Southern District of Ohio
Press releases recorded for this federal judicial district.
Justice Department Announces Franklin County, Ohio, Sheriff's Office Has Fully Implemented Agreement Regarding Use of TasersRead the Press Release
The Justice Department announced today that it has jointly sought and received court approval to terminate a settlement agreement with the Franklin County Sheriff’s Office (FCSO) in Columbus, Ohio, regarding the deployment of tasers in the Franklin County jails. The move recognizes the successful implementation of reforms by the FCSO that resulted in a dramatic reduction in the use of tasers overall, as well as substantial improvements in policies, procedures, training and accountability and review mechanisms in those limited circumstances that tasers are used.
The settlement agreement resolved allegations that the FCSO inappropriately used tasers against detainees, including persons with disabilities, in violation of their constitutional rights. The allegations were initially brought in a class action lawsuit filed by Ohio Legal Rights Service (now Disability Rights Ohio), a federally designated protection and advocacy organization for persons with disabilities. The department filed a statement of interest and later intervened in the lawsuit under its enforcement authority under the Violent Crime Control and Law Enforcement Act.
The U.S. District Court of the Southern District of Ohio approved and entered the settlement agreement on Feb. 4, 2011. The agreement prohibited sheriff’s deputies from using tasers against any detainee who is not reasonably perceived to pose a threat to the safety of the deputy or others and is not resisting by use of physical force. The agreement further restricted the practice of using tasers against persons who question a deputy’s commands in a non-violent manner, or who remain in a limp or prone position. Critically, the settlement agreement prohibited the use of tasers against persons who are known or reasonably believed to be pregnant, are intoxicated due to drugs or alcohol, or are mentally ill or physically impaired. To achieve these reforms, the agreement detailed changes to FCSO’s policies, procedures, training, accountability and supervisory review mechanisms, including the use of de-escalation techniques, heightened reporting requirements by each deputy involved in a use of force and triggers for automatic higher-level review by the Internal Affairs Bureau.
On Dec. 24, 2015, the department joined the FCSO and Disability Rights Ohio in a motion to terminate the settlement agreement, citing the sheriff's sustained substantial compliance with the terms of the agreement for more than two years, as required by the agreement’s terms. On Dec. 28, 2015, the federal court granted the parties’ joint motion to terminate the settlement agreement in light of these improvements.
“We are pleased to see the Franklin County Sheriff's Office reform its use of force practices in its jails, especially with respect to persons with disabilities,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “The accountability mechanisms implemented through this agreement will ensure that the positive outcomes will be sustained long after the agreement is terminated.”
“The termination of this agreement illustrates the positive changes implemented by the Franklin County Sheriff's Office in its policies, training and accountability in regard to taser use, particularly when involving those with disabilities,” said U.S. Attorney Carter M. Stewart of the Southern District of Ohio.
Section 14141 authorizes the department to bring a lawsuit seeking remedies to eliminate a pattern or practice of misconduct by law enforcement agencies. The Civil Rights Division’s Special Litigation Section partnered with the U.S. Attorney’s Office of the Southern District of Ohio and attorneys with Disability Rights Ohio to investigate, negotiate and monitor the successful implementation of reforms to the use of tasers in the Franklin County jails.
Grove City Man Charged with Distributing HerionRead the Press Release
COLUMBUS, Ohio – Roman Hernandez, 38, of Grove City, appeared in U.S. District Court today on charges related to the distribution of more than 1,000 grams of heroin. A federal grand jury previously charged Hernandez in a three-count indictment.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Guy A. Ficco, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation, Cincinnati Field Office, Marlon V. Miller, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), Franklin County Sheriff Zach Scott and other members of Central Ohio HIDTA (High Intensity Drug Trafficking Area) Drug Task Force announced the indictment. The HIDTA Task Force is operated as part of the Ohio Attorney General’s Ohio Organized Crime Investigations Commission.
The indictment alleges that in April 2013 Hernandez possessed the heroin with the intent of distributing it. The defendant also allegedly possessed a firearm as a convicted felon and purchased criminally derived property worth more than $10,000, namely, a property on Manitoba Road in Columbus, Ohio.
Possession with intent to distribute more than 1,000 grams of heroin is a crime punishable by up to life in prison. Possessing a firearm as a previously convicted felon and engaging in monetary transactions in property derived from specified unlawful activity each carry a maximum sentence of up to 10 years imprisonment.
Hernandez was arrested in April and has been in custody since.
U.S. Attorney Stewart commended the investigation of this case by the Central Ohio HIDTA Task Force, and Assistant U.S. Attorney Timothy Prichard, who is prosecuting the case.
An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
Local Man Charged with Human Trafficking, Child PornographyRead the Press Release
COLUMBUS, Ohio – A federal grand jury has charged J’Vonta C. Buckley, 25, of Columbus, Ohio, with charges related to human trafficking and child pornography in an indictment returned in Columbus, Ohio.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Ohio Attorney General Mike DeWine and members of the Central Ohio Human Trafficking Task Force, including Columbus Police Chief Kim Jacobs and Franklin County Prosecutor Ron O’Brien announced the indictment returned last week.
The indictment alleges that the defendant recruited and harbored a 16-year-old victim, posted advertisements that depicted the child on the website Backpage.com to solicit customers for commercial sexual activity, and used her to create sexually explicit child pornography images with his cell phone. The indictment also alleges that Buckley used force, fraud or coercion against an adult female who also worked for him as a prostitute on Backpage.
Investigators with the human trafficking task force discovered Buckley in December 2014 while conducting a sting on a Backpage ad that they believed depicted a minor girl. The defendant was arrested at that time on a warrant for a gun charge and served a sentence for that charge that ended December 20, 2015.
Buckley’s initial appearance on the current charges was held yesterday in front of U.S. Magistrate Judge Norah McCann King.
He was charged with one count of sex trafficking by force, fraud or coercion, which carries a potential sentence of 15 years to life in prison, one count of sex trafficking of a minor, which carries a potential sentence of 10 years to life in prison, one count of production of child pornography, which carries a potential sentence of 15 to 30 years’ incarceration and one count of possession of child pornography, which carries a maximum sentence of 10 years imprisonment.
U.S. Attorney Stewart commended the investigation of this case by the Ohio Attorney General’s Ohio Organized Crime Investigations Commission Human Trafficking Task Force, which includes authorities from the Attorney General's Bureau of Criminal Investigation (BCI), U.S. Homeland Security Investigations, Columbus Division of Police, Ohio State Highway Patrol, Powell Police Department, The Franklin County Prosecutor’s Office and the Delaware County Prosecutor's Office. He also commended Assistant United States Attorney Heather A. Hill and Special Assistant United States Attorney Jennifer Rausch from the Franklin County Prosecutor’s Office, who are prosecuting the case.
An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
Former Frisch's Employee Pleads Guilty in Scheme to Embezzle Nearly $4MRead the Press Release
CINCINNATI – Michael Hudson, 53, of Cincinnati, Ohio pleaded guilty in U.S. District Court today to one count of wire fraud and one count of filing a false federal income tax return with the Internal Revenue Service (IRS) relative to a scheme to defraud Frisch’s Restaurants, Inc. (“Frisch’s”) by embezzling funds in excess of his authorized pay and compensation.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Guy A. Ficco, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation, Cincinnati Field Office, and Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Division, announced the plea entered into today before U.S. District Judge Michael R. Barrett.
According to court documents, between 1992 and 2014 Hudson was employed at Frisch’s and between 2004 and December 2014 Hudson was the assistant treasurer for Frisch’s. While serving as assistant treasurer, Hudson made unauthorized wire or ACH transfers of funds from the Frisch’s bank accounts for his own benefit. For example, on one occasion, Hudson transferred money from Frisch’s bank account to a bank account in the name of WPMH Properties, LLC, which was a business owned and controlled by Hudson.
In total, between 2008 and 2014 Hudson embezzled $3,905,930.11 from Frisch’s as a result of this fraud scheme.
In addition, Hudson filed a false 2009 income tax return with the IRS. Specifically, Hudson embezzled $323,936.19 from Frisch’s in 2009, but failed to report it as income on his 2009 income tax return.
Also, for the 2010 through 2013 income tax years, Hudson failed to file an income tax return with the IRS in an effort to evade the payment of income taxes related to the embezzlement scheme.
The total amount of income taxes due and owing for the 2009 through 2013 income tax years was $969,697.81.
For the fraud count, Hudson faces a maximum of 20 years in prison and a $250,000 fine or two times the loss. For the tax count, Hudson faces a maximum of 3 years in prison and a $100,000 fine.
“No matter what the source of income, all income is taxable,” said Guy A. Ficco, Acting Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. “The prosecution of individuals who intentionally conceal income and evade taxes is a vital element of the IRS’s enforcement strategy.”
U.S. Attorney Stewart commended the investigation by IRS-Criminal Investigation and the FBI, as well as Assistant United States Attorney Timothy S. Mangan, who is prosecuting the case.
Treasure Hunter Sentenced for Criminal ContemptRead the Press Release
COLUMBUS, Ohio – Thomas “Tommy” G. Thompson, 63, formerly of Columbus, Ohio, was sentenced in U.S. District Court to 24 months in prison for criminal contempt for failing to appear in court after being ordered to do so in connection with civil suits against him. Thompson was a fugitive until earlier this year when he was arrested by the U.S. Marshals Service.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, and Peter C. Tobin, United States Marshal for the Southern District of Ohio, announced the sentence imposed yesterday by U.S. District Judge Algenon L. Marbley.
According to court documents, U.S. District Chief Judge Sargus ordered Thompson to appear at an August 13, 2012 hearing in a federal civil case. At the 2012 hearing, Thompson was to provide an accounting of certain funds and the location of 500 re-strike commemorative gold coins as part of a lawsuit over the treasure that Thompson found from the SS Central America shipwreck. After Thompson failed to appear, a bench warrant for Thompson’s arrest was issued the same day.
In March 2013, an arrest warrant based on a criminal complaint alleging criminal contempt was authorized against Thompson.
U.S. Marshals tracked, found, and arrested Thompson and co-defendant Alison L. Antekeier, 47, also formerly of Columbus, Ohio, on January 27, 2015 in Boca Raton, Florida. Thompson and Antekeier – Thompson’s close associate – had been living in a Hilton hotel room under fake names and paying with cash.
The two pleaded guilty on April 8, 2015. As part of their plea, the couple agreed that $425,000 in cash seized at the time of their arrest would not be returned to them.
Thompson was also ordered to pay a fine of $250,000 and was sentenced to one year of supervised release following his prison term, along with 208 hours of community service. Shortly after the sentencing, a hearing was held to determine why Thompson should not be held in civil contempt for failing to comply with Judge Marbley’s order that Thompson assist the civil litigants in the identification and recovery of the 500 coins and other assets. Judge Marbley found that Thompson had not complied and ordered him jailed indefinitely and fined $1000 per day until he complies.
U.S. Attorney Stewart commended the investigation by the U.S. Marshals Service, as well as Assistant U.S. Attorney Douglas W. Squires, who is representing the United States in this case.
Owner of Fairfield Ohio Car Dealership Pleads Guilty to Money LaunderingRead the Press Release
CINCINNATI – Bryan Barbarawi, 35, of West Chester, Ohio, pleaded guilty to committing money laundering relative to the sale of a vehicle. Barbarawi faces a maximum prison term of 20 years and a fine of up to $250,000.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Joseph P. Reagan, Special Agent in Charge, Drug Enforcement Administration (DEA) and Guy A. Ficco, Acting Special Agent in Charge, Internal Revenue Service (IRS), Criminal Investigation, Cincinnati Field Office, announced the announced the guilty plea entered before U.S. District Judge Susan J. Dlott.
According to court documents, since February 2011 Barbarawi owned and operated a car dealership in Fairfield, Ohio under the names Nationwide Credit Solutions, LLC d/b/a Auto Max, Extreme Imports and Falcon Auto Sales, Inc.
On November 5 and 6, 2014, Barbarawi committed money laundering by concealing the source and ownership of the proceeds from narcotics trafficking, as represented to Barbarawi by an undercover law enforcement officer, while conducting a financial transaction. Specifically, Barbarawi sold a vehicle to an undercover law enforcement officer, who represented that the money used to purchase the car was drug proceeds.
Barbarawi received approximately $21,533.50 in cash from the sale of the vehicle and then caused an employee of his car dealership to fabricate a Form 8300 – Report of Cash Payments Over $10,000 Received in a Trade or Business, which falsely reported the purchaser of the vehicle and the source of the funds used to purchase the vehicle.
“IRS, Criminal Investigation focuses on the flow of money which ultimately leads us to the individual who attempts to conceal the true source of the money,” said Guy A. Ficco, Acting Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office.
U.S. Attorney Stewart commended the investigation of this case by the DEA and IRS, and Assistant United States Attorneys Jessica W. Knight and Karl Kadon, who are prosecuting the case.
Justice Department Agrees to Termination of Consent Decree Concerning Children in Ohio Juvenile Correctional FacilitiesRead the Press Release
WASHINGTON – The United States announced today that it has joined with the state of Ohio in seeking the termination of a consent decree with the Ohio Department of Youth Services (DYS), recognizing Ohio’s successful elimination of its use of disciplinary solitary confinement on children in its custody and its improvement of individualized mental health treatment for children formerly at risk of such confinement.
DYS pledged in the consent decree on May 21, 2014, to dramatically reduce and eventually eliminate its use of solitary confinement on children in its custody. DYS also committed to ensure that children in its juvenile facilities receive individualized mental health treatment to prevent and address the conditions and behaviors that led to solitary confinement. Ohio also committed to reduce the potential harms caused by solitary confinement by increasing access to therapeutic, educational and recreational services while a child is in solitary confinement and addressing the child’s behavior that led to acts of violence.
The consent decree resolved allegations that Ohio subjected children with mental health needs to harmful solitary confinement and withheld treatment and programming, in violation of their constitutional rights. The consent decree included performance standards to measure compliance, and the monitors in the United States and S.H. cases monitored compliance jointly. In the order of termination, the court concluded that Ohio had complied with the terms and conditions of the consent decree.
In granting the joint motion to terminate the consent decree, the U.S. District Court for the Southern District of Ohio noted the “remarkable improvement” in conditions of confinement at DYS juvenile facilities. The court commended DYS for numerous improvements, including the abolition of the practice of disciplinary solitary confinement, its “vastly improved” mental health services and a reduction in the incarcerated population from over 2000 children to fewer than 500 today. The experts who monitored the consent decree prepared and filed with the court a detailed report that explained the reforms DYS made “to memorialize [DYS’] major policy and practice decisions for the benefit of others in the field.”
“The state of Ohio, the administrators of the Department of Youth Services and their counsel are to be commended for their commitment to reforming Ohio’s juvenile correctional facilities,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “Ohio’s achievements can serve as a model throughout the nation.”
“The termination of this consent decree illustrates state and federal cooperation to provide safer practices for children in Ohio juvenile facilities,” said U.S. Attorney Carter Stewart of the Southern District of Ohio.
“We are gratified that we were able to work together with our state partners to make juvenile justice in Ohio more rehabilitative,” said U.S. Attorney Steven M. Dettelbach of the Northern District of Ohio.
