno girl, which were intended to persuade and entice the girl to engage in sexually explicit conduct with Suon. The conversations were engaged in using different smart phone applications, including “Tango” and “Skout.” On Aug. 29, 2014, Suon traveled to Reno from California in order to meet the girl and to have sex with her. Suon was arrested outside the girl’s home after he attempted to engage in sexual intercourse with her in his vehicle.
The case was prosecuted by Assistant U.S. Attorney Carla Higginbotham. It was investigated by the Washoe County Sheriff’s Office and the FBI, and brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals, federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Sex Offender Sentenced to Life in Prison for Guilty Plea to Federal Firearms OffenseRead the Press Release
LAS VEGAS, Nev. – A convicted sex offender who was arrested at his home in Las Vegas with a minor boy and also found in possession of a firearm, was sentenced today to life in prison for his guilty plea to a federal firearms offense, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
William Oliver Smith, 43, most recently a resident of Las Vegas, was sentenced by U.S. District Judge Jennifer A. Dorsey. Smith pleaded guilty in February 2015 to one count of felon in possession of a firearm and stipulated in the plea agreement to the life sentence. There is no parole in the federal system.
“We will continue to use federal gun laws to prosecute repeat offenders and remove them from our community, permanently if necessary” said U.S. Attorney Bogden. “We can all be thankful for the work of our investigators and prosecutors in ensuring community safety and that this defendant will never again harm any more children.”
According to the plea agreement, on May 25, 2013, officers from the Las Vegas Metropolitan Police Department identified Smith as a suspect in the disappearance of a juvenile in Las Vegas. When officers contacted Smith at his residence, he was with a 10-year-old boy, who was not the missing juvenile. Smith was arrested for lewdness with a minor. During a search of the residence, officers recovered a .38 caliber handgun in a drawer next to Smith’s bed.
Smith was previously convicted of sexual assault of a minor and taking indecent liberties with a child in North Carolina, child molestation in San Paulo, Brazil, and attempted sexual assault, in Reno, Nev.
This case was investigated by the Las Vegas Metropolitan Police Department and the Bureau of Alcohol, Tobacco, Firearms, and Explosives, as part of the Safe Streets Task Force and Project Safe Neighborhoods program. The case was prosecuted by Assistant U.S. Attorney Phillip N. Smith, Jr.
Arraignments Today for Two Men Charged with Using Counterfeit U.S. Postal Service Keys to Steal MailRead the Press Release
LAS VEGAS, Nev. – The arraignments for two men charged with using counterfeit mail box keys to steal checks, credit cards, and other information from local mailboxes will be held at 3:00 p.m. today before U.S. Magistrate Judge Carl W. Hoffman, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
John Douglas Gibson, 44, and Juan Carlos Rodriguez, 40, both of Las Vegas, are charged with one count of possession of counterfeit U.S. Postal Service keys, one count of possession of stolen mail, one count of theft of government money, one count of fraud and related activity in connection with access devices, and one count of aggravated identity theft. If convicted, they face up to five years in prison on the stolen mail count and up to 10 years in prison on each other count, except for the aggravated identity theft count which carries a two year mandatory minimum penalty which must be served consecutively. They also face fines of up to $250,000 on each count.
“Financial and personal identifying information stolen from the U.S. mail is commonly used to create counterfeit checks and credit cards and to assume the identity of the victims whose mail was stolen,” said U.S. Attorney Bogden. “Be aware of any suspicious activity at your mailbox and report it to the U.S. Postal Inspection Service as soon as possible so that investigators can track it.”
According to the criminal complaint filed on May 8, 2015, the U.S. Postal Inspection Service had been investigating reports of extensive mail theft in the Henderson and Las Vegas areas. The reports indicated that someone was stealing all of the mail from individual and cluster mailboxes without causing any damage to the mailboxes. Investigators determined that between Feb. 1 and May 7, defendants Gibson and Rodriguez were allegedly using counterfeit U.S. Postal Service mailbox keys to steal mail from secured mailboxes. The criminal indictment specifically charges Gibson and Rodriguez with possessing stolen mail belonging to an individual who resided at La Suena Court in Henderson, stealing U.S. Treasury checks valued at more than $10,000, and fraudulently using Sam’s Club and Lowe’s hardware store credit cards.
Information concerning mail theft should be reported to the U.S. Postal Inspection Service online at https://postalinspectors.uspis.gov/ or by telephone at 800-275-8777.
The case is being investigated by the U.S. Postal Inspection Service and prosecuted by Assistant U.S. Attorney J. Gregory Damm.
“The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.”
An indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Man Sentenced to 19 1/2 Years in Prison for Swindling Millions from Persons in Golf Course SchemeRead the Press Release
RENO, Nev. – A man who made false statements and used phony documents to solicit millions from victims who thought they were helping him purchase a golf course in Gardnerville, Nev., was sentenced today to 19½ years in prison, three years of supervised release, and ordered to pay $1.4 million in restitution, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Scott H. Summerhays, 56, currently in custody, but formerly of the South Lake Tahoe area, was sentenced by Senior U.S. District Judge Larry R. Hicks. Summerhays pleaded guilty in February 2014 to 14 counts of wire fraud, seven counts of money laundering, two counts of identity theft, and one count of aggravated identity theft.
“If you are considering a financial arrangement with someone, be sure to check the veracity of any documents they provide you, as fraudulent documents are common and easy to create,” said U.S. Attorney Bogden.
According to the court records, during 2008 to 2010, Summerhays represented to potential investors that he was purchasing the Genoa Lakes Golf Club located west of Gardnerville, Nev. for $17 million and needed a short term loan to complete the deal because his own money was tied up in a trust. Summerhays also represented to the potential investors that he solicited funds for oil and gas investments in Texas and owned over $30 million in Berkshire, Las Vegas Sands and MGM stocks. Summerhays showed some of the investors a fraudulent investment account statement. Summerhays also claimed that he was in partnership with Las Vegas Sands owner Sheldon Aldelson, and showed potential investors a partnership agreement containing the forged signature of Adelson. In reality, Summerhays had no investment portfolio, and Adelson never heard of Summerhays or had any partnerships with him. Using this scheme, Summerhays was able to convince 11 persons to loan him money for the golf course, totaling approximately $3.6 million. None of the investors were repaid and they lost all of the money they loaned Summerhays.
The case was investigated by the FBI and IRS Criminal Investigation, and prosecuted by Assistant U.S. Attorney Megan Rachow.
“The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.”
Title Company Owner Pleads Guilty to Embezzling Escrow FundsRead the Press Release
LAS VEGAS, Nev. – A Utah man who owned a title and escrow company that operated in Nevada, has pleaded guilty to wire fraud for embezzling almost $4 million from company escrow accounts for his own personal use, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Christopher L. Durling, 49, of Sandy, Utah, pleaded guilty on Wednesday, May 13, 2015, before Senior U.S. District Judge Kent J. Dawson to one count of wire fraud, and is scheduled to be sentenced on Aug. 11 at 9:00 a.m. Durling faces up to 20 years in prison and a $250,000 fine.
“The U.S. Attorney’s Office for the District of Nevada successfully prosecuted hundreds of persons for fraud committed during the housing and mortgage lending bubble,” said U.S. Attorney Bogden. “Many of them were employed in the housing and lending industries and are now serving time in federal prison.”
Durling owned and operated Direct Title Insurance Agency, a title and escrow company which had offices in Nevada, Utah, Texas, Indiana, California, and elsewhere. From about March 2009 through June 2011, Durling devised a scheme to defraud various persons and entities of money and property by diverting funds from escrow accounts for his own personal use. Durling used a kiting scheme to artificially inflate the balances of office trust accounts in order to cover up the shortages that were caused by his diversion of the escrow funds. In late 2010, the volume of the diversions from the escrow accounts reached such a level that the kiting scheme could no longer conceal the fraud, and insurance companies had to reimburse 13 lenders approximately $4 million.
The case was investigated by the FBI and prosecuted by Assistant U.S. Attorney Daniel J. Cowhig.
“The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.”
Man Who Was Caught with Almost 100 Pounds of Meth and Marijuana in Vehicle Sentenced to over 30 Years in PrisonRead the Press Release
LAS VEGAS, Nev. – A Topeka, Kansas man who was pulled over by Nevada Highway Patrol Officers in 2013, and found to be in possession of 24 pounds of methamphetamine and 74 pounds of marijuana, was sentenced today to 365 months in prison and 10 years of supervised release, announced U.S. Attorney Daniel G. Bogden, for the District of Nevada.
Paul Edward Davis, 49, who was convicted by a jury in Las Vegas on Dec. 2, 2014, of one count of possession of methamphetamine with the intent to distribute and one count of possession of marijuana with the intent to distribute, was sentenced by U.S. District Judge Andrew P. Gordon.
“This defendant was transporting large quantities of methamphetamine and marijuana,” said U.S. Attorney Bogden. “We work with our Nevada High Intensity Drug Trafficking Area (HIDTA) program and with state and local law enforcement on several task forces to apprehend and prosecute federally drug traffickers who are traveling through our Nevada communities with significant quantities of drugs for distribution.”
According to the court records, on July 27, 2013, at approximately 9:15 p.m., a Nevada Highway Patrol Officer pulled Davis’ SUV over for speeding on I-15 northbound near Las Vegas at Mile Marker 64. The trooper immediately observed the odor of marijuana coming from the inside of the vehicle, and a law enforcement canine dog alerted to the presence of a controlled substance. During a search of the vehicle, officers located three cellular phones, numerous air fresheners, and several large canvas bags in the rear area of the vehicle containing approximately 24 pounds of methamphetamine and 74 pounds of marijuana. Testimony at trial established that the value of the drugs was over $1 million.
Davis was on federal supervised release for a drug trafficking conviction when he was pulled over for this offense. In 2000, he had been convicted by a federal jury in Topeka, Kan., of distributing crack cocaine within 1,000 feet of a university and sentenced to 17½ years in prison and 10 years of supervised release. After serving 11 years, he was re-sentenced and released from prison due to the amendments that were made to the federal sentencing guidelines which reduced the penalties for persons convicted of crimes involving crack cocaine.
The case was prosecuted by Assistant U.S. Attorney Amber M. Craig and investigated by the DEA, Nevada Highway Patrol, and Las Vegas Metropolitan Police Department.
Las Vegas Urologist Sentenced to Four Years in Prison for Re-Using Needle Guides During Prostate ProceduresRead the Press Release
LAS VEGAS, Nev. – Las Vegas urologist, Michael Stanley Kaplan, 60, was sentenced today to four years in prison and one year of supervised release for re-using single use needle guides during prostate procedures, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
“Dr. Kaplan re-used the needle guides for the purpose of personal enrichment and with an intent to defraud or mislead,” said U.S. Attorney Bogden. “We will hold accountable those medical professionals who endanger patients for their own personal profit.”
Kaplan was convicted by a jury last September of one count of conspiracy to commit adulteration. The jury acquitted him of making false representations to Food and Drug Administration (FDA) investigators regarding the duration of his re-use of the needle guides.
“FDA’s requirements for safe use of medical devices are in place to protect the health of the public; when these requirements are flouted, serious consequences can ensue,” said Lisa L. Malinowski, Special Agent in Charge of the Los Angeles Field Office for FDA’s Office of Criminal Investigations. “We will continue our vigilance in protecting the U.S. consumers’ and patients’ right to safe medical products.”
At the time of the offense, Dr. Kaplan operated Green Valley Urology. According to the evidence presented at trial, Kaplan re-used single-use plastic needle guides during prostate procedures, causing a significant health risk to his patients. The packaging on each needle guide clearly warned that they should not be used more than once, but Dr. Kaplan instructed his staff and permitted his staff to re-use them three to five times prior to disposal. Between about Dec. 15, 2010, and March 11, 2011, Dr. Kaplan performed approximately 120 procedures requiring a needle guide but used less than 10 guides during that period.
The case was investigated by the FDA Office of Criminal Investigations and prosecuted by Assistant U.S. Attorney Crane M. Pomerantz and Special Assistant U.S. Attorney Peter J. Leininger.
Endoscopy Center Ceo Sentenced for Billing Fraud SchemeRead the Press Release
LAS VEGAS, Nev. – Tonya Rushing, former CEO of the now-defunct Endoscopy Center of Southern Nevada, was sentenced today by Senior U.S. District Judge Larry R. Hicks to one year and one day in prison for conspiring with Dipak Desai, the former owner of the center, to commit health care fraud, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Rushing, 47, who pleaded guilty last July to conspiracy to commit health care fraud, must also serve two years of supervised release, perform 150 hours of community service, and pay a $10,000 fine and $50,000 in restitution. An order of forfeiture was also ordered for $8.1 million.
“Those perpetrating Medicare and Medicaid fraud cheat both taxpayers and vulnerable patients,” said U.S. Attorney Bogden. “We will hold criminals accountable and will seek to recover stolen dollars in each case of healthcare fraud we prosecute.”
Between about January 2005 and February 2008, Desai and Rushing conspired to overcharge Medicare, Medicaid, and other private health insurance companies at the Endoscopy Center of Southern Nevada by significantly overstating the amount of time the certified registered nurse anesthetists spent with patients on a given procedure. Desai and Rushing created a separate company, Healthcare Business Solutions, owned by Rushing, to handle the billing for the anesthesia services. This company received approximately nine percent of all money collected for anesthesia services rendered at the endoscopy center. Desai and Rushing imposed intense pressure on the endoscopy center employees to schedule and treat as many patients as possible in a day, and instructed the nurse anesthetists to overstate in their records the amount of time they spent on the anesthesia procedures. Desai and Rushing also instructed the office staff to rely on the false anesthesia records when preparing the claims for reimbursement which were sent to Medicare, Medicaid and the insurance companies. The plea agreement states that Rushing received approximately $1.3 million as her share of the inflated anesthesia billing scheme.
