Northern District of New York

Discussed Northern District of New York’s Aggressive Civil Frauds Program

ALBANY, NEW YORK – On Wednesday, September 17, 2014, United States Attorney Richard S. Hartunian and other senior Department of Justice officials addressed the membership of Taxpayers Against Fraud, a nonprofit organization dedicated to combating fraud against the government and protecting public resources through public-private partnerships. The Acting Associate Attorney General of the United States spoke about the Department of Justice’s national fraud priorities, while United States Attorney Hartunian addressed his office’s aggressive and innovative efforts to fight fraud in upstate and central New York.

Mr. Hartunian was asked to focus his remarks on the Northern District of New York’s application of the False Claims Act, which is the United States’ strongest civil tool to deter and redress fraud committed against government programs. The Act has unique qui tam provisions, which allow private citizens to file suit alleging fraud on behalf of the government. If the government prevails in the action, the whistleblower (known as a “relator”) receives up to 30 percent of the recovery. The Department of Justice secured $3.8 billion in False Claims Act settlements and judgments last fiscal year alone, of which relators received $345 million. Several million of those dollars were recovered as a result of cases worked by Mr. Hartunian’s staff.

“As a United States Attorney, my responsibilities include protecting the public fisc and our people from harm. I am committed to fulfilling that responsibility aggressively and fairly, and I have instructed my staff to be both aggressive and fair in their interpretation and application of the False Claims Act,” explained United States Attorney Hartunian. Mr. Hartunian highlighted the following fraud cases that his office resolved this past year:

Marketing of prescription drugs for unapproved uses: His office, in conjunction with its colleagues in the Eastern District of Pennsylvania, resolved criminal and civil investigations arising from Endo Pharmaceuticals’ marketing of the prescription drug Lidoderm for uses not approved as safe and effective by the Food and Drug Administration. In total, the company agreed to pay $192.7 million in civil damages, criminal forfeiture, and monetary penalties and to enter into a deferred prosecution agreement with enhanced compliance measures. This settlement emphasized that public health is protected by compliance with FDA’s drug approval process and requirement that product labeling be based on performance, rather than profitability.

Administering drugs outside of the presence of a qualified physician: Thanks to the assistance of a whistleblower, his office reached a $3.57 million settlement to resolve allegations that Imagimed (operating as “Open MRI”), its owners, and chief radiologist, submitted false claims to federal healthcare programs for magnetic resonance imaging services with a contrast dye without the direct supervision of a qualified physician. Since a potential adverse side effect of contrast dye is anaphylactic shock, federal regulations require that a physician supervise the administration of contrast dye when it is used for an MRI. Such a resolution stripped away the profit motive for circumventing the physician supervision requirements that safeguard patients.

Violations of the Recovery Act’s “Buy American” requirement: His office recently resolved, for $500,000, a case involving allegations that Jett Industries, a Colliersville-based general contractor, had falsely certified compliance with the American Recovery and Reinvestment Act’s “Buy American” provision. Jett purchased key project components in France, and then created and submitted paperwork in an effort to mislead the government into believing that the cheaper, French-made products were produced in the United States.

City acknowledges that it mismanaged federal funds: Another recent case that involved a seven-figure monetary recovery, an admission of wrongdoing, and other forward-looking (non-monetary) components was a settlement reached last month with the City of New York. This settlement resolved allegations, brought to our attention by a whistleblower, that the New York City Human Resources Administration (HRA) violated the False Claims Act by causing various managed care organizations to provide health care coverage to individuals that HRA knew, or should have known, were ineligible to receive benefits through New York State’s Medicaid program. As part of the settlement, HRA accepted responsibility for failing to timely review and close Medicaid cases after being provided information that the beneficiaries moved outside of New York City, and it admitted that its inaction caused one or more MCOs to receive payments to insure individuals who were ineligible for benefits through New York State’s Medicaid program. HRA also agreed as part of the settlement to establish a process to investigate and close Medicaid cases whenever it learns that a beneficiary no longer resides within its coverage area.

Unlawful physician compensation arrangements: A settlement was also reached last month with the New York Heart Center. In that case, a group of upstate New York cardiologists agreed to pay $1.34 million to resolve allegations that its physicians’ compensation was determined using a formula that took into account the volume or value of each physician’s ordering of designated health services from other physicians in the practice, in violation of the Stark Law. By pursuing such cases, physicians in Northern New York and elsewhere will think twice before entering into financial arrangements where a physician’s medical judgment may be compromised by financial incentives.

Billing the government for no-show jobs: With the assistance of another whistleblower, his office resolved allegations that Ithaca-based defense contractor Agave BioSystems and its president submitted false claims to the Department of Defense, seeking reimbursement for work that was never performed. Mr. Hartunian concluded his remarks at the conference with the following observation: “The Northern District of New York is committed to building a leading qui tam practice because the False Claims Act works. It works because it is an effective tool to fight fraud across the full spectrum of federal programs. It works because it provides powerful incentives for companies and individuals to do business honestly. And it works because it safeguards taxpayer money, protects public safety, and improves confidence in government.”

Youth Courts meet at Syracuse University College of Law
MONDAY– September 22, 2014- 9am

SYRACUSE, NEW YORK – U.S. Attorney Richard S. Hartunian and Retired New York State Court of Appeals Judge Judith Kaye will speak at the annual meeting of New York State Youth Courts at the new Syracuse University College of Law at Dineen Hall.

U.S Attorney Hartunian stated “Youth Courts are one of the most effective ways to reduce juvenile crime. More Communities need to support this innovative way of deterring teens from becoming involved in the criminal justice system”

Syracuse area youth court students will be conducting a mock hearing exercise.

9:00am Guest Speakers – Dean Hannah R. Arterian, Syracuse University College of Law & Richard S. Hartunian, United States Attorney Northern District of New York

Keynote Address – Judge Judith S. Kaye, Co-Chair, NYSBA Committee on Youth Courts

10:15-10:45am – Mock Hearing, Melanie Gray Ceremonial Courtroom

11:00am-12:00pm – Concurrent Workshops:

Innovative Practices and Volunteer Training – MacNaughton Collaboratory
Presenters: Katherine Chambers, Warren County Youth Court and Sharese Crouther, Brownsville Youth Court
Positioning for Sustainability – Conference Room 222
Presenter: Jack Levine, NAYC Program Director
12:00-1:00pm – Lunch, MacNaughton Collaboratory

1:00-2:00pm –Melanie Gray Ceremonial Courtroom
Implications of “Raising the Age” in NYS on Youth Courts – Center for Youth Executive Director Elaine Spaull, PhD., JD

2:00-3:15pm – Facilitated Roundtable Discussions, MacNaughton Collaboratory
How Youth Courts can prepare for changes in NYS – Facilitated by Marilyn Morey

Charges include sexual exploitation of three children

SYRACUSE, NEW YORK – Hermon, NY residents STEPHEN M. HOWELLS, II, age 39, and NICOLE F. VAISEY, age 25, were formally charged today in federal court in Syracuse on multiple counts including conspiracy to sexually exploit children and sexual exploitation of children according to United States Attorney Richard S. Hartunian and Special Agent in Charge, Andrew W. Vale of the Federal Bureau of Investigation, Albany Division.

The five count indictment returned by a federal Grand Jury charged Howells and Vaisey with the following crimes: Count 1 - Conspiracy to Sexually Exploit Children involving two minor female victims (V-1 and V-2) and Count 2 - Sexual Exploitation of a Child (V-1). Counts 3 and 4 charge Howells and Vaisey, individually, with Sexual Exploitation of a third female child (V-3). Howells was also charged in Count 5 with Possession of Child Pornography.1

If found guilty on Counts 1 – 4, each defendant faces a statutory minimum of at least fifteen years imprisonment and a maximum term of thirty years imprisonment. On Count 5, Howells faces a maximum term of twenty years imprisonment. Both defendants may be fined up to $250,000 on each count of conviction. Upon release from prison, they would be placed on Supervised Release for a mandatory minimum at least five years and up to life. They would also be required to register as sex offenders.

United States Attorney Hartunian said, “This indictment charges Howells and Vaisey with enticing and coercing children to engage in sexual conduct and making a video recording of it. The Department of Justice is committed to the safety and well-being of every child and has placed a high priority on combating sexual exploitation of minors. We will continue to work closely with our state and local partners to identify and prosecute those who prey on our children.”

Anyone having information regarding this case may contact the Federal Bureau of Investigation at 1-800-CALL-FBI.

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1The charges are merely accusations and the defendants are presumed innocent until and unless proven guilty.

Saint Lawrence County kidnapping case

SYRACUSE, NEW YORK – United States Attorney Richard S. Hartunian will conduct a press conference on Thursday, Sept. 18th at 11:30 AM, in the U.S. Attorney’s Office, 9th floor, 100 S. Clinton Street, Syracuse, NY.

No further information will be provided prior to the press conference.

Plattsburgh man indicted on 13 counts related to production, distribution, and possession of child pornography

PLATTSBURGH, NEW YORK – A federal grand jury returned an indictment today charging Heath Powers, 33 years old of Plattsburgh, with 11 counts of production of child pornography, 1 count of distribution of child pornography, and 1 count of possession of child pornography announced United States Attorney Richard S. Hartunian and Federal Bureau of Investigation Special Agent-in-Charge Andrew W. Vale.

If the defendant is convicted, he faces at least 15 years and up to 30 years in prison on each production of child pornography charge; at least 5 years and up to 20 years in prison on the distribution of child pornography charge; and up to 20 years of prison on the possession of child pornography charge. If convicted, he also faces for each count a fine of up to $250,000, a lifetime term of supervised release and registration as a sex offender.

The case is being investigated by the Federal Bureau of Investigation. The prosecution is being handled by Assistant United States Attorney Katherine Kopita.

The charges in the indictment are merely accusations and the defendant is presumed innocent until and unless proven guilty.

If anyone has information regarding this matter, please contact the Federal Bureau of Investigation at telephone number 1-800-CALL-FBI.

SYRACUSE, NEW YORK - Richard S. Hartunian, United States Attorney for the Northern District of New York, announced today the entry of guilty pleas for violations of the Clean Water Act by Mark Pullyblank, 53, of Caledonia, NY, William Clements, 53, of Victor, New York, and Crane-Hogan Structural Systems, Inc., 3001 Brockport Road, Spencerport, New York, (which employs Pullyblank and Clements) before the Honorable Thomas J. McAvoy in federal district court in Binghamton, NY.

Crane-Hogan is a company that uses hydro-demolition to renovate concrete structures. Hydro-demolition uses high pressure water to remove concrete from buildings such as parking garages, dams, bridges, and highways prior to resurfacing. The waste-water from the hydrodemolition process contains a slurry of industrial waste including concrete residue which has a highly caustic pH and total suspended solids, both of which are pollutants under the Clean Water Act. Mark Pullyblank was Crane-Hogan’s Project Manager in charge of renovation projects at the Binghamton Governmental Center Parking Garage and Johnson City Wilson Hospital Parking Garage throughout 2008 and 2009. He directed workers to discharge concrete slurry into the Susquehanna River for portions of two years, and into the Binghamton-Johnson City Publically Owned Treatment Works (POTW) during the summer 2009, both without Clean Water Act permits and without treatment for the high pH. William Clements was also a Project Manager in charge of the Johnson City Wilson Hospital Parking Garage renovation who participated in the unpermitted POTW discharges in 2009.