The department first investigated conditions at Ohio juvenile correctional facilities in 2007 and found constitutional deficiencies in Ohio’s use of physical force, mental health care, grievance investigation and processing and use of solitary confinement. In June 2008, the department entered into a consent decree with Ohio to remedy these violations at two facilities that are now closed – the Scioto Juvenile Correctional Facility and the Marion Juvenile Correctional Facility. Simultaneously, private plaintiffs in the case S.H. v. Reed entered into a consent decree with Ohio regarding similar deficiencies at all of the state’s juvenile correctional facilities. However, between November 2013 and January 2014, data from the monitoring of both consent decrees revealed that Ohio had continued to use unlawful solitary confinement on children at Scioto and in the other facilities.
The Violent Crime Control and Law Enforcement Act of 1994 authorizes the department to seek a remedy for a pattern or practice of conduct that violates the constitutional or federal statutory rights of youth in juvenile justice institutions. Please visit the Civil Rights Division’s website to learn more about this act and other laws the Civil Rights Division enforces.
This agreement is due to the efforts of the Civil Rights Division’s Special Litigation Section, the U.S. Attorney’s Office of the Southern District of Ohio and the U.S. Attorney’s Office of the Northern District of Ohio. The agreement was also due to the work of plaintiffs’ counsel in S.H., Alphonse Gerhardstein of Gerhardstein & Branch Co. LPA and Kim Tandy of the Children’s Law Center Inc., and to the leadership of DYS.
Newark Man Sentenced for Receiving Child PornographyRead the Press Release
COLUMBUS, Ohio – Marion M. Kimball, 51, of Newark, Ohio, was sentenced in U.S. District Court to 144 months in prison and 10 years of supervised release for receiving child pornography.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, and Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Division, announced the sentence handed down today by Senior U.S. District Judge George C. Smith.
According to court documents, investigators executed a search warrant at Kimball’s home in February 2015 after undercover agents observed child pornography files being shared via peer-to-peer file-sharing programs at an IP address registered to the home. The titles of the files indicate the pornography involved children ages seven years old to 10 years old.
In total, investigators discovered more than 11,000 images and 230 videos of child pornography.
Kimball pleaded guilty on July 31, 2015 to one count of receiving child pornography.
This case is being brought as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the U.S. Attorneys Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
U.S. Attorney Stewart commended the cooperative investigation by the FBI Columbus Child Exploitation Task Force, which includes officers from the Westerville, Reynoldsburg and Powell Police Departments as well as Assistant United States Attorney Jessica H. Kim, who is representing the United States in this case.
Minnesota Man Sentenced for Computer Extortion Involving Confidential Pictures, VideoRead the Press Release
COLUMBUS, Ohio – Demonte Johntrell Latimore, 28, of St. Paul, Minn, was sentenced in U.S. District Court to 48 months in prison, to be served concurrently with a separate federal gun sentence, for threatening to impair the confidentiality of information obtained from a protected computer without authorization.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Division and Newark Police Chief Barry Connell, announced the sentence handed down today by U.S. District Judge Michael H. Watson.
According to court documents, a female student in a college library in Newark, Ohio had her laptop computer stolen. A few weeks later, the victim received an email from an unknown subject using the email address “iwant300dollars” that indicated that the sender had something the victim wanted back “very badly” and commented that the victim “had a lovely body.”
Latimore found explicit photos and a video of the victim that were on the laptop in a password protected folder. One of those photos was sent to the victim with a demand for $3,000 to prevent all of the photos and video being sent to her friends, co-workers and family as well as “every porn site available.”
The defendant created a Facebook account as “Payme ForSilence” and eventually posted a number of nude pictures and sex video of the victim and her boyfriend on the Facebook account. The FBI was able to get the Facebook account closed. Latimore and possibly others also continued to harass the victim via email, demanding money to prevent his wider distribution of the material.
Latimore was charged by information and pleaded guilty on July 8, 2015 to the one count of the computer extortion involving the confidential pictures and video.
U.S. Attorney Stewart commended the cooperative investigation by the FBI and Newark Division of Police, as well as Assistant United States Attorney Deborah Solove, who is representing the United States in this case.
Columbus Man Sentenced to 200 Months for Facilitating Prostitution, Gun ChargeRead the Press Release
COLUMBUS, Ohio – Carl R. Smith, Jr., 30, of Columbus, Ohio, was sentenced in U.S. District Court to 200 months in prison for transportation in interstate commerce for purposes of prostitution and possession of a firearm by a previously convicted felon. He was also sentenced to an additional 24 months for violating his existing supervised release, making his total sentence 224 months.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Ohio Attorney General Mike DeWine and members of the Central Ohio Human Trafficking Task Force, which is part of the Ohio Attorney General’s Ohio Organized Crime Investigations Commission, including Marlon V. Miller, Special Agent in Charge, U.S. Homeland Security Investigations, Columbus Police Chief Kim Jacobs and Colonel Paul Pride of the Ohio State Highway Patrol announced the sentenced handed down yesterday by U.S. District Judge Michael H. Watson.
According to court documents, during a traffic stop in July 2013 in which Smith was driving, law enforcement officers discovered an adult female passenger had a plastic baggie containing cocaine base and heroin. Based on information previously obtained through surveillance and confidential sources, it was believed that Smith was involved in directing the prostitution activities of the passenger and other females and that he had used the passenger during the traffic stop to conceal his supply of cocaine base and heroin.
Members of the Central Ohio Human Trafficking Task Force and the Columbus Police Department conducted an investigation of Smith’s suspected criminal activities between July 2013 and February 2014. A search warrant was executed at Smith’s residence in February 2014. While searching the residence, officers discovered Smith, who had been previously convicted of four felony offenses, was carrying a pistol. Numerous additional firearms and narcotics were seized from Smith’s residence during the execution of the search warrant.
During the course of the investigation leading up to the execution of the search warrant, officers conducted electronic and physical surveillance of Smith’s activities. During this surveillance, officers observed that Smith frequented various hotels in the Columbus, Ohio area where he had prostitutes working for him. Continued surveillance revealed that Smith also facilitated travel out of state to Pittsburgh and New York City, where his prostitutes engaged in sexual activity for hire. Smith attracted clients/johns for his prostitution business by posting numerous advertisements in the escort section of the Internet site backpage.com.
“The circumstances surrounding the defendant’s offenses showed the defendant to be a master of manipulating, dominating and preying on the weak and vulnerable, and using those he brought under his control purely for his own financial benefit,” Assistant U.S. Attorney Heather A. Hill told the court. “At its core, this case involves the defendant’s dedication to his own bottom line: he sold human beings and maintained his supply of human chattel through violence and the threat of drug withdrawal.”
Smith pleaded guilty to transportation in interstate commerce for purposes of prostitution and possession of a firearm by a previously convicted felon in April.
U.S. Attorney Stewart commended the cooperative investigation by the Central Ohio Human Trafficking Task Force, as well as Assistant United States Attorneys Heather A. Hill and Salvador A. Dominguez, who are representing the United States in this case.
U.S. Attorney’s Office Collects Nearly $55 Million for U.S. Taxpayers in Fiscal Year 2015Read the Press Release
COLUMBUS, Ohio – U.S. Attorney Carter M. Stewart announced today that the Southern District of Ohio collected nearly $55 million in criminal and civil actions in Fiscal Year 2015. Of this amount, nearly $46 million was collected in criminal actions and approximately $9 million was collected in civil actions.
Additionally, the Southern District of Ohio worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $49.7 million in cases pursued jointly with these offices. Of this amount, approximately $7 million was collected in criminal actions and $42.5 million was collected in civil actions.
Attorney General Loretta E. Lynch announced yesterday that the Justice Department collected $22.9 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2015.
The more than $22.9 billion in collections in FY 2015 represents more than seven and a half times the approximately $2.93 billion of the Justice Department’s combined appropriations for the 94 U.S. Attorneys’ offices and the main litigating divisions in that same period.
"The Department of Justice is committed to upholding the rule of law, safeguarding taxpayer resources, and protecting the American people from exploitation and abuse,” said Attorney General Loretta Lynch. “The collections we are announcing today demonstrate not only the strength of that commitment, but also the significant return on public investment that our actions deliver. I want to thank the prosecutors and trial attorneys who made this achievement possible, and to reiterate our dedication to this ongoing work.”
“The collection figures in our district and across the country highlight the Justice Department’s work to protect our citizens and safeguard taxpayer resources,” U.S. Attorney Stewart said. “We are dedicated to providing a valuable return on investment to the American people.”
The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal financial, health, safety, civil rights and environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Additionally, the U.S. Attorney’s office in Southern Ohio, working with partner agencies and divisions, collected nearly $18 million in asset forfeiture actions in FY 2015. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
‘Pill Mill’ Employees Plead Guilty to Oxycodone ChargeRead the Press Release
COLUMBUS, Ohio – Dr. David Rath, 60, of Alexandria, Ohio, and Karen Climer, also known as Karen D. Muncey and Karen D. Long, 58, of Columbus, each pleaded guilty in U.S. District Court to one count of conspiracy to illegally distribute oxycodone.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, and Joseph P. Reagan, Special Agent in Charge, Drug Enforcement Administration (DEA) and , announced the plea entered into today before U.S. Magistrate Judge Elizabeth Preston Deavers.
According to court documents, Rath was employed as a physician and Climer as an administrative employee at Columbus Southern Medical Clinic, which purported to be a “family medical practice.”
Rath supervised two physician assistants who were each seeing between 50-100 patients a day. Climer scheduled between 200 and 400 patients a day total, knowing that many of the patients were drug seekers addicted to oxycodone. The practice prescribed pain killers to these patients without properly examining, diagnosing and treating them. The clinic focused on a drug seeking patient population that was addicted to pain medications and other controlled substances.
It is estimated that half of the patients receiving controlled substances at the clinic were receiving them unlawfully. Climer also falsified drug tests for patients who tested positive for illegal drugs or who did not have the prescribed controlled substances in their system.
Each defendant faces a maximum prison sentence of 20 years in prison and a potential maximum fine of $1 million.
U.S. Attorney Stewart commended the cooperative investigation by the DEA Tactical Diversion Squad and Ohio Bureau of Workers Compensation, as well as Assistant United States Attorney Kenneth F. Affeldt and Department of Justice Trial Attorney Richard M. Rolwing, who are representing the United States in this case.
Columbus Man Sentenced on Marijuana, Money Laundering, Gun ChargesRead the Press Release
COLUMBUS, Ohio – Richard Spriggs, Sr., 47, of Columbus, was sentenced in U.S. District Court to 46 months in prison for conspiring to possess with intent to distribute marijuana, conspiring to commit money laundering and for the unlawful possession of a firearm. In addition, Spriggs was ordered to forfeit approximately $86,000 in cash, firearms and ammunition. Spriggs previously pleaded guilty to these charges on August 27, 2015.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Joseph P. Reagan, Special Agent in Charge, Drug Enforcement Agency (DEA), Troy N. Stemen, Acting Special Agent in Charge, Internal Revenue Service (IRS) Criminal Investigation, Cincinnati Field Office and Columbus Police Chief Kim Jacobs, announced the sentence handed down today by Senior U.S. District Judge George C. Smith.
According to court documents, Spriggs and others in an organization were responsible for distributing multiple kilograms of marijuana by use of Ohio residences, business fronts, commercial freight, semi tractor-trailers and vehicles. Spriggs and others transported in excess of 100 kilograms of marijuana to various places in Columbus, Ohio from suppliers in Houston, Texas. The drug shipments were disguised as hair care products, beauty supplies and whole grain rice.
During the execution of a search warrant, Spriggs and others were observed removing numerous packages, which contained approximately 500 kilograms of marijuana, that were concealed inside approximately 12-15 pool tables.
Spriggs used the drug proceeds to purchase assets and to fund bank accounts through the use of nominees. Spriggs purchased a residence by paying cash. In addition, Spriggs used pre-paid debit cards which he funded in another person’s name as his personal credit card and used them to purchase air travel, rent vehicles and pay for cellular telephone bills.
“The laundering of illegal drug profits is as important and essential to drug traffickers as the very distribution of their illegal drugs. Without these ill-gotten gains, the traffickers could not finance their organizations,” said Troy N. Stemen, Acting Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office.
U.S. Attorney Stewart commended the cooperative investigation by law enforcement, as well as Assistant United States Attorney Kenneth F. Affeldt, who is representing the United States in this case.
‘Pill Mill’ Operators SentencedRead the Press Release
CINCINNATI – Christopher Stegawski, 65, of Cleveland, and John Randy Callihan, 58, of Portsmouth, Ohio, were sentenced in U.S. District Court for running “pill mills.” Stegawski was sentenced yesterday to 160 months in prison and 10 years of supervised release. Callihan was sentenced today to 60 months in prison and five years of supervised release.
Carter M. Stewart, United States Attorney for the Southern District of Ohio; Ohio Attorney General Mike DeWine; Troy N. Stemen, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), A.J. Groeber, Executive Director of the State Medical Board of Ohio; and Steven W. Schierholt, Executive Director, Ohio Board of Pharmacy announced the sentences handed down today by U.S. District Judge Michael R. Barrett.
According to court testimony, beginning about November 2009 until May 2012, Stegawski and Callihan owned and/or operated a business initially known as Eastside Medical Specialist in Dayton, Ohio. In February 2010, the business moved to Lucasville, Ohio and the name was changed to Lucasville Medical Specialist. Stegawski took over the ownership of Lucasville Medical Specialist and listed his partner and co-conspirator, Callihan, as an employee.
Stegawski represented himself as a chronic pain management doctor at these clinics and an unnamed clinic located in Southpoint, Ohio. The clinics operated as “pill mills” by selling prescriptions for controlled substances, primarily oxycodone, without a legitimate need for the prescriptions. There was no valid doctor-patient relationship and many of the prescriptions were openly sold and diverted.
Stegawski had a DEA registration number that allowed him to order controlled substances for the clinics. Stegawski received a medical degree in Warsaw, Poland in 1977 and was purportedly trained to specialize in anesthesiology. The Ohio Board of Pharmacy has suspended and is pursuing permanent revocation of Stegawski’s license to practice medicine.
As many as 40 patients would visit the clinics each weekday. In some cases, customers traveled in excess of 200 miles roundtrip to obtain prescriptions from the doctor. Stegawski knowingly prescribed large amounts of prescription drugs to drug abusers and addicts, who were charged $200 cash per visit and received at most a cursory examination.
During the tenure of the pain clinics, many local pharmacies refused to honor any prescriptions written by Stegawski due to the “large quantities of narcotics” and his “catering to customers with prior drug abuse and arrest histories.”
A United States District Court jury convicted Stegawski in February of one count of conspiracy to distribute and dispense prescription drugs, one count of conspiracy to launder money and two counts of maintaining a place for illegal distribution of drugs.
Stegawski and Callihan were charged in an 11-count-indictment by a grand jury on May 16, 2012. Callihan pleaded guilty to conspiracy to distribute and dispense prescription drugs and money laundering.