Desai pleaded guilty on April 2, 2015, to one count of conspiracy to commit health care fraud, one count of health care fraud, and is scheduled to be sentenced on July 9.
This case was investigated by the FBI, Office of the Nevada Attorney General, Health and Human Services Office of Inspector General, Department of Labor Office of Inspector General, Food and Drug Administration Office of Criminal Investigations, and the United States Postal Inspection Service, and prosecuted by Assistant U.S. Attorney Crane M. Pomerantz and Mark N. Kemberling, who was designated as a Special Assistant U.S. Attorney on this case and is Chief Deputy Nevada Attorney General.
According to a recent report by the Inspector General for the U.S. Department of Health and Human Services, for every dollar the Departments of Justice and Health and Human Services have spent fighting health care fraud, they have returned an average of nearly eight dollars to the U.S. Treasury, the Medicare Trust Fund and others. To learn more or to report Medicare fraud, go to http://www.stopmedicarefraud.gov/
Oklahoma Couple Sentenced for Ponzi Scheme Related to Fictitious Hedge FundRead the Press Release
LAS VEGAS, Nev. – An Oklahoma husband and wife received prison sentences today for stealing over $6.5 million from six victims who thought they were investing in a hedge fund, announced U.S. Attorney Daniel G. Bogden for the District of Nevada, Laura A. Bucheit, Special Agent in Charge of the FBI for Nevada, and John Collins, Special Agent in Charge of IRS Criminal Investigation for Nevada.
“The defendants used convincing tactics and tempting monetary returns to persuade their victims to part with their money,” said U.S. Attorney Bogden. “If someone offers unusually high returns on an investment, it is likely too good to be true.”
Linda Livolsi, aka Linda G. Findley, aka Linda Grogg, 46, of Cleveland, Oklahoma, was sentenced to 45 months in prison, three years of supervised release, and ordered to pay approximately $6.1 million in restitution. She pleaded guilty on Oct. 15, 2014, to one count of wire fraud and one count of making and filing a false and fraudulent tax return. Her husband, William Livolsi, Jr., 55, was sentenced to two years in prison, three years of supervised release, and ordered to pay approximately $5 million in restitution. He pleaded guilty on Oct. 15, 2014, to one count of wire fraud. Linda Livolsi was allowed to self-report to prison by July 24, 2015, and William Livolsi was permitted to report to prison 30 days after Linda is released from prison.
“These sentences are a reminder of the FBI’s dedication to identify, investigate and prosecute those who are committing financial crimes against innocent consumers,” said FBI Special Agent in Charge Bucheit.
“Individuals should be careful in choosing their investment advisers as they would in choosing a doctor or a lawyer,” said IRS CI Special Agent in Charge Collins. “IRS criminal investigators will use all permissible tools to pursue these criminals and hold them accountable.”
According to the plea agreements, since about 2003, under the artifice of RGM Enterprises, LLC, Linda Livolsi had been soliciting and inducing persons to give her money for the purpose of investing it in a purported hedge fund that offered large monetary returns. In reality, the hedge fund never existed and the Livolsi’s spent most the money for their personal benefit. Linda and William Livolsi, Jr. were married in 2004, and according to the plea agreements, William Livolsi participated in the fraud scheme by vouching to victims about the scheme, by creating a trust and bank accounts into which he received and withdrew monies deposited by victims, and by using the fraud monies for his own personal benefit. The victims were fooled into thinking their investments were good because the Livolsi’s provided them with false and fraudulent financial statements and account statements. The Livolsi’s fraudulently obtained about $6.5 million in funds from six investors from 2003 to 2007, including approximately $5 million that came from one victim. Linda Livolsi also filed false federal tax returns for the years 2003 to 2006, and failed to file tax returns for 2007 and 2008. Her total tax liability for those years, not including interest and penalties, is approximately $1.1 million.
The case was investigated by the FBI and IRS Criminal Investigation and prosecuted by Assistant U.S. Attorney J. Gregory Damm.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The 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 about the task force visit: www.stopfraud.com.
Men Sentenced to Prison for Kidnapping Conspiracy and Thefts from Delivery Drivers and WarehousesRead the Press Release
LAS VEGAS, Nev. – Three Las Vegas men who stole controlled substances and designer goods from warehouses and delivery drivers, and conspired to kidnap and rob a pharmaceutical delivery van driver, were sentenced on Friday, April 17, 2015, to eight, 10, and 16 years in prison and three years of supervised release, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Alexander Del Valle Garcia, 42, was sentenced to 96 months in prison, Julio De Armas Diaz, 55, was sentenced to 130 months in prison, and Alexis Torres Simon, 46, was sentenced to 192 months in prison. The three men were convicted by a jury in May 2014 of one count of conspiracy to interfere with commerce by robbery in addition to one count of conspiracy to commit theft from interstate shipment. Garcia was also convicted of one count of making a false statement to the FBI. Diaz was also convicted of one count of making a false statement to the FBI and three counts of theft from interstate shipment. Simon was also convicted of one count of felon in possession of a firearm and three counts of theft from interstate shipment.
“We regularly use federal laws to prosecute persons who use guns and violence to commit robberies and thefts in our community,” said U.S. Attorney Bogden. “Not only were these defendants committing thefts and planning a violent robbery, but they were selling stolen controlled substances causing additional harm to the community.”
According to the court records and evidence introduced at trial, beginning no later than about October 2012 and continuing to April 8, 2013, Diaz and Simon broke into warehouses, storage facilities, and delivery vans, and stole designer handbags and controlled substances and sold the goods for their own financial gain. The defendants broke into warehouses by cutting through warehouse doors, and broke into delivery vans and other vehicles that had been left unsupervised in commercial parking lots. Between April 7 and April 8, 2013, Diaz, Simon and Garcia conspired to kidnap and rob a delivery van driver with a firearm in order to obtain control and possession of the van containing controlled substances. On April 8, Garcia falsely told FBI agents that he was driving a friend to apply for a job the morning of his arrest and that gloves and duct tape found in the car he was driving belonged to the registered owner of the vehicle. On April 8, Diaz falsely told the FBI that he had no knowledge of a Beretta 9mm firearm recovered that day from the trunk of his vehicle, when he knew that the firearm had been placed in the trunk to be used that day in the planned robbery and theft of the van driver.
This case was investigated by the FBI and the Las Vegas Metropolitan Police Department, and prosecuted by Assistant U.S. Attorneys Christina M. Brown and Daniel R. Schiess.
Las Vegas Man Pleads Guilty to Shipping Packages of Controlled Substances from Las Vegas to Tennessee and TexasRead the Press Release
LAS VEGAS, Nev. – A Las Vegas man pleaded guilty today to shipping illegal drugs, including codeine and marijuana, from Nevada to other states, and using a false identity and structured bank deposits to hide over $850,000 in proceeds that he received from the drug trafficking activities, announced U.S. Attorney Daniel G. Bogden, for the District of Nevada.
Damien Williams, 26, pleaded guilty before Senior U.S. District Judge Howard D. McKibben to one count of conspiracy to distribute a controlled substance, one count of conspiracy to launder money, and one count of aggravated identity theft, and is scheduled to be sentenced on July 22, 2015. Williams faces a maximum of 20 years in prison on the drug and money laundering counts, two consecutive years in prison on the aggravated identity theft count, and fines of up to $1 million.
“We work with our local and federal law enforcement partners to identify and prosecute persons who are unlawfully using the mails to ship controlled substances to other states,” said U.S. Attorney Bogden. “As this case shows, using a false identity and structuring your bank deposits is not going to go unnoticed by our investigators.”
According to the guilty plea agreement, between May 2012 and October 2013, Williams used the identification documents of “Goldie Cage” to obtain a Nevada identification card, rent an apartment, obtain an automobile loan, and open bank accounts Cage’s name. During the same period, Williams was sending packages of controlled substances, including codeine and marijuana, to persons in Tennessee and Texas. In exchange for the controlled substances, Williams received approximately $856,000 in proceeds, which were deposited by persons in other states into the bank accounts that Williams had opened under Cage’s name. Williams would then withdraw the funds and use them in furtherance of additional illegal drug activities. The deposits and withdrawals were structured in amounts of less than $10,000 in order to avoid federal bank reporting requirements.
This case was investigated by IRS Criminal Investigation, U.S. Postal Inspection Service, and Henderson Police Department.
Carson City Man Sentenced to Prison for Possessing and Distributing Images and Videos of Child Pornography and RapeRead the Press Release
RENO, Nev. – A man who was found in possession of 6,000 images and 20 videos of child pornography, including child rape, has been sentenced to 10 years in prison, lifetime supervised release, and ordered to pay $25,000 in restitution to various victims, announced U.S. Attorney Daniel G. Bogden, for the District of Nevada.
Andrew Wayne Hamrick, 30, of Carson City, Nev., who pleaded guilty on July 28, 2014, to one count of distribution of child pornography and one count of receipt of child pornography, was sentenced on April 6, by U.S. District Judge Miranda M. Du. Hamrick has been in custody since he was arrested in April 2014.
“As the investigation in this case demonstrates, there are persons trolling the Internet 24 hours-a-day looking for accomplices and innocent children to harm,” said U.S. Attorney Bogden. “Thanks to the dedication and skills of these investigators and prosecutors, we are able to identify, arrest and successfully prosecute these dangerous predators.”
According to the court records, in October 2013, Hamrick engaged in a series of email and text message conversations with an FBI special agent who was posing undercover as an adult female interested in incest. Hamrick provided the undercover agent with instructions on how to teach the undercover agent’s fictional six-year old niece to engage in sexual activity. During the chat sessions, Hamrick emailed approximately 10 images of child pornography to the undercover agent. In March 2014, a federal search warrant was executed at Hamrick’s home in Carson City, and agents recovered two cellular telephones that, upon forensic examination, were found to contain a total of approximately 6,000 images and 20 videos of child pornography. The images and videos included depictions of child rape, bestiality, sadistic or masochistic conduct, and bondage-related activities with both young boys and girls. Agents obtained a federal arrest warrant for Hamrick, and he was arrested in Carson City while driving his vehicle. Law enforcement officials recovered another cellular telephone from Hamrick that had been activated only a few hours after the search warrant was served on his home. Several more images of child pornography were recovered from the new phone. Hamrick worked as a locksmith in Carson City.
The case was prosecuted by Assistant U.S. Attorney Carla Higginbotham. It was investigated by the FBI, Nevada Attorney General’s Office, and Northern Nevada Internet Crimes Against Children Task Force, and brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals, federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Man Sentenced to Six Years in Prison for Threatening to Kill Two Federal Judges in Las VegasRead the Press Release
LAS VEGAS, Nev. – A Las Vegas man who told federal homeland security officials on June 3, 2014, that he had placed explosives under the desks of two federal district court judges in Las Vegas and planned to blow them up, has been sentenced to 75 months in federal prison, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Clifford James Schuett, 60, was sentenced by U.S. District Judge Jennifer A. Dorsey on April 7, 2015. Schuett pleaded guilty in December 2014 to one count of threatening to kill or cause damage by explosive.
“We take all threats to federal officials and federal buildings very seriously,” said U.S. Attorney Bogden. “Fortunately, no one was injured as a result of the threats in this case, and the perpetrator has been convicted and sentenced and is in federal custody for a lengthy period of time.”
According to the plea agreement, on June 3, 2014, Schuett entered a U.S. Immigration and Customs Enforcement (ICE) field office in Las Vegas and stated that he had placed explosives in the courtrooms and under the desks of two U.S. District Judges in the Lloyd George Federal Courthouse with the intent to kill them. Law enforcement agents detained Schuett, and notified federal courthouse security of the threat. The courthouse was searched and cleared of any threats, and no explosives were located. Schuett told the agents that he wanted to blow up one of the judges because the judge had sent him to prison, and wanted to blow up the other judge because the judge had turned down his court case. Schuett also said that if he were released from custody, he would shoot a federal judge and would first go after the judge who had sent him to prison. Schuett was previously convicted in March 2010 of threatening to blow up Nellis Air Force Base, and sentenced to 42 months in prison and three years of supervised release. When Schuett was released from prison on that conviction, he failed to report to his probation officer and was sentenced in June 2013 to one additional year in prison.
This case was investigated by the FBI, ICE, and Las Vegas Metropolitan Police Department, and prosecuted by Assistant U.S. Attorney Phillip N. Smith, Jr.
Former Owner of Las Vegas Endoscopy Center, Dipak Desai, M.D., Pleads Guilty to Federal Health Care Fraud ChargesRead the Press Release
LAS VEGAS, Nev. – Dr. Dipak Desai, the former owner of a defunct Nevada endoscopy center, pleaded guilty today to conspiracy to defraud Medicare, Medicaid and other private health insurance companies by inflating and overcharging for anesthesia services it provided, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
“Dr. Desai intentionally defrauded the federal health care system for his own personal enrichment,” said U.S. Attorney Bogden. “He has finally taken responsibility for his conduct. We are hopeful this closes a long and sordid chapter of harm caused to the people and businesses of Nevada.”
Desai, 65, of Las Vegas, pleaded guilty before U.S. District Judge Larry R. Hicks to one count of conspiracy to commit health care fraud, one count of health care fraud, and agreed to the forfeiture of property of up to approximately $2.2 million. Desai is scheduled to be sentenced on July 9, 2015, and faces a maximum of five years in prison on the conspiracy count, 10 years in prison on the health care fraud count, and maximum fines of $250,000 on each count.