The Clean Water Act was enacted into law in 1972. Since that time it has been illegal to discharge pollutants into waters of the United States without a permit and without approved pretreatment prior to discharge. The Susquehanna River is a navigable water of the United States that provides drinking water to many thousands of individuals. It traverses through New York State, Pennsylvania, and Maryland and flows into the Chesapeake Bay and Atlantic Ocean. Mark Pullyblank and Crane-Hogan both plead guilty to felony violations of the Clean Water Act. William Clements pled guilty to a misdemeanor Clean Water Act violation. Pullyblank faces a maximum possible penalty of three years in prison and a $700,000 fine, plus supervised release thereafter. Crane-Hogan faces a maximum fine of $750,000 and five years of probation. If the plea agreement is accepted by the court, Crane-Hogan will be required to prepare and implement an environmental compliance plan to alter its policies and practices so as to reduce the likelihood of future criminal environmental conduct. William Clements faces a maximum possible term of incarceration of one year and a fine of $350,000 plus a term of supervised release. Sentencing will take place on January 23, 2014 in Binghamton, NY at 11:30AM for Mark Pullyblank, 1:30PM for Crane-Hogan, and 2:00PM for William Clements.

This case was investigated by Criminal Investigators with the New York State Department of Environmental Conservation, Bureau of Environmental Crimes Investigations, and Special Agents of the United States Environmental Protection Agency. Assistance with this case has been provided by the New York State Office of General Services, the Binghamton City Engineer, and the Binghamton-Johnson City Publically Owned Treatment Works. The case is being prosecuted by Assistant United States Attorney Craig Benedict. Questions may be directed to AUSA Benedict at 315-391-1110.

Albany, NY – Assistant United States Attorneys Elizabeth Coombe, Richard Belliss and Wayne Myers and former Assistant United States Attorney John Katko were among the 243 members of the Department of Justice recognized by Attorney General Eric Holder at the 30th annual Director’s Awards Ceremony on Wednesday in Washington, D.C.

In his prepared remarks, Attorney General Holder told the awardees, “Locally, nationally, and internationally, you represent the very best that this Department has to offer. Your work embodies our ongoing commitment – not merely to win cases, but to do justice; to protect our fellow citizens from crime, violence, and terrorism; to empower the most vulnerable among us; and to uphold the rule of law.”

Assistant United States Attorneys Elizabeth Coombe, Richard Belliss, and Wayne Myers were recognized for the successful investigation and prosecution of Timothy McGinn and David Smith, two Albany-area securities brokers who devised and executed a $30 million investment fraud scheme. The defendants owned and operated a prominent Albany broker-dealer specializing in the securitization of burglar alarm, broadband, cable, and telephone services contracts. Along with associates who were also indicted, convicted, and sentenced, the lead defendants used a complex arrangement of trusts, holding companies, and layered financial transactions to siphon investor funds for personal expenses; to pay purported returns to some investors to encourage additional investment and conceal significant losses; to cover operating expenses of the broker-dealer; and to conceal from both investors and regulators these improper diversions of investor funds. The defendants, whose criminal conduct wiped out the life savings of numerous investors, received sentences of 15 and 10 years in prison.

Former Assistant United States Attorney John Katko was recognized for the investigation and racketeering prosecution of 25 members of the “Bricktown” and “V-NOT” street gangs. Both gangs were involved in multiple murders, armed assaults, and robberies, as well as firearm and cocaine base trafficking. The investigations solved numerous acts of violence that had occurred during a 2010 gang war, including the tragic drive-by murder of an uninvolved high school basketball star and the killing of a 20-month-old child in a misguided act of retaliation.

United States Attorney Richard S. Hartunian said, “We thank Attorney General Holder for recognizing the hard work of four of our dedicated prosecutors. Our office has 41 other diligent lawyers who fight crime and injustice every day on behalf of the citizens in our district.”

Forfeited Assets from 2009 drug case distributed to 33 law enforcement agencies

ALBANY, NEW YORK – United States Attorney Richard S. Hartunian announced today the distribution of $12,515,738 which represented the proceeds of assets seized in a marijuana distribution conspiracy. Of the total assets, $8,923,708.19 have been distributed to thirty-three law enforcement agencies in the Capitol District area and as far away as Illinois and California. Joining in the announcement was Wilbert L. Plummer, Associate Special Agent in Charge of the New York Division, of the United States Drug Enforcement Administration and James R. Burns, Jr., Assistant Special Agent in Charge, Albany District Office, of the Drug Enforcement Administration.

The remaining $3,592,029.81 went to the Department of Justice Asset Forfeiture Program. The primary mission of the Program is to employ asset forfeiture powers in a manner that enhances public safety and security. Asset forfeiture laws are intended to enable law enforcement agencies to disrupt and dismantle criminal organizations and deprive them of their illegal profits.

U.S. Attorney Hartunian stated, “What started as a simple traffic stop in Illinois turned into a well-orchestrated, multi-state effort involving the collaboration of many agencies resulting in the sentencing of five drug traffickers and forfeiture of millions of dollars of assets. By attacking large scale drug trafficking organizations and stripping them of their ill-gotten profits, we make a hard-hitting impact, stopping the distribution of drugs and ensuring the safety of our communities. We are pleased to use our federal resources to provide these forfeited assets to our partner agencies.”

DEA Acting Special Agent in Charge James J. Hunt stated, “Canori reaped millions from the illicit sale of marijuana in the Albany area contributing to drug abuse and drug addiction. Due to law enforcement’s cooperation, those millions will now be used to stop drug trafficking, curb drug abuse and support law enforcement’s ongoing efforts to keep our cities safe and secure.”

The case started on June 13, 2009 when Illinois State Police found approximately 334 pounds of marijuana hidden in a car trailer during a routine traffic stop. The drugs were intended to be transported from California to upstate New York for distribution. Through a controlled delivery executed with the Albany DEA Office, the delivery was completed, resulting in the arrest of three co-conspirators, Melissa Giove, Eric Canori and Robert Reinfurt, and eventually two others, Pamela Grosch and Sara Shafer. All five were later convicted in U.S. District Court for drug offenses.

At the time of his arrest, $1,473,543 in cash was seized from Eric Canori’s Wilton residence, along with approximately 40 pounds of marijuana. A subsequent search of a home in Ross, CA, rented by Canori, resulted in the seizure of an additional $688,660. Law enforcement agents were later provided with the locations of buried gold and silver bars and coins. 172 gold bars, 161 gold coins and a one hundred ounce silver bar were recovered, forfeited and eventually auctioned. Two pickup trucks and one trailer were also seized and forfeited.

As set forth below, agencies receiving a share of the $8,923,708.19 of forfeited assets include twenty local police departments, sheriff’s offices and district attorney’s offices, four New York State agencies and one federal agency. Additionally four Illinois law enforcement agencies and four California law enforcement agencies shared in the distribution. All received a percentage of the shared assets because of their cooperative work on the case.

This case was investigated by the Drug Enforcement Administration and the Internal Revenue Service. The case was prosecuted by Assistant United States Attorney Richard Belliss.

U.S. v. Canori et al. asset sharing Chart

Fraud Scheme Originated in Saranac Lake, New York

LOS ANGELES –A Ventura, California man has pleaded guilty to federal fraud charges for his involvement in an $8 million investment scheme that lured investors with false promises relating to the development of an alternative energy technology, Richard S. Hartunian, the United States Attorney for the Northern District of New York, announced today.

William A. Stehl, 69, pleaded guilty in federal court in Los Angeles on September 2 to five counts: conspiracy to commit mail and wire fraud, lying to federal agents, two counts of attempting to evade the payment of federal income taxes for calendar years 2003 and 2004, and subscribing to a false federal income tax return for calendar year 2003.

Stehl entered his plea before United States District Judge Terry J. Hatter, Jr., who scheduled a sentencing hearing for December 15, 2014. At sentencing, Stehl faces up to 38 years in federal prison.

Judge Hatter allowed Stehl to enter guilty pleas based on the 1970 United States Supreme Court decision in North Carolina v. Alford, which held there is no constitutional bar to a defendant entering a plea of guilty without acknowledging his guilt, if, the defendant concludes he would be convicted after a trial. Stehl and a co-defendant – Richard M. Rossignol, 64, of Los Angeles, California – were arrested in Oxnard, California four years ago in connection with an indictment filed in the Northern District of New York. Both men were charged with conspiracy to commit mail and wire fraud. Additionally, Stehl was charged with several tax charges and lying to federal agents.

The conspiracy count alleged that from 2001 up to the time of the indictment in March 2010, Stehl, Rossignol and others induced victims to invest money in companies that were purportedly developing or utilizing an alternative energy source Stehl claimed he had developed. Investors were told that one of Stehl’s applications related to the processing of precious metals allegedly contained in a slag pile in Silver City, New Mexico.

Stehl and Rossignol were charged with fraudulently obtaining money from investors by making false representations about the status of the process, claiming that contracts and licensing agreements had either been signed, or were about to be signed, that would result in significant financial returns for the investors. Stehl, Rossignol, and others obtained more than $8 million from more than 300 victims, and attempted to obtain at least an additional $50 million. None of the investors received the returns promised by Stehl and Rossignol, and most of the money obtained was used for personal expenditures.

Stehl was living near Saranac Lake, New York, when the scheme started. Stehl moved to Southern California in late 2005. Fraud victims lived across the nation.

Although the indictment was originally filed in federal court in Binghamton, New York, in October 2012 the case was transferred to the Central District of California to accommodate Stehl, who received injuries in an explosion that occurred in a building in Sylmar, California, on August 9, 2011.

In November 2013, Judge Audrey B. Collins, who previously presided over the case, granted a request by Stehl’s attorneys for a separate trial.

Stehl remains free on bond pending sentencing.

Trial and Sentencing of Co-Defendant Richard Rossignol

Rossignol’s case went to trial in Los Angeles on January 14, 2014. On February 28, the jury convicted Rossignol of the sole count he faced, conspiracy to commit mail and wire fraud. On July 28, Judge Collins sentenced Rossignol to 20 years – the maximum statutory sentence – and immediately remanded him into custody. Judge Collins also ordered Rossignol to pay more than $8.1 million in restitution to the fraud victims. Judge Collins described the fraud as being among the most egregious she had seen in her 20 years on the federal bench.

The investigation in this case was conducted by Special Agents of the Internal Revenue Service - Criminal Investigation, New York Field Office, and the Albany, New York, Field Office of the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney Kevin P. Dooley of the Binghamton branch office in the Northern District of New York. Additional inquiries can be directed to AUSA Dooley at (607) 343-3713, or Executive Assistant John Duncan at (315) 448-0672.

Press Conference to be held Monday, September 8, 2014 1:30 PM

ALBANY, NEW YORK – United States Attorney Richard S. Hartunian will be conducting a press conference Monday, September 8, 2014 at 1:30 PM in the U.S. Attorney’s Office, 2nd Floor, James T. Foley Courthouse, 445 Broadway, Albany, NY.

An announcement will be made regarding the sharing of significant asset forfeitures from a drug case with 33 law enforcement agencies.

Press releases will be distributed at the press conference. No other information will be available until the press conference.