Stewart commended the cooperative investigation by agents and officers of the agencies named above including IRS Special Agent Robert Mullins, Ohio Board of Pharmacy Agent Jesse Wimberly, the Ohio Bureau of Criminal Investigation in Attorney General DeWine’s Office, the DEA, Lawrence County Sheriff Jeff Lawless and the Sheriff’s Drug Task Force, Scioto County Sheriff Marty Donini, and the Riverside Police Department, as well as Criminal Chief Kenneth L. Parker and Assistant U.S. Attorney Timothy D. Oakley, who prosecuted the case.
Dayton Man Sentenced for Sophisticated Tax Fraud and Aggravated Identity Theft Scheme Involving the Online Purchase of Hundreds of Stolen IdentitiesRead the Press Release
DAYTON – Lance Ealy, 29, of Dayton, was sentenced in U.S. District Court to 124 months in prison, three years of supervised release and ordered to pay approximately $61,000 in restitution following convictions for access device fraud, wire fraud, aggravated identity theft and related charges arising from a sophisticated scheme in which he purchased hundreds of stolen identities online (including specifically targeting identities of the elderly and disabled) and used the identities to file more than 150 fraudulent federal income tax returns seeking refunds to which he was not entitled.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Troy N. Stemen, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), and Mark Porter, Special Agent in Charge, U.S. Secret Service announced the sentenced handed down last Friday by U.S. District Judge Michael Barrett.
After an initial investigation by the United States Secret Service determined that Ealy had purchased stolen identities from an illicit online source, he was arrested on a federal complaint in October 2013. A federal grand jury subsequently indicted Ealy in November 2013, charging him with one count of knowingly possessing 15 or more access devices with intent to defraud.
A further investigation by both Secret Service and the IRS determined that Ealy was using stolen identities that he had purchased online to file fraudulent federal tax returns and open fraudulent bank accounts in which to deposit the fraudulent tax refunds.
The investigation also determined that Ealy continued to engage in fraudulent activities while on bond, including, but not limited to using stolen personal identifying information to open fraudulent bank accounts, conduct fraudulent purchases using the victim's personal accounts, and opened financial accounts at numerous institutions.
As a result of Ealy’s conduct, Judge Barrett revoked Ealy’s bond in July 2014. The Secret Service’s and IRS’ additional investigation also resulted in a federal grand jury returning a Second Superseding Indictment against Ealy in September 2014.
Following a nearly two-week trial, a jury in the Southern District of Ohio convicted Ealy of all 46 charges in the Second Superseding Indictment in November 2014, including on one count of illegally possessing 15 or more unauthorized access devices, 11 counts of filing false claims for income tax refunds with the IRS, 14 counts of wire fraud, 14 counts of aggravated identity theft, one count of mail fraud, and one count of using unauthorized access devices to obtain $1,000 or more in a one-year period. An access device includes things such as payment cards and bank account numbers used to access financial accounts.
According to the testimony and evidence presented at trial, between approximately January 2013 and October 2013, Ealy engaged in a sophisticated scheme in which he electronically filed at least 150 fraudulent federal income tax returns, including returns filed using the personal information of others that he had unlawfully acquired from an illicit online source.
Ealy opened dozens of bank accounts at multiple financial institutions using the names and social security numbers of other individuals – without their knowledge or permission – in order to electronically deposit the fraudulent tax refunds. The evidence at trial also showed Ealy specifically targeted vulnerable individuals, including the elderly and disabled, who were less likely to realize that their identities had been stolen to file fraudulent tax returns or open fraudulent bank accounts. Ealy was also convicted on the charges (wire fraud and aggravated identity theft) arising from his fraudulent conduct while on bond.
During the course of the trial, Ealy became a fugitive after failing to appear on November 17, 18 and 19, 2014 (Ealy had been placed back on bond in October 2014). It was later determined that Ealy had removed his electronic monitoring device on November 15, 2014 and fled while under bond conditions. He was ultimately recaptured in late March 2015 in the Atlanta, Georgia area by the United States Marshal’s Service.
In June 2015, Ealy was indicted by a grand jury in the Southern District of Ohio on three counts of failure to appear in violation of 18 U.S.C. § 3146. He was subsequently convicted on all three counts following a bench trial before U.S. District Court Judge Thomas M. Rose that took place on October 22, 2015. Judge Rose issued a written verdict on November 4, 2015.
Ealy faces a sentence of up to 10 years in prison for his failure to appear convictions, which must run consecutive to the 124 month sentence that has been imposed by Judge Barrett. Judge Rose has scheduled sentencing in Ealy’s failure to appear case for February 6, 2016.
"Today’s announcement exemplifies IRS Special Agents' intense focus on the rigorous pursuit of identity theft and refund fraud," said Troy N. Stemen, Acting Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. "Lance Ealy perpetuated an elaborate scheme driven by insatiable greed and a blatant disregard for the tremendous damage inflicted on innocent victims. Be assured that IRS Criminal Investigation, together with our partners at the U.S. Attorney's Office and the United States Secret Service, will hold those who engage in similar behavior fully accountable."
U.S. Attorney Stewart commended the investigation of this case by the Secret Service and IRS-Criminal Investigation and Assistant U.S. Attorneys Alex R. Sistla and Andrew J. Hunt, who prosecuted the case.
Gahanna Woman Pleads Guilty to Illegally Receiving VA BenefitsRead the Press Release
COLUMBUS, Ohio – Rita Green, 55, of Gahanna, Ohio, pleaded guilty in U.S. District Court to theft of public money by illegally receiving Department of Veterans Affairs Dependency Indemnity Compensation benefits.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Gavin McClaren, Resident Agent in Charge, Department of Veterans Affairs Office of Inspector General (VA-OIG), Cleveland, Ohio, and Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Division, announced the plea entered into today before U.S. District Judge Algenon L. Marbley.
According to court documents, Green kept $89,646.22 of Department of Veterans Affairs Dependency Indemnity Compensation benefits to which she knew she was not entitled. Green’s mother was a recipient of the benefits, which are paid to surviving spouses of veterans who died in the line of duty or died from a disease or injury incurred or aggravated while on active duty. Those benefits were paid monthly to a bank account in the mother’s name.
Green’s mother died in 2009 but the VA, unaware of her death, continued depositing money into her account. Green kept the account open and converted this money to her own use by withdrawing funds and making purchases using a debit card in her mother’s name. Green also failed to disclose these VA payments on a Free Application for Federal Student Aid (FAFSA) submitted in 2012.
Theft of public money is a crime punishable by up to 10 years in prison and a $250,000 fine.
U.S. Attorney Stewart commended the investigation of this case by the VA-OIG and the FBI, and Assistant U.S. Attorney Peter Glenn-Applegate, who is prosecuting the case.
Financial Management Company Owner Pleads Guilty to Defrauding ClientsRead the Press Release
COLUMBUS, Ohio – Douglas E. Cowgill, 60, of Westerville, Ohio, pleaded guilty in U.S. District Court to wire fraud, theft or embezzlement from employee benefit plans, and perjury.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Division, James Vanderberg, Special Agent in Charge, U.S. Department of Labor – Office of the Inspector General, and Joseph Rivers, Cincinnati Office Director of the U.S. Department of Labor - Employee Benefits Security Administration, announced the plea entered into today beforeU.S. District Judge Michael H. Watson.
From July 2013 through August 2014, Cowgill was president and sole owner of Professional Investment Management (PIM), Inc. in Columbus, where he had been employed since July 1981.Cowgill used his positions at PIM to defraud investors and use their funds for his own use. From March 2008 through October 2013, he misappropriated approximately $840,575. He manually altered account balances in company software and wired the misappropriated funds to an account for his own use. Cowgill paid various personal obligations with the money, depositing the money into his bank accounts, bank accounts of his wife, and bank accounts of the Northwest Swim Club, a non-profit swim club in Columbus for which he served as the treasurer.
PIM had the funds of approximately 300 individual clients under management, and Cowgill’s fraudulent scheme harmed at least 125 victims.
Most of the victims had their money in one of approximately 15 retirement plans. Each of the retirement plans was a qualified employee pension benefit plan under the Employee Retirement Income Security Act of 1974, and Cowgill pleaded guilty to theft or embezzlement from employee benefit plans.
On January 23, 2014, Cowgill lied under oath before officers of the Securities and Exchange Commission (SEC) while the SEC was conducting an investigation to determine whether there had been violations of federal securities laws in connection with PIM.
In January 2014, in Columbus, Ohio, Cowgill gave a deposition in connection with the SEC’s investigation. As part of the deposition, Cowgill took an oath that he would testify truthfully and that all materials prepared by him in anticipation of his testimony were accurate and complete.
In connection with the deposition, Cowgill prepared responses to a background questionnaire that, in part, asked him to list all accounts in his name, in which he had any beneficial interest, or over which he had any control. In response, Cowgill failed to disclose his control of over five bank accounts associated with the Northwest Swim Club for which he was an authorized signatory. During his sworn deposition, Cowgill affirmed that his answers to the questionnaire were accurate, and again failed to disclose the five Northwest Swim Club accounts to the officers of the SEC. At the time of the deposition, Cowgill knew that the Northwest Swim Club had been a recipient of a substantial portion of the funds misappropriated by him. In doing so, Cowgill attempted to conceal his misappropriation of client funds from investigators.
Cowgill faces a maximum sentence of 20 years in prison for wire fraud. Theft or embezzlement from employee benefit plansand perjury are each crimes punishable by up to five years in prison.
U.S. Attorney Stewart commended the cooperative investigation by the FBI and the U.S. Department of Labor - Office of the Inspector General and U.S. Department of Labor - Employee Benefits Security Administration, as well as Assistant United States Attorney Peter Glenn-Applegate, who is representing the United States in this case. U.S. Attorney Stewart also commended the SEC for its work on the related civil matter, prior to the initiation of this criminal case.
Ohio-Based Tax Return Preparation Business Executive Pleads Guilty to Obstructing the IRSRead the Press Release
WASHINGTON - A Liberty Township, Ohio, resident pleaded guilty to one count of obstructing and impeding the Internal Revenue Code, announced Acting Deputy Assistant Attorney General Bruce M. Salad of the Justice Department’s Tax Division.
According to court documents, Kyle Wade, 44, was the former vice-president of franchising for Instant Tax Service (ITS), a tax preparation business that claimed to have over 1,100 franchise locations throughout the United States in 2009. Wade formerly owned multiple ITS franchises.
From Jan. 1, 2004 through Nov. 1, 2012, Wade and another individual executed a scheme to obstruct the Internal Revenue Service (IRS), wherein numerous ITS franchises filed false federal income tax returns without the permission of their taxpayer clients and without receiving a valid W-2 form from each client. The false returns included false and inflated sole proprietorship Schedule C income in an attempt to increase the Earned Income Tax Credit refund. Wade and another individual also created and presented false documents with the IRS, such as phony W-2 forms that were created by ITS employees using tax preparation software and various other false IRS forms containing forged signatures.
At his sentencing on a date to be determined later, Wade faces a statutory maximum sentence of three years in prison and a fine of $250,000.
The Tax Division commended the efforts of special agents of IRS – Criminal Investigation, who investigated the case and Senior Litigation Counsel Corey Smith and Trial Attorney Mark McDonald of the Tax Division, and Assistant U.S. Attorney Jessica Knight of the Southern District of Ohio, who are prosecuting the case.
Former Fugitive Convicted for Failure to AppearRead the Press Release
DAYTON – Lance Ealy, 29, of Dayton, was convicted of three counts of failure to appear. U.S. District Court Judge Thomas M. Rose issued his verdict today after a bench trial that took place on October 22, 2015.
A jury in the Southern District of Ohio convicted Ealy in November 2014 of buying stolen identities online and using the identities to file more than 150 fraudulent federal income tax returns seeking refunds to which he was not entitled.
Ealy failed to appear for his jury trial on November 17, 18 and 19, 2014. He became a fugitive on November 15, 2014, after he removed his electronic monitoring device and fled while under bond conditions. He was recaptured in late March 2015 in Georgia.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, United States Marshal Peter Tobin, Troy N. Stemen, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), and Mark Porter, Special Agent in Charge, U.S. Secret Service, announced the verdict reached today.
According to court testimony in the jury trial, between approximately January 2013 and October 2013, Ealy electronically filed at least 150 fraudulent federal income tax returns, including returns filed using the personal information of others that he had unlawfully acquired from an illicit online source. Ealy opened dozens of bank accounts at multiple financial institutions using the names and social security numbers of other individuals – without their knowledge or permission – in order to electronically deposit the fraudulent tax refunds.
The jury convicted Ealy of 46 charges, including one count of illegally possessing 15 or more unauthorized access devices, 11 counts of filing false claims for income tax refunds with the IRS, 14 counts of wire fraud, 14 counts of aggravated identity theft, one count of mail fraud, and one count of using unauthorized access devices to obtain $1,000 or more in a one-year period. An access device includes things such as payment cards and bank account numbers used to access financial accounts.
Ealy faces up to 10 years in prison on each count of possessing 15 or more unauthorized access devices with intent to defraud and using unauthorized access devices to obtain items of $1,000 or more in value; up to five years in prison on each count of filing false claims for income tax refunds with the IRS; up to 20 years in prison on each count of wire fraud and each count of mail fraud; and mandatory two-year sentences on each count of aggravated identity theft that must run consecutive to whatever sentence may ultimately be handed down. Each count of conviction also carries a fine of up to $250,000. Ealy is scheduled to be sentenced before Judge Michael R. Barrett on November 20, 2015 for his convictions in the underlying case.
He faces a sentence of up to 10 years in prison for his failure to appear convictions, which must run consecutive to the sentence of imprisonment for any other offense. Judge Rose has scheduled sentencing in Ealy’s failure to appear case for February 6, 2016.
Ealy was initially charged in a federal complaint filed on October 28, 2013 following an investigation by Secret Service agents that revealed that Ealy had purchased stolen identities from an illicit online source. A federal grand jury initially indicted Ealy in November 2013, charging him with one count of knowingly possessing 15 or more access devices with intent to defraud.
U.S. Attorney Stewart commended the investigation of this case by the United States Marshals Service, Secret Service and IRS-Criminal Investigation agents, and Assistant U.S. Attorneys Alex R. Sistla and Andrew J. Hunt, who are prosecuting the case.
Former Executive Director of Zanesville's Center for Child and Family Development Pleads Guilty to Stealing Program FundsRead the Press Release
COLUMBUS, Ohio – Melissa Daley, 45, of Nashport, Ohio, pleaded guilty in U.S. District Court to one count each of filing a false income tax return with the Internal Revenue Service (IRS), wire fraud and money laundering.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Troy N. Stemen, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), and Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Division, announced the plea entered into today before U.S. District Judge Gregory L. Frost.
According to court documents, since 1992 Daley acted as the Executive Director for the Center for Child and Family Development (CCFD), which was located in Zanesville, Ohio. CCFD, a non-profit organization, provided foster care and residential case services to children as well as adult care services.
In June 2009, on behalf of CCFD, Daley applied to the Ohio Department of Developmental Disabilities (DODD) to allow for CCFD to be a part of the Individual Options Waiver Program (I/O Waiver Program). This program allowed for continued care of adult individuals with mental or developmental disabilities and permitted qualified individuals to remain in their homes and obtain support for their disabilities rather than requiring them to live in an Intermediate Care Facility for the Mentally Retarded. The application was approved by DODD.