Last July, Desai’s co-defendant and chief operating office of the endoscopy center, Tonya Rushing, pleaded guilty to one count of conspiracy to commit health care fraud, and is scheduled to be sentenced on May 4, 2015.
According to Desai’s guilty plea agreement, between about January 2005 and February 2008, Desai and Rushing conspired to overcharge Medicare, Medicaid, and other private health insurance companies at the Endoscopy Center of Southern Nevada by significantly overstating the amount of time the certified registered nurse anesthetists spent with patients on a given procedure. Desai and Rushing created a separate company, Healthcare Business Solutions, owned by Rushing, to handle the billing for the anesthesia services. This company received approximately nine percent of all money collected for anesthesia services rendered at the endoscopy center. Desai and Rushing imposed intense pressure on the endoscopy center employees to schedule and treat as many patients as possible in a day, and instructed the nurse anesthetists to overstate in their records the amount of time they spent on the anesthesia procedures. Desai and Rushing also instructed the office staff to rely on the false anesthesia records when preparing the claims for reimbursement which were sent to Medicare, Medicaid and the insurance companies. The plea agreement states that the parties agreed that the amount of loss to the victims is approximately $2.2 million.
This case was investigated by the FBI, Office of the Nevada Attorney General, Health and Human Services Office of Inspector General, Department of Labor Office of Inspector General, Food and Drug Administration Office of Criminal Investigations, and the United States Postal Inspection Service, and prosecuted by Assistant U.S. Attorney Crane M. Pomerantz and Mark N. Kemberling, who was designated as a Special Assistant U.S. Attorney on this case and is Chief Deputy Nevada Attorney General.
According to a recent report by the Inspector General for the U.S. Department of Health and Human Services, for every dollar the Departments of Justice and Health and Human Services have spent fighting health care fraud, they have returned an average of nearly eight dollars to the U.S. Treasury, the Medicare Trust Fund and others. To learn more or to report Medicare fraud, go to http://www.stopmedicarefraud.gov/
Joint Law Enforcement Task Force Announces Arrests and Continuing Efforts to Capture Child PredatorsRead the Press Release
LAS VEGAS, Nev. – Federal, state and local law enforcement joined arms today to announce the results of a six-month arrest surge of child predators in southern Nevada, and to discuss their ongoing efforts to identify and prosecute persons who are committing sex crimes against children in Nevada, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
At a news conference in the Lloyd D. George Federal Courthouse, U.S. Attorney Bogden was joined on stage by FBI Assistant Special Agent in Charge Rick Brodsky, Clark County District Attorney Steve Wolfson, Clark County Sheriff Joe Lombardo, Nevada Attorney General Adam Laxalt, HSI Assistant Special Agent in Charge Mike Harris, U.S. Marshal Christopher Hoye, and Captain Michael Johnston of the Henderson Police Department to announce arrest and prosecution results in Operation Protect the Powerless. The Operation occurred from June 1 to Dec. 31, 2014, and resulted in the prosecution and conviction of 219 persons, the execution of 100 search warrants, and the recovery of over 500,000 images and 2,700 videos of child rape and pornography. The surge also resulted in prosecutions are being handled jointly by the U.S. Attorney’s Office and Clark County District Attorney’s Office, and resulted in distinct charges in federal and state court.
Henry Genaro Macias, 33, of Las Vegas, Nev., is a defendant who was jointly prosecuted by state and federal authorities and was sentenced during Operation Protect the Powerless. Investigators determined that Macias was using the internet to share numerous files of child pornography and at the same time was molesting minor children. Macias pleaded guilty in federal court to receipt of child pornography and was sentenced on Dec. 4, 2014, to 12 years in prison and lifetime supervised release. Macias also pleaded guilty in Clark County District Court to attempt lewdness with a child and was sentenced on July 29, 2014, to six to 15 years in prison.
Operation Protect the Powerless was organized and led by the Project Safe Childhood (PSC) Task Force in southern Nevada, and targeted child traffickers, persons who were coercing and enticing minors for sex, child pornographers, child molesters and child rapists. The Task Force, comprised of federal, state and local investigators and prosecutors, was reorganized in 2013 to provide a format for weekly meetings in Las Vegas to review cases involving sex crimes against children and to determine the best venue for prosecution. Members of the Task Force have also been participating in outreach at Clark County schools in order to educate parents and children about the dangers of the internet and unsuspecting child sex predators. The reorganization promptly resulted in the successful six-month operation.
Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals, federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Gig Harbor, Wash. Woman Sentenced for Role in Las Vegas Investment Fraud SchemeRead the Press Release
LAS VEGAS, Nev. – A Gig Harbor woman has been sentenced to six months in prison for participating in an investment fraud scheme that bilked over 50 victims out of millions in cash for almost a decade, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Constance C. Fenton, 70, was sentenced on March 2, 2015, in Las Vegas, by U.S. District Judge Jennifer A. Dorsey. Fenton was also sentenced to six months of home confinement, three years of supervised release, 40 hours of community service, and ordered to pay approximately $2.9 million in restitution. Fenton pleaded guilty in September to one count of conspiracy to commit money laundering. She must report to federal prison by June 2, 2015.
Fenton was one of six persons charged in the investment fraud scheme. According to the plea memoranda, the defendants lured victims into the scheme by falsely telling them that Thomas A. Cecrle, Jr., 57, of Henderson, Nev., worked as a contractor for the U.S. Department of Homeland Security, purchasing and selling water rights worth millions of dollars as part of a secret government program. The conspirators then solicited money by falsely claiming that Cecrle needed short-term cash loans to complete his phantom water deals, loans he promised to repay in short order along with a very large return. Cecrle and his co-conspirators concocted a similar story involving a land deal on the Las Vegas Strip where Cecrle needed short-term loans to supposedly close a deal with Sir Richard Branson. In truth, however, Cecrle held no position with the federal government and there were no land or water rights deals.
Fenton became the voice of the fraud and ran Cecrle’s “boiler room.” As new victims were introduced to the scheme, Cecrle turned them over to Fenton, who quickly established a rapport over the telephone, maintained contact and commiserated with them when the payout never happened, but always reassuring them that it would happen soon if a little more money was poured into the deal. Fenton also told the victims that she was invested and like them, was also expecting a return. Fenton portrayed herself as a religious person and often appealed to the religious beliefs of the victims. Fenton dealt with victims across the United States, at all time of the day and night and, with few exceptions, always by telephone and email, never meeting them face-to-face.
Using his office as a family court judge in Clark County, Nev., defendant Steven E. Jones, 57, of Henderson, Nev., knowingly vouched for Cecrle and the legitimacy of the deals to potential investors when he knew the deals were, in fact, scams. Jones continued to further the conspiracy by receiving money from a victim in the parking lot of the Family Division Courthouse, meeting with at least one potential investor in his chambers and elsewhere in the courthouse to discuss the investment, obtaining an “Own Recognizance” bond to release Cecrle from custody after he was arrested for bad checks he had passed to a victim, and opening and maintaining a joint checking account with Cecrle, through which flowed over $260,000 in illegal proceeds.
During the entire conspiracy, which lasted from about September 2002 to October 2012, the defendants defrauded at least 22 victims of more than $2.6 million, money they quickly converted to their own use.
All of the co-defendants pleaded guilty and have been sentenced. Cecrle was sentenced on March 2, 2015, to 6½ years in prison. Jones was sentenced on Feb. 25, 2015, to 26 months in prison. Terry J. Wolfe, 59, of Henderson, Nev., was sentenced on Feb. 19, 2015, to time served, having served approximately 16 months in pretrial detention. Mark L. Hansen, 56, of Corvallis, Ore., was sentenced on Jan. 27, 2015, to four months in prison. Ashlee M. Martin, 31, of Las Vegas, Nev., entered into a 12-month pretrial diversion agreement with the government.
The case was investigated by the FBI and prosecuted by First Assistant U.S. Attorney Steven W. Myhre and Assistant U.S. Attorney Daniel R. Schiess of the U.S. Attorney’s Office for the District of Nevada.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The 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 about the task force visit: www.stopfraud.com.
Former Clark County Family Court Judge Steven Jones Sentenced to over Two Years in Prison for Investment Fraud SchemeRead the Press Release
LAS VEGAS, Nev. – Former Clark County Family Court Judge Steven E. Jones was sentenced today by U.S. District Judge Jennifer A. Dorsey to 26 months in prison, three years of supervised release, and ordered to pay approximately $2.9 million in restitution for participating in an investment fraud that bilked over 50 investor victims out of millions in cash for almost a decade, announced U.S. Attorney Daniel G. Bogden for the District of Nevada and Laura Bucheit, Special Agent in Charge of the FBI for Nevada.
Jones, 57, of Henderson, Nev., who served for almost 20 years as a family court judge in Clark County, pleaded guilty in September to one count of conspiracy to commit wire fraud. He was permitted to self-surrender to federal prison by May 25, 2015. Jones’ sentence was enhanced for violating his position of trust, and because the loss amount was over $200,000 and there were more than 10 victims. Jones resigned his position as judge and surrendered his Nevada law license in September as one of the conditions of his plea agreement.
“Former Judge Steven Jones played an integral part in this investment fraud scheme and was the most prominent and indispensable member,” said U.S. Attorney Bogden. “This crime was not a “one-off” for Jones, but a calculated and deliberate decision that he replicated for years. He knew right from wrong, but engaged in the conduct anyway because he could.”
"This sentencing reaffirms to the public that the FBI will continue to make certain that no one is above the law, and when public corruption is identified, it will be aggressively investigated and prosecuted,” said Special Agent in Charge Bucheit.
All of the co-conspirators charged in the fraud scheme have also pleaded guilty. Thomas A. Cecrle, Jr., 57, of Henderson, Nev., and Constance C. Fenton, 70, of Gig Harbor, Wash., are scheduled to be sentenced on March 2. Terry J. Wolfe, 59, of Henderson, was sentenced on Feb. 19, to time served, three years of supervised release, and ordered to pay approximately $2.9 million in restitution. Mark L. Hansen, 56, of Corvallis, Ore., was sentenced on Jan. 27, 2015, to four months in prison, three years of supervised release, and ordered to pay approximately $2.9 million in restitution. Ashlee M. Martin, 31, of Las Vegas, Nev., entered into a 12-month pretrial diversion agreement with the government.
According to the plea memoranda, defendants lured victims into a fraud scheme by falsely telling them that Cecrle worked as a contractor for the U.S. Department of Homeland Security, purchasing and selling water rights worth millions of dollars as part of a secret government program. The co-conspirators then solicited money by falsely claiming that Cecrle needed short-term cash loans to complete his phantom water deals, loans he promised to repay in short order along with a very large return. Cecrle and his co-conspirators concocted a similar story involving a land deal on the Las Vegas Strip where Cecrle needed short-term loans to supposedly close a deal with Sir Richard Branson. In truth, however, Cecrle held no position with the federal government and there were no land or water rights deals.
Using his office as an elected state court judge, defendant Jones knowingly vouched for Cecrle and the legitimacy of the deals to potential investors when he knew the deals were, in fact, scams. According to the plea memorandum, Jones continued to further the conspiracy by receiving money from a victim in the parking lot of the Family Division Courthouse, meeting with at least one potential investor in his chambers and elsewhere in the courthouse to discuss the investment, obtaining an “Own Recognizance” bond to release Cecrle from custody after he was arrested for bad checks he had passed to a victim, and opening and maintaining a joint checking account with Cecrle, through which flowed over $260,000 in illegal proceeds. During the entire conspiracy, which lasted from about September 2002 to October 2012, the defendants defrauded at least 22 victims of more than $2.6 million, money they quickly converted to their own use.
The case was investigated by the FBI and prosecuted by First Assistant U.S. Attorney Steven W. Myhre and Assistant U.S. Attorney Daniel R. Schiess of the U.S. Attorney’s Office for the District of Nevada.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The 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 about the task force visit: www.stopfraud.com.
Las Vegas Business Man and His Mother Charged with Arson for 2010 Convenience Store Fire in Which Man DiedRead the Press Release
LAS VEGAS, Nev. – A Las Vegas man and his mother have been indicted by the federal grand jury on charges that they destroyed the mini-mart store they owned in North Las Vegas in order to collect the insurance proceeds, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Peter Argyris, 46, of Las Vegas, and his mother, Joann Argyris, 67, of Boulder City, Nev. are charged with conspiracy to commit arson, arson resulting in death, use of fire to commit mail fraud, six counts of mail fraud, and criminal forfeiture. They were arrested yesterday evening by ATF Special Agents, and are scheduled for an arraignment and plea at 3:00 p.m. today before U.S. Magistrate Judge George Foley, Jr. If convicted, they face up to life in prison on the conspiracy and arson charges, 10 years consecutive on the use of fire to commit mail fraud charge, up to 20 years in prison on each mail fraud charge, and fines of up to $250,000 on each count.
“The allegations against the defendants are very serious,” said U.S. Bogden. “Not only did the fire destroy the property, but a life was lost. We will use federal resources to ensure that the persons who committed this crime for monetary gain are convicted and punished.”
"Death by an act of arson is a heinous crime and leaves a devastating impact on the victim’s family and the community," said Special Agent in Charge, Joseph M. Riehl. "ATF and its partners will aggressively pursue this investigation and bring those responsible to justice."