PLATTSBURGH, NEW YORK – Heath Powers, 33, of Plattsburgh, was arrested on August 11, 2014, and charged by complaint with production of child pornography announced United States Attorney Richard S. Hartunian and Federal Bureau of Investigation Special Agent-in-Charge Andrew W. Vale. Following an initial appearance before United States Magistrate Judge Larry Kudrle, Powers has been held without bond. If convicted, Powers faces at least 15 years and up to 30 years in prison, followed by a lifetime term of supervised release, a $250,000 fine, and registration as a sex offender.

The case is being investigated by the Federal Bureau of Investigation. If anyone has information regarding this matter, please contact the Federal Bureau of Investigation at telephone number 1- 800-CALL-FBI. The prosecution is being handled by Assistant United States Attorney Katherine Kopita.

The charges in the complaint are merely accusations and the defendant is presumed innocent until and unless proven guilty.

Had Been Removed Five Times

ALBANY, NEW YORK – Jesus Vasquez-Loyola (28, of Valatie, NY) was sentenced today to serve 14 months in prison by Chief United States District Court Judge Gary L. Sharpe announced United States Attorney Richard S. Hartunian and the Department of Homeland Security, Immigration and Customs Enforcement (ICE). In May, Vasquez-Loyola pled guilty to illegally reentering the United States following removal, a felony under federal law. Following the completion of the term of imprisonment, the Department of Homeland Security will process Vasquez-Loyola for removal from the United States to Mexico.

In April 2014, Vasquez-Loyola was arrested by New York State Police Officers in Kinderhook, New York and charged with several offenses including driving while intoxicated. Vasquez-Loyola had been previously removed to Mexico five times, most recently in July 2012 after his conviction in the Northern District of New York for illegally entering the United States after removal.

The case was investigated by the Department of Homeland Security, Immigration and Customs Enforcement (ICE), Albany, NY.

Alleged Production of Child Pornography

ALBANY, NEW YORK – A grand jury returned an indictment charging ROBERT McLAUGHLIN, age 57, of Mechanicville, New York, with two counts of production of child pornography, announced United States Attorney Richard S. Hartunian.1 McLAUGHLIN faces up to 30 years of imprisonment and a maximum fine of $250,000 on each count.

McLAUGHLIN had his initial appearance and arraignment on the charges in Albany today before the Honorable Christian F. Hummel, United States Magistrate Judge. McLAUGHLIN was detained pending resolution of the charges.

According to the indictment, between 2012 and 2014, McLAUGHLIN engaged in sexually explicit conduct with two young girls and also produced visual depictions of such conduct.

This case is being investigated by the New York State Police and the Federal Bureau of Investigation. This case is being prosecuted by Assistant United States Attorney Lisa M. Fletcher and Special Assistant United States Attorney Amanda W. Cox.

This 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 Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better 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 “resources” tab.

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1The charge is merely an accusation, and the defendant is presumed innocent until and unless proven guilty.

SYRACUSE, NEW YORK – Yesterday, Derrick Richards (42, of Syracuse, NY) was sentenced to 37 months imprisonment in U. S. District Court according to United States Attorney Richard S. Hartunian. In February, Richards pled guilty to possessing a firearm as a convicted felon, a felony under federal law. In addition to his term of incarceration, U.S. District Court Judge Glenn T. Suddaby ordered that Richards be placed on a 3 year term of federal supervised release.

In June 2013, Syracuse Police officers were called to a residence on W. Calthrop Avenue in Syracuse regarding a domestic dispute complaint involving a weapon. During their investigation police determined Richards was in possession of a 9mm Hi-Point rifle. Given that Richards had previously been convicted of Robbery in the First Degree, he was prohibited from possessing any firearms.

The case was investigated by the Syracuse Police Department, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Syracuse Resident Office and prosecuted by Assistant U.S. Attorney Richard Southwick.

Transported a Confidential Source Who Claimed to Possess Cocaine in an FBI Sting

ALBANY, NEW YORK —CHARLES E. FULLER, age 46, of Corinth, New York, pled guilty today in Albany before Chief United States District Court Judge Gary L. Sharpe to one count of attempting to aid and abet the possession with intent to distribute a controlled substance, announced United States Attorney Richard S. Hartunian and Andrew W. Vale, Special Agent-in- Charge, Federal Bureau of Investigation, Albany Division. Fuller faces at least five years of imprisonment and up to forty years of imprisonment.

During the plea hearing, Fuller admitted that in February of 2014, while he was employed as a Saratoga County Deputy Sheriff, he accepted a total of $5,000 from a confidential source supervised by the Federal Bureau of Investigation as payment for transporting the confidential source while the source was carrying what Fuller believed to be cocaine. The source actually had imitation cocaine. The defendant made two trips from Albany to Warren County: one on February 19, 2014 and one on February 27, 2014. During the first trip, the defendant drove the source with what he believed to be 250 grams of cocaine in return for $1,000, and during the second trip, the defendant transported the source with what he believed to be one kilogram of cocaine in return for $4,000.

Sentencing is scheduled for December 18, 2014, at 1:00 p.m. in Albany, New York. This case was investigated by the Federal Bureau of Investigation. This case is being prosecuted by Assistant United States Attorney Daniel Hanlon.

Cardiology Practice Allegedly Compensated Physicians for Improper Referrals

ALBANY, NEW YORK: Cardiovascular Specialists, P.C., d/b/a New York Heart Center (NYHC) – a group practice of cardiologists with offices throughout central and northern New York – has agreed to pay the United States $1,336,636.98 plus interest to resolve allegations that it violated the False Claims Act and the Physician Self-Referral Law (commonly known as the Stark Law) by knowingly compensating its physicians in a manner that violated federal law, announced United States Attorney Richard S. Hartunian.

The Stark Law is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives that encourage referrals for unnecessary services, which drive up health care costs for Medicare beneficiaries and the Medicare program. The law prohibits physicians from referring Medicare beneficiaries to health care providers, including providers in their own group medical practices, for certain services if their financial relationships with the provider do not fall within an exception to the Stark Law. In the case of financial relationships between a medical practice and its physicians, the exceptions do not permit practices to compensate physicians in a manner that directly takes into account the volume or value of the physician’s referrals for services that are not personally performed by the ordering physician. If a group’s financial relationship with a physician does not satisfy an exception, the group cannot bill Medicare for the physician’s prohibited referrals.

The settlement announced today resolves allegations that, from September 2007 through August 2008, compensation for each NYHC partner-physician was determined using a formula that took into account the volume or value of that physician’s referrals for nuclear scans and CT scans, in violation of the Stark Law and the False Claims Act. The government’s investigation revealed that NYHC adopted this formula with knowledge that it could violate the Stark Law.

United States Attorney Hartunian said: “Today’s settlement is another example of this office’s commitment to ensure that services paid for by federal health care programs are based on the best interests of patients rather than the financial interests of referring physicians. The United States Department of Health and Human Services’ Office of Inspector General should be commended for bringing this issue to light and for its outstanding investigation.”

“Medical decisions should always be made on the basis on what’s best for the patient’s health, not the physician’s finances. The compensation system in place in this case had the potential to influence medical judgment, which would be unacceptable,” said Special Agent in Charge Thomas O’Donnell of the Department of Health and Human Services Office of Inspector General (HHS-OIG), New York region.

The investigation and settlement were the result of a coordinated effort between the United States Attorney’s Office for the Northern District of New York and HHS-OIG, with the assistance of the Department of Justice’s Civil Division. Locally, the United States was represented by Assistant United States Attorney Adam J. Katz.

ALBANY, NEW YORK – JOHN DOOLEY, age 57, of Rochester, New York, was sentenced today by Senior United States District Judge Thomas J. McAvoy to 45 years of imprisonment for (1) attempted enticement of a minor to engage in sexual activity; (2) attempted production of child pornography, and (3) committing a felony offense involving a minor while already required to registered as a sex offender, announced United States Attorney Richard S. Hartunian, Saratoga Springs Police Chief Gregory Veitch, and Andrew W. Vale, Special Agent-in-Charge, Federal Bureau of Investigation, Albany Division. A jury found DOOLEY guilty of the offenses in October 2013 following a three-day trial.

DOOLEY, a registered Level III sex offender with two previous convictions for sexual abuse of a minor, was arrested on May 11, 2012, in Saratoga Springs, New York, after he travelled there to meet “Kara,” a fifteen year old girl he met in a Yahoo! chat room. “Kara” was actually an undercover Saratoga Springs Police Investigator, and DOOLEY had been communicating with “Kara” for one and one-half months via Yahoo! Messenger. During the online communications, the undercover investigator repeatedly told DOOLEY that “Kara” was 15. DOOLEY told “Kara” that he would travel to Saratoga Springs, rent a motel room, have sex with her, and capture that sexual conduct on digital photo and video. On May 11, 2012, Dooley drove from Rochester to Saratoga Springs, checked into his motel room, and brought with him various sexual devices, vodka, computer equipment, cameras, and presents for “Kara,” including lingerie.

This prosecution resulted from an investigation conducted by the Saratoga Springs Police Department and the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Jeffrey C. Coffman.

New York City Human Resources Administration Accepts Responsibility for Causing
Managed Care Organizations to Insure Individuals who were Ineligible for Benefits through New York State’s Medicaid Program

ALBANY, NEW YORK – The City of New York has agreed to pay the United States $1.05 million to settle allegations that the New York City Human Resources Administration (HRA) violated the False Claims Act by causing various insurance companies (known as “managed care organizations” or “MCOs”) to provide health care coverage to individuals that HRA knew, or should have known, were ineligible to receive Medicaid benefits through New York State’s Medicaid program, according to United States Attorney Richard S. Hartunian.

Medicaid is a matching program in which the United States shares with the States the cost of medical services for low income and disabled individuals. Several MCOs have contracted with the State of New York to provide health care coverage to Medicaid beneficiaries who reside in New York City in exchange for fixed monthly payments. Many individuals who qualify for Medicaid also receive assistance under the federal Supplemental Security Income (SSI) program, which provides financial assistance to the elderly, blind, and disabled. In many States, including New York, SSI recipients automatically qualify to receive Medicaid benefits. When a Medicaid beneficiary residing in New York City moves to another State and enrolls for SSI benefits, the federal government provides written or electronic notification to the New York State Department of Health (DOH), which administers the Medicaid program throughout New York. Once DOH receives this information, it must promptly forward it to HRA. HRA, in turn, has an obligation to quickly review the information and, where appropriate, close a beneficiary’s Medicaid case if it determines that the beneficiary has moved out of New York City. If HRA fails to timely close a Medicaid case after learning from DOH or from another source that the beneficiary has relocated to another State, the MCO insuring that person will continue receiving monthly payments to insure an individual who is no longer eligible for Medicaid coverage in New York.

The United States’ investigation revealed that, although MCOs on several occasions notified HRA in writing that certain beneficiaries may have moved out of State, HRA failed to appropriately follow up on that information and work with DOH to ensure that MCOs stopped receiving monthly payments. As part of the settlement, HRA accepted responsibility for failing to timely review and close certain Medicaid cases after being provided information that those beneficiaries may have moved outside of New York City, and it admitted that its inaction caused one or more MCO to receive payments to insure individuals who were ineligible for benefits through New York State’s Medicaid program. HRA also agreed as part of the settlement to establish a process to investigate and close Medicaid cases whenever it receives information suggesting that a Medicaid beneficiary no longer resides within its coverage area.