Between March 2011 and November 2012 Daley devised a scheme to defraud CCFD. Daley faxed a change of direct deposit form to the agency responsible for processing payments for the I/O Waiver Program, which was Ohio Shared Services (OSS). Included in the fax to the OSS was a request to change the direct deposit of I/O Waiver Program funds from the CCFD operating account into a different account. Daley included in her request a copy of a bank check and a bank letter purportedly signed by a bank representative confirming that the new account was a business account in the name of CCFD. However, the letter Daley submitted was fictitious, the bank representative was an individual who never worked for the bank and the bank account was not a business account in the name of CCFD, but rather, a personal checking account for Daley. In addition, Daley altered the bank check she submitted to OSS to make it appear as though the bank account belonged to CCFD and not to her. As a result of this fraudulent scheme, Daley received $71,977.31 of CCFD’s I/O Waiver funds that were deposited into her personal checking.
In addition, in August 2011, after having resigned from CCFD, Daley opened a new bank account in the name of CCFD and claimed she was the President of the organization. After opening the account, Daley again faxed a change of direct deposit form to OSS to have CCFD I/O Waiver Program funds deposited into her bank account. Once Daley received CCFD’s I/O Waiver funds she would immediately transfer the funds into another bank account in the name of Community Base Services, which was a newly formed entity created by Daley. As a result of this fraudulent scheme, Daley received an additional $296,115.00 of CCFD’s I/O Waiver funds into her personal bank account
Daley did not report any of CCFD’s I/O Waiver funds she fraudulently obtained on her 2011 or 2012 income tax returns. The total unreported income on Daley’s 2011 and 2012 income tax returns was $360,182.37 resulting in additional taxes due and owing to the IRS in the amount of $103,043.07.
“Operating a non-profit program does not give you a license to steal,” said Troy N. Stemen, Acting Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. “The conduct detailed in this case was egregious. This program was designed to help children and adults with their much needed continued care, and this defendant defrauded them for her own personal gain.”
Filing a false income tax return with the IRS is punishable by up to five years in prison and a $250,000 fine. Wire fraud is a crime punishable by up to 20 years in prison and $250,000 fine. Money laundering carries a maximum sentence of 10 years in prison and a $250,000 fine.
U.S. Attorney Stewart commended the cooperative investigation by the FBI and IRS, as well as Assistant United States Attorney Kenneth F. Affeldt, who is representing the United States in this case.
Akron Man Sentenced to 330 Months for Production of Child PornographyRead the Press Release
COLUMBUS, Ohio – Antonio L. Sibley, 38, of Akron, Ohio, was sentenced in U.S. District Court to 330 months in prison and 15 years of supervised release for production of child pornography.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, along with members of the Central Ohio Human Trafficking Task Force, including Ohio Attorney General Mike DeWine, Marlon V. Miller, Special Agent in Charge, U.S. Homeland Security Investigations, Colonel Paul Pride of the Ohio State Highway Patrol and Columbus Police Chief Kim Jacobs announced the sentence handed down today by U.S. District Judge Gregory L. Frost.
Sibley was convicted by a U.S. District Court jury following a weeklong trial in May.
According to court testimony, in July 2014, while Sibley was harboring a 17-year-old girl in a motel room in Whitehall, Ohio, he took sexually explicit photographs of her and advertised her on internet websites for paid sexual services. Members of the Human Trafficking Task Force found the girl during an undercover operation on July 31, 2014, and thereafter found the pornographic photographs Sibley had taken on a phone that was in the motel room. The victim testified that she and Sibley had been involved in a sexual relationship since she was 15 years old, and that Sibley had taken the pornographic photographs of her.
The jury convicted Sibley of production of child pornography, a crime punishable by a sentence ranging from a mandatory minimum 15 years in prison to 30 years in prison. The jury could not reach a verdict on a second charge of sex trafficking of a minor.
Sibley was arrested on August 11, 2014, by members of the Central Ohio Human Trafficking Task Force at the Casa Villa Motel in Whitehall, Ohio. He was indicted on September 11, 2014.
U.S. Attorney Stewart commended the investigation of this case by the Central Ohio Human Trafficking Task Force, which was formed in 2012 and is part of the Ohio Attorney General’s Ohio Organized Crime Investigations Commission, and also includes authorities from the Attorney General's Bureau of Criminal Investigation (BCI), Columbus Division of Police, Homeland Security Investigations (HSI), Powell Police Department, Federal Bureau of Investigation and the Delaware County Prosecutor's Office. Assistant United States Attorney Heather A. Hill and Special Assistant United States Attorney General Brant Cook, director of the Ohio Attorney General’s Crimes Against Children Initiative, represented the government in this case.
4 Columbus Gang Members Plead Guilty to MurderRead the Press Release
COLUMBUS, Ohio – Four Columbus men pleaded guilty to murder in connection to a racketeering case involving the organized criminal enterprise known as the Short North Posse.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Joseph P. Reagan, Special Agent in Charge, Drug Enforcement Administration (DEA), Donald J. Soranno, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Franklin County Prosecutor Ron O’Brien, and Columbus Police Chief Kim Jacobs, announced the pleas entered into today before U.S. District Judge Algenon L. Marbley.
Joseph Hill, 31, Christopher V. Wharton, 25, Troy A. Patterson, 24, and Ishmael Bowers, 33, each pleaded guilty to one count of murder in aid of racketeering. Hill also pleaded guilty to a second count of murder in aid of racketeering and conspiracy to commit racketeering. Wharton also pleaded guilty to possession with intent to distribute cocaine and marijuana and possession with intent to distribute marijuana.
Each of the defendants faces a potential maximum sentence of life in prison.
The four were charged by a superseding indictment in October 2014. Twenty individuals total were indicted in the racketeering case with charges that included murders, attempted murders, drug trafficking, weapons trafficking, extortion and robbery.
U.S. Attorney Stewart commended the two-year long investigation by federal, state and local law enforcement agencies, including the FBI, DEA, ATF, Columbus Police, Franklin County Sheriff Zach Scott’s Office, and Franklin County Prosecutor Ron O’Brien’s Office. Fairfield County Prosecutor Gregg Marx, Licking County Prosecutor Kenneth Oswalt, Muskingum County Prosecutor D. Michael Haddox, Ross County Prosecutor Matthew S. Schmidt, law enforcement leaders from those counties, and officials of the Ohio Department of Rehabilitation and Correction, as well as Assistant U.S. Attorneys David DeVillers, Kevin Kelley and Brian Martinez, as well as Special Assistant U.S. Attorney Jimmy Lowe with Franklin County Prosecutor O’Brien’s Office, who are prosecuting the case.
Kettering Woman Sentenced for Role in Pill RingRead the Press Release
DAYTON – Amanda R. Pappert, 31, of Kettering, Ohio, was sentenced in U.S. District Court to 18 months in prison and three years of supervised release for conspiracy to possess and distribute Oxycodone.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Ohio Attorney General Mike DeWine, Rocky Nelson, Director of the Ohio Organized Crime Investigations Commission, Wendell Willcox, Director, Tactical Crime Suppression Unit, Anthony Mohat, Supervising Agent in Charge, U.S. Department of Agriculture Office of Inspector General, Chicago Division, Kettering Police Chief Christopher Protsman, Centerville Police Chief Bruce Robertson and Germantown Police Chief Roy McGill, Jr. announced the sentence handed down today by U.S. District Judge Thomas M. Rose.
The Ohio Organized Crime Investigations Commission in Attorney General DeWine’s Office investigated the case.
According to court documents, Pappert became part of a conspiracy to fabricate, falsify and forge various Dayton based physicians’ prescriptions for Oxycodone, Hydrocodone and Alprazolam. The group would fill the prescriptions at various retail pharmacies throughout the Greater Dayton area. Once obtained, the prescription drugs would thereafter be sold to various drug dealers and addicts in return for cash and illegal narcotics.
Pappert pleaded guilty on June 5 to one count of conspiracy to possess and distribute Oxycodone. She was charged by one-count bill of information on April 21. Pappert was also ordered to complete 100 hours of community service.
Co-defendants in the conspiracy include: Christian P. Fannon, Brian A. Siler, Sandy Earnstean Bryson, Elaina Marie Morocho, Mandy Marie Ernestine McGhee, Sean Aaron Ring, Justin Michael Crouch and Candice Page Crouch.
U.S. Attorney Stewart commended the cooperative investigation by the task force agencies which include the Internal Revenue Service Criminal Investigation (IRS), the U.S. Department of Agriculture Office of Inspector General – Investigations, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Ohio Bureau of Criminal Investigation (BCI), the Ohio Investigative Unit, and the police departments in Centerville, Kettering, West Carrollton, Moraine and Oakwood, and the Tactical Crime Suppression Unit. He also commended Assistant U.S. Attorney Dwight Keller, who prosecuted the case.
Nearly 500 Hospitals Pay United States more than $250 Million to Resolve False Claims Act Allegations Related to Implantation of Cardiac DevicesRead the Press Release
WASHINGTON – The Department of Justice has reached 70 settlements involving 457 hospitals in 43 states for more than $250 million related to cardiac devices that were implanted in Medicare patients in violation of Medicare coverage requirements, the Department of Justice announced today.
“While recognizing and respecting physician judgment, the department will hold accountable hospitals and health systems for procedures performed by physicians at their facilities that fail to comply with Medicare billing rules,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “We are confident that the settlements announced today will lead to increased compliance and result in significant savings to the Medicare program while protecting patient health.”
An implantable cardioverter defibrillator, or ICD, is an electronic device that is implanted near and connected to the heart. It detects and treats chaotic, extremely fast, life-threatening heart rhythms, called fibrillations, by delivering a shock to the heart, restoring the heart’s normal rhythm. It is similar in function to an external defibrillator (often found in offices and other buildings) except that it is small enough to be implanted in a patient’s chest. Only patients with certain clinical characteristics and risk factors qualify for an ICD covered by Medicare.
Medicare coverage for the device, which costs approximately $25,000, is governed by a National Coverage Determination (NCD). The Centers for Medicare and Medicaid Services implemented the NCD based on clinical trials and the guidance and testimony of cardiologists and other health care providers, professional cardiology societies, cardiac device manufacturers and patient advocates. The NCD provides that ICDs generally should not be implanted in patients who have recently suffered a heart attack or recently had heart bypass surgery or angioplasty. The medical purpose of a waiting period -40 days for a heart attack and 90 days for bypass/angioplasty - is to give the heart an opportunity to improve function on its own to the point that an ICD may not be necessary. The NCD expressly prohibits implantation of ICDs during these waiting periods, with certain exceptions. The Department of Justice alleged that from 2003 to 2010, each of the settling hospitals implanted ICDs during the periods prohibited by the NCD.
“The settlements announced today demonstrate the Department of Justice’s commitment to protect Medicare dollars and federal health benefits,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida. “Guided by a panel of leading cardiologists and the review of thousands of patients’ charts, the extensive investigation behind the settlements was heavily influenced by evidence-based medicine. In terms of the number of defendants, this is one of the largest whistleblower lawsuits in the United States and represents one of this office’s most significant recoveries to date. Our office will continue to vigilantly protect the Medicare program from potential false billing claims.”
“Working as a team with the Department of Justice to investigate and settle false billing claims of this magnitude has resulted in substantial recoveries to Medicare and the successful enforcement of Medicare’s coverage requirements for these procedures,” said Inspector General Daniel Levinson of the Department of Health and Human Services’ Office of Inspector General (HHS-OIG).
The 70 settlements, representing nearly 500 hospitals, are listed on the attached chart. Most of the settling defendants were named in a qui tam, or whistleblower, lawsuit brought under the False Claims Act, which permits private citizens to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment awarded against a defendant. The lawsuit was filed in federal district court in the Southern District of Florida by Leatrice Ford Richards, a cardiac nurse, and Thomas Schuhmann, a health care reimbursement consultant. The whistleblowers have received more than $38 million from the settlements. The Department of Justice is continuing to investigate additional hospitals and health systems.
The settlements were the result of a coordinated effort among the U.S. Attorney’s Office of the Southern District of Florida, the Civil Division’s Commercial Litigation Branch and HHS-OIG, Office of Investigations and Office of Counsel to the Inspector General.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $26.2 billion through False Claims Act cases, with more than $16.4 billion of that amount recovered in cases involving fraud against federal health care programs.
The claims resolved by these settlements are allegations only and there has been no determination of liability.
Large Scale Miami Drug Supplier Pleads Guilty in Nationwide Prescription Drug Diversion SchemeRead the Press Release
WASHINGTON – The Department of Justice announced that a South Florida man pleaded guilty in U.S. District Court in Cincinnati, Ohio, in connection with the prosecution of a nationwide prescription drug diversion scheme.
Ricardo Alfredo Jurado, 59, of Miami Beach, pleaded guilty before U.S. District Court Judge Timothy S. Black to one count of conspiracy to commit mail and wire fraud.
Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division; U.S. Attorney Carter M. Stewart of the Southern District of Ohio; Special Agent in Charge Antoinette V. Henry of the U.S. Food and Drug Administration’s Office of Criminal Investigations (FDA-OCI), Metro Washington Field Office and Assistant Inspector in Charge Christopher White of the U.S. Postal Inspection Service (USPIS), Cincinnati Field Office, announced the guilty plea.
“Prescription drug diversion compromises the integrity of America’s drug supply chain,” said Principal Deputy Assistant Attorney General Mizer. “This Miami-based supplier sold tens of millions of dollars of illegally diverted drugs, which ended up on the shelves of pharmacies and in the medicine cabinets of American consumers.”
“The drug diversion activities charged in this case create unacceptable public health risks,” said U.S. Attorney Stewart. “Patients purchased what they believed were FDA-approved prescription drugs that had remained in regulated distribution channels intended to protect against misbranded, adulterated, sub-potent, improperly handled, counterfeit and stolen products. Instead, these customers received drugs of unknown quality and origin.”
Jurado sold illegally diverted prescription drugs to David Miller and his company, Minnesota Independent Cooperative (MIC). On May 6, Miller and MIC, along with Artur Stepanyan and Mihran Stepanyan, were indicted in the Southern District of Ohio and charged with one count of conspiracy to commit mail and wire fraud, ten counts of mail fraud and one count of conspiracy to make false statements and to distribute prescription drugs without a wholesale license. Those charges are still pending. Jurado is the eighth co-conspirator who pleaded guilty for participating in the drug diversion scheme involving Miller and MIC.
Miller and MIC sold the prescription drugs obtained through Jurado – along with multiple other illegal sources – to wholesale and retail customers throughout the United States, including in the Southern District of Ohio. Miller and MIC are alleged to have created fraudulent pedigree documents falsely stating that they had purchased the drugs from B&Y Wholesale, a company in Puerto Rico. These false pedigrees covered up the illegitimate sources of the drugs – various illicit suppliers, including Jurado – and falsely stated that B&Y was an authorized distributor of the prescription drugs.