According to the allegations in the indictment, in 2010, the defendants and their company, Argyris Enterprises, LLC, owned a commercial property located at 3820 E. Craig Road in North Las Vegas, which housed a gas station, convenience store and restaurant called the JCW Mini-Mart. The defendants held an insurance policy on the property for approximately $4.7 million. From about June to September 2010, the defendants conspired and devised a scheme to intentionally burn down the mini-mart in order to collect the insurance proceeds. On Sept. 19, 2010, the defendants caused the mini-mart to be destroyed by fire, which resulted in the death of B.D. In December 2010, Peter Argyris submitted an insurance claim seeking approximately $1.4 million for the replacement cost of the building and loss of business income, and falsely represented that the fire damage did not originate by any act of his own.
This case is being investigated by ATF, the North Las Vegas Fire Department, and the North Las Vegas Police Department, and is being prosecuted by Assistant U.S. Attorney Phillip N. Smith, Jr.
Man Who Operated Reno Consulting Firm Sentenced to 2 1/2 Years in Prison for Theft and Failing to Pay Employment TaxesRead the Press Release
RENO, Nev. – Michael Stickler, 54, of Reno, was sentenced on Monday, Feb. 9, 2015, by U.S. District Judge Miranda M. Du to 2½ years in federal prison, three years of supervised release, 100 hours of community service, and ordered to pay $200,000 in restitution to the U.S. Department of Health and Human Services and $100,899 to the IRS for his convictions on theft of federal grant money and failing to pay employment taxes, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
“Government programs are often the victims of scams and fraud,” said U.S. Attorney Bogden. “If you steal from a federal program, you risk being investigated, prosecuted and sent to prison.”
Stickler owned and operated a company in Reno called Faith Based Solutions from 1999 to 2009. In 2007, Faith Based Solutions, received $500,000 in federal grant money to teach non-profit organizations how to apply for federal government grants. Part of the grant terms required that $200,000 of the grant funds be paid to sub-grantees. However, Stickler drew down all of the grant funds in the first seven months of the grant period and no money was ever provided to any sub-grantee. Rather, Stickler put the money in accounts that he controlled and used it to pay large salaries to himself and family members, to take elaborate vacations, and for other items that were not approved by the grant. Stickler also collected and withheld employment and FICA taxes from his employees’ wages, but failed to pay them over to the IRS.
Stickler pleaded guilty to one tax charge and was convicted by a jury of the theft charge. He is released on a personal recognizance bond and must report to federal prison by May 11, 2015.
The cases were investigated by IRS Criminal Investigation and the U.S. Department of Health and Human Services Office of Inspector General. They were prosecuted by Assistant U.S. Attorney Carla B. Higginbotham.
Man Pleads Guilty to Grant Fraud Involving 390 Victims and over $5 Million in LossesRead the Press Release
LAS VEGAS, Nev. – In another case of fraud involving the solicitation of money in exchange for business grants, a Las Vegas man has pleaded guilty to conspiracy to commit wire fraud, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Mickey Gines, 41, pleaded guilty on Monday, Feb. 2, before U.S. District Judge Gloria M. Navarro to one count of conspiracy to commit wire fraud. Gines is scheduled to be sentenced on June 4, 2015, at 10 a.m., and faces up to 20 years in prison and a fine of up to $250,000.Two others were also charged in the case. Christine M. Gagnon, aka Crystal Waters, 35, of Escanaba, Mich., pleaded guilty in November to conspiracy to commit wire fraud and is scheduled to be sentenced on March 19, and Gregory Villegas, aka Ray Matsui, aka Ray Mathis, 35, of Las Vegas, is scheduled for trial on March 16. Villegas is in federal custody pending trial.
According to the plea agreement, beginning on about March 1, 2008, and continuing to about May 2, 2012, the defendants entered into a conspiracy to induce small business owners to pay them money for grants that the defendants never intended to pursue. The defendants made numerous false statements to the victims in order to convince them to pay the advance monies, including that they were pre-qualified for or guaranteed “free” private and government grants; that they would partner them with private foundations or government grant programs; that they had obtained grants for other victims; that they would hold their monies in an escrow account; and that their fees were refundable if they did not receive the grants. The defendants knew that their representations were not true, and that they never intended to obtain grants for the victims. Once the defendants received money from the victims, they converted it to their own use. The defendants operated grant funding companies under multiple and evolving names, including BFS Enterprises, Inc. and Global Business Funding, Inc., and used multiple aliases in order to advance the scheme. The defendants repeatedly solicited victims for additional money for goods and services and lulled the victims with false promises of funding and excuses for delays in order to avoid investigation by law enforcement and consumer protection agencies. Using this scheme, the amount of loss that the defendants caused to at least 390 victims was approximately $5.3 million.
This case was investigated by the U.S. Secret Service and FBI and is being prosecuted by Assistant U.S. Attorney Christina M. Brown.Former Owner of Shooting Range Pleads GuiltyRead the Press Release
RENO, Nev. – A man who held a federal firearms dealer’s license and owned an indoor shooting range in Reno, Nev., has pleaded guilty to charges that he unlawfully sold multiple firearms, including guns with obliterated serial numbers and machine guns, to undercover ATF agents at his business in April and May 2014, announced U.S. Attorney Daniel G. Bogden for the District of Nevada and ATF Special Agent in Charge Joseph M. Riehl.
James David Harwin, 59, of Reno, pleaded guilty on Thursday, Jan. 29, before U.S. District Judge Miranda M. Du to one count of transfer of a firearm in violation of the National Firearms Act. Harwin is scheduled to be sentenced on May 4, 2015, at 1:30 p.m., and he faces up to 10 years in prison and a fine of up to $250,000.
“Federally licensed firearms dealers are entrusted to uphold federal laws pertaining to the importation, manufacture and sales of firearms,” said U.S. Attorney Bogden. “We will be especially vigilant in our investigations and prosecutions of firearm dealers who consciously choose to violate these laws.”
“A licensed federal firearms dealer who intentionally circumvents the law and commits federal firearm violations will be held accountable,” said ATF Special Agent in Charge Riehl. “This is a serious crime and it is critical for FFL’s to comply with federal regulations to ensure the safety of our communities.”
According to the plea agreement, Harwin and Safe Shot LLC possessed a federal firearms license (FFL) to manufacture and sell firearms. Safe Shot LLC did business as the Safe Shot Indoor Shooting Range, located at 9425 Double R Boulevard in Reno. On or about April 17, 2014, Harwin unlawfully sold four handguns to two undercover ATF agents who told Harwin they were residents of Sacramento, Calif. One of the handguns had an obliterated serial number. On May 2, 2014, Harwin sold a machine gun with an obliterated serial number to the undercover ATF agents, and on May 29, 2014, Harwin unlawfully sold a Street Sweeper shotgun and three machine guns to the undercover agents. Harwin removed the serial numbers on one of the machine guns in the presence of the undercover agents.
This case was investigated by ATF and is being prosecuted by Assistant U.S. Attorney Megan Rachow.
Defendant Arrested in Business Loan Fraud CaseRead the Press Release
LAS VEGAS, Nev. – A Las Vegas man has been arrested on wire fraud charges for taking hundreds of thousands in fees from persons who thought the payments would help them obtain loans for various business ventures, announced U.S. Attorney Daniel G. Bogden for the District of Nevada and Laura A. Bucheit, Special Agent in Charge of the FBI for Nevada.
Ronald Gene Morgan, 60, was arrested by FBI agents in Las Vegas on Jan. 29. He is charged in a criminal indictment with 13 counts of wire fraud and criminal forfeiture. Morgan appeared before U.S. Magistrate Judge Cam Ferenbach on Jan. 29, and pleaded not guilty to the charges. At a detention hearing today, Morgan was released on a personal recognizance bond pending a March 30 trial date.
“We have been working diligently with our federal, state and local investigative partners to catch and prosecute persons who are committing advance fee fraud crimes,” said U.S. Attorney Bogden. “The persons who commit these offenses portray themselves as legitimate business persons, when in reality they are nothing more than con artists.”
According to the indictment, from about March 2009 to April 2011, Morgan resided in Las Vegas and operated an Illinois-incorporated company, Argent Asset Management, and a Florida-incorporated company, Argent securities (Argent). Morgan allegedly used numerous means, including the mail, internet, and telephone to advertise a fraudulent bond-offering program. Morgan promised persons that for an advance fee, he would provide them with business loans by using Argent’s assets to acquire bank bonds at a discount. Morgan told the victims that he would then re-sell the bonds at face value to an investor, generating hundreds of millions of dollars that would be available in funding to them for their various business ventures. As part of the scheme, Morgan required advance fees from victims in amounts as high as $780,000, and told victims that the fees would be held in escrow; would be refunded if loans were not obtained; and would be used solely for purposes relating to obtaining the loan. Morgan knew Argent had no assets and acquired no bonds. Morgan converted the fees he received from the victims to personal uses such as travel and entertainment, and also used them to promote and conceal the scheme to defraud. Morgan continued to solicit and accept victims’ fees while knowingly providing false excuses for funding delays when he knew he had converted victim fees to his own personal use, causing losses to victims of more than 3 million dollars.
If convicted, Morgan faces a maximum of 20 years in prison and a $250,000 fine on all counts.
The case is being investigated by the FBI, and prosecuted by Assistant U.S. Attorney Christina M. Brown.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The 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 about the task force visit: www.stopfraud.com.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Four Charged in Grant Fraud SchemeRead the Press Release
LAS VEGAS, Nev. – Four persons have been charged with conspiracy and fraud for obtaining money from small business owners for grant funding and services that they never provided or intended to provide, announced U.S. Attorney Daniel G. Bogden for the District of Nevada and Laura A. Bucheit, Special Agent in Charge of the FBI for Nevada.
Jason Demko, 38, Lorraine Riddiough, 66, Lissette Alvarez, 27, all of Las Vegas, and Mark Jones, 32, of Barberton, Ohio, are charged in a criminal indictment with one count of conspiracy to commit mail fraud and wire fraud, five counts of wire fraud, and criminal forfeiture. Riddiough, Alvarez, and Jones were arrested in Las Vegas yesterday. They appeared yesterday before Magistrate Judge Ferenbach and pleaded not guilty to the charges, and were released on personal recognizance bonds pending a March 16 trial date. Demko is scheduled to appear before U.S. Magistrate Judge Cam Ferenbach at 3:00 p.m. today for an arraignment.
“Unfortunately, advance fee fraud schemes are very common,” said U.S. Attorney Bogden. “The con artist will ask for money up front before any tangible service or product is provided, and it will be very difficult to get your money back once you have turned it over to the scammers.”
“These arrests emphasize the FBI's continued commitment to investigate financial crimes,” said Special Agent in Charge Bucheit. “It also serves as a reminder for consumers to protect themselves, and remember if it seems too good to be true, it almost always is."
According to the indictment and other court records, from about January 2013 to February 2014, the defendants allegedly made false and fraudulent representations and promises to small business owners to persuade and induce them to pay initial fees, usually between $2,500 and $5,000 for goods and services they thought would help them obtain grants for their businesses. The business owners were told that the total cost for obtaining a grant was between $10,000 and $15,000, depending on the total amount of funding requested, and that the remaining fees would not be charged until the owners received 100 percent of the grant funding. Among other things, the defendants falsely stated that they represented a company named Foundation Processing Center in Wilmington, Del., when in fact, they represented JCD Business Services in Las Vegas; falsely stated that only certain clients had qualified for grants, when in fact anyone who paid the fees were qualified by the defendants; and stated that they had obtained grants for other clients, when in fact they had not done so. The defendants also re-solicited clients for additional fees, including business plans, when they knew that the plans were not going to assist the clients in obtaining any grants. The defendants knew that the true purpose of their solicitations was to obtain funds to personally enrich themselves.
If convicted, the defendants face a maximum of 20 years in prison and a $250,000 fine on all counts.
The case is being investigated by the FBI, and prosecuted by Assistant U.S. Attorney Sarah E. Griswold.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The 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 about the task force visit: www.stopfraud.com.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Ninth Circuit Affirms Former Lobbyist's Conviction for Making Unlawful Campaign ContributionsRead the Press Release
WASHINGTON - The U.S. Court of Appeals for the Ninth Circuit today affirmed the convictions of a former Nevada lobbyist for making excessive campaign contributions and contributions in the name of another person, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Daniel G. Bogden of the District of Nevada.
“We're pleased that today's decision confirms that the cornerstones of our campaign finance laws - contribution limits and transparency - are not subject to creative misinterpretations of those determined to break the law,” said Assistant Attorney General Caldwell.
“Harvey Whittemore knew the law, he knew how to raise money the right way, he knew right from wrong, and he knew how he could violate the law and avoid detection,” said U.S. Attorney Bogden. “He made a conscious and willful choice to violate federal elections laws in order to increase his own power and influence at the expense of the voting public and the election process.”
F. Harvey Whittemore, 62, of Reno, Nevada, a prominent Nevada lawyer, former lobbyist and land developer, was convicted by a jury in the District of Nevada in May 2013 of making excessive campaign contributions, making contributions in others’ names, and causing a materially false statement to be made to the Federal Election Commission (FEC). He was sentenced on Sept. 30, 2013, to two years in prison and a $100,000 fine.
According to evidence presented at trial, Whittemore was aware of the strict limits on individual federal campaign contributions. In an effort to circumvent those limits, he devised a scheme to unlawfully funnel more than $130,000 of his own money through approximately 29 family members, employees and their spouses to the campaign committee for a U.S. senator. This scheme allowed Whittemore to make an individual campaign donation in excess of the federal limits. Whittemore concealed the scheme from the FEC, the senator, and the senator’s campaign committee.