United States Attorney Hartunian said: “Safeguarding public dollars is one of this office’s top priorities. When the United States entrusts other entities to administer federally funded programs, they must ensure that government funds are put to proper use. With today’s settlement, HRA has accepted responsibility for its past inaction and agreed to implement measures that will help ensure scarce taxpayer dollars are not wasted paying MCOs in New York to insure individuals who have moved to other States. I would like to thank the agents and auditors from the United States Department of Health and Human Services’ Office of Inspector General for their diligent efforts bringing this matter to a successful conclusion.”

“This settlement is yet another example of OIG’s commitment to ensuring that federal health care programs are administered with integrity,” said Thomas O’Donnell, Special Agent in Charge, United States Department of Health and Human Services, Office of Inspector General (HHS-OIG), New York Regional Office.

The government’s investigation was triggered by a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act, which allow private persons, known as “relators,” to file civil actions on behalf of the United States and share in any recovery. The relator in this case will receive $175,000 from the settlement.

The investigation and settlement were the result of a coordinated effort between the United States Attorney’s Office for the Northern District of New York and HHS-OIG. The United States was represented by Assistant United States Attorney Adam J. Katz.

ALBANY, NEW YORK – RICHARD J. GODDEAU, age 46, of Athens, New York, pled guilty today in Albany to one count of Social Security fraud and one count of theft of government property before Chief United States District Judge Gary L. Sharpe, announced United States Attorney Richard S. Hartunian, Special Agent in Charge Edward J. Ryan of the Social Security Administration, Office of Inspector General, Office of Investigations, New York Field Division, the United States Secret Service, and Shelly Binkowski, Inspector in Charge, United States Postal Inspection Service, Boston Division.

As part of his guilty plea, GODDEAU admitted that he made false statements to Social Security Administration personnel to obtain Social Security Supplemental Security Income benefits payments to which he was not entitled. For example, he concealed that he was operating a business and living with his wife, and falsely claimed that he was paying rent and living at a different address.

GODDEAU faces up to 5 years of prison on the Social Security fraud count, 10 years of prison on the theft of government property count, and fines of up to $250,000 on both counts. GODDEAU’s plea agreement also requires that he pay $54,285 in restitution to the Commissioner of Social Security. GODDEAU will be sentenced in Albany, New York, on December 2, 2014.

This case was investigated by the Social Security Administration, Office of Inspector General, with the assistance of the United States Secret Service and the United States Postal Inspection Service, and is being prosecuted by Assistant United States Attorney Jeffrey C. Coffman.

RICHARD S. HARTUNIAN, United States Attorney, Northern District of New York announces that DAVID PIZIO (58, of Jamesville, NY) entered a guilty plea in U.S. District Court to the felony offense of conspiracy to commit bank fraud. The defendant is facing a statutory maximum of 30 years imprisonment and a maximum fine of $1,000,000.00. PIZIO is scheduled to be sentenced on December 5, 2014, before the Honorable David N. Hurd in Utica, NY.

During the plea hearing on July 24, 2014, PIZIO admitted he was one of the owners of Syracuse Suburban Airport, LLC (“SSA”). In 2004, SSA purchased a 93 acre reliever airport site in Hastings, New York for $350,000.00. Between 2004 and 2009, SSA received five Federal Aviation Administration (“FAA”) grants totaling approximately $2,973,621.00 to be used for planning and development at the reliever airport in Hastings.

On April 29, 2005, SSA obtained a line of credit from First Niagara Bank in the amount of $650,000.00. The line of credit agreement stated that the loan proceeds were to be used by SSA only for airport expenditures reimbursable by the FAA through the grants. The line of credit agreement specifically listed DAVID PIZIO as one of the persons authorized to make requests for loans under the line of credit. PIZIO was authorized to sign for all bank accounts bearing the name of SSA, including the First Niagara line of credit.

$125,000.00 to a Texas real estate project

On December 13, 2005, PIZIO submitted an invoice to First Niagara Bank for the release of loan proceeds in the amount of $125,000.00 for the purchase of airport equipment. On that same day, First Niagara Bank transferred $125,000.00 into SSA’s checking account at First Niagara Bank. PIZIO never intended to use the $125,000.00 to purchase airport equipment. Instead, PIZIO invested the $125,000.00 in a Texas real estate project without the knowledge or consent of First Niagara Bank.

$97,604.00 to the Upstate New York Bean Company

In 2006, PIZIO opened an investment brokerage account in the name of Gildner Road Associates (“GRA”). GRA was a corporation owned by PIZIO. Thereafter, PIZIO submitted an invoice to First Niagara Bank for the release of funds in the amount of $97,604.00 for the purchase of airport equipment. On that same day, First Niagara Bank transferred $97,604.00 into SSA’s checking account at First Niagara Bank. PIZIO never intended to use the $97,604.00 to purchase airport equipment. Instead, PIZIO transferred $96,000.00 from the GRA checking account to the investment account without the knowledge or consent of First Niagara Bank. In June of 2006, PIZIO transferred the money to the Upstate New York Bean Company. In 2006, PIZIO was affiliated with the Upstate New York Bean Company located in Marcellus, New York. In June 2006, PIZIO received First Niagara Bank loan proceeds in the form of checks from the Upstate New York Bean Company. The Upstate New York Bean Company is currently out of business.

This prosecution resulted from an investigation conducted by the U.S. Department of Transportation-Office of Inspector General, and the Federal Bureau of Investigations. The case was prosecuted by Assistant United States Attorney Ransom P. Reynolds. Further questions may be directed to Executive Assistant U.S. Attorney John Duncan at (315-448-0672).

RICHARD S. HARTUNIAN, United States Attorney, Northern District of New York announces that a federal grand jury in Syracuse has returned an indictment charging DINO F. TUCCIARONE (56, of New Hartford, NY) with filing false tax returns with the Internal Revenue Service (“IRS”). If found guilty, the defendant faces a statutory maximum sentence of 3 years and a maximum fine of $100,000.00 per count of conviction.

The indictment alleges the defendant filed false Form 1040 tax returns with the IRS for tax years 2007 through 2009. Specifically, the indictment alleges that, under the penalty of perjury, the defendant falsely underreported his income for all three tax years.

The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

This prosecution resulted from an investigation conducted by the Internal Revenue Service Criminal Investigation Division, Syracuse, New York. The case was prosecuted by Assistant United States Attorney Ransom P. Reynolds. Further questions may be directed to Executive Assistant U.S. Attorney John Duncan at (315-448-0672).

ALBANY, NEW YORK – JOHN W. CALTABIANO, Jr., 47, of Cairo, New York, and COLLEEN J. McCARTEN, 41, of Coxsackie, New York, appeared today before Magistrate Judge Randolph F. Treece in U.S. District Court in Albany to be arraigned on an 11-count July 17, 2014, indictment charging them with engaging in a fraudulent scheme to obtain Social Security Disability and New York State Workers’ Compensation benefits, announced United States Attorney Richard S. Hartunian and Special Agent Edward J. Ryan of the Social Security Administration, Office of the Inspector General, Office of Investigations, New York Field Division.

According to the indictment, CALTABIANO and McCARTEN conspired to fraudulently obtain payments by submitting false information in connection with CALTABIANO’s Social Security Disability and Workers’ Compensation claims. The indictment alleges that McCARTEN and CALTABIANO submitted documents to the Social Security Administration falsely stating that CALTABIANO could not go out alone or drive, and that McCARTEN led CALTABIANO into a Workers’ Compensation Board hearing as if he was blind, when in fact CALTABIANO regularly moved without assistance and drove a car.

If convicted, CALTABIANO and McCARTEN face up to 20 years in prison on a conspiracy to commit mail fraud count and each of five mail fraud counts, up to five years in prison on each of two Social Security Disability fraud counts and two false statements counts, and up to 10 years in prison on a theft of government property count. They could also be ordered to pay fines of up to $250,000 on each count.

The charges are merely accusations and the defendants are presumed innocent until and unless proven guilty.

The indictment resulted from an investigation conducted by the Social Security Administration, Office of the Inspector General, with assistance from the Workers’ Compensation Board, Office of Fraud Inspector General. The case is being prosecuted by Assistant United States Attorney Jeffrey C. Coffman.

SYRACUSE, NEW YORK – A federal jury in Utica, New York found Dilip D. Kachare, a Utica, New York physician, not guilty of three counts of health care fraud and sixteen counts of mail fraud following a four week trial before the Honorable David N. Hurd, United States District Judge.

Today’s verdict follows a prior three week trial in October/November 2013, when a mistrial was declared after a jury was unable to reach a decision after three days of deliberation.

United States Attorney Richard S. Hartunian said, “Although this was not the outcome we expected based on the evidence presented, we believe that justice is served when a case is fully and fairly adjudicated before an impartial, attentive jury who listened to the facts that were presented and tested by lawyers on both sides of the issue; that is what happened here and we accept the jury’s verdict. We bring cases based on the facts and the law, not popularity or other good works, and we do not shy away from difficult cases, especially those involving the misappropriation of public funds.”

The indictment resulted from an investigation conducted by the U.S. Department of Health and Human Services Office of Inspector General and the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Kevin P. Dooley of the Binghamton office. Further inquiries can be directed to Executive Assistant U.S. Attorney John Duncan at the (315) 448-0672.

Defendant Used his Computer and the Internet to Download and Save Approximately 600 Child Pornography Files

ALBANY, NEW YORK – GARY MINER, age 45, of Glens Falls, New York was sentenced on July 10, 2014 to 120 months of imprisonment for possessing and receiving child pornography by United States District Court Judge Mae A. D’Agostino, announced United States Attorney Richard S. Hartunian and Andrew W. Vale, Special Agent-in-Charge, Federal Bureau of Investigation, Albany Division. MINER, who had entered a guilty plea on February 6, 2014, was also ordered to serve a 25 year term of supervised release, to have no unsupervised contact with minors, and to register with the New York State Sex Offender Registry Program.

Between January 2010 and November 29, 2011, MINER used the Internet to download approximately 600 files that contained child pornography from a website and other individuals.

This case was investigated by the Federal Bureau of Investigation.

ALBANY, NEW YORK –C.P. Buckner Steel Erection Inc., (“Buckner”) of Graham, North Carolina has agreed to pay $825,000 in civil forfeiture over two years as part of a settlement in an investigation of its employment of illegal aliens announced United States Attorney Richard S. Hartunian and U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), Assistant Special Agent in Charge, Nicholas DiNicola. As part of the settlement agreement, if Buckner fully complies with the terms of the settlement agreement, the United States Attorney for the Northern District of New York agrees not to pursue corporate criminal charges against Buckner for its employment of illegal alien workers before March 31, 2009.

The government’s investigation documented that Buckner employed workers at projects who were not eligible to work. The investigation began in January 2009 following a tip that Buckner had transported illegal aliens from North Carolina to a Beech-Nut project in Montgomery County, New York. Regarding that project, on January 22, 2009 and February 18, 2009, HSI arrested a total of nine Buckner employees, including two supervisors, because they were unlawfully present in the United States. Six of those employees were released, and Buckner continued to employ them. In addition, after the first arrests, the employees moved from a hotel located within one mile of the project to one thirty miles away. This move was approved by Buckner.