According to court documents, from July 2007 through April 2014, Jurado facilitated the sale of tens of millions of dollars of illegally diverted prescription drugs to Miller and MIC. Jurado obtained the drugs from other illicit, unlicensed sources in South Florida. To hide Jurado’s involvement in the sale of these drugs, Jurado and Miller used a middleman, Fernando Galan. On Oct. 14, Galan pleaded guilty for his role in the conspiracy. Neither Jurado nor Galan was licensed to engage in the wholesale distribution of prescription drugs.
In connection with the sale of the diverted drugs, Jurado sent bank wiring instructions, frequently through his middleman Galan, directing Miller to send payments for the drugs. During the course of the entire conspiracy, Jurado and his co-conspirators directed payments to more than 25 different bank accounts at banks in Mexico, Nicaragua, Canada, Florida and other locations. During the course of the conspiracy, Miller and MIC wired more than $40 million to the bank accounts specified by Jurado.
This matter is being investigated by FDA-OCI and the USPIS. Assistant U.S. Attorneys Anne L. Porter and Christy Muncy of Southern District of Ohio and Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch are representing the United States in this case.
Dayton Couple Charged in Alleged $70 Million Ponzi SchemeRead the Press Release
DAYTON – A federal grand jury has charged William M. Apostelos, 54, and Connie M. Apostelos, 50, both formerly of Springboro, Ohio, with charges related to fraudulently inducing hundreds of individuals from around the country to invest $70 million collectively.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Kathy A. Enstrom, Special Agent in Charge, Internal Revenue Service Criminal Investigation, Cincinnati Field Office, Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI) and Christopher White, Assistant Inspector in Charge, U.S. Postal Inspection Service, James Vanderberg, U.S. Department of Labor Office of Inspector General, the U.S. Department of Labor Employee Benefits Security Administration and Brian Peters, Enforcement Attorney, Ohio Department of Commerce Division of Securities, announced the indictment returned October 29 and unsealed today.
The indictment alleges that beginning in 2009, The indictment alleges that beginning in 2009, and continuing for at least five years, the couple and others orchestrated a Ponzi scheme in the Dayton area in which nearly 480 investors lost more than $30 million collectively. William Apostelos operated and oversaw multiple purported investment and asset management companies in the Dayton area, including WMA Enterprises, LLC, Midwest Green Resources, LLC and Roan Capital. He allegedly falsely reported that he held a degree in mathematics and was a registered securities broker.
Connie Apostelos, also known as Connie Coleman, also operated and oversaw multiple companies in the Dayton area, including Coleman Capital, Inc. and Silver Bridle Racing, LLC. These companies were allegedly operated through improper use of investor funds to William Apostelos’ companies.
The couple recruited investors from 37 states to invest in WMA and Midwest Green, telling the investors that their money would be used for acquiring stocks or securities, purchasing real estate or land, providing loans to business and buying gold and silver.
When the defendants became late on interest payments to the victims, it is alleged that they advised that their bank account had been hacked, a bank mistakenly failed to wire payment and/or the deal the victim had invested in was temporarily on hold.
A number of investors have initiated legal action against the couple.
William and Connie Apostelos are charged with one count of conspiracy to commit mail and wire fraud, eight counts of mail fraud and 13 counts of wire fraud, each crimes punishable by up to 20 years in prison. They were also charged with two counts of money laundering, which each carry a potential 10-year prison sentence. They were also charged with one count of theft or embezzlement from employee benefit plan, which carries a maximum penalty of up to five years imprisonment. Finally, Connie Apostelos is charged separately with one count of making a false statement, which carries a maximum penalty of up to five years imprisonment.
U.S. Attorney Stewart commended the investigation of this case by law enforcement, and Assistant United States Attorneys Brent G. Tabacchi and Alex R. Sistla, who are prosecuting the case.
The couple is scheduled to appear before U.S. Magistrate Judge Michael J. Newman at 1:30pm today.
An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
7 Charged in Heroin Trafficking RingRead the Press Release
STEUBENVILLE, Ohio – A grand jury in Columbus, Ohio has charged seven individuals for their roles in a Steubenville-area heroin-trafficking operation.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, and William J. Ihlenfeld, II, United States Attorney for the Northern District of West Virginia, Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Joseph P. Reagan, Special Agent in Charge, Drug Enforcement Administration (DEA), Jefferson County Prosecutor Jane M. Hanlin and members of the Jefferson County Drug Task Force and the Hancock-Brooke-Weirton Drug Task Force announced the indictment returned on October 20.
The yearlong investigation by local, state and federal law enforcement culminated in the seizure of eight firearms, three vehicles and approximately $110,000 of suspected narcotics proceeds.
According to court documents, investigators discovered the organization was responsible for street-level heroin sales in Steubenville, Ohio, including in the Market Street apartment public housing area, Weirton, W.Va., Wheeling, W.Va. and Bellaire, Ohio.
Those charged in the indictment include:
Frederick A. McShan, 35, of Steubenville, Ohio
Donae F. Grier, 37, of Irving, Texas
Christopher J. Bishop, 31, of Weirton, W.Va.
David McShan, 37, of Steubenville, Ohio
Kerris D. Moncrease, 30, of Weirton, W.Va.
Terrence J. Smith, 26, of Steubenville, Ohio
Perrier D. Coleman, 19, of Steubenville, Ohio
All of the defendants are scheduled for arraignment at 1pm today before U.S. District Chief Judge Edmund A. Sargus.
Conspiracy to possess with intent to distribute more than one kilogram of heroin is a federal crime punishable by 10 years to up to life in prison.
U.S. Attorneys Stewart and Ihlenfeld also commended the cooperative efforts of law enforcement, as well as OCDETF Chief Michael Hunter, Assistant United States Attorney Steve Vogrin and Special Assistant United States Attorney Jane Hanlin who are prosecuting the case.
An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
Troy Man Sentenced to 20 Years in Prison for Production of Child Pornography and Coercion and Enticement of a MinorRead the Press Release
DAYTON – Michael Epley, 30, of Troy was sentenced to concurrent prison terms of 240 months each on one count of production of child pornography and one count of coercing and enticing a minor to engage in sexually explicit conduct.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Angela L. Byers Special Agent in Charge, Federal Bureau of Investigation (FBI), and Troy Police Chief Charles C. Phelps, announced the sentence imposed yesterday by United States District Judge Timothy S. Black.
Epley was indicted in February 2015 on two federal charges of committing sexual acts with children. He pleaded guilty in April 2015 to photographing himself sexually abusing a four-year-old female in 2014 and to inducing a 13-year-old female to engage in sexual activity with him after exchanging conversations and sexually explicit pictures with her over the internet between November 2013 and July 2014. Epley has two previous convictions in 2013 and 2014 involving minor children in Troy, Ohio and is currently serving a state prison sentence for the latter conviction.
Epley will be on supervised release for the rest of his life after serving his federal prison term.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorney’s Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
U.S. Attorney Stewart commended the investigation of this case by FBI agents and Troy Police investigators, and Assistant United States Attorney Kyle Healey, who prosecuted the case.
Former Fugitive Pleads Guilty to Embezzling $8.7 Million from EmployerRead the Press Release
CINCINNATI – James T. Hammes, 53, formerly of Lexington, Kentucky, pleaded guilty in U.S. District Court to one count of wire fraud and has agreed to pay nearly $7.7 million in restitution, specifically, approximately $6.7 million to G & J Pepsi-Cola Bottlers, Inc. and $1 million to Cincinnati Insurance Company.
Carter M. Stewart, United States Attorney for the Southern District of Ohio and Angela L Byers, Federal Bureau of Investigation (FBI) Special Agent in Charge - Cincinnati Division, announced the plea entered into today before Judge Susan J. Dlott.
According to court documents, from about 1998 through February 2009, Hammes embezzled more than $8.7 million from his employer, G & J Pepsi-Cola Bottlers, Inc., a large, privately held manufacturer and distributor of Pepsi products that is headquartered in Cincinnati.
Hammes served as a controller for the company, and was responsible for all financial accounting and internal controls for his division, including supervising accounts payable to vendors for services provided to the company’s division.
The defendant set up phantom vendor accounts and manipulated monthly accounting reports, using a miscellaneous account to charge off fraudulent checks and then manipulating legitimate accounts to offset the amounts carried in the miscellaneous account.
The stolen money that Hammes invested and traded generated IRS 1099 forms. Hammes voluntarily made estimated tax payments to the IRS totaling at least $2.7 million using the funds that he stole from his employer. Despite making the estimated tax payments, he failed to file tax returns for multiple tax years.
Hammes was questioned about the issuance of possible fraudulent checks in February 2009, at which time he fled and spent the majority of six years as a fugitive hiking the Appalachian Trail and living under an alias, which belonged to a real person. Federal criminal charges were filed against Hammes and he was arrested in Virginia in May 2015.
Hammes faces a potential maximum sentence of 20 years in prison.
U.S. Attorney Stewart commended the cooperative investigation led by the FBI Cincinnati Division, with assistance from FBI- Richmond Division, FBI- Indianapolis Division, Internal Revenue Service – Criminal Investigations, and the US Marshal’s Service, as well as Assistant United States Attorney Emily N. Glatfelter and Criminal Chief Kenneth L. Parker, who are prosecuting the case.
Dayton Man Sentenced to 73 Months in Prison for Illegally Possessing FirearmsRead the Press Release
DAYTON – Travis Matthews, 28, of Dayton was sentenced here today to 73 months in prison for possession of a firearm after having been previously been convicted of a felony offense.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Joseph P. Reagan, Special Agent in Charge, Drug Enforcement Administration (DEA) Detroit Field Division, and Dayton Police Chief Richard Biehl, announced the sentenced imposed today by United States District Judge Walter H. Rice.
Matthews pleaded guilty in July 2015 after being charged in a one-count bill of information with possessing a Cobra .380 caliber pistol. Matthews was on parole in 2013 for prior drug convictions, when adult parole authorities searched his home and discovered a total of four weapons, three of which were stolen. With three prior felony convictions, including two for possession of cocaine in 2006 and 2009 and one for trafficking heroin in 2009, Matthews is prohibited from possessing firearms.
Matthews was ordered to serve three years on supervised release following his prison term.
“Matthews poses a risk to the safety of the community because of his continuing criminal conduct,” said U.S. Attorney Carter Stewart. “Such lack of respect for the law requires deterrence in the form of a lengthy prison sentence.”
U.S. Attorney Stewart commended the investigation of this case by DEA agents, Dayton Police investigators, and Ohio Adult Parole Authority officers, and Assistant United States Attorney Andrew Hunt, who prosecuted the case.
Former Upper Arlington Financial Advisor Sentenced for Defrauding InvestorsRead the Press Release
COLUMBUS, Ohio – Jason W. Cox, 39, now of Dublin, Ohio was sentenced to 60 months in prison, three years of supervised release, and was ordered to pay $ 412,252 in restitution to the victims, one of which was an impaired adult, of his scheme to defraud them of the funds they had invested through him as their financial advisor. Cox previously pleaded guilty on July 8, 2015 to two counts of money laundering, two counts of mail fraud, and one count of wire fraud.
Carter M. Stewart, United States Attorney for the Southern District of Ohio and Kathy A. Enstrom, Special Agent in Charge, Internal Revenue Service Criminal Investigation announced the sentence handed down today by U.S. District Chief Judge Edmund A. Sargus, Jr.
According to court documents, the defendant used his position as a financial advisor with a national financial services company at their Upper Arlington office to defraud an impaired adult and other victims.
The impaired adult had been introduced to Cox by her father and was told by her father that Cox would be her financial advisor and that he was a person she could trust to manage her money after her father was no longer around to do so. After the victim’s father died, Cox devised and carried out schemes to defraud the impaired adult, resulting in the loss of her residence and approximately $ 400,000 in assets over the course of 18 months. Cox left her with no assets and no income.
Cox would cause the sale of a fund in the victim’s accounts and then wire the funds to her bank or mail a check to her that would be deposited into her account. He would then convince the victim to give him cash or a check in an amount equal to or slightly less than the amount transferred. These amounts were frequent and were generally in thousands of dollars.
“She believed that she and Cox were business partners even though she was unclear what that business was,” Assistant United States Attorney Deborah A. Solove said. “Since she has little concept of the value of money or the relative amounts changing hands, she thought that the money she agave him and the money he gave her was somehow a normal thing to do.”
Cox convinced a second victim to invest some of the money the victim transferred from his 401k after being laid off. Cox asked the victim to invest $60,000 with a guaranteed 10 percent rate of return. The victim agreed to invest $10,000 after Cox sent him the agreement in writing in his employer’s business envelope. Although the victim received his principal and the interest eventually, Cox was fired when this came to light.
The defendant defrauded a third client, an elderly woman, whose adult daughters were handling her financial affairs, whom he paid back with the impaired adult’s money.
"The web of financial lies that Jason Cox created came crashing down like a house of cards and he is now a convicted felon that must pay back the stolen money," said Kathy A. Enstrom, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. "Unfortunately, the victims in this case, including an impaired individual, have been left to pick up the pieces"
U.S. Attorney Stewart commended the investigation of this case by the IRS Criminal Investigation Division, and Assistant U.S. Attorney Deborah A. Solove, who prosecuted the case.
Columbus Lobbyist Pleads Guilty to ExtortionRead the Press Release
COLUMBUS, Ohio – An Ohio lobbyist pleaded guilty to extortion in connection with conduit contributions, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Carter M. Stewart of the Southern District of Ohio and Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Field Office.
John P. Raphael, 60, of Columbus, pleaded guilty today to a one-count information charging him with interference with commerce by threats.
According to the information, Raphael was a consultant and lobbyist based in Columbus, Ohio, who was hired and paid by companies that sought to do business with municipalities and counties in Ohio. From March 2005 to February 2013, a red light camera enforcement company hired and paid Raphael to seek and obtain lucrative contracts to provide red light photo enforcement systems in the City of Columbus.
During the time the red light camera enforcement company was seeking to retain contracts in Columbus, Raphael repeatedly pressured and induced the company to make campaign contributions to the campaigns of various elected officials. He communicated to the company that it would lose its contracts and suffer an economic loss if it did not make the payments. Thus, Raphael obtained and attempted to obtain the funds by the wrongful use of fear of economic harm.
The former chief executive officer of the red light camera vendor, Karen L. Finley, previously pleaded guilty to conspiracy to commit federal programs bribery and honest services wire and mail fraud.
Interference with commerce by threats is a crime punishable by up to 20 years in prison and a fine of $250,000 or a fine of twice the pecuniary gain or loss. A sentencing hearing is yet to be scheduled.
The case was investigated by the FBI’s Cincinnati Field Office, Columbus Resident Agency, with the assistance of IRS-Criminal Investigations and the Ohio Bureau of Criminal Investigation. The case is being prosecuted by Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney J. Michael Marous of the Southern District of Ohio.
This information only contains a charge against John Raphael and should not be construed as a reflection on the guilt or innocence of any other individual.
Two Drug Suppliers Plead Guilty in Nationwide Prescription Drug Diversion SchemeRead the Press Release
WASHINGTON – The Department of Justice announced that a California man and a New Jersey man pleaded guilty today in U.S. District Court in Cincinnati in connection with the prosecution of a nationwide prescription drug diversion scheme.