The case was investigated by the FBI and prosecuted by Deputy Chief Eric G. Olshan of the Criminal Division’s Public Integrity Section and First Assistant U.S. Attorney Steven W. Myhre of the District of Nevada. Appellate Chief and Assistant U.S. Attorney Elizabeth Olson White of the District of Nevada argued the appeal.Femal Getaway Driver Convicted of Robberies of 13 Banks and Stores in Las Vegas Area During 2012-2013Read the Press Release
LAS VEGAS, Nev. – A woman who served as the getaway driver for the robberies of 13 banks and stores in southern Nevada from December 2012 to March 2013, has been convicted by a federal jury of multiple counts of robbery and firearm charges, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Sesley Williams, 46, of Las Vegas, was convicted on Friday, Jan. 16 of eight counts of bank robbery, five counts of interference with commerce by robbery and five counts of brandishing a firearm in furtherance of a crime of violence. Williams is scheduled for sentencing before U.S. District Judge Andrew P. Gordon on May 21, 2015. She faces up to 20 years in prison on each robbery count and a mandatory minimum of 107 years in prison on the brandishing counts, which must run consecutively to the sentences for the other counts.
The co-defendant, Anthony Jordan, was convicted by a jury in November 2014 of 13 counts of robbery and firearm-related charges, and is scheduled to be sentenced on March 19, 2015.
The duo robbed six banks, three outlet mall and one other store in Las Vegas, two banks in Henderson, and one outlet mall store in Primm, Nev., between Dec. 28, 2012, and March 30, 2013.
This case was investigated by the Las Vegas Metropolitan Police Department, as part of the Safe Streets Task Force and Project Safe Neighborhoods program. The case was prosecuted by Assistant U.S. Attorney Lisa Cartier-Giroux.Las Vegas Lawyer/Former U.S. Attorney Sentenced to Prison for Failing to File Tax ReturnsRead the Press Release
LAS VEGAS, Nev. – A Las Vegas lawyer who served as the U.S. Attorney for Nevada during the 1970’s, was sentenced today to 18 months in prison, one year of supervised release, and ordered to pay approximately $290,000 in restitution to the IRS for failing to file individual and corporate income tax returns from 2006 to 2010, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Lawrence J. Semenza, II, 72, pleaded guilty in August 2014 to three misdemeanor counts of willful failure to file a tax return, and was sentenced by U.S. District Judge James C. Mahan. Semenza must report to federal prison by April 17, 2015.
“The consequences of failing to file your tax returns can be very serious,” said U.S. Attorney Bogden. “At the end of the day, you are better off filing your return than facing penalties such as wage garnishments, asset seizures, prosecution, and, as in this case, prison time.”
The case was investigated by IRS Criminal Investigation and prosecuted by Assistant U.S. Attorneys Eric Johnson and Nicholas D. Dickinson.
“It is especially egregious that a former federal prosecutor should try to skirt his own tax obligations,” said John Collins, Special Agent in Charge of IRS Criminal Investigation for Nevada. “American taxpayers have a right to expect that everyone will be held to the same standard of tax compliance. No one, regardless of current or former position, is above the law.”
According to the guilty plea agreement, Semenza operated his law practice in Las Vegas as a subchapter C personal service corporation. For the years 2006 through 2010, Semenza individually had taxable income of approximately $655,000, and the corporation had taxable income of approximately $345,000, but Semenza failed to file individual or corporate income tax returns for those years, and failed to pay the tax due and owing to the IRS, totaling about $290,000.Las Vegas "Cinched Hoodie Robber" Sentenced to Life in PrisonRead the Press Release
LAS VEGAS, Nev. – A Las Vegas man who robbed 13 convenience stores and a small casino in the Las Vegas area during 2013, was sentenced today by U.S. District Judge Gloria M. Navarro to multiple life terms in prison, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Abdul Howard, 49, was convicted by a jury last June of one count of felon in possession of a firearm, 14 counts of interference with commerce by robbery, and 12 counts of possession of a firearm during, in relation to, and in furtherance of a crime of violence. A number of the life terms were ordered to be served consecutively. There is no parole in the federal system.
“This defendant, who has a lengthy criminal history, terrorized convenience store employees in Las Vegas over a four month period during 2013, and it is fortunate that no one was killed,” said U.S. Attorney Bogden. “With his federal sentence of life in prison, Mr. Howard’s violent crime reign on Nevada streets and in our community is now over and done.”
Howard robbed 13 convenience stores and one casino in the Las Vegas area between January 15 and April 16, 2013. Howard robbed most of the businesses late at night using a semi-automatic handgun which he used to threatened store employees and some customers. In some of the robberies, Howard pointed the handgun at an employee or stuck a gun into the employee’s body or head. In one instance, Howard fired a handgun at an employee, and in another, Howard shot an employee in the neck. Investigators dubbed Howard the “Cinched Hoodie Robber,” because he typically entered the businesses wearing a hooded sweatshirt with the hood “cinched” up around his face in an effort to conceal his identity.
Howard has at least five prior felony convictions in New York, Florida, and Nevada related to robbery, burglary, cocaine distribution and sexually motivated coercion.
This case was investigated by the FBI, Las Vegas Metropolitan Police Department, and North Las Vegas Police Department, as part of the Safe Streets Task Force and Project Safe Neighborhoods program, and prosecuted by Assistant U.S. Attorneys Phillip N. Smith, Jr. and Cristina D. Silva.
Las Vegas Man who Earned over $7 Million during 2007 Sentenced to 10 Months in Prison for Failing to File a Tax ReturnRead the Press Release
LAS VEGAS, Nev. – A Las Vegas man who earned over $7 million during 2007 and failed to file a 2008 federal tax return with the IRS, was sentenced today to 10 months in prison, one year of supervised release, and ordered to pay approximately $2.5 million in restitution to the IRS, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
“We work with the IRS to enforce the nation's tax laws,” said U.S. Attorney Bogden. “We will do this fully, fairly, and consistently, through both criminal and civil litigation, in order to promote voluntary compliance with the tax laws and to maintain public confidence in the integrity of the tax system.”
Shawn Lampman, 49, was sentenced by U.S. District Judge James C. Mahan. Lampman was originally charged in April 2013 and pleaded guilty on April 14, 2014, to one count of failure to file an individual tax return. He must report to federal prison by April 6, 2015.
According to the guilty plea agreement, during 2007, Lampman earned income in excess of $7 million and willfully failed to make and file an individual tax return with the IRS on or before April 15, 2008.
The case was investigated by IRS Criminal Investigation and prosecuted by First Assistant U.S. Attorney Steven W. Myhre.
Las Vegas Man Sentenced to 15 Months in Prison for Tax EvasionRead the Press Release
LAS VEGAS, Nev. – A Las Vegas man who formerly operated a well-known local adult entertainment club and owned an escort service business, was sentenced today by U.S. District Judge Phillip M. Pro to 15 months in prison for his guilty plea to tax evasion, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Emannouil “Manny” Varagiannis, 44, was also ordered to pay $230,651 in restitution and to forfeit two homes in Las Vegas. Varagiannis was originally charged in September 2012, and pleaded guilty on April 9, 2014, to one count of tax evasion. He must report to federal prison by April 3, 2015.
“We work with the IRS to enforce the nation's tax laws,” said U.S. Attorney Bogden. “We will do this fully, fairly, and consistently, through both criminal and civil litigation, in order to promote voluntary compliance with the tax laws and to maintain public confidence in the integrity of the tax system.”
According to the guilty plea agreement and court records, IRS Criminal Investigation began investigating Varagiannis in 2012 as a result of him conducting unusual banking activities. At that time, Varagiannis was the owner of Midnight Entertainers, an adult escort service in Las Vegas. The investigation revealed that Varagiannis was structuring deposits into two financial institution accounts in order to avoid reporting the money to the IRS. Specifically, between Jan. 6, 2009, and Aug. 16, 2012, Varagiannis made 182 deposits totaling approximately $1.5 million. Further investigation revealed that Varagiannis and his wife used the funds from the two accounts to purchase two separate homes for cash. Further investigation also revealed that Varagiannis failed to declare federal taxes he owed for the years 2009 through 2011, totaling $230,651, and that he willfully took affirmative steps to evade or defeat payment of the taxes, including conducting transactions to avoid financial institution reporting requirements to the IRS.
The case was investigated by IRS Criminal Investigation and the Las Vegas Metropolitan Police Department, and prosecuted by Assistant U.S. Attorney Cristina D. Silva.Seven Persons Charged in Telemarketing Scheme Targeting Small Business OwnersRead the Press Release
LAS VEGAS, Nev. – Seven persons have been charged by the federal grand jury in Las Vegas with using fraud and deception to steal money from small business owners who thought they were receiving assistance in obtaining grants for their businesses, announced U.S. Attorney Daniel G. Bogden for the District of Nevada and Laura A. Bucheit, Special Agent in Charge of the FBI for Nevada.
Mark L. Bausch, aka Mark Eting, 40, Alan W. Rodrigues, 55, David Bergstrom, 49, Jonas Bowen, 61, Rachel Glaser, 74, Lee Panelli, 66, all of the Las Vegas area, and Craig Rudolph, 43, of Wonder Lake, Ill., are charged in a criminal indictment with one count of conspiracy to commit wire fraud and 31 counts of wire fraud. Bausch and Rodrigues are also charged with six counts of money laundering. Defendants Bausch, Rodrigues, Glaser, and Panelli were arrested this morning in Las Vegas. They appeared this afternoon before U.S. Magistrate Judge Nancy J. Koppe and pleaded not guilty to the charges, and were released on personal recognizance bonds with conditions pending trial. Defendant Rudolph was arrested in Chicago this morning and will be scheduled for a court appearance in Las Vegas in the near future. Defendants Bergstrom and Bowen are scheduled to surrender to federal authorities next week.
“Paying money to someone in anticipation of receiving something of greater value—such as a loan, contract, investment, or gift, is a risky proposition,” said U.S. Attorney Bogden. “You should always ask yourself if you have any guarantee that the person requesting your money will use it in the manner upon which you agreed. If the opportunity seems too good to be true, it probably is.”
“Today’s arrests highlight the FBI’s commitment to investigate financial crimes and the continued need for consumers to be cautious and protect themselves,” said Special Agent in Charge Bucheit.
According to the indictment, from about 2007 to 2010, the defendants allegedly organized and operated four telemarketing companies, Small Business Funding Co., Inc., Company Funds, Inc., Foundation Research, Inc., and Silver State Holding Company. In exchange for fees, the defendants offered to help small business owners obtain grants from public and private entities. The defendants made false statements and promises to the victims to make it appear that they were likely to or guaranteed to receive a grant. The defendants hired salespersons to market the services and to provide false information to the customers. In order to convince the customers that the service was legitimate, the defendants instructed their employees to conduct research about funding entities and send letters to customers and funders, knowing that many of the customers would not qualify for the grants. The defendants also solicited customers by conducting seminars throughout the United States. Through the entire scheme, the telemarketing companies received numerous complaints, and the defendants made false statements to them to prevent or delay them from contacting law enforcement. The defendants used the proceeds from the scheme to enrich themselves.
If convicted, the defendants face a maximum of 20 years in prison on all counts. Additionally, there is a maximum $250,000 fine on the conspiracy and each wire fraud count, and a maximum fine of $500,000 on each money laundering count.
The case is being investigated by the FBI and IRS Criminal Investigation, and prosecuted by Assistant U.S. Attorney Daniel R. Schiess.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The 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 about the task force visit: www.stopfraud.com.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Limousine Company Owner Pleads Guilty to Racketeering ChargeRead the Press Release
LAS VEGAS, Nev. – The owner of CLS Transportation, a Las Vegas, Nev. limousine company, has pleaded guilty to a federal racketeering charge for using the company to commit and promote criminal activities, including prostitution, drug trafficking, and financial fraud, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Charles Horky, 54, of Las Vegas, pleaded guilty on Thursday, Dec. 18, before U.S. District Judge Robert C. Jones to one count of conspiracy to conduct or participate in an enterprise engaged in a pattern of racketeering activity. Horky faces up to 20 years in prison and a $250,000 fine, and is scheduled to be sentenced on April 16, 2015.
“As this case demonstrates, persons who commit serious criminal offenses as part of an organized criminal enterprise, including prostitution, drug dealing and credit card and bank fraud, will be charged with federal racketeering crimes,” said U.S. Attorney Bogden. “Through the guilty pleas of these defendants and the dismantling of their racketeering organization, law enforcement has closed the books on Charles Horky and his coconspirators and the limousine service used to further a number of criminal activities and schemes.”
Five others charged in the scheme have also pleaded guilty, including CLS office manager Kimberly Flores, CLS accountant and financial advisor Archie Granata, two limousine drivers, James Reda and Clarence Adams, and Solomon Zemedhun, who was supplying controlled substances to the organization. Two other limousine drivers and a drug supplier are pending trial.
According to Horky’s plea agreement, Horky owned a controlling interest in and was the managing member of CLS Nevada, LLC, which operated as CLS Transportation, Las Vegas. Beginning no later than September 2008 and continuing through November 2012, Horky and his co-defendants used the limousine service to conduct and facilitate a broad range of criminal activities, including selling controlled substances, facilitating illegal prostitution, credit card fraud, bank fraud and check-kiting. Horky encouraged and directed the criminal activity, and required drivers to pay him a cut of the money they were receiving from the criminal activities.