On February 28, 2009, when auditors from the New York State Department of Labor (“DOL”) and the New York State Bureau of Criminal Investigation (“BCI”) appeared unannounced at the project to interview employees, all but one employee, who was also not authorized to work, fled. Those employees, as approved by Buckner, went to North Carolina and continued working for Buckner there despite the fact that they were not authorized to work. Until April 2009, Buckner failed to make further inquiry regarding the work authorization status of those employees who had fled and other employees in its workforce who Buckner had sponsored for green cards consciously avoiding the inferences that could be drawn from the combination of the Buckner’s sponsorship of the employees in the green card program, the crew’s action in the Northern District of New York, and HSI’s arrest of Buckner employees in 2008 and 2009. In addition, Buckner had received repeated notices over multiple years from the SSA of hundreds of irregularities in the social security numbers used for employment purposes by its workers.

Under the settlement agreement, which remains in effect until July 10, 2016, Buckner agrees to cooperate fully and actively with the U.S. Attorney’s Office and the government entities involved in the investigation. Buckner is also required to continue remedial hiring actions implemented after it learned about the investigation on March 31, 2009. Those actions include using DHS’s “E-Verify” screening program for all new hires, verifying the social security numbers of all Buckner employees, and maintaining an employee hotline to receive reports of any suspected violation of law at the company.

The investigation was conducted by HSI. The case is being handled by Assistant United States Attorneys Edward Grogan and Gwendolyn Carroll.

SYRACUSE, NEW YORK - United States Attorney Richard S. Hartunian announced today that his office has settled a civil action under the False Claims Act, against the Carthage Area Hospital. This case involves allegations that the Carthage Area Hospital (“Carthage”) doublebilled Medicare for operating room services and ambulatory services from September 1, 2006 through June 30, 2010. Carthage submitted approximately 1900 claims for payment to Medicare which improperly contained both revenue code 360 (operating room services) and revenue code 490 (ambulatory surgery).

The parties have agreed to a civil resolution of this case, in which Carthage will pay the United States $750,000.00. While the United States was entitled to seek double or treble damages plus fines and penalties under the False Claims Act, this settlement reflects single damages (the approximate amount of the excess billing), in light of the unique circumstances of this case and the full cooperation of Carthage throughout this investigation.

Richard S. Hartunian, United States Attorney for the Northern District of New York, stated that “Health care fraud is a priority of the Department of Justice and this office. This settlement reflects an appropriate resolution of this case in light of the circumstances. We wish to recognize the full cooperation of Carthage throughout this investigation.”

This case was investigated by the U.S. Department of Health and Human Services, Office of the Inspector General (“HHS OIG”). The excess billing was confirmed by the HHS OIG investigation, as well as a self-audit conducted by Carthage.

This matter is assigned to Assistant U.S. Attorney Charles E. Roberts. News inquiries should be directed to Executive Assistant United States Attorney John Duncan, tele. (315) 448- 0672.

Lottery Fraud Scheme Targeted Elderly Victims

ALBANY, NEW YORK – A federal grand jury returned an indictment yesterday charging DOUGLAS WATSON, 30, of Albany, NY, with three counts of mail fraud in connection with an “advance-fee scam” that targeted elderly victims, announced United States Attorney Richard S. Hartunian, United States Postal Inspection Service - Boston Division Inspector-in-Charge Shelly Binkowski, and Homeland Security Investigations Assistant Special Agent-in-Charge Nicholas DiNicola. If convicted, WATSON faces up to twenty years in prison and a fine of up to $250,000 on each count. WATSON was arraigned in Albany on Thursday, July 10, 2014, before United States Magistrate Judge Christian F. Hummel and was released on a $25,000 secured bond.

According to the indictment, WATSON received at least $25,000 from elderly victims in Massachusetts and Washington, D.C. who sent him money through the United States Mail after being told that they had won the lottery and needed to pay “taxes” and “fees” to claim their winnings. In reality, they had not won any lottery.

The charges are merely accusations and the defendant is presumed innocent until and unless proven guilty.

The indictment resulted from an investigation conducted by the United States Postal Inspection Service and Homeland Security Investigations, with the assistance of the Pittsfield, Massachusetts Police Department. The case is being prosecuted by Assistant United States Attorney Sean O’Dowd.

RICHARD S. HARTUNIAN, United States Attorney, Northern District of New York announces that ROBERT A. WILLIAMS (22, of Watertown, NY) entered a guilty plea to the felony offenses of being a convicted felon in possession of firearms and ammunition, in violation of Title 18, United States Code, Section 922(g)(1), and using and carrying a firearm during and in relation to a crime of violence, in violation of Title 18, United States Code, Section 924(c)(1)(A). The defendant is facing a statutory maximum of life, a mandatory minimum of 25 years imprisonment and a maximum fine of $250,000.00 per count of conviction. WILLIAMS is scheduled to be sentenced on November 14, 2014, before the Honorable Glenn T. Suddaby in Syracuse, NY.

During the plea hearing on July 8, 2014, WILLIAMS admitted the following. On July 31, 2013 at approximately 12:41 am, WILLIAMS and another male entered Sunoco located at 1222 Washington Street, Watertown, New York intending to commit a robbery. After entering Sunoco, WILLIAMS pointed a sawed-off 12 gauge shotgun at the store clerk and stated “give me your money.” The clerk then opened the cash register drawer and placed approximately $513.00 in United States currency in a store bag. At the same time, the other male removed approximately $395.00 in tobacco products from behind the counter and instructed the clerk to get on the floor.

WILLIAMS further admitted that he had also possessed a Remington rifle and a Savage shotgun at his Watertown residence. In 2012, WILLIAMS was convicted in Jefferson County Court of four counts of Third Degree Burglary.

This prosecution resulted from an investigation conducted by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, Syracuse, New York, the Watertown Police Department and the Metro-Jefferson Drug Task Force. The case was prosecuted by Assistant United States Attorney Ransom P. Reynolds. Further questions may be directed to Executive Assistant U.S. Attorney John Duncan at (315-448-0672).

Owner of Tebbs Head shops Sentenced to 87 Months

SYRACUSE, NEW YORK – RICHARD S. HARTUNIAN, United Sates Attorney, Northern District of New York, announces that JOHN TEBBETTS, age 34, of Rome, NY, was sentenced today in U.S. District Court in Syracuse to 87 months imprisonment, followed by 3 years of supervised release, for distributing synthetic drugs from his 12 head shops.

As part of his plea, TEBBETTS admitted to owning several Tebbs head shops in Central New York and Maine, as well as a warehouse in Oneida. TEBBETTS admitted that he possessed the Schedule I controlled substances: AM-2201, JWH-122, JWH-203, and JWH-250, all synthetic cannabinoids (commonly referred to as “Spice” or “K2”) with the intent to distribute these products. TEBBETTS also admitted to possessing controlled substance analogues (synthetic cathinones, commonly known as “Bath Salts”) with the intent to distribute them and intending that these substances be used for human consumption. Lastly, TEBBETTS admitted to purchasing a 2012 motor home for over $157,000.00 which was cash proceeds from his illegal sale of controlled substances and controlled substance analogues. As part of his plea, TEBBETTS agreed to forfeit six vehicles, including the motor home, and over $314,000.00.

These prosecutions resulted from a lengthy investigation undertaken in the spring of 2012 by the Syracuse Resident Office of the Drug Enforcement Administration (DEA), along with the Onondaga County Sheriff’s Office, and the Department of Homeland Security.

Further questions or inquiries may be directed to Assistant United States Attorney Carla Freedman, the prosecutor handling the case, at (315) 448-0672.

Transported a Confidential Source Who Claimed to Possess Cocaine in an FBI Sting

ALBANY, NEW YORK —CHARLES E. FULLER, age 46, of Corinth, New York, was sentenced today by Chief United States District Court Judge Gary L. Sharpe to five years in prison for attempting to aid and abet the possession with intent to distribute a controlled substance, announced United States Attorney Richard S. Hartunian and Andrew W. Vale, Special Agent-in-Charge, Federal Bureau of Investigation, Albany Division.

As Fuller admitted during his August 20, 2014 guilty plea, in February of 2014, while he was employed as a Saratoga County Deputy Sheriff, he accepted a total of $5,000 from a confidential source supervised by the Federal Bureau of Investigation (“FBI”) as payment for transporting the confidential source while the source was carrying what Fuller believed to be cocaine. The source actually had imitation cocaine. The defendant made two trips from Albany to Warren County: one on February 19, 2014 and one on February 27, 2014. During the first trip, the defendant drove the source with what he believed to be 250 grams of cocaine in return for $1,000, and during the second trip, the defendant transported the source with what he believed to be one kilogram of cocaine in return for $4,000.

This prosecution resulted from an investigation conducted by the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Daniel Hanlon.

SYRACUSE, NEW YORK - This morning, agents from the Federal Bureau of Investigation, Syracuse Office, and the United States Postal Inspection Service, arrested BRIAN DANIEL NORTON, age 59, of Cicero, New York, on federal felony charges of mailing threatening communications and transmitting false information and hoaxes in violation of 18 U.S.C. §876(c) and 1038(a), respectively, according to United States Attorney Richard S. Hartunian.

The charges relate to conduct by Norton in mailing 21 threatening letters containing white powder, alleged to be either anthrax or ricin to various addresses in the Syracuse, New York area and elsewhere beginning in about 1997 and continuing through 2012. Those receiving the letters included LeMoyne College and Bishop Ludden High School in Syracuse, as well as U.S. Senator John McCain, then-Secretary of Defense Robert Gates and former Congresswoman Ann Marie Buerkle. Later analysis of the powder contained in the letters proved that it was harmless.

Norton made an initial appearance in U.S. District Court in Syracuse before the Hon. David E. Peebles today. If convicted, Norton faces a maximum possible sentence of ten years incarceration. He is being detained pending a detention hearing scheduled for Monday, June 16th at 11am.

The case is being investigated by the Federal Bureau of Investigation, Syracuse Resident Office and the United States Postal Inspection Service, Syracuse Office, and prosecuted by Assistant United States Attorney Stephen C. Green.

For additional information, contact Executive Assistant U.S. Attorney John G. Duncan at 315-448-0672.

The charges in the Complaint are merely accusations and the defendant is presumed innocent unless and until proven guilty.

ALBANY, NEW YORK – CHRISTOPHER J. WHITE, age 29, of Whitehall, New York, was sentenced today to 15 years in prison for receiving child pornography by United States District Judge Mae A. D’Agostino, announced United States Attorney Richard S. Hartunian, Joseph D’Amico, Superintendent of the New York State Police, and Andrew W. Vale, Special Agent in Charge of the Albany Division of the Federal Bureau of Investigation. WHITE must also serve a life term of supervised release and register as a sex offender.

As part of his February 24, 2014, guilty plea, WHITE admitted that, following his 2010 Attempted Sexual Abuse in the First Degree conviction in Saratoga County Court, he used the Internet to search for, receive, and view images of child pornography.

This case was investigated by the New York State Police and the Federal Bureau of Investigation and was prosecuted by Assistant United States Attorney Jeffrey C. Coffman.

ALBANY, NEW YORK – DANIEL J. KEMPROWSKI, age 25, of Troy, New York, pled guilty today in Albany to one count of receipt of child pornography and three counts of possession of child pornography before Chief United States District Judge Gary L. Sharpe, announced United States Attorney Richard S. Hartunian and Andrew W. Vale, Special Agent in Charge of the Albany Division of the Federal Bureau of Investigation.