Fernando Galan, 50, of Simi Valley, California, pleaded guilty before U.S. District Court Judge Timothy S. Black to one count of conspiracy to distribute prescription drugs without a wholesale license. The department also unsealed the case against David Konigsberg, 58, of East Hanover, New Jersey, who pleaded guilty on June 22 to one count of conspiracy to commit mail and wire fraud for his participation in the drug diversion scheme.
Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, U.S. Attorney Carter M. Stewart of the Southern District of Ohio, Special Agent in Charge Antoinette V. Henry of the U.S. Food and Drug Administration’s Office of Criminal Investigations (FDA-OCI) Metro Washington, D.C., Field Office and Assistant Inspector in Charge Christopher White of the U.S. Postal Inspection Service’s (USPIS) Cincinnati Field Office announced the two guilty pleas.
“Prescription drug diversion compromises the integrity of America’s drug supply chain,” said Principal Deputy Assistant Attorney General Mizer. “This extensive investigation demonstrates that the Department of Justice will protect American consumers by prosecuting those who violate federal law by selling diverted drugs.”
“The sale of illegally diverted prescription drugs creates unacceptable public health risks,” said U.S. Attorney Stewart. “Patients purchased what they believed were FDA-approved prescription drugs that had remained in regulated distribution channels intended to protect against misbranded, adulterated, sub-potent, improperly handled, counterfeit and stolen products. Instead, these customers received drugs of unknown quality and origin.”
Galan and Konigsberg participated in the sale of illegally diverted prescription drugs to David Miller and his company, Minnesota Independent Cooperative (MIC). On May 6, David Miller and MIC, along with Artur Stepanyan and Mihran Stepanyan, were indicted in the Southern District of Ohio and charged with one count of conspiracy to commit mail and wire fraud, 10 counts of mail fraud and one count of conspiracy to make false statements and to distribute prescription drugs without a wholesale license. Those charges are still pending. Galan and Konigsberg are the sixth and seventh co-conspirators to plead guilty for their participation in the drug diversion scheme involving Miller and MIC.
Miller and MIC sold the prescription drugs obtained through Galan and Konigsberg – along with multiple other illegal sources – to wholesale and retail customers throughout the United States, including in the Southern District of Ohio. Miller and MIC are alleged to have created fraudulent pedigree documents falsely stating that they had purchased the drugs from B&Y Wholesale, a company in Puerto Rico. These false pedigrees covered up the illegitimate sources of the drugs – various illicit suppliers, including Konigsberg and Ricardo Jurado, a Miami supplier – and falsely stated that B&Y was an authorized distributor of the prescription drugs.
Galan
According to court documents, from July 2007 through October 2012, Galan facilitated the sale of millions of dollars of illegally diverted prescription drugs. Galan, who owned a restaurant in Rosemead, California, acted as a middleman in the sale of diverted prescription drugs from Ricardo Jurado, a drug supplier in Miami, to Miller and MIC. Neither Jurado nor Galan was licensed to engage in the wholesale distribution of prescription drugs. Jurado has also been charged for his role in this conspiracy.
In connection with facilitating the sale of the diverted drugs, Galan forwarded wiring instructions from Jurado directing Miller to send payments to at least 13 different bank accounts at banks in Mexico, Nicaragua, Canada, Florida and other locations. During the course of the conspiracy, Miller and MIC wired more than $30 million to the bank accounts specified by Galan. From June 2009 through July 2012, Galan received between $550,000 and $1 million in commission payments on the drug sales.
Konigsberg
According to court documents, from 2008 through February 2104, Konigsberg sold illegally diverted prescription drugs to Miller and MIC. Doing business as Preferred Inc., Konigsberg received prescription drugs from another supplier, who obtained the drugs from illicit street sources in New York and New Jersey at substantial discounts off of the wholesale price. Konigsberg then offered the drugs to Miller and MIC for a profit.
At Miller’s direction, Konigsberg included false notations on the invoices he provided to Miller indicating that Konigsberg had purchased the drugs from a large wholesale distributor. As Konigberg and Miller both knew, Konigsberg had obtained the drugs from illegal sources, not from the large distributor.
This matter is being investigated by FDA-OCI and the USPIS. Assistant U.S. Attorneys Anne L. Porter and Christy Muncy of the Southern District of Ohio and Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch are representing the United States in these cases.
Fugitive Arrested, Charged with Coercion, Enticement, Production of Child PornographyRead the Press Release
CINCINNATI – Cody Lee Jackson, 20, most recently of Norwood, Ohio, was charged by criminal complaint with coercion and enticement of a minor to engage in illegal sexual activity and production of child pornography. Jackson was arrested last week in Utah.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Division, Norwood Police Chief William Kramer and Blue Ash Police Chief Paul Hartinger announced the charges, which were unsealed today.
According to court documents, investigators were contacted with the information that two females, including a minor, had previously been held against their will by Jackson, in Blue Ash, Ohio. While on electronic monitoring for charges in that case, Jackson allegedly met the minor victim in the instant case, through Facebook. Jackson arranged for a taxi to deliver the minor to his place of residence, and had sexual intercourse with her on multiple occasions.
Over time, Jackson allegedly became more controlling and would not let the victim leave his residence. He established various rules and punishments which included physical abuse.
After pleading guilty on July 31, 2015 to state charges of interference with custody, abduction and kidnapping, Jackson fled to other states including South Carolina and Texas. During that time, he allegedly threatened to kill the minor victim’s family if she did not send him sexually explicit photographs via Facebook.
Coercion and enticement of a minor to engage in illegal sexual activity carries a minimum of ten years and a maximum sentence of life in prison. Production of child pornography is a crime punishable by a range of 15 to 30 years in prison.
Jackson is also facing charges of rape, kidnapping, unlawful sexual conduct with a minor, and interference with custody, brought by the Norwood Police Department and the Hamilton County Prosecutor’s Office.
This case is being brought as part of Project Safe Childhood, a nationwide initiative by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorney's Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children as well as to identify and rescue victims.
U.S. Attorney Stewart commended law enforcement for the cooperative investigation, and Assistant U.S. Attorney Christy Muncy who is representing the United States in this case.
A criminal complaint merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
FBI Victim Hotline Created Relating to Coercion and Enticement ChargesRead the Press Release
CINCINNATI – A federal grand jury has charged Bryan Harris, 27, of Cincinnati, with coercion and enticement in an indictment returned in Cincinnati.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Division, Hamilton County Sheriff Jim Neal and Cincinnati Police Department Interim Chief Eliot Isaac announced the indictment returned last week.
According to court documents, Harris allegedly used the Internet and social media to coerce more than 15 minor females, ordering them to send him sexually explicit photographs and meeting with some in person to engage in sexual activity.
Coercion and enticement by means of interstate commerce is a crime punishable by up to 20 years in prison and coercion and enticement of a minor to engage in sexual activity carries a maximum life sentence, with a mandatory minimum 10-year sentence.
Any individuals who believe they may also be a victim in this case are encouraged to call the FBI victim information line at 513-979-8882, where they will be connected with a member of the FBI Cincinnati Child Exploitation Task Force.
U.S. Attorney Stewart commended the investigation of this case by the FBI Cincinnati Child Exploitation Task Force, which includes FBI, Hamilton County Sheriff’s Office and Cincinnati Police Department, and Assistant U.S. Attorney Christy Muncy, who is prosecuting the case.
An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
Ohio Hospital to Pay $4.1 Million to Resolve False Claims Act AllegationsRead the Press Release
WASHINGTON – Cincinnati-based West Chester Hospital and its parent company, UC Health, have agreed to pay $4.1 million to settle allegations that West Chester Hospital violated the False Claims Act by billing federal health care programs for costs associated with medically unnecessary spine surgeries, the Justice Department announced today.
“Hospitals have a responsibility to ensure that services provided at their facilities are medically necessary and appropriate before they bill federal health care programs for those services,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “When providers charge for medically unnecessary services, we will aggressively seek remedies under the False Claims Act.”
This settlement resolves allegations that West Chester Hospital knowingly submitted claims to Medicare and Medicaid for hospital charges related to medically unnecessary spine surgeries performed between 2009 and 2013 by Dr. Abubakar Atiq Durrani, a surgeon from Mason, Ohio, who had admitting privileges at West Chester Hospital. Durrani was arrested in July 2013 and charged with health care fraud violations relating to allegations that he performed medically unnecessary spine surgeries on patients residing in Ohio and Kentucky. Following his arraignment, Durrani allegedly fled the United States and remains a fugitive.
Medicaid is funded jointly by the states and the federal government. The state of Ohio and commonwealth of Kentucky paid for some of the Medicaid claims at issue and will receive approximately $72,000 of the settlement amount.
“Federal health care programs cover only those procedures that are medically necessary,” said U.S. Attorney Carter M. Stewart of the Southern District of Ohio. “The U.S. Attorney’s Office is committed to pursuing providers that seek payment for unnecessary medical procedures.”
“Any time greed replaces medical necessity as the primary factor in performing invasive procedures and surgeries on Medicare and Medicaid patients, our most vulnerable citizens – the elderly, disabled, and economically disadvantaged – are imperiled,” said Special Agent in Charge Lamont Pugh of the Health and Human Services Office of Inspector General (HHS-OIG). “Medical businesses and physicians who unnecessarily place patients at risk to boost profits will be held accountable for their actions.”
The civil settlement resolves a lawsuit filed under the whistleblower provisions of the False Claims Act, which permit private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery. The civil lawsuit was filed in the Southern District of Ohio by former patients of Durrani and is captioned United States ex rel. Scott, et al. v. Durrani, et al. As part of today’s resolution, the whistleblowers will receive approximately $800,000 from the federal share of the settlement.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $25.2 billion through False Claims Act cases, with more than $16.1 billion of that amount recovered in cases involving fraud against federal health care programs.
This matter was investigated by the U.S. Attorney’s Office of the Southern District of Ohio and the Civil Division’s Commercial Litigation Branch, with assistance provided by HHS-OIG. The claims resolved by this settlement are allegations only and there has been no determination of liability.
Cincinnati Men Charged Federally for Illegal Possession of FirearmsRead the Press Release
CINCINNATI – A federal grand jury has charged Keno Phillips, 41, of Cincinnati, Ohio, with possession with intent to distribute cocaine, possession of a firearm by a prohibited person and possession of a firearm in furtherance of a drug trafficking offense and Steve Ivery, 30, of Cincinnati, Ohio, with possession of a firearm and ammunition by a prohibited person, in indictments returned in Cincinnati.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Interim Cincinnati Police Chief Eliot Isaac, and Donald J. Soranno, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Columbus Field Division, announced the indictments returned yesterday.
The indictment charging Phillips alleges that he possessed a mixture of cocaine and a semi-automatic handgun, along with ammunition, and that he used the loaded handgun in furtherance of a drug trafficking crime. Phillips is a convicted felon, having been convicted in both state and federal courts.
The indictment charging Ivery alleges that he possessed a revolver and ammunition after being convicted of three violent felonies. Ivery is charged as being an Armed Career Criminal.
Phillips faces a mandatory sentence of 5 years and up to life for possession of a firearm in furtherance of a drug trafficking offense, up to 10 years imprisonment for possession of a handgun and ammunition by a prohibited person. Ivery faces a mandatory sentence of 15 years and up to life for the offense he currently faces.
“These indictments illustrate the commitment of state and federal law enforcement working together to pursue federal charges against those who illegally wield weapons and perpetuate gun violence,” U.S. Attorney Stewart said.
U.S. Attorney Stewart commended the investigation of this case by the Cincinnati Police Department and ATF, and Assistant U.S. Attorneys Christy Muncy and Timothy Oakley who are prosecuting the cases.
An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
Aspiring Rap Artist Charged with Producing Child Pornography in Music VideosRead the Press Release
COLUMBUS, Ohio – A federal grand jury has charged Eric D. Chavis, 23, of Columbus, with conspiracy to produce and production of child pornography in an indictment returned in Columbus.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Ohio Attorney General Mike DeWine and members of the Central Ohio Human Trafficking Task Force, including Marlon V. Miller, Special Agent in Charge, U.S. Homeland Security Investigations, announced the indictment that was unsealed yesterday.
The indictment alleges that Chavis recruited minor victims to engage in sexually explicit conduct in his rap music videos. Chavis then posted those videos via the Internet on websites including Facebook.com, Pornhub.com, Youtube.com and Instagram.com.
Chavis is charged with one count of conspiracy to produce child pornography, and three counts of production of child pornography, each punishable by up to 30 years in prison.
Co-defendants Lamont D. Abbington, 29, of Kissimmee, Fla., Carlton S. Jackson, 30, of Toledo, and Mareekus E. Davis, 22, of Columbus, are each also charged with one count of conspiracy to produce child pornography, for their roles in recruiting, directing or engaging in sexually explicit conduct with the minor victims in the rap videos.
U.S. Attorney Stewart commended the cooperative investigation by the Central Ohio Human Trafficking Task Force, which was formed in 2012 and is part of the Ohio Attorney General’s Ohio Organized Crime Investigations Commission, and which also includes authorities from the Attorney General's Bureau of Criminal Investigation (BCI), U.S. Homeland Security Investigations, Columbus Division of Police, Ohio State Highway Patrol, Powell Police Department, Federal Bureau of Investigation and the Delaware County Prosecutor's Office. Assistant U.S. Attorney Heather Hill and Special Assistant U.S. Attorney Brant Cook, director of the Ohio Attorney General’s Crimes Against Children Initiative, are representing the government in this case.
An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
Ohio Lobbyist Agrees to Plead Guilty to ExtortionRead the Press Release
An Ohio lobbyist agreed today to plead guilty to extortion in connection with a bribery and fraud scheme involving conduit contributions to the campaigns of elected officials, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Carter M. Stewart of the Southern District of Ohio and Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Division.
John P. Raphael, 60, of Columbus, Ohio, agreed to plead guilty to a one-count information charging him with a violation of the Hobbs Act.
Raphael was a consultant and lobbyist based in Columbus. From March 2005 to February 2013, a red light camera enforcement company engaged Raphael to seek and obtain lucrative contracts with the cities of Columbus and Cincinnati. During that time, according to admissions made in his plea, which was filed today, Raphael conveyed to the company specific solicitations for campaign contributions on behalf of elected officials in Columbus and Cincinnati, and repeatedly pressured and induced the company to make contributions by advising the company that it would lose its contracts if it did not.
Raphael admitted that, as a result of his actions, the red light camera enforcement company made over $70,000 in campaign contributions, which were funneled through Raphael in his own name and in the names of his family members, friends and business associates.
The former chief executive officer of the red light camera vendor, Karen L. Finley, previously pleaded guilty to conspiracy to commit federal programs bribery and honest services wire and mail fraud.
The case is being investigated by the FBI’s Cincinnati Division, Columbus Resident Agency, with the assistance of IRS-Criminal Investigations and the Ohio Bureau of Criminal Investigation. The case is being prosecuted by Assistant U.S. Attorney J. Michael Marous of the Southern District of Ohio and Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section.
Former Ohio Music Instructor Charged Federally with Child Pornography OffensesRead the Press Release
COLUMBUS, Ohio – A former school music instructor was charged late Thursday by criminal complaint with production of child pornography.