In addition to distributing illegal drugs from CLS limousines and procuring prostitutes for CLS customers, Horky, Flores, and Granata devised and executed a scheme to defraud American Express by placing fraudulent unauthorized transactions on the American Express accounts of CLS customers. Many of the customers disputed the charges, and American Express notified CLS of the fraudulent transactions and executed charge-backs. American Express eventually cancelled the CLS Transportation account, but the defendants perpetuated the fraudulent scheme by opening successive additional American Express merchant accounts under false names, aliases and nominees. In this manner, Horky, Flores, Granata and others, fraudulently obtained more than $2.8 million from American Express. Horky, Flores and Granata also devised a check-kiting scheme in which they drew checks on CLS Transportation’s payroll account knowing that the account did not contain sufficient funds. Horky, Flores, and Granata knowingly issued themselves and their associates thousands of checks on the account without sufficient funds to honor the checks.
The plea agreement also states that Horky agreed to the entry of a criminal forfeiture money judgment of $5.2 million. He is released on a personal recognizance bond pending sentencing.
The case is being investigated by the FBI and the Las Vegas Metropolitan Police Department through the Safe Streets Task Force.Suspended Las Vegas Doctor Pleads Guilty to Obtaining Controlled Substances by FraudRead the Press Release
LAS VEGAS, Nev. – A suspended Las Vegas doctor who was prescribing and obtaining controlled substances at local pharmacies in the name of a deceased patient, pleaded guilty today to the federal felony offense of obtaining controlled substances by fraud, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Kent Swaine, 50, of Las Vegas, entered his guilty plea before U.S. District Judge Richard F. Boulware, and is scheduled to be sentenced on April 18, 2015. Swaine faces a maximum penalty of four years in prison and a $250,000 fine.
“The Centers for Disease Control and Prevention has classified prescription drug abuse as an epidemic,” said U.S. Attorney Bogden. “We are acutely aware that this is a problem which cannot be addressed through law enforcement action alone, and have been working with community partners in three other major areas to prevent and reduce prescription drug abuse, education, monitoring, and medication disposal.”
According to the court records, Swaine was originally licensed to practice medicine in Nevada in July 2001, and operated a medical practice at 5380 S. Rainbow Boulevard in Las Vegas. In January 2014, the Las Vegas DEA initiated an investigation into Swaine following a complaint that Swaine was writing prescriptions and obtaining controlled substances at several Las Vegas pharmacies in the name of a deceased patient. The investigation determined that Dr. Swaine was impersonating a deceased individual in order to obtain controlled substances. Swaine was arrested and charged by federal criminal complaint in August. At the guilty plea today, Swaine admitted that he had been fraudulently writing and filling prescriptions for Hydromorphone (generic Dilaudid), in the name of a patient who died in August 2011, for the purpose of his own drug addiction.
According to the State Medical Board’s website, Swaine’s license to practice is currently suspended indefinitely.
Next Wednesday and Thursday, Dec. 17 to Dec. 18, the U.S. Attorney’s Office is co-sponsoring with the Nevada High Intensity Drug Trafficking Area Task Force (Nevada HIDTA) an annual training summit in Las Vegas to address prescription drug abuse. In addition to law enforcement, medical, treatment and pharmacy providers, as well as community and family service agency representatives are welcome to attend. For more information and to register go to: http://www.nvhidta.org/default.aspx?menuitemid=694.
The case was investigated by the HIDTA Pharm-Net Task Force, and prosecuted by Assistant U.S. Attorney Crane M. Pomerantz.
Couple Sentenced in Mortgage Fraud SchemeRead the Press Release
LAS VEGAS, Nev. – A Katy, Texas couple who owned two mortgage service businesses in Henderson, Nev., have been sentenced to prison for their roles in a mortgage fraud scheme that caused over $30 million in losses to federally insured financial institutions, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Derrick Phelps, 46, former owner of Investors Realty and Enterprise Mortgage Services, was sentenced to 70 months in prison, and his wife, Cynthia Phelps, 44, was sentenced to four years in prison. Both defendants were also ordered to serve five years of supervise release and to pay approximately $31 million in restitution. They were sentenced by U.S. District Judge James C. Mahan on Tuesday, Dec. 2, and were permitted to self-report to federal prison by March 6, 2015. They pleaded guilty in April to one count of conspiracy to commit bank fraud, mail fraud and wire fraud and seven counts of bank fraud.
“Hundreds of mortgage industry employees and business owners have been convicted of fraud and sentenced to prison for defrauding the financial institutions during the housing boom in southern Nevada,” said U.S. Attorney Bogden. “We are continuing to work with our local, state and federal law enforcement partners to pursue all sorts of financial fraud cases that impact the entire community.”According to their plea agreements, from about January 2003 to November 2006, the defendants devised a scheme to defraud federally insured financial institutions through the use of false mortgage applications. The defendants solicited buyers with good credit ratings to purchase homes in the Las Vegas area and made offers to purchase the homes above the sellers’ asking prices. In some instances, the defendants caused buyers to purchase multiple houses at or about the same time, so that the purchases would not show up on their credit report and the lenders would not be aware of the other purchases. The defendants then caused false information to be placed in the buyer’s mortgage loan applications pertaining to things such as income and intent to occupy the home. Once the loans were approved, the defendants caused the sellers to agree that part of the excess funds be redirected to the buyers under the pretense of making upgrades and repairs to the properties. The defendants intentionally concealed from the financial institutions that buyers were receiving part of the loan disbursements for their own use and benefit. The defendants defaulted on the mortgage loans which caused the properties to go into foreclosure. Using this scheme, the defendants purchased approximately 233 properties and caused losses to the financial institutions greater than $30 million
Three co-defendants charged in the scheme, Linda Mack, Tai Keyster, and Darryl Reese, are scheduled to go to trial on March 15, 2015.
The case is being investigated by the United States Postal Inspection Service, and is being prosecuted by Assistant U.S. Attorney Sarah E. Griswold.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The 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 about the task force visit: www.stopfraud.com.
Meth Dealer Sentenced to 10 Years in PrisonRead the Press Release
LAS VEGAS, Nev. – A local man who possessed over two kilos of methamphetamine in his car and another 4½ kilos of methamphetamine in a rented storage locker in Las Vegas, has been sentenced to 121 months in prison and five years of supervised release, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
John Ortega, 25, of Las Vegas, was sentenced on Tuesday, Nov. 25, by Chief U.S. District Judge Gloria M. Navarro. Ortega pleaded guilty in August to one count of conspiracy to possess a controlled substance with intent to distribute methamphetamine and one count of money laundering.
According to the court records, law enforcement investigators learned in early 2013 that Ortega was supplying kilo quantities of methamphetamine to co-defendant Keith Alcos, of Honolulu, Hawaii. In August 2013, investigators obtained information that on Aug. 21, Alcos and two other co-defendants, James Richardson, Jr., and George Flores, were traveling from Honolulu to Las Vegas to obtain methamphetamine. Investigators conducted surveillance of the defendants when they arrived in Las Vegas, and detected phone calls between the co-defendants and Ortega. On Aug. 25, they followed Ortega from his residence to a storage facility, where Ortega entered a storage unit and left with a black bag. Investigators conducted a traffic stop on Ortega’s vehicle and during a search of the vehicle, recovered approximately two kilos of methamphetamine from a compartment. A later search of the storage unit resulted in the recovery of approximately 4½ kilos of liquid methamphetamine, $13,000, and a 9 mm handgun with an obliterated serial number. Investigators determined that Ortega rented the storage locker using a fake Mexican driver’s license bearing his photograph but the name of Jose Veltran Perez.
Keith Alcos pleaded guilty to conspiracy to possess a controlled substance with intent to distribute methamphetamine, and is scheduled to be sentenced on Jan. 8, 2015. Richardson, Jr. and Flores are fugitives.This case was investigated by the FBI, IRS Criminal Investigation, DEA, and Las Vegas Metropolitan Police Department, and prosecuted by Assistant U.S. Attorney Amber M. Craig.
Federal Charges Filed Against Three Men for Jewelry Store Robbery Last WeekRead the Press Release
LAS VEGAS, Nev. – Three local men have been charged with robbing a jewelry store in Las Vegas last week of approximately $700,000 worth of merchandise, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Theren Phillip Frazier, 27, Phillip Allerson Vaughn, 25, and Eric Jamar Goodall, 29, of North Las Vegas, are charged in a criminal complaint with one count of interference with commerce by robbery. They made an initial court appearance yesterday before U.S. Magistrate Judge Cam Ferenbach. Frazier and Vaughn were detained pending a preliminary hearing, and Goodall was temporarily detained pending a hearing on Monday. If convicted, they face up to 20 years in prison and a $250,000 fine.
“Our U.S. Attorney’s Office has made the prosecution of violent retail robbery and theft cases a priority,” said U.S. Attorney Bogden. “We have been working with our local police departments and federal partners to identify these violent crime cases with interstate nexus for federal prosecutions. The persons committing these crimes are typically repeat offenders who are unlawfully carrying and using firearms in furtherance of their crimes and are violating federal laws.”
The complaint alleges that at about 2:00 p.m. on Nov. 10, Goodall, who was brandishing a semiautomatic pistol, and Vaughn entered a jewelry store located just off the Las Vegas Strip, and told victims to get down on the floor while they demanded jewelry and robbed the display cases of several hundred items of jewelry. Vaughn and Goodall loaded the jewelry into a backpack and left the store with about $700,000 worth of merchandise. They were observed fleeing in a small white sedan driven by Frazier. Las Vegas Metropolitan Police Department (LVMPD) officers followed the white car to a warehouse about a mile north, where Goodall and Vaughn jumped from the vehicle while it was still moving, and were apprehended. Officers found the white vehicle badly damaged in a nearby casino valet area, and recovered from it a semiautomatic pistol and all of the jewelry from the robbery. Frazier was arrested three days later by an FBI-led Criminal Apprehension Team task force.
The case is being investigated by the FBI and LVMPD, and is being prosecuted by Assistant U.S. Attorneys Kathryn C. Newman and Daniel Cowhig.
The public is reminded that a criminal complaint contains only charges and is not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Nevada U.S. Attorney's Office Collects $10.9 Million in 2014Read the Press Release
LAS VEGAS, Nev. – U.S. Attorney Daniel G. Bogden announced today that the Nevada U.S. Attorney’s Office collected $10.9 million in Fiscal Year (FY) 2014 related to criminal, civil and asset forfeiture actions. Of this amount, approximately $4.6 million was collected in criminal actions, $1.4 million was collected in civil actions, and $5 million was collected in criminal and civil forfeitures.
Additionally, the District of Nevada worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $14 million in cases pursued jointly with these offices. This additional shared amount was almost entirely collected in civil actions.“The collection of monetary penalties in federal litigation is a critical aspect of our work that frequently gets overlooked,” said U.S. Attorney Bogden. “These collections are used to help crime victims and for a variety of other law enforcement purposes. Our FY 2014 collections far exceeded the total appropriated budget for our office for FY 2014.”
An example of a recent case in which the U.S. Attorney’s Office for the District of Nevada collected a significant amount of money was a settlement of the Como Fire litigation. That case involved a claim against Silver Reserve Corp. and Mining Contractor's Inc. for recoupment of fire suppression costs and rehabilitation of federal land. The fire was caused by the negligent operation of an excavator that struck a power pole and ignited vegetation. The contractor settled the claim and paid $250,000 to the United States.
Attorney General Eric Holder also announced today that the Justice Department collected $24.7 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2014. The more than $24 billion in collections in FY 2014 represents nearly eight and a half times the appropriated $2.91 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.“Every day, the Justice Department’s federal prosecutors and trial attorneys work hard to protect our citizens, to safeguard precious taxpayer resources, and to provide a valuable return on investment to the American people,” said Attorney General Holder. “Their diligent efforts are enabling us to achieve justice and recoup losses in virtually every sector of the U.S. economy. And this result shows the fruits of the Justice Department’s tireless work in enforcing federal laws; in protecting the American people from violent crime, national security threats, discrimination, exploitation, and abuse; and in holding financial institutions accountable for their roles in causing the 2008 financial crisis.”
The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Two Men, One Woman Sentenced for Operating Synthetic Drug Business from Las VegasRead the Press Release
LAS VEGAS, Nev. – U.S. District Judge Jennifer A. Dorsey sentenced three defendants this morning for their involvement in a conspiracy to distribute the synthetic drugs known as “spice” and “bath salts,” announced U.S. Attorney Daniel G. Bogden, for the District of Nevada.
Joshua Michael Riley, 32, of Henderson, Nev., was sentenced to 51 months in prison and three years of supervised release, Nicholas Collado, 32, of Houston, Texas, was sentenced to 37 months in prison and three years of supervised release, and Alexandra Haardt, 28, of Henderson, Nev., was sentenced to three years of probation with a condition of one year of home confinement. They pleaded guilty over the summer to one count of conspiracy to possess with intent to distribute and distribute a controlled substance and controlled substance analogue. Judge Dorsey also entered final orders of forfeiture against all of the defendants requiring them to turn over in large part to the government approximately $802,000 in bank accounts, $371,000 in gold and silver bars and coins, $32,000 in money orders and checks, $14,700 in jewelry, a Cadillac vehicle, a condominium in Henderson, Nev., and two handguns and ammunition.
Two other defendants were also charged in the conspiracy. Marco Alvarado pleaded guilty and was sentenced on Nov. 12 to 30 months in prison, and Jacob Fisher pleaded guilty and is scheduled for sentencing on Nov. 19.
“Spice” and “bath salts” are potent and dangerous substances that are being sold to an unwary public in convenience stores, head shops, gas stations and online,” said U.S. Attorney Bogden. “These synthetic drugs are powerful substances that when consumed have caused hallucinations and dangerous levels of overdose. We will continue working diligently with our local, state and federal law enforcement partners to prosecute persons who callously and recklessly distribute them.”