KEMPROWSKI, who was detained pending his sentencing, faces at least five years and up to 80 years of imprisonment, a lifetime term of supervised release, and fines of $250,000 on each of the four counts. He must also register as a sex offender. KEMPROWSKI will be sentenced in Albany, New York, on September 4, 2014.

As part of his guilty plea, KEMPROWSKI admitted that from June 2010 through September 2012, he downloaded still images and videos of child pornography through a file sharing program. On September 6, 2012, an investigator accessed file sharing network and downloaded four video files depicting child pornography from the defendant’s computer. On January 18, 2013, investigators searched KEMPROWSKI’s residence and recovered approximately 1,300 images and 185 videos depicting child pornography.

This case was investigated by the Federal Bureau of Investigation, Albany Division, and is being prosecuted by Assistant United States Attorney Jeffrey C. Coffman.

SYRACUSE, NEW YORK - United States Attorney Richard S. Hartunian announced that John Killingbeck, 63, of Utica, New York was sentenced in federal court in Utica today on two counts of receiving and three counts of possessing child pornography, stemming from his conviction on those charges in December following a jury trial.

United States District Court Judge, Hon. David N. Hurd sentenced Killingbeck to a total of 20 years in federal prison: concurrent sentences of 20 years on each of his convictions for receiving child pornography, to be served concurrently to 10 year sentences on each of the possession charges. The Court further ordered that upon release from federal prison Killingbeck will be placed on federal supervised release for an additional 20 years. He will also have to register as a sex offender.

Killingbeck’s arrest was the result of an investigation by the Oneida County Child Advocacy Center, Oneida County District Attorney’s Office, and the Utica Police Department. The case was adopted for federal prosecution by the United States Secret Service and the United States Attorney’s Office as a part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorneys’ Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc.

The federal prosecution was handled by Assistant U.S. Attorney Lisa Fletcher.

Colliersville Contractor Accepts Responsibility for Submission of False Certification to EPA in Connection With Construction of a Water Pump Station in the Village of Briarcliff Manor

ALBANY, NEW YORK – United States Attorney Richard S. Hartunian and Environmental Protection Agency (EPA) Inspector General Arthur A. Elkins, Jr. announced today that Jett Industries, Inc. (Jett) has paid the United States $500,000 to settle allegations that Jett violated the False Claims Act by falsely certifying compliance with the American Recovery and Reinvestment Act of 2009 (Recovery Act) in connection with a federally-funded contract it performed for the Village of Briarcliff Manor. Jett, a Colliersville-based general contractor, specializes in the construction and modification of water and wastewater treatment facilities.

In January 2009, Jett was awarded a contract to construct a water pump station for the Village of Briarcliff Manor (the Project). A component of the Project was a bladder surge tank, which was to be made, in part, of steel. Prior to the date Jett began construction on the Project, the company knew that it would be paid with Recovery Act funds and, as such, any steel used on the Project was required to be produced in the United States. As time went on, several Jett employees learned that the tank Jett ordered had been manufactured in France, and those same employees expressed concern amongst one another that installation of a French-manufactured tank on the Project may violate the Recovery Act’s “Buy American” provision. Nevertheless, Jett accepted delivery of and decided to install the non-compliant tank on the Project. A Jett employee later used a Jett computer to create a certification, purportedly from the tank’s manufacturer, which falsely asserted that the French-made tank had been manufactured in the United States. That same day, the same Jett employee sent the false certification to a consultant for the Village of Briarcliff Manor, falsely representing that the Project was compliant with the Recovery Act, so that Jett could obtain payment for the Project.

As part of the settlement, Jett admitted, acknowledged, and accepted responsibility for its actions, including an admission that one of its former employees created a false certification, and caused a third party to present that false certification to EPA, “to cover up Jett’s violation” of the requirement that all steel goods used on the Project be produced in the United States. Jett also agreed as part of the settlement to work with the Village of Briarcliff Manor to bring the Project into compliance with the Recovery Act.

United States Attorney Hartunian said: “Protecting taxpayer dollars is one of our core priorities. Companies that do business with the government must do so honestly, or suffer the consequences. The Recovery Act was designed to stimulate our Nation’s economy in the wake of an economic crisis unlike any since the Great Depression, and we will continue to pursue vigilantly those who misuse funds designated for that purpose. With today’s settlement, Jett has accepted responsibility for its misconduct and has agreed to fix a problem it alone created.”

“The American people trust that the laws of their land will be followed or, when they are not, violations will be rectified,” said EPA Inspector General Elkins. “This settlement is the result of a careful investigation and an excellent working relationship between the EPA Office of Inspector General and the United States Attorney’s Office for the Northern District of New York. I am most appreciative of that office’s support and look forward to working together in the future to ensure that public funds are used as intended.”

The investigation and settlement were the result of a coordinated effort between the United States Attorney’s Office for the Northern District of New York and EPA’s Office of Inspector General, with assistance from officials with the Village of Briarcliff Manor. The United States was represented by Assistant United States Attorney Adam J. Katz.

Defendant Faces Imprisonment term of 10 years to Life

BINGHAMTON, NEW YORK - United States Attorney Richard S. Hartunian announced that Edward Tilden, 32 years of age and from Utica, New York, pleaded guilty today in federal court to an offense charging him with Sex Trafficking Of A Child.

In pleading guilty, Edward Tilden admitted that in and about February of 2012, in the Broome, Oneida, and Onondaga counties in the Northern District of New York and elsewhere, defendant Tilden and others, aiding and abetting each other, while in and affecting interstate commerce, did knowingly recruit, entice, harbor, transport, provide, obtain, and maintain by any means a person with the initials M.L., who had not attained the age of 18 years, knowing, or in reckless disregard of the fact that M.L. would be caused to engage in one or more commercial sex acts, and did benefit, financially and by receiving things of value, from participation in the venture which has engaged in the act described above, in violation of Title 18, United States Code, §§ 1591(a) & (b) and 2.

Tilden further admitted that he and others, while aiding and abetting each other, knowingly recruited, enticed, harbored, transported, provided, obtained, and maintained a minor with the initials M.L., who was 16 years of age at the time, in order to prostitute M.L. to adult men in exchange for money and controlled substances. Tilden and the others photographed and caused M.L. to be photographed in sexually seductive poses wearing only lingerie and posted said photographs of M.L. on Backpage.com, an internet classified advertising website, offering M.L. for sex in exchange for money. Additionally, Tilden and the others utilized cellular telephones to send mass cellular texts offering M.L. for sex to customers in exchange for money. Furthermore, Tilden and the others transported and caused M.L. to be transported to various locations including hotels where M.L. was instructed and caused to engage in commercial sex acts, in that, M.L. engaged in sexual acts including intercourse and oral sex with customers in exchange for money and controlled substances. Tilden and the others benefitted, both financially and by receiving things of value, by prostituting M.L. to customers, in that, Tilden and the others shared the money and controlled substances acquired from customers with whom M.L. was caused to engage in sex acts.

The federal charge stems from an investigation conducted by the FBI-Albany Division, New York State Police, Oneida County District Attorney’s Office, Utica Police Department, and the Oneida County Child Advocacy Center. The investigation concerned a prostitution ring involved in selling a minor to engage in sexual conduct in exchange for money and drugs. The prostitution ring utilized the website Backpage.com to advertise the prostitution. The ring also utilized a texting network to advertise their prostitution business. The Oneida County District Attorney has charged several other defendants with state crimes in connection to this overall joint investigation.

Edward Tilden continues to be held in the custody of the U.S. Marshal’s Service pending sentencing. Tilden is scheduled to be sentenced on September 19, 2014. At sentencing, he faces a statutory mandatory minimum term of 10 years prison and a maximum of life. The maximum possible fine is $250,000.

ALBANY, NEW YORK – PAUL SCROM, age 63, of Albany, New York, pled guilty today in Albany before Senior United States District Judge Thomas J. McAvoy to one count of distribution of child pornography, announced United States Attorney Richard S. Hartunian and Andrew W. Vale, Special Agent-in-Charge of the Albany Division of the Federal Bureau of Investigation.

SCROM faces a statutory mandatory minimum sentence of five years and a maximum sentence of twenty years, as well as a lifetime term of supervised release, a maximum fine of $250,000, and mandatory registration as a sex offender. SCROM will be sentenced in Albany, New York on October 14, 2014.

As part of his guilty plea, SCROM admitted that he distributed images and movies of child pornography through a peer-to-peer file sharing program. On September 12, 2013, investigators searched SCROM’s residence and recovered numerous images and videos depicting child pornography.

This case was investigated by the Federal Bureau of Investigation, Albany Division and is being prosecuted by Assistant United States Attorney Wayne A. Myers.

ALBANY, NEW YORK – A federal jury in Albany found Joseph L. Bruno, the former New York State Senate Majority Leader, not guilty of honest-services mail fraud following a two week trial before the Honorable Gary L. Sharpe, Chief United States District Judge.

Today’s verdict follows a prior trial and two appeals. In December of 2009, a jury convicted Bruno of carrying out a scheme to defraud the State of New York and its citizens of the right to his honest services by soliciting private business from, and entering into financial relationships with, persons or entities who were pursuing interests before the New York State Legislature or other state agencies, and concealing and failing to disclose the existence and true nature of such financial relationships, and the resulting conflicts of interest, while taking discretionary official actions benefitting parties with whom he had those relationships. Then, in 2010, the United States Supreme Court decided United States v. Skilling, holding that the honest services statute criminalizes only fraudulent schemes involving bribes or kickbacks.

On November 16, 2011, the United States Court of Appeals for the Second Circuit issued an opinion vacating Bruno’s conviction and authorizing a retrial, as requested by the United States. The Court of Appeals noted that the jury had been instructed pursuant to the law in effect at the time of the trial, which had not required bribery or kickbacks to constitute honest services fraud, but the subsequent Skilling decision had changed the law. In determining that a retrial was proper, the Court of Appeals reviewed the case against the elements of honest services fraud as altered by Skilling and held that the evidence presented at trial was sufficient for a reasonable jury to find that Bruno engaged in a quid pro quo bribery scheme under the standard announced in Skilling.

On May 3, 2013, a federal grand jury returned a superseding indictment, and Bruno filed a motion to dismiss that indictment on double jeopardy grounds. Chief Judge Sharpe denied the motion, and Bruno filed an interlocutory appeal denied by the Second Circuit on August 6, 2013.

United States Attorney Hartunian said, “Although this was not the outcome we expected based on the evidence presented, we believe that justice is served when a case is fully and fairly adjudicated before an impartial, attentive jury who listened to facts that were presented and tested by talented lawyers on both sides of the issue; that is what happened here, and we accept the jury’s verdict. We bring cases based on the facts and the law, not popularity or other good works, and we do not shy away from difficult cases, especially those involving the conduct of public officials who intertwine personal business and the public trust. No less than the Court of Appeals for the Second Circuit examined this case and found that there was sufficient evidence of a quid pro quo bribery scheme for a reasonable jury to convict Mr. Bruno on these counts. As the history of this case demonstrates, whether Mr. Bruno’s conduct constituted a federal crime needed to be decided by a jury.”