Brian Sze, 34, of Seattle, was arrested September 29 without incident at his residence. He is also facing related state charges in Ohio.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Marlon V. Miller, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), Columbus Police Chief Kim Jacobs and members of the Franklin County Internet Crimes Against Children (ICAC) Task Force announced the charges.
According to court documents, the investigation began in July 2015 after a tip was called into ICAC which indicated Sze had illicit sexual contact with a minor and subsequently recorded the encounter.
Production of child pornography is a crime punishable by a range of 15 to 30 years in prison.
The Franklin County ICAC Task Force is a multi-agency effort dedicated to the fight against computer facilitated crimes against children. The following agencies are members:
Franklin County Sheriff’s Office Ohio ICAC Grove City Police Department Columbus Police Department Grandview Heights Police Department Westerville Police Department Hilliard Police Department Franklin County Prosecutor's Office Homeland Security InvestigationsThis case is being brought as part of Project Safe Childhood, a nationwide initiative by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorney's Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children as well as to identify and rescue victims.
U.S. Attorney Stewart commended the members of the ICAC Task Force for the cooperative investigation, and Assistant U.S. Attorney Heather Hill who is representing the United States in this case.
A criminal complaint merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
Columbus Lobbyist Agrees to Plead Guilty to ExtortionRead the Press Release
COLUMBUS, Ohio – An Ohio lobbyist has agreed to plead guilty to extortion in connection with conduit contributions, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Carter M. Stewart of the Southern District of Ohio and Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Field Office.
John P. Raphael, 60, of Columbus, has agreed to plead guilty to a one-count information charging him with interference with commerce by threats. A plea hearing will be scheduled.
According to the information, Raphael was a consultant and lobbyist based in Columbus, Ohio, who was hired and paid by companies that sought to do business with municipalities and counties in Ohio. From March 2005 to February 2013, a red light camera enforcement company hired and paid Raphael to seek and obtain lucrative contracts to provide red light photo enforcement systems in the City of Columbus.
During the time the red light camera enforcement company was seeking to retain contracts in Columbus, Raphael repeatedly pressured and induced the company to make campaign contributions to the campaigns of various elected officials. He communicated to the company that it would lose its contracts and suffer an economic loss if it did not make the payments. Thus, Raphael obtained and attempted to obtain the funds by the wrongful use of fear of economic harm.
The former chief executive officer of the red light camera vendor, Karen L. Finley, previously pleaded guilty to conspiracy to commit federal programs bribery and honest services wire and mail fraud.
Interference with commerce by threats is a crime punishable by up to 20 years in prison and a fine of $250,000 or a fine of twice the pecuniary gain or loss.
The case was investigated by the FBI’s Cincinnati Field Office, Columbus Resident Agency, with the assistance of IRS-Criminal Investigations and the Ohio Bureau of Criminal Investigation. The case is being prosecuted by Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney J. Michael Marous of the Southern District of Ohio.
This information only contains a charge against John Raphael and should not be construed as a reflection on the guilt or innocence of any other individual.
Associate of Treasure Hunter Sentenced for Criminal ContemptRead the Press Release
COLUMBUS, Ohio – Alison L. Antekeier, 48, formerly of Columbus, Ohio, was sentenced in U.S. District Court today to five months in jail for criminal contempt, specifically disobedience or resistance of the court, stemming from a civil lawsuit.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, and Peter C. Tobin, United States Marshal for the Southern District of Ohio, announced the plea entered into today before U.S. District Judge Algenon L. Marbley.
Antekeier and treasure-hunter Thomas “Tommy” G. Thompson, 63, also formerly of Columbus, Ohio, pleaded guilty to criminal contempt in April.
According to court documents, Thompson disobeyed and resisted a lawful order of U.S. District Chief Judge Sargus, who ordered Thompson to personally appear at an August 13, 2012 hearing related to a civil case involving the defendant. Specifically, Thompson had been ordered to appear at a hearing to provide an accounting of certain funds and the location of 500 re-strike commemorative gold coins as part of a lawsuit over the treasure that Thompson found from the SS Central America shipwreck. A bench warrant for Thompson’s arrest was issued the same day.
Antekeier was also ordered to appear in U.S. District Court as a witness in the civil lawsuit. She was to appear in court to give testimony related to the civil case on November 7, 2012; a bench warrant for her arrest was issued when she failed to appear.
In March 2013, an arrest warrant based on a criminal complaint alleging criminal contempt was authorized against Thompson.
U.S. Marshals found and arrested Thompson and Antekeier on January 27, 2015 in Boca Raton, Florida. Thompson and Antekeier had been living in a Hilton hotel room under fake names and paying with cash.
As part of their plea, the couple has agreed to forfeit the more than $425,000 in cash that was seized at the time of their arrest.
Thompson is scheduled to be sentenced at 9:30am on October 29.
U.S. Attorney Stewart commended the investigation by the U.S. Marshals Service, as well as Assistant United States Attorney Doug Squires, who is representing the United States in this case.
Co-Founder of Oxywater Sentenced for Wire Fraud and Money LaunderingRead the Press Release
WASHINGTON – A co-founder of Imperial Integrative Health Research and Development LLC (Imperial) was sentenced to serve 83 months in prison in federal court today for his role in a fraud scheme related to Imperial and its product, OXYwater, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Carter M. Stewart of the Southern District of Ohio.
Thomas E. Jackson, 40, of Powell, Ohio, was sentenced by U.S. District Court Judge Gregory L. Frost of the Southern District of Ohio. In addition to the prison sentence, Jackson was ordered to serve three years of supervised release and to pay approximately $8.8 million in restitution to victims of the fraud. On March 25, Jackson was convicted of conspiracy to commit wire fraud, conspiracy to commit money laundering, eight counts of wire fraud and 12 counts of money laundering.
Jackson’s business partner, Preston J. Harrison, 43, and Harrison’s wife, Lovena Harrison, 42, both of Lewis Center, Ohio, also went to trial in March and were convicted of multiple crimes. Preston Harrison was convicted of conspiracy to defraud the United States, filing a false income tax return, conspiracy to commit wire fraud, conspiracy to commit money laundering and 12 counts of money laundering. Lovena Harrison was convicted of conspiracy to defraud the United States, filing a false income tax return and structuring financial transactions to evade currency reporting requirements.
The Harrisons were sentenced on Aug. 25. Preston Harrison was also sentenced to serve 83 months in prison to be followed by three years of supervised release, and ordered to pay approximately $8.8 million to victims of the fraud and approximately $376,000 in restitution to the Internal Revenue Service (IRS). He was also ordered to forfeit $1.1 million, including two vehicles, eight weapons, cash and the contents of a bank account. Lovena Harrison was sentenced to serve 12 months and one day in prison to be followed by three years of supervised release, and ordered to pay approximately $376,000 in restitution to the IRS.
According to court testimony, Jackson and Preston Harrison operated Imperial, based in Westerville, Ohio, and developed OXYwater, a beverage that promoters claimed was an all-natural, vitamin-enhanced sports drink that contained added oxygen for improved physical performance.
The defendants engaged in a scheme to deceive Imperial’s investors about Imperial and OXYwater’s structure, composition, finances, sales and profits in order to make the company appear to be a lucrative and profitable financial investment. Jackson and Preston Harrison produced and sent false and fraudulent documents intended to deceive investors in order to obtain additional investments in Imperial. They then misappropriated that money for their own personal use, which included purchasing jewelry, a Cadillac Escalade, a BMW vehicle, weapons, clothing, home improvements and a swimming pool.
Between August 2010 and spring 2013, Jackson and Preston Harrison misappropriated approximately $2 million of the investors’ funds. The defendants’ scheme caused investors to suffer substantial losses when the corporation was forced to declare bankruptcy with no assets. As a result of the defendants’ conduct, investors lost approximately $9 million.
In 2011, Preston Harrison misappropriated approximately $1.1 million from Imperial, which he and Lovena Harrison diverted into an account in the name of a daycare business and used for personal expenses. The Harrisons did not report the money as income on their 2011 income tax return.
“When you knowingly mix deceit and trickery into the financial well-being of individuals, you create a recipe for devastation that could last a lifetime,” said Special Agent in Charge Kathy A. Enstrom of the IRS-Criminal Investigation (CI) Cincinnati Field Office. “Today's sentencing demonstrates how federal law enforcement will band together to help put an end to the criminal behavior of those who prey on investors for their personal financial gain.”
Acting Assistant Attorney General Ciraolo and U.S. Attorney Stewart commended special agents of IRS-CI and the FBI, who investigated the case, as well as Assistant U.S. Attorney Jessica Kim of the Southern District of Ohio and Trial Attorney Jason Scheff of the Tax Division, who prosecuted the case.
Chiropractor Pleads Guilty to Insurance FraudRead the Press Release
COLUMBUS, Ohio – Jeffrey R. Shope, 44, of Blacklick, Ohio, pleaded guilty in U.S. District Court to one count of insurance fraud.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Lieutenant Governor Mary Taylor, Director of Ohio Department of Insurance and Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Division, announced the plea entered into today before U.S. District Judge Gregory L. Frost.
According to court documents, Shope was a licensed chiropractor and owner of True Health Chiropractic in Westerville, Ohio. From January 2009 to December 2012, Shope made false statements to defraud federal health care benefit programs and obtained nearly $700,000 in fraudulent payments. Shope would bill for equipment and services not rendered to maximize insurance payments and would bill two separate programs for identical services provided to the same patients on the same day.
Health care fraud is a crime punishable by up to 10 years in prison and a $250,000 fine.
U.S. Attorney Stewart commended the cooperative investigation by the FBI and Ohio Department of Insurance, as well as Assistant United States Attorney Ken Affeldt, who is representing the United States in this case
Justice Department and Consumer Financial Protection Bureau Reach Settlement to Resolve Allegations of Auto Lending Discrimination by Fifth Third BankRead the Press Release
WASHINGTON – The Department of Justice and the Consumer Financial Protection Bureau (CFPB) today announced an $18 million settlement to resolve allegations that Fifth Third Bank (Fifth Third) engaged in a pattern or practice of discrimination against African-American and Hispanic borrowers in its indirect auto lending business.
The settlement, which is subject to court approval, includes compensation for African-American and Hispanic borrowers who were overcharged, and requires changes to the way that Fifth Third prices automobile loans. Specifically, Fifth Third has agreed to change the way it prices its loans by limiting dealer markup to 125 basis points, or 1.25 percent, for loans of 60 months or less, and to 100 basis points, or one percent, for loans greater than 60 months.
“We commend Fifth Third for its commitment to treating all of its customers fairly without regard to race or national origin and its leadership in agreeing to impose lower caps on discretionary markups,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “This agreement shows that the indirect auto lending industry is moving toward a model of dealer compensation that fairly compensates dealers for their work related to loans, while limiting the dealer markup that leads to discriminatory pricing.”
“Consumers deserve a level playing field when they enter the marketplace, especially when financing an automobile,” said U.S. Attorney Carter M. Stewart of the Southern District of Ohio. “This settlement prevents discrimination in setting the price for auto loans.”
“We are committed to promoting fair and equal access to credit in the auto finance marketplace,” said CFPB Director Richard Cordray. “Fifth Third’s move to a new pricing and compensation system represents a significant step toward protecting consumers from discrimination."
The coordinated investigations by the department and the CFPB that preceded today’s settlement determined Fifth Third’s previous system of subjective and unguided pricing discretion directly resulted in the bank’s qualified African-American and Hispanic borrowers paying more than qualified non-Hispanic white borrowers. The department and CFPB anticipate that Fifth Third’s new caps on discretionary markups will substantially reduce or eliminate these disparities.
The investigation relates to what are called “indirect” auto loans, because, rather than taking applications directly from consumers, the bank makes most of its auto loans through car dealers nationwide who help their customers pay for their new or used car by submitting their loan application to Fifth Third. Fifth Third’s previous business practice, like that of many other major auto lenders, allowed car dealers discretion to mark up a loan’s interest rate from the price Fifth Third initially sets based on the borrower’s objective credit-related factors. Dealers received greater payments from Fifth Third for loans that included a higher interest rate markup.
The settlement resolves claims by the department and the CFPB that Fifth Third discriminated by charging thousands of African-American and Hispanic borrowers higher interest rates than non-Hispanic white borrowers. The agencies claim that Fifth Third charged borrowers higher interest rates because of their race or national origin and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk. The United States’ complaint alleges that the average African-American victim was obligated to pay over $200 more during the term of the loan because of discrimination and the average Hispanic victim was also obligated to pay over $200 more during the term of the loan because of discrimination. The Equal Credit Opportunity Act (ECOA) prohibits such discrimination in all forms of lending, including auto lending. Fifth Third’s settlement with the Department of Justice, which is subject to court approval, was filed today in the U.S. District Court for the Southern District of Ohio in conjunction with the Department of Justice’s complaint. Fifth Third resolved the CFPB’s claims by entering into a public administrative settlement.
The settlement also requires Fifth Third to improve its monitoring and compliance systems. The settlement allows the lender to experiment with different approaches toward lessening discrimination and requires it to regularly report to the department and the CFPB on the results of its efforts as well as discuss potential ways to improve results. The department commends Fifth Third for working cooperatively to reach an appropriate resolution of this case.
The settlement provides for an administrator to locate victims and distribute payments of compensation at no cost to borrowers whom the department and the CFPB identify as victims of Fifth Third’s discrimination. The department and the CFPB will make a public announcement and post information on their websites once more details about the compensation process become available. Borrowers who are eligible for compensation from the settlement will be contacted by the administrator, and do not need to contact the department or the CFPB at this time.
The Civil Rights Division, the U.S. Attorney’s Office for the Southern District of Ohio and the CFPB are members of the Financial Fraud Enforcement Task Force. President Obama established that interagency task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
The Justice Department’s enforcement of fair lending laws and the Servicemembers Civil Relief Act is conducted by the Housing and Civil Enforcement Section in the Civil Rights Division. Since 2010, the Civil Rights Division has provided approximately $1.3 billion in monetary relief for individual borrowers and impacted communities through its enforcement of the Fair Housing Act, ECOA and the SCRA. The Attorney General’s annual reports to Congress on ECOA enforcement highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications/.
Justice Department and Consumer Financial Protection Bureau Reach Settlement to Resolve Allegations of Auto Lending Discrimination by Fifth Third BankRead the Press Release
The Department of Justice and the Consumer Financial Protection Bureau (CFPB) today announced an $18 million settlement to resolve allegations that Fifth Third Bank (Fifth Third) engaged in a pattern or practice of discrimination against African-American and Hispanic borrowers in its indirect auto lending business.
The settlement, which is subject to court approval, includes compensation for African-American and Hispanic borrowers who were overcharged, and requires changes to the way that Fifth Third prices automobile loans. Specifically, Fifth Third has agreed to change the way it prices its loans by limiting dealer markup to 125 basis points, or 1.25 percent, for loans of 60 months or less, and to 100 basis points, or one percent, for loans greater than 60 months.