According to the court records, Riley owned and operated JMR Enterprises in Las Vegas. The defendants ordered chemicals from China, and manufactured controlled substance analogues, such as spice and bath salts, at Riley’s large residence in Las Vegas. The defendants sold the controlled substances online over the website, thesupplyboys.com, using the brand names “Mad Pineapple,” Tiger Blood,” “Mad Max,” and “New Ivory Wave,” and distributed the orders via overnight delivery service on a regular basis to buyers as far east as Philadelphia, Pa. In July 2012, agents executed a federal search warrant at Riley’s home and recovered approximately 26 pounds of synthetic cannabinoids, also known as “spice,” three pounds of synthetic cathinones also known as “bath salts,” packaging materials, baking pans containing substances that were drying outside, and two firearms. Law enforcement investigators also recovered approximately three additional pounds of bath salts, and 47 packages of “spice,” from the mails during the investigation.
“As these sentences make abundantly clear, the manufacture and sale of synthetic drugs is a serious crime,” said Michael Harris, Assistant Special Agent in Charge for Homeland Security Investigations Las Vegas. “These substances may have benign names like ‘spice’ and ‘bath salts,’ but they have been linked to serious health complications and even death. Even more troubling, is the fact that the distributors of these dangerous synthetic drugs are packaging and marketing them to appeal to young people.”
According to the Office of National Drug Control Policy, synthetic drugs are a rapidly emerging threat and there is an increasingly expanding array of synthetic drugs available. Use of synthetic drugs is alarmingly high, especially among young people. The contents and effects of synthetic drugs are unpredictable due to a constantly changing variety of chemicals used in manufacturing processes devoid of quality controls and government regulatory oversight. Health warnings have been issued by numerous public health authorities and poison control centers describing the adverse health effects associated with the use of synthetic drugs. The Administration has been working with federal, congressional, state, local, and non-governmental partners to put policies and legislation in place to combat this threat, and to educate people about the tremendous health risk posed by these substances. For more information on the risks and dangers of synthetic drugs, go to http://www.whitehouse.gov/ondcp/ondcp-fact-sheets/synthetic-drugs-k2-spice-bath-salts.The case was prosecuted by Assistant U.S. Attorney James E. Keller and investigated by ICE HSI and the U.S. Postal Inspection Service, with the assistance of the DEA.
Man Sentenced to 10 Years in Prison for Transporting 14-Year-Old Girl from California to Reno for SexRead the Press Release
RENO, Nev. – A California man who brought a 14-year-old girl from Richmond, Calif., to the Reno area with the intent that she engage in sexual activity, was sentenced on Nov. 13, 2014, to 10 years in prison and lifetime supervised, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Nicholas Rider Wessel, 38, of Richmond, Calif., pleaded guilty in August to one count of transportation of a minor for illegal sexual activity and was sentenced by U.S. District Judge Miranda M. Du. Judge Du denied Wessel’s request for release on bond pending a prison designation.
“If you prey on underage children on the Internet, you face federal prosecution,” said U.S. Attorney Bogden. “The penalties are stiff, and you will be marked as a sex offender for the rest of your life.”
According to the court records, sometime in May 2014, Wessel began communicating with the 14-year-old girl on Facebook and by cell phone texts. During those conversations, Wessel arranged to pick the girl up in Modesto, Calif. and drive her to his home in Richmond. Wessel knew that she was only 14 years old. On May 5, Wessel picked her up, along with another minor girl, and they drove to his home where he engaged in sexual intercourse with the 14-year-old. The following day, Wessel drove the girl to Reno, and they again engaged in sex at a hotel in Sparks, Nev.
The investigation was conducted by the Sparks Police Department and the FBI. The case was prosecuted by Assistant U.S. Attorney Carla Higginbotham.
The case was brought as part of Project Safe Childhood (PSC), a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, PSC marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about PSC, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Man who Operated Reno Consulting Firm Pleads Guilty to Failure to Pay $100,000 in Employment Taxes to IRSRead the Press Release
RENO, Nev. – Michael Stickler, 54, of Reno, pleaded guilty today before U.S. District Judge Larry R. Hicks to one count of willful failure to collect or pay employment and Federal Insurance Contribution Act (FICA) taxes to the IRS, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
According to Stickler’s plea agreement, he owned and operated a company in Reno called Faith Based Solutions from 1999 to 2009. Stickler collected and withheld employment and FICA taxes from his employees’ wages, but failed to pay them over to the IRS. Stickler pleaded guilty to failing to pay $17,389.25 in employment and FICA taxes for the fourth quarter of tax year 2007, but the plea agreement states that Stickler also admitted to willfully failing to pay over employment and FICA taxes to the IRS for other periods during the tax years 2006 through 2010, and that the total tax loss that can be used for sentencing purposes is $100,899.90.
In a separately filed federal case, Stickler was convicted by a jury on March 24 of theft of public money. The evidence presented to the jury in that case was that in 2007, Stickler’s company, Faith Based Solutions, received $500,000 in federal grant money to teach non-profit organizations how to apply for federal government grants. Stickler drew down all of the grant funds in the first seven months of the grant period, and instead of distributing the money to sub-grantees, he put it in accounts that he controlled and used it to pay large salaries to himself and family members, to take elaborate vacations, and for other items that were not approved by the grant.Sentencing in both cases will be on Feb. 9, 2015, at 9:00 a.m. before U.S. District Judge Miranda M. Du.
The cases were investigated by IRS Criminal Investigation and the U.S. Department of Health and Human Services Office of Inspector General. They are being prosecuted by Assistant U.S. Attorney Carla B. Higginbotham.Nevada Woman Pleads Guilty to Receiving over $300,000 in Fraudulent Refunds from IRSRead the Press Release
LAS VEGAS, Nev. – Denise J. Vick, 39, of Las Vegas, pleaded guilty on Tuesday, Nov. 4, 2014, before U.S. District Judge Andrew P. Gordon to four counts of filing false claims with the IRS, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
“Tax refund fraud is a growing problem locally and nationally,” said U.S. Attorney Bogden. “This type of tax fraudster cheats honest and law abiding tax payers by defrauding the government and stealing funds that are not rightfully theirs. We will continue working with the IRS in Nevada to identify and prosecute these fraudsters.”
According to the plea agreement, during 2010 and 2011, Vick created and caused to be filed false and fraudulent tax returns for herself and others for the tax years 2009 and 2010. The returns reported wages, income and other information that was false, and caused the IRS to issue tax refunds to Vick and the others to which they were not entitled. The refunds were issued on debit cards that Vick controlled. In total, Vick fraudulently received $307,231 from the IRS as a result of the false claims that she submitted for herself and others.
Vick is scheduled to be sentenced on March 5, 2015, and faces up to five years prison and a fine of up to $250,000 on each count.
The case was investigated by IRS Criminal Investigation and prosecuted by Assistant U.S. Attorney Kathryn C. Newman.
November 2014 ElectionsRead the Press Release
LAS VEGAS, Nev. – Assistant U.S. Attorney (AUSA) Sarah E. Griswold will lead the efforts of the U.S. Attorney’s Office for the District of Nevada in connection with the Justice Department’s nationwide Election Day Program for the upcoming Nov. 4, 2014 general elections, announced U.S. Attorney Daniel G. Bogden. AUSA Griswold has been appointed to serve as the District Election Officer (DEO) for the District of Nevada, and in that capacity is responsible for overseeing the District’s handling of complaints of election fraud and voting rights abuses in consultation with Justice Department Headquarters in Washington.
United States Attorney Bogden said, “Every citizen must be able to vote without interference or discrimination and to have that vote counted without it being stolen because of fraud. The Department of Justice will act promptly and aggressively to protect the integrity of the election process.”The Department of Justice has an important role in deterring election fraud and discrimination at the polls, and combating these violations whenever and wherever they occur. The Department’s long-standing Election Day Program furthers these goals, and also seeks to insure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open on Election Day.
Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input. It also contains special protections for the rights of voters and provides that they can vote free from acts that intimidate or harass them. For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting may violate federal voting rights law. Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice.In order to respond to complaints of election fraud or voting rights abuses on Nov. 4, 2014, and to ensure that such complaints are directed to the appropriate authorities, U.S. Attorney Bogden stated that the U.S. Attorney’s Office, as part of the Nevada Election Integrity Task Force, will be working with the Nevada Secretary of State, the Nevada Attorney General, the Las Vegas Metropolitan Police Department, and the FBI to investigate complaints regarding questionable voter registration practices, potential voter fraud, and enforcement of laws regarding voter intimidation. On Election Day, there will be command posts in Carson City and Las Vegas staffed by members of the Task Force. Additionally, AUSA/DEO Griswold will be available while the polls are open on Nov. 4, 2014, to assist with the investigation of any complaints of election fraud or voting rights abuses, and to ensure that such complaints are directed to the appropriate authorities. AUSA Carla Higginbotham will be available in Reno to assist with any complaints in the northern Nevada area.
Law enforcement officials, election workers and citizens can file complaints in a number of ways.
1) By Completing the Election Law Violation Form on the NV Secretary of State's website, http://nvsos.gov/index.aspx?page=256;
2) By calling the NV Secretary of State at (775) 684-5705; or
3) By calling the FBI in Las Vegas at (702) 385-1281 and asking for Special Agent Michael B. Elliott.
4) Complaints about possible violations of the federal voting rights laws can be made directly to the Civil Rights Division’s Voting Section in Washington by phone at 1-800-253-3931 or (202) 307-2767, by fax at (202) 307-3961, by email to [email protected] or by complaint form at ;
Last of the "30 Minutes or Less" Robbers Gets 16 Years in PrisonRead the Press Release
LAS VEGAS, Nev. –The last of four defendants who participated in the high speed robberies of four Las Vegas convenience stores during April 2012, was sentenced to prison this week, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Michael Hall, 28, of Las Vegas, was sentenced by U.S. District Judge Jennifer A. Dorsey on Monday, Oct. 20, 2014, to 194 months in prison and five years of supervised release. Hall pleaded guilty on Feb. 19, to four counts of interference with commerce by robbery and one count of brandishing a firearm in furtherance of a crime of violence.
“We are working with our local police departments to prosecute federally deserving defendants who use guns to commit store robberies,” said U.S. Attorney Bogden. “Fortunately more victims were spared and this robbery spree was terminated because of excellent police work by the Las Vegas Metropolitan Police Department and the alert officer who observed the last robbery and chased down the defendants by car and on foot.”
Hall was the getaway driver for each of the robberies that occurred between about 4:00 and 4:30 p.m. on April 6, 2012, causing law enforcement to dub the crimes the “30 minutes or less” series. Hall’s co-defendants, Delon Hunter, 18, William Bonaparte, 24, and Erica Bowden-Payne, 26, all pleaded guilty and were sentenced to prison. In each robbery, Hunter pointed a handgun at Bonaparte, who was posing as a customer. Hunter threatened to shoot Bonaparte if the store employee did not turn over money and other items. A Las Vegas Metropolitan Police Officer observed the last robbery in progress near Cheyenne Road and Buffalo Drive, and confronted the defendants as they were leaving the store. The defendants fled in the getaway vehicle driven by Hall, leading officers on a high speed chase before their vehicle came to a stop near Tenaya Way and Rainbow Boulevard. Three of the defendants fled on foot and were apprehended nearby. The fourth defendant, Bowden-Payne, remained in the vehicle and was apprehended there.
The case was investigated by the FBI Safe Streets Task Force and Las Vegas Metropolitan Police Department and prosecuted by Assistant U.S. Attorney Cristina D. Silva. The case was screened through the Southern Nevada Project Safe Neighborhoods Task Force, a team of federal and local law enforcement officers and prosecutors who meet on a regular basis to discuss arrests involving guns and explosives. Project Safe Neighborhoods, also known as PSN, is a Department of Justice initiative and a nationwide commitment to reduce gun and gang crime in America.
Southern California Man Gets 21 Months in Federal Prison for Income Tax Return Fraud in NevadaRead the Press Release
LAS VEGAS, Nev. – A Huntington Beach, Calif. man who defrauded the IRS of almost $800,000 in a false income tax refund scheme, was sentenced today to 21 months in prison and ordered to pay restitution to the government, announced U.S. Attorney Daniel G. Bogden for the District of Nevada and Special Agent in Charge John Collins of IRS Criminal Investigation for Nevada.
Judas Godina, 39, was sentenced by U.S. District Judge Kent J. Dawson. Godina was indicted in July 2013 and pleaded guilty on July 15, 2014, to one count of conspiracy to defraud the IRS. He must report to federal prison by Jan. 16, 2015.
“This type of tax crime harms every U.S. citizen and resident,” said U.S. Attorney Bogden. “We will aggressively work with the IRS to prosecute these cases, and will also recommend prison sentences in order to deter others from this type of fraud.”
“The substantial sentence of imprisonment and restitution handed down today on this case makes it clear that filing false claims for tax refunds is a serious crime,” said Special Agent in Charge Collins. “IRS Criminal Investigation, with the assistance of our law enforcement partners and federal prosecutors, will aggressively pursue these violations of the law and protect the integrity of the tax system and honest taxpayers.”