The investigation which led to this indictment was conducted by the Albany Division of the Federal Bureau of Investigation. The United States was represented in this prosecution by Assistant United States Attorneys Elizabeth C. Coombe and William C. Pericak.

SYRACUSE, NEW YORK – The U.S. Department of Justice has declined to authorize a death penalty prosecution against David Renz in connection with a potential federal carjacking charge and the resulting murder of Lori Bresnahan on March 14, 2013, announced United States Attorney Richard S. Hartunian. The death penalty cannot be sought in any federal prosecution without prior written authorization of the Attorney General. Renz will now be sentenced in Onondaga County Court to imprisonment for life without parole based upon his pleas of guilty to first degree murder and predatory sexual assault against a child.1

United States Attorney Richard S. Hartunian stated, “No sentence that could ever be imposed in this case will undo the tragic death of Lori Bresnahan or the pain inflicted on the young victim, or adequately account for the depravity of the crimes committed. The mandatory life sentence in state court and the imposition of an additional 30 year federal consecutive sentence will insure that David Renz can do no further harm.”

All federal criminal prosecutions that carry a potential sentence of death are thoroughly reviewed pursuant to a detailed protocol established by the Department of Justice and involve careful consideration of applicable statutory mitigating and aggravating factors, the federal interest, and all the relevant facts and circumstances. The United States Attorney assembles and analyzes the evidence and applicable law, defense counsel is afforded an opportunity to submit matters in opposition to the death penalty, and the victim’s family is consulted and the views of family members taken into consideration. Following review by the Department’s Capital Case Section, the matter is forwarded to a committee of senior Justice Department lawyers, the Attorney General’s Capital Case Review Committee. The Review Committee then makes its recommendation to the Attorney General, who makes the final decision regarding whether to seek the death penalty.

For further information contact Executive Assistant United States Attorney John G. Duncan at (315)448-0672.

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1On April 10, 2013, an Onondaga County grand jury returned a 37-count indictment that charged Renz with kidnapping, rape, criminal sexual act, murder, and sexual assault related to the attack and murder. On July 17, 2013, Renz entered a plea of guilty in New York State court to first-degree murder and predatory sexual assault against a child, with an agreed-upon sentence of life imprisonment without the possibility of parole. Renz and the Onondaga County District Attorney’s Office agreed that Renz could withdraw his state guilty plea if the federal government sought the death penalty against him.

ALBANY, NEW YORK – JEFFREY GUNDEL, M.D., of Gansevoort, New York, was arrested today and charged with unlawful distribution of oxycodone, announced United States Attorney Richard S. Hartunian and James J. Hunt, Acting Special Agent-in-Charge of the Drug Enforcement Administration, New York Division. Following an initial appearance before United States Magistrate Judge Christian F. Hummel, GUNDEL was released on conditions. If convicted, GUNDEL faces up to twenty years in prison, a fine of up to $1,000,000.00, and a term of supervised release.

The investigation is being conducted by the Drug Enforcement Administration.

The charges are merely accusations, and the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt in court.

SYRACUSE, NEW YORK - Richard S. Hartunian, United States Attorney for the Northern District of New York, announced today that Mark Anselm, 37, of Clayton, N.Y., was sentenced to seven years in prison before the U.S. District Judge Glen T. Suddaby after having pled guilty to six felony offenses that charged him with making false statements to officials of the United States Coast Guard, possession and use of an altered merchant marine license, and aggravated identity theft. In addition, Anselm was sentenced to three years of supervised release following his release from prison. While in prison and thereafter Anselm has been directed to submit to mental health counseling and treatment.

In pleading guilty, Anselm admitted that during 2011 and 2012 he held himself out to federal officials, to various marina owners, and to other potential employers as being a licensed commercial ship pilot when he possessed no such license. Anselm admitted to having repeatedly presented fraudulent merchant marine licenses to employers and potential employers that he had altered to substitute his name. With his false licenses, he gained employment and captained various commercial ships on Lake Ontario including operating a tour boat within the 1000 Islands. His criminal conduct was discovered by the Coast Guard after he grounded a tug boat in Canadian waters on June 19, 2012 that he falsely claimed he owned. The ensuring investigation revealed numerous instances of Anselm holding himself out as a licensed commercial merchant marine captain based upon licenses that he had forged.

This case was investigated by Special Agents of the Coast Guard Investigative Service, Buffalo Field Office and Department of Homeland Security, Office of the Inspector General. Prosecution is being handled by Assistant United States Attorney Craig A. Benedict. Mr. Benedict may be contacted for questions regarding this case at 315-448-0726.

Defendant Used his Computer and the Internet to Download and Save Dozens of Child Pornography Files

ALBANY, NEW YORK — TIMOTHY TEFFT, age 65, of Greenwich, New York, pled guilty today in Albany before Chief United States District Court Judge Gary L. Sharpe to one count of receiving child pornography, announced United States Attorney Richard S. Hartunian and Andrew W. Vale, Special Agent-in-Charge, Federal Bureau of Investigation, Albany Division. TEFFT faces at least five years of imprisonment and up to a maximum sentence of twenty years of imprisonment. TEFFT was detained pending his sentencing.

During the plea hearing, TEFFT admitted that between January 1, 2009 and May 3, 2011, he accessed the Internet and downloaded and possessed, from various websites, dozens of files that contained child pornography. TEFFT further admitted that on occasion he would save the child pornography files onto a thumb drive in order to view the files at a later time.

Sentencing is scheduled for September 3, 2014, at 9:00 a.m. in Albany, New York. This case was investigated by the Federal Bureau of Investigation. This case is being prosecuted by Assistant United States Attorney Rick Belliss.

Local Karate Instructor Admits to Producing Child Pornography

PLATTSBURGH, NEW YORK – Ryan Staples, 37, of Chateaguay, pled guilty to three counts of production of child pornography today in United States District Court in Albany, New York, announced United States Attorney Richard S. Hartunian and Homeland Security Investigations Special Agent in Charge James Spero.

United States Attorney Richard S. Hartunian stated: “We will continue to aggressively pursue anyone and everyone who seeks to traumatize and sexually exploit our children. I commend the Department of Homeland Security and their investigators who worked so hard to bring this defendant to justice.”

“Child pornography creates a permanent record of a child’s sexual exploitation and each time it’s shared online, that child is victimized again," said Spero. "Traumatizing children for sexual purposes is one of the most despicable crimes HSI investigates. HSI will continue to relentlessly pursue child predators to rescue innocent victims and bring their abusers to justice.”

STAPLES faces a statutory mandatory minimum sentence of imprisonment for fifteen years on each count and a maximum sentence of imprisonment for thirty years on each count, a lifetime term of supervised release, a maximum fine of $250,000 on each count, and mandatory registration as a sex offender. STAPLES, who was remanded, will be sentenced in Albany on September 11, 2014 by United States District Judge Thomas J. McAvoy.

Staples pled guilty to three counts of production of child pornography involving three different victims. Staples admitted that he videotaped and took photographs of himself engaged in sexually explicit conduct with the three minor victims.

This prosecution resulted from an investigation conducted by the Department of Homeland Security, Homeland Security Investigations, Rouses Point. The case was prosecuted by Assistant United States Attorney Katherine Kopita.

Retired State Worker’s Child Pornography Collection Included
Thousands of Images and Over 800 Movies

ALBANY, NEW YORK – Today, a federal jury trial that began Monday ended in the conviction of STEPHEN J. KONN, 63, of Clifton Park, New York, of the felony offenses of distribution of child pornography, receipt of child pornography, and possession of child pornography, announced United States Attorney Richard S. Hartunian and Andrew W. Vale, Special Agent-in-Charge of the Albany Division of the Federal Bureau of Investigation.

KONN faces a statutory mandatory minimum sentence of imprisonment for five years and a maximum sentence of imprisonment for twenty years for each of the distribution and receipt convictions, and a maximum sentence of imprisonment for ten years for the possession conviction, as well as a lifetime term of supervised release, a maximum fine of $250,000, and mandatory registration as a sex offender. KONN, who was remanded, will be sentenced in Albany on September 4, 2014 by United States District Judge Mae A. D’Agostino.

The evidence presented at trial showed that KONN, a retired employee from the New York State Department of Taxation and Finance, used a peer-to-peer file trading program to distribute child pornography to an undercover FBI agent via the Internet. A subsequent search of KONN’s Clifton Park residence uncovered a computer containing over 4,000 images and 800 videos of child pornography, and evidence that KONN had been trading child pornography over the Internet for years.

This prosecution resulted from an investigation conducted by the Federal Bureau of Investigation, Albany Division. The case was prosecuted by Assistant United States Attorney Wayne A. Myers.

Habakkuk Nickens -240 Month Sentence

SYRACUSE, NEW YORK –

RICHARD S. HARTUNIAN, United States Attorney, Northern District of New York, announces the sentencing of HABAKKUK NICKENS, age 28, of Syracuse, NY, an admitted member of the V-NOT Gang. NICKENS previously pled guilty to an indictment which charged him and ten others with conspiring to exploit their membership in the V-NOT Gang to engage in a pattern of racketeering activity which included acts of murder, drug trafficking, and robbery. NICKENS was sentenced today to 240 months in prison.

NICKENS, who was known on the street as “HB,” previously admitted his involvement in many acts, including being present when brother and co-defendant TITUS NICKENS possessed a gun; assaulting and stealing a .50 caliber handgun from a victim along with co-defendants RIADDA TRAVET and CHRISTOPHER MIKE; possessing a .38 caliber handgun; firing a handgun in the vicinity of West Brighton Avenue; participating, along with co-defendants CHRISTOPHER MIKE, JEFFREY POWELL, KAHARI SMITH, TITUS NICKENS, KENNETH JACKSON, DWAYNE HESTER, and others, in a gang fight against Bricktown Gang members on October 23, 2010; and being the driver of a vehicle at the time passenger and co-defendant KAHARI SMITH fired several shots into a rival gang member’s car, with others present including co-defendants JEFFREY POWELL, WILLIE SANDERS and one other person, which resulted in the death of Kihary Blue and the wounding of Bricktown Gang member Jarrell Williams.

All the other indicted V-NOT members previously pled guilty and have been sentenced.

The Indictment to which NICKENS pled alleges that from at least 2003 through May 2012 members of the V-Not Gang: (1) maintained a specific geographic territory within the City of Syracuse in which only gang members can sell crack cocaine and marijuana; (2) protected that exclusive crack distribution territory with violence; (3) obtained drugs from various suppliers; (4) projected a very violent attitude and responded to violence with violence in order to preserve their stature in the gang community; (5) used graffiti, hand signs, and tributes on their clothing to slain gang members to signify their gang membership; (6) used criteria such as a willingness to use violence, ability to sell drugs, and familial connections to determine membership; and (7) routinely carried and used firearms in connection with their gang activity.

There are multiple acts of violence and drug distribution set forth in the Indictment, including 1 murder, 10 other shootings, 8 other acts of gun possession, and 18 acts of crack distribution and/or possession with intent to distribute crack.

This prosecution resulted from a long-term investigation conducted by the Syracuse Gang Violence Task Force, which is comprised of agents and detectives from the following agencies: the Syracuse Police Department, the Onondaga County Sheriff's Department, the New York State Troopers, the United States Marshals Service and the United States Department of Justice, Bureau of Alcohol, Tobacco, and Firearms (Syracuse Office). The Onondaga County District Attorney’s Office also assisted in the investigation.