“We commend Fifth Third for its commitment to treating all of its customers fairly without regard to race or national origin and its leadership in agreeing to impose lower caps on discretionary markups,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “This agreement shows that the indirect auto lending industry is moving toward a model of dealer compensation that fairly compensates dealers for their work related to loans, while limiting the dealer markup that leads to discriminatory pricing.”
“Consumers deserve a level playing field when they enter the marketplace, especially when financing an automobile,” said U.S. Attorney Carter M. Stewart of the Southern District of Ohio. “This settlement prevents discrimination in setting the price for auto loans.”
“We are committed to promoting fair and equal access to credit in the auto finance marketplace,” said CFPB Director Richard Cordray. “Fifth Third’s move to a new pricing and compensation system represents a significant step toward protecting consumers from discrimination."
The coordinated investigations by the department and the CFPB that preceded today’s settlement determined Fifth Third’s previous system of subjective and unguided pricing discretion directly resulted in the bank’s qualified African-American and Hispanic borrowers paying more than qualified non-Hispanic white borrowers. The department and CFPB anticipate that Fifth Third’s new caps on discretionary markups will substantially reduce or eliminate these disparities.
The investigation relates to what are called “indirect” auto loans, because, rather than taking applications directly from consumers, the bank makes most of its auto loans through car dealers nationwide who help their customers pay for their new or used car by submitting their loan application to Fifth Third. Fifth Third’s previous business practice, like that of many other major auto lenders, allowed car dealers discretion to mark up a loan’s interest rate from the price Fifth Third initially sets based on the borrower’s objective credit-related factors. Dealers received greater payments from Fifth Third for loans that included a higher interest rate markup.
The settlement resolves claims by the department and the CFPB that Fifth Third discriminated by charging thousands of African-American and Hispanic borrowers higher interest rates than non-Hispanic white borrowers. The agencies claim that Fifth Third charged borrowers higher interest rates because of their race or national origin and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk. The United States’ complaint alleges that the average African-American victim was obligated to pay over $200 more during the term of the loan because of discrimination and the average Hispanic victim was also obligated to pay over $200 more during the term of the loan because of discrimination. The Equal Credit Opportunity Act (ECOA) prohibits such discrimination in all forms of lending, including auto lending. Fifth Third’s settlement with the Department of Justice, which is subject to court approval, was filed today in the U.S. District Court for the Southern District of Ohio in conjunction with the Department of Justice’s complaint. Fifth Third resolved the CFPB’s claims by entering into a public administrative settlement.
The settlement also requires Fifth Third to improve its monitoring and compliance systems. The settlement allows the lender to experiment with different approaches toward lessening discrimination and requires it to regularly report to the department and the CFPB on the results of its efforts as well as discuss potential ways to improve results. The department commends Fifth Third for working cooperatively to reach an appropriate resolution of this case.
The settlement provides for an administrator to locate victims and distribute payments of compensation at no cost to borrowers whom the department and the CFPB identify as victims of Fifth Third’s discrimination. The department and the CFPB will make a public announcement and post information on their websites once more details about the compensation process become available. Borrowers who are eligible for compensation from the settlement will be contacted by the administrator, and do not need to contact the department or the CFPB at this time.
The Civil Rights Division, the U.S. Attorney’s Office for the Southern District of Ohio and the CFPB are members of the Financial Fraud Enforcement Task Force. President Obama established that interagency task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
The Justice Department’s enforcement of fair lending laws and the Servicemembers Civil Relief Act is conducted by the Housing and Civil Enforcement Section in the Civil Rights Division. Since 2010, the Civil Rights Division has provided approximately $1.3 billion in monetary relief for individual borrowers and impacted communities through its enforcement of the Fair Housing Act, ECOA and the SCRA. The Attorney General’s annual reports to Congress on ECOA enforcement highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications/.
DOJ Awards Law Enforcement Hiring Grants to Help Build Trust, Reduce Violence, Protect SchoolsRead the Press Release
WASHINGTON, DC—Today, U.S. Attorney General Loretta Lynch announced Office of Community Oriented Policing Services (COPS Office) funding awards to12 cities and counties in Ohio, aimed at creating, and in some cases protecting, 58 law enforcement positions. Over $107 million will be awarded nationally, through the COPS Hiring Program (CHP), including $7.3 million in Ohio.
In the Southern District of Ohio, nearly $1.9 million is being awarded to the City of Cincinnati for 15 law enforcement positions.
The list of this year’s grantees includes: Austintown Township, Barberton, Boardman, Canton, Cincinnati, Cleveland, Cuyahoga Metropolitan Housing Authority Police, East Cleveland, Mansfield, Massillon, Milton Township and the Village of Northfield.
“The COPS Office is pleased to assist local law enforcement agencies throughout the country in addressing their most critical public safety issues,” said Ronald L. Davis, Director of the COPS Office. “These grants are not simply about putting more officers on the street, they are about expanding the capacity of law enforcement agencies to engage in community policing.”
CHP provides grants to state, local and tribal law enforcement agencies to hire or rehire community policing officers. The program provides salaries and benefits for officer and deputy hires for three years.
Priority consideration was given this year to agencies that selected any of the Building Trust focus areas or School Based Policing through School Resource Officers. All applicants were encouraged to refer to the report of the President's Task Force on 21st Century Policing for suggested actions to incorporate into their proposed community policing strategy.
The COPS Office is a federal agency responsible for advancing community policing nationwide. Since 1995, COPS has invested over $14 billion to advance community policing, including grants awarded to more than 13,000 state, local, and tribal law enforcement agencies to fund the hiring and redeployment of approximately 127,000 officers and provide a variety of knowledge resource products including publications, training, and technical assistance.
For the entire list of grantees and additional information about the 2015 COPS Hiring Program, visit the COPS website at www.cops.usdoj.gov.
Ross County Business Owner Sentenced in Employment Tax Fruad CaseRead the Press Release
COLUMBUS, OHIO – Andrew J. Parish, 40, of Chillicothe, Ohio was sentenced to 18 months in prison, three years of supervised release, and was ordered to pay $341,336.46 in restitution to the Internal Revenue Service (IRS) for failing to account for and pay over employment taxes to the IRS. Parish previously pleaded guilty to the aforementioned charge on May 5, 2015.
Carter M. Stewart, United States Attorney for the Southern District of Ohio and Kathy A. Enstrom, Special Agent in Charge, Internal Revenue Service Criminal Investigation, Cincinnati Field Office announced the sentence handed down today by Senior U.S. District Judge James L. Graham.
According to court documents, between January 2009 and March 2009, Parish defrauded the IRS by failing to account for and pay over employment taxes. Parish was the owner and operator of Axiom Consulting Group, LLC (“Axiom”) and was responsible for collecting, truthfully accounting for, and paying over the employment taxes to the IRS from the employees of Axiom. Parish retained the services of an accounting firm that employed Certified Professional Accountants. One of the accounting firm’s responsibilities was to process the payroll for Axiom based on figures provided to them by Parish. The accounting firm was also retained to prepare Forms 941, Employer’s Quarterly Federal Tax Returns.
Parish did not follow the established payroll procedures and instead paid a majority of Axiom’s payroll by issuing the payroll checks himself to the Axiom employees. These payroll checks did contain withholding amounts for the required employment taxes owed. However, the amount of employment taxes that Parish withheld from his employees were never remitted to the IRS. In addition, Parish never provided the true amount of the wages paid to the employees to the accounting firm, causing the preparation of an inaccurate Form 941 for the period January 1, 2009 through March 31, 2009. In addition, it was Parish’s responsibility to transmit the Forms 941 to IRS, but he failed to do so.
The total tax loss to the IRS as a result of the non-payment of employment taxes was $341,336.46.
"IRS Criminal Investigation realizes the detrimental consequences of employment tax evasion. It results in the loss of tax revenue to the United States government and the loss of future social security or Medicare benefits for the employees," stated Kathy A. Enstrom, Special Agent in Charges, IRS Criminal Investigation, Cincinnati Field Office.
This case was prosecuted by Assistant United States Attorney Jessica H. Kim and was investigated by special agents of IRS-Criminal Investigation.
KYB Agrees to Plead Guilty and Pay $62 Million Criminal Fine for Fixing Price of Shock AbsorbersRead the Press Release
WASHINGTON – Kayaba Industry Co. Ltd., dba KYB Corporation (KYB) has agreed to plead guilty and to pay a $62 million criminal fine for its role in a conspiracy to fix the price of shock absorbers installed in cars and motorcycles sold to U.S. consumers.
According to charges filed today, KYB conspired from the mid-1990s until 2012 to fix the prices of shock absorbers sold to Fuji Heavy Industries Ltd. (manufacturer of Subaru vehicles), Honda Motor Co. Ltd., Kawasaki Heavy Industries Ltd., Nissan Motor Company Ltd., Suzuki Motor Corporation and Toyota Motor Company, including their subsidiaries in the United States.
“KYB turned the competitive process on its head by agreeing with its competitors to fix the prices of shock absorbers installed in cars and motorcycles sold in the U.S.,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “Working with the FBI and our other law enforcement partners, the Antitrust Division will continue to protect American car buyers and hold automotive part suppliers accountable for their illegal conduct.”
“Any collusive agreement among competitors to restrict price competition undercuts our free enterprise system and violates the law,” said U.S. Attorney Carter M. Stewart of the Southern District of Ohio. “We will continue to work to prosecute these fraudulent arrangements in order to protect consumers’ right to free and open competition, particularly in the auto parts industry.”
“Fixing prices and rigging bids is against the law and ultimately harms consumers by artificially inflating prices and creating a corrupt marketplace,” said Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Division. “The FBI and our partners will continue to investigate anticompetitive practices and promote fair competition.”
According to the information filed in the U.S. District Court of the Southern District of Ohio, KYB, based in Tokyo, and its two co-conspirators agreed to allocate the supply of shock absorbers sold and determine the price submitted to the targeted vehicle manufacturers. To keep prices up, KYB and its co-conspirators also agreed to coordinate on price adjustments requested by the vehicle manufacturers and strived to keep their conduct secret.
Today’s charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI. KYB has agreed to cooperate with the department’s ongoing investigation and the plea agreement is subject to court approval. Including KYB, 37 companies and 55 executives have been charged in the division’s ongoing investigation and have agreed to pay a total of more than $2.6 billion in criminal fines. KYB is being prosecuted by the Antitrust Division’s Chicago Office and the FBI’s Cincinnati Field Office, with assistance from the U.S. Attorney’s Office of the Southern District of Ohio. Anyone with information on market allocation, price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Cincinnati Field Office at 513-421-4310.
Third Defendant Sentenced in Illegal Deer Trafficking CaseRead the Press Release
COLUMBUS, Ohio – Benjamin N. Chason, 61, of Climax, Ga. pleaded guilty and was sentenced in U.S. District Court for three charges related to violating the Lacey Act. Chason was ordered to pay $1.6 million in fines and restitution, the largest sum of money ordered of an individual to pay for a wildlife crime in the United States.
Of the $1.6 million, $600,000 is to be paid into the Ohio Department of Natural Resources Wildlife Habitat Fund $200,000 to the Federal Endangered Species and Wildlife Diversity Fund, $400,000 to Columbus and Franklin County Metro Parks and $100,000 to the Ohio DNR Division of Wildlife Turn in a Poacher (TIP) program.
Carter Stewart, U.S. Attorney for the Southern District of Ohio, Gregory Jackson, Special Agent in Charge, United States Fish and Wildlife Service Office of Law Enforcement, Chief Scott Zody, Ohio Department of Natural Resources Division of Wildlife, Franklin County Prosecutor Ron O’Brien, the Florida Fish and Wildlife Conservation Commission and Georgia Department of Natural Resources announced the sentence, which was unsealed yesterday.
According to court documents, Chason and co-conspirator Donald W. Wainwright, Sr., trafficked in live white-tailed deer. Wainwright Sr. owned hunting preserves in Logan County, Ohio, and Live Oak, Florida; both preserves were named Valley View Whitetails. Donald Wainwright, Jr. was part-time resident and part-time operator of the site in Ohio. Chason was part-owner of Valley View Whitetails in Ohio and also owned an extensive high-fenced property containing white-tailed deer in Climax, Ga.
Wainwright Sr. illegally shipped deer to Florida from Ohio and attempted to ship deer to Georgia from Ohio. The deer herds involved with these shipments were not certified to be free from chronic wasting disease, tuberculosis and brucellosis. Federal law requires interstate shipments of deer to be certified to be disease-free; because the deer in the present case were not certified as disease-free, deer herds (both captive and wild) in Florida were potentially exposed to these diseases. Tuberculosis and brucellosis can also be transmitted from deer to cows and humans.
The attempted shipment to Georgia was intercepted on I-71 South, about 50 miles from the Ohio River, when Ohio Division of Wildlife officers noticed deer noses and antlers inside a cargo trailer and pulled over a truck driven by Wainwright Sr.’s employees.
Wainwright Sr. and Chason placed federal identification tags from a certified deer that had previously died into the ear of an uncertified deer they were selling. They then sold breeding services and semen from the deer to breeders around the United States.
The defendants also sold illegal white-tailed deer hunts at Valley View Whitetails of Ohio. They induced clients from around the country to hunt at Valley View Whitetails of Ohio – charging customers from $1,000 to $50,000 to kill deer inside his high fence preserve when Wainwright did not have a hunting preserve license. The customers then took the bucks back to their home states, including: Florida, Michigan, Alabama and Virginia.
“Illegal sale and transport of white-tailed deer are serious crimes and I appreciate the teamwork and cooperation between all of the agencies involved to help obtain these convictions,” ODNR Division of Wildlife Chief Scott Zody said.
"We are pleased to see the positive results in this investigation. The U.S. Fish and Wildlife Service, Office of Law Enforcement considers the potential spread of disease caused by the illegal commercialization of fish and wildlife resources a high priority, and we will continue to work closely with our State partners to assist them in these important investigations," said Edward Grace, U.S. Fish and Wildlife Service Deputy Assistant Director for Law Enforcement.
Chason pleaded guilty on May 1, 2014. Besides being ordered to pay restitution, Chason was sentenced to three years of probation and four months of home confinement. Chason also agreed to publish a statement in North American Whitetail Magazine and perform 150 hours community service in an Ohio or Georgia State Park.
Wainwright Sr. pleaded guilty on February 27, 2015, to 12 charges related to violating the Lacey Act, one count of conspiracy and one count of wire fraud. He was sentenced to 21 months in prison, a $125,000 fine 200 hours of community service to be served in a parks system and ordered to publish an article in The Deer Breeders Gazette.
Wainwright Jr. pleaded guilty on February 17, 2015, to eight charges related to offering illegal hunts in violation the Lacey Act and was sentenced to four months of house arrest and three years of probation.
Under the Lacey Act, it is unlawful to import, export, transport, sell or purchase wildlife, fish or plants that were taken, possessed, transported or sold in violation of a state, federal or foreign law. When it was passed in 1900, the Lacey Act became the first federal law protecting wildlife.
U.S. Attorney Stewart commended the cooperative investigation by law enforcement, as well as Special Assistant United States Attorney Heather Robinson with the Franklin County Prosecutor’s Office and Assistant United States Attorneys J. Michael Marous and Peter Glenn-Applegate, who represented the United States in this case.