According to the guilty plea agreement, from about January through December 2010, Godina conspired with Felix and Walter Guzman to defraud the IRS through a false income tax refund scheme. Godina recruited customers in Las Vegas into the tax return scheme by telling them that he could prepare their individual income tax returns and generate large refunds for them. Godina requested their identification information and tax returns from prior years, and then prepared the fraudulent tax returns using the information they provided, along with fraudulent W-2’s and Schedule E’s for business losses that he created. Godina transmitted or caused to be submitted the fraudulent forms to the IRS and monitored the status of the refunds. When the customers received the refunds, Godina arranged to meet them and demanded payment of approximately one-half of the refund. Godina also offered to pay a finder’s fee to customers who referred other paying customers to him and prepared fraudulent tax returns for customers recruited by co-defendants Felix and Walter Guzman. Using this fraudulent scheme, Godina admitted that his conduct resulted in $791,666 in fraudulent refunds being issued by the IRS. The Guzman’s are currently fugitives and the charges against them are unresolved.
The case was investigated by IRS Criminal Investigation and prosecuted by Assistant U.S. Attorney Kathryn C. Newman.
California Man who was Supplying Pure Methamphetamine to Reno, Nev. Area Sentenced to 19½ Years in PrisonRead the Press Release
RENO, Nev. - A man who supervised and directed an illegal drug distribution operation in Reno from his home in southern California, was sentenced on Monday, Oct. 20, to 19½ years in federal prison and five years of supervised release, announced U.S. Attorney Daniel G. Bogden, for the District of Nevada.
Rosendo Salgado, 42, of Montclair, Calif., who was convicted by a jury on July 18 of one count of conspiracy to distribute methamphetamine, one count of money laundering conspiracy, and one count of illegal use of a communication facility, was sentenced by U.S. District Judge Larry R. Hicks.
“This defendant was no amateur drug trafficker and made a personal choice to engage in the trafficking of large amounts of almost pure methamphetamine over an extended period of time,” said U.S. Attorney Bogden. “He showed his leadership of, experience and command of the conspiracy by using lower-ranking members to make hand-to-hand sales and use of coded language to track sales.”
According to court records and evidence admitted at trial, beginning in January 2013 pursuant to a court authorized wiretap, law enforcement officials intercepted telephone calls of Salgado discussing the methamphetamine distribution operation in the Reno area with co-conspirators. The investigation continued, with Salgado observed meeting his co-conspirators in Reno. On May 12, 2013, officials discovered from additional intercepted telephone calls of Salgado’s telephone, that a supply of methamphetamine from Salgado would be arriving that day in Reno via a vehicle courier, with the drugs secreted in the back door of the vehicle. Investigators conducted surveillance outside the Reno home where the methamphetamine was delivered, and observed two co-conspirators removing a panel from the back passenger door of a white Toyota bearing California license plates. That evening, investigators executed a federal search warrant at the home and recovered a firearm and two pounds of pure methamphetamine. Two days later, Salgado was arrested and charged by federal criminal complaint in California.
At sentencing, the court found that Salgado was an organizer, leader, manager or supervisor of the methamphetamine distribution conspiracy based upon the evidence, including intercepted calls, revealing Salgado’s instruction to his co-conspirators on a number of operational matters, including how to locate the concealed drugs that had been delivered to them, how much to sell the drugs for, where to deposit the drug proceeds, and how to use coded language to keep tallies of sales. The co-conspirators who resided in Reno were prosecuted and convicted by the Washoe County District Attorney’s Office.
The case was prosecuted by Assistant U.S. Attorneys James E. Keller and Megan M. Rachow and investigated by the DEA, Northern Nevada High Intensity Drug Trafficking Area (HIDTA) Task Force, and Washoe County Sheriff’s Department.
Las Vegas Doctor Sentenced to 46 Months in Prison for Writing Unlawful Oxycodone PrescriptionsRead the Press Release
LAS VEGAS, Nev. – Victor Bruce, M.D., 49, who operates Swan Lake Medical Center in Las Vegas, was sentenced this afternoon to 46 months in federal prison and three years of supervised release for writing prescriptions for oxycodone for persons he did not see or treat, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Bruce, who pleaded guilty in July to one count of conspiracy to distribute a controlled substance, was sentenced by U.S. District Judge Andrew P. Gordon. Bruce was permitted to self-report to federal prison by Jan. 16, 2015.
“Dr. Bruce repeatedly wrote prescriptions for highly addictive controlled substances for patients who did not need them, and for patients who did not appear at his medical practice or did not exist,” said U.S. Attorney Bogden. “We continue to work with our local, state and federal law enforcement partners to put illegal pill-pusher doctors like Dr. Bruce in prison and out of business.”According to Bruce’s guilty plea agreement, he represents himself to be a pain management specialist and is the only physician working at the practice. Beginning at a date unknown and continuing to around November 2013, Bruce and several co-conspirators, including Robert Wolfe, aka “old man,” Millicent Epino, Dylan DuBois, Jennifer Monge, and Jade Lepoma, conspired to distribute oxycodone. Wolfe would provide Bruce a list of names, and Bruce would write prescriptions for oxycodone for those names and give them to Wolfe. Bruce also created “dummy” medical records for those persons, to make it appear as if a legitimate patient encounter had taken place. On four occasions in June 2013, an undercover law enforcement officer purchased Bruce-written oxycodone prescriptions from Wolfe for $700 each. On each occasion, the undercover provided Wolfe or another co-conspirator with copies of Nevada driver’s licenses bearing the names of customers. Usually within a day, Wolfe or another co-conspirator would then provide the undercover with written prescriptions for oxycodone. Bruce knew he was writing prescriptions for controlled substances to customers he did not treat and who did not need the prescriptions. None of the prescriptions were issued for a legitimate medical purpose or in the usual course of profession practice.
According to the Nevada State Board of Medical Examiners, Bruce’s license to practice medicine in Nevada is still active; however, there is a pending board action against him related to the unlawful administering, dispensing or prescribing of controlled substances.
Wolfe and several of the other co-conspirators were also charged in the drug conspiracy.
This case was investigated by the Nevada High Intensity Drug Trafficking Area (Nevada HIDTA) Pharm-Net Task Force, including the DEA, IRS Criminal Investigation, Las Vegas Metropolitan Police Department, Henderson Police Department, North Las Vegas Police Department, and the Nevada Division of Investigations, and prosecuted by Assistant U.S. Attorneys Crane M. Pomerantz and Cristina D. Silva.
Henderson Doctor Arraigned on Drug Distribution ChargesRead the Press Release
LAS VEGAS, Nev. – Mahesh Kuthuru, M.D., 46, of Henderson, Nev. was arraigned by a federal magistrate judge this afternoon and pleaded not guilty to felony drug distribution charges that he unlawfully sold highly addictive prescription painkillers to persons who did not have a medical necessity for them, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Kuthuru is charged in a criminal indictment with nine counts of unlawful distribution of controlled substances. If convicted, he faces not more than 20 years in prison and a fine of up to $1 million. U.S. Magistrate Judge Cam Ferenbach released Kuthuru on a personal recognizance bond pending trial.“Deaths from drug overdose, the majority from pharmaceuticals, have been rising steadily over the past two decades and have now become the leading cause of injury death in the United States,” said U.S. Attorney Bogden. “The number of overdose deaths combined with the costs to the workplace and healthcare and criminal justice systems, is cause for great alarm. We will continue to prosecute doctors who are contributing to this enormous problem.”
According to the indictment, Kuthuru is a licensed physician in Nevada who represents himself to be a specialist in pain management. Kuthuru operates Desert Pain Management which has occupied various locations on Charleston Boulevard in Las Vegas. Beginning on a date unknown and continuing through at least 2013, Kuthuru allegedly sold prescriptions for large quantities of highly addictive frequently diverted prescription drugs, including oxycodone, morphine sulfate and methadone without medical necessity.
This case is being investigated by the Nevada High Intensity Drug Trafficking Area (Nevada HIDTA) Pharm-Net Task Force, including the DEA, IRS Criminal Investigation, Las Vegas Metropolitan Police Department, Henderson Police Department, North Las Vegas Police Department, and the Nevada Division of Investigations, and is being prosecuted by Assistant U.S. Attorney Crane M. Pomerantz.
An indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Las Vegas Meth Dealer Sentenced to 15 Years in PrisonRead the Press Release
LAS VEGAS, Nev. – Saul Candelorio Gastellum-Sanchez, a local illegal drug dealer, was sentenced today by U.S. District Judge Lloyd D. George to 15 years in prison and five years of supervised release, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
Gastellum-Sanchez, aka “Cervancio Perez-Zazueta,” aka “Bartolo Castillo,” aka “Vampiro,” 29, pleaded guilty in May to one count of conspiracy to distribute methamphetamine, one count of possession of methamphetamine with the intent to distribute, one count of possession of a firearm during and in relation to a drug trafficking crime, unlawful re-entry of a deported alien, and conspiracy to launder monetary instruments.
“The defendant was a prolific drug trafficker who was distributing large quantities of methamphetamine and had firearms at hand,” said U.S. Attorney Bogden. “He was a serious threat to public safety and a lengthy sentence of imprisonment was warranted.”
According to Gastellum-Sanchez’ plea agreement, from about June 1, 2012, to June 20, 2013, Gastellum-Sanchez conspired with six co-defendants to distribute 464 grams of methamphetamine to an undercover officer. On May 20, 2013, Gastellum-Sanchez purchased an ATV for $11,000 in cash, which were proceeds from the sale of methamphetamine.
On June19, 2013, a federal search warrant was executed at Gastellum-Sanchez’ residence in Las Vegas, and law enforcement agents recovered over two kilograms of methamphetamine, an AK-47 assault rifle and two semi-automatic handguns. At the time of the crime, Gastellum-Sanchez was residing unlawfully in the United States and had been previously deported in January 2008.
Four of the co-defendants pleaded guilty and were sentenced to prison, one is a fugitive, and one is pending trial.
This case was investigated by the DEA, Homeland Security Investigations, IRS Criminal Investigation, and the North Las Vegas Police Department, and prosecuted by Assistant U.S. Attorney Amber M. Craig.
Man Pleads Not Guilty to Kidnapping and Sex Trafficking ChargesRead the Press Release
RENO, Nev. – John Thomas Abrams, 47, aka Buck, aka David George Garnett, aka John McDonald, aka David Blackwell, appeared before a federal magistrate judge today and pleaded not guilty to charges that he kidnapped a 15-year-old boy and girl in California and transported them to Reno with the intent that the girl engage in sexual activity, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
Abrams is charged in a criminal indictment with two counts of kidnapping and one count of transportation of a minor for illegal sexual activity. Abrams was ordered detained pending trial, which was set for Dec. 1, 2014. If convicted, Abrams faces a minimum of 20 years in prison on the kidnapping charges, a minimum of 10 years in prison on the transportation charge, as well as fines of up to $250,000 on each count.According to the allegations contained in the indictment, between about July 12 and July 22, 2012, Abrams kidnapped the girl and the boy in the Sacramento, Calif. area, and held them for ransom, reward, and otherwise. Abrams then transported them to Reno, Nev. with the intent that the girl engage in illegal sexual activity.
“Investigating persons who prey on minors, elderly, and other vulnerable victims, is a top priority of the Justice Department and U.S. Attorney’s Office in Nevada,” said U.S. Attorney Bogden. “We have dedicated more resources than ever to catching and prosecuting these predators, and are working with local, state and federal partners to make sure they face the criminal justice system.”
The investigation is being conducted by the FBI and the Sacramento Police Department. The case is being prosecuted by Assistant United States Attorney Carla Higginbotham.
The case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals, federal,
state, and local resources to locate, apprehend, and prosecute individuals who sexually
exploit children, and to identify and rescue victims. For more information about Project
Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet
safety education, please visit www.usdoj.gov/psc and click on the tab "resources."Two Men Charged with Fraud for Looting Hedge FundsRead the Press Release
LAS VEGAS, Nev. – Two men have been charged with conspiracy and fraud for engaging in a scheme to misappropriate $34 million from two Florida-based hedge funds during 2008 to 2010, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
Robert Buckhannon, 53, of Las Vegas, and Terry Rawstern, 66, of Aberdeen, S.D., are charged in a criminal indictment with one count of conspiracy to commit wire fraud and one count of wire fraud. Buckhannon, who was arrested by FBI agents yesterday in Henderson, Nev., pleaded not guilty this afternoon at an arraignment before U.S. Magistrate Judge George Foley, and was released on a personal recognizance bond pending trial. Rawstern’s arraignment is scheduled for tomorrow, Oct. 2 at 3:00 p.m. If convicted, the defendants face up to 30 years in prison on the conspiracy charge, up to 20 years in prison on the wire fraud charge, and fines of up to $1 million on each count.
“We have been working with our federal, state and local partners to investigate and prosecute persons who commit significant financial crimes,” said U.S. Attorney Bogden. “Often these cases take considerable time and resources to investigate and litigate, but the American people deserve to know that we are working diligently to catch the perpetrators.”
According to the indictment, from April 2008 through April 2010, Buckhannon and Rawstern and co-conspirators were managing members of two Bradenton, Florida-based hedge funds, Arcanum Equity Fund, LLC and Vestium Equity Fund, LLC. The defendants allegedly engaged in a fraudulent scheme to misappropriate $34 million they raised from investors by misrepresenting how they would use the investors’ funds and misrepresenting that there were safeguards over the investors’ money, such as an independent trustee and independent fund administrator. The defendants then looted and bankrupted the hedge funds by taking payments on false and fictitious profits and taking improper and undisclosed loans. The indictment states that as a result of the defendants’ conduct, investors lost approximately $13.1 million. In April 2010, the hedge funds voluntarily filed for Chapter 7 bankruptcy and are now under the control of court-appointed trustees.
The case is being investigated by the FBI, and prosecuted by Assistant U.S. Attorney Kathryn C. Newman.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The 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 about the task force visit: www.stopfraud.com.