Further questions or inquiries may be directed to Assistant U.S. Attorney, Carla Freedman, who is handling the case, at (315) 448-0672.

SYRACUSE, NEW YORK – United States Attorney Richard S. Hartunian announced that DEAN STEPPELLO, was sentenced before the Honorable Norman A. Mordue in U.S. District Court in Syracuse, New York to 63 months incarceration following his conviction of federal felony drug charges. STEPPELLO was also ordered to serve a three year term of supervised release following his term of incarceration and to pay a $200 special assessment.

STEPPELLO, 43, of Utica, New York was convicted on September 19, 2013, of two counts of Possession of Cocaine with Intent to Distribute following a four day jury trial. The jury also found he possessed over 500 grams of cocaine, requiring a mandatory minimum sentence of five years imprisonment.

The defendant was arrested by members of the New York State Police Community Narcotics Enforcement Team (“CNET”) in Utica as he attempted to deliver four ounces of cocaine. A subsequent search of the defendant’s residence resulted in the recovery of an additional pound and three quarters of cocaine, drug paraphernalia, a shotgun and four thousand dollars in cash.

The case was investigated by the New York State Police Community Narcotics Enforcement Team and was prosecuted by Assistant U.S. Attorneys Richard R. Southwick and Tamara B. Thomson. The Oneida County District Attorney’s Office also assisted in the prosecution of this matter.

ALBANY, NEW YORK – GLENN RICHARD UNGER, 62, of Ogdensburg, New York, was sentenced to 97 months imprisonment by Senior U.S. District Judge Thomas J. McAvoy, and ordered to pay $200,000 in restitution, announced Richard S. Hartunian, United States Attorney, Northern District of New York, and Kathryn Keneally, Assistant Attorney General of the Tax Division. On October 21, 2013, a U.S. District Court jury convicted UNGER of the following offenses: obstructing and impeding the Internal Revenue Service (IRS); filing false claims against the United States; tax evasion; and passing fictitious obligations.

The evidence at trial showed that:

• UNGER, a former orthodontist, engaged in a multi-year scheme to obstruct and impede the IRS by filing numerous false and fraudulent claims with the IRS for payment of a refund of taxes totaling approximately 36 million dollars. Between 2007 and 2011, UNGER filed 14 false tax returns claiming that he earned substantial income reported on IRS Forms 1099-OID, had substantial withholdings on that income, and was entitled to 36 million dollars in tax refunds. Despite numerous warning letters from the IRS that his returns were frivolous, he continued filing false tax returns.

• UNGER also attempted to evade payment of taxes he owed to the IRS. During 2004 and 2005, UNGER earned income and failed to file tax returns reporting that income. The IRS assessed taxes for those two years and also assessed penalties for filing frivolous tax returns. After the IRS filed a tax lien against UNGER, he attempted to file a false document with the Saratoga County Clerk’s office attempting to release the lien.

• UNGER also attempted to pay off a debt to another orthodontist with a fictitious document purported to be worth $200,000.

United States Attorney Hartunian said, "This lengthy prison sentence shows that tax defiers like Unger who use bogus tax schemes and pay debts with fictitious documents will be punished for their crimes. No one can set himself above the law for personal financial gain."

“Those who commit tax fraud by filing false and frivolous tax returns or failing to pay taxes risk criminal prosecution resulting in prison,” said Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division. “This sentence serves as one more example that tax defier conduct may result in severe repercussions, including imprisonment, restitution orders and fines.”

This prosecution resulted from an investigation conducted by the Internal Revenue Service, Criminal Investigation, New York Field Office, the Federal Bureau of Investigation, Albany Field Office, the New York State Police, and the Treasury Inspector General for Tax Administration. The case was prosecuted by Assistant United States Attorney Ransom P. Reynolds (NDNY) and Jeffrey Bender (DOJ Tax Division).

SYRACUSE, NEW YORK - United States Attorney Richard S. Hartunian announced that JOHANNA KUHLMANN pled guilty Friday, April 11, 2014, to the felony offense of Theft of Government Property, in violation of 18 U.S.C. § 641, before the Hon. David N. Hurd in the United States District Court in Syracuse, New York. Sentencing for KUHLMANN is scheduled for August 8, 2014. As a result of the conviction, KUHLMANN is facing a term of imprisonment of up to ten years, supervised release of up to three years, a fine of up to $250,000, and a special assessment of $100.

KUHLMANN admitted that she took books of stamp from the Weedsport Post Office and converted them to cash at the Port Byron Post Office. KUHLMANN also admitted that she received payments for post office box rental fees but did not enter them into the United States Postal Service deposits. In total, KULHMANN admitted that she stole and converted to her own use $9,697.63, of cash which belonged to the United States Postal Service, between October 1, 2008 and January 9, 2011.

KUHLMANN’s prosecution is the result of an investigation by the United States Postal Service Office of Inspector General. The prosecution was handled in the United States Attorney’s Office by Assistant U.S. Attorney Tamara B. Thomson.

Forfeits Nearly $10 Million Generated by Illegal Gambling Business

ALBANY, NEW YORK - Philip Gurian, 52, of Boca Raton, Florida, was sentenced today in United States District Court in connection with his previous guilty plea to conspiracy to commit money laundering, announced United States Attorney Richard S. Hartunian, Andrew W. Vale, Special Agent-in-Charge, Federal Bureau of Investigation, Albany Division, and Toni M. Weiracuh, Special Agent-in-Charge, Internal Revenue Service - Criminal Investigation Division, New York Field Office. United States District Judge Mae A. D’Agostino sentenced Gurian to time served, to be followed by supervised release for 3 years, and to pay a $100,000 fine. Gurian had been incarcerated since his arrest on April 10, 2013. As part of his plea agreement and sentence, Gurian also forfeited a total of about $9,974,307.

A co-defendant, Michele Lasso-Barraza, 30, of Parkland, Florida, was sentenced to probation earlier this month in connection with her role in the gambling enterprise and money laundering conspiracy. She forfeited her interest in $8 million and was ordered to pay a $25,000 fine. Lasso-Barraza, a Panamanian citizen, was also deported as a result of her conviction.

Gurian operated a large-scale illegal gambling business using internet websites which allowed bettors to place thousands of wagers from the capital area of New York, Florida, Indiana, California, Texas, and Nevada. Gurian and Lasso-Barraza laundered in excess of $8 million generated from the illegal gambling business by causing wire transfers to offshore accounts in Panama, Andorra, and the Cayman Islands. Some of the offshore accounts were in the names of sham entities and corporations created by Lasso-Barraza on behalf of Gurian.

Gurian was charged as the result of a joint investigation initiated by the Albany County Sheriff’s Office, and joined by the Albany County District Attorney’s Office, the Saratoga District Attorney’s Office, the Federal Bureau of Investigation, the Internal Revenue Service- Criminal Investigation, the Broward County Money Laundering Task Force, and the office of the United States Attorney for the Northern District of New York.

The case was prosecuted by Assistant United States Attorney Robert A. Sharpe.

SYRACUSE, NEW YORK - Stanley L. Cohen, an attorney with offices on Avenue D, New York City and Jeffersonville, New York, entered a guilty plea in United States District Court in Syracuse this morning to a felony offense of corruptly obstructing and impeding the Internal Revenue Service, according to United States Attorney Richard S. Hartunian and Acting IRS Criminal Investigations Special Agent-in-Charge Shantelle P. Kitchen.. Sentencing is scheduled in U.S. District Court on August 21, 2014 at 10:00 am before the Hon. Norman A. Mordue.

Under terms of a plea agreement, Cohen is to be sentenced to 18 months incarceration. He is also required within the next ten days to enter guilty pleas in the Southern District of New York to pending charges of failure to file income tax returns. As part of his agreement, Cohen is also required to pay all federal and state income taxes due and owing from the years 2005 through 2010. He has also waived any appeal and collateral attack of his conviction.

This case followed a lengthy investigation led by the Internal Revenue Service-Criminal Investigations, Syracuse Office. Investigators found that the defendant failed to file both federal and state tax returns for the years 2005-2010. In those years, he only filed a single extension to file his return and made only a modest payment towards taxes due and owing. He subsequently never filed state or federal tax returns for these six years.

In court, the government stated that its evidence revealed that in the tax year 2004, the last year Cohen filed an income tax return, he had claimed gross receipts of $289,000 when in fact investigators ascertained that he had deposits in excess of $426,000 for that year. Investigators determined that for the years 2004 through 2010, Cohen had deposits totaling $3,673,906.85 in his financial accounts.

In the course of the investigation, judicially authorized search warrants were executed at Cohen’s law office on Avenue D in New York City and his law office in his home in Jeffersonville, New York. Investigators found that essentially he kept no financial records regarding income or payment of fees from clients. From 2005 to 2010, he also failed to file either a 1099 or W2 for payments made to a law office assistant, who performed services for him during those years.

A search warrant executed on a safe deposit box that Cohen maintained in a bank in Jeffersonville, New York revealed that he had $50,000 in cash. Bank records revealed that Cohen accessed his safety deposit box 77 times from 2006 through 2008 and made deposits of cash totaling approximately $504,000 at that bank. Additional investigation revealed that approximately $183,500 of this amount was deposited by Cohen on days when he accessed his safety deposit box. On many occasions, Cohen made multi-thousand dollar cash deposits at the Jeffersonville bank and frequently exchanged small bills for $100 bills.

Additional evidence developed during the investigation revealed that Cohen made deposits of cash to his financial accounts as follows:

In 2004 he made in excess of $194,000 in cash deposits, in 2005 more than $237,000, in 2006 more than $321,000, in 2007 more than $395,000, in 2008 more than $405,000, in 2009, after the execution of the referenced search warrants, he deposited more than $54,000 and in 2010 more than $147,000 in cash. Many of these deposits were made in amounts under $10,000, thus avoiding the filing of currency transaction reports required under the law.

Investigators also found that Cohen would cause wire transfers of cash to his accounts to be made by clients, many of whom were residents of the Akwesasne Reservation. These wire transfers all made by MoneyGram from the Speedway Convenience Store located near the Reservation. The wire transfers totaled more than $643,000 between October 2004 and December of 2008.

United States Attorney Richard S. Hartunian stated, “As citizens, we all have an obligation to pay our fair share of taxes needed to support the United States. Stanley Cohen sought to avoid his tax obligations by consistently failing to file his federal and state tax returns over a six year period and by operating his law practice in a manner that corruptly hid millions of dollars in legal fees from the Internal Revenue Service. No citizen, especially an attorney, is above the law. The Internal Revenue Service has done a commendable job in helping to bring Mr. Cohen to justice.”

Acting Special Agent in Charge Shantelle P. Kitchen said, “The investigation and prosecution of individuals who brazenly attempt to obstruct the Internal Revenue Service and to prevent it from performing its mission is vital to maintaining public confidence in our tax system. In addition to serving as a warning to those who might contemplate similar activity, this outcome provides the honest American taxpayer with a timely reassurance that their government is committed to making sure that everyone pays their fair share.”

The case was investigated by the Internal Revenue Service-Criminal Investigations, Syracuse Office, the New York State Police and the Drug Enforcement Administration. The case was prosecuted by Assistant United States Attorneys Stephen Green and John Duncan.

For further information please contact Assistant U.S. Attorney John Duncan at 315-448-0672.