Southern District of Ohio
Press releases recorded for this federal judicial district.
Country Music Star Pleads Guilty to Obstructing the IRSRead the Press Release
CINCINNATI – David Allen Coe, 76, of Cincinnati, Ohio, pleaded guilty to one count of impeding and obstructing the due administration of the Internal Revenue laws. Coe faces a maximum of three years in prison and a fine of up to $250,000.
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 announced the guilty plea entered today before U.S. District Judge Timothy S. Black.
According to court documents, David Allen Coe was a national recording artist in the country music industry. Coe performed at least 100 concerts yearly throughout the United States where he earned income, including during the 2008 through 2013 calendar years. During this same time period, Coe either failed to file his individual income tax returns with the IRS or when Coe did file his individual income tax returns with the IRS, he failed to pay the taxes due and owing. In addition, during this same time period, Coe also owed money to the IRS for prior years of taxes due and owing. Instead of paying his taxes in full, Coe spent the money earned from performing concerts on other debts and gambling.
As part of his entertainer contract, when a concert was booked, Coe required that the total concert fee be deposited upfront. The deposit was either paid by wire or by check made payable to the booking manager's account. The booking manager took his fee out of the deposit and then wired the remaining amount directly to Coe or to Coe’s road manager's business account.
In approximately May 2009, Coe stopped receiving these payments by wire into his personal bank account after receiving correspondence from the IRS as to his current outstanding tax liabilities. This action prevented the IRS from levying his bank account to pay his income taxes. The remaining balance of the concert fee was to be paid in cash only, by 3:00p.m.on the day of the concert, with no $50 dollar bills allowed as Coe believed they were bad luck and would not gamble with them. Coe’s road manager picked up the cash, which he used to pay himself and the other band members, and then provided the remaining cash to Coe either in person or through MoneyGram or Western Union. Additionally, Coe would sometimes receive cash bonuses from playing concerts. Coe’s arrangement to be paid primarily in cash was also in an effort to impede the ability of the IRS to collect on the taxes owed.
Despite earning income from his concerts, Coe willfully failed to pay the income taxes due and owing when he filed his 2009, 2011 and 2013 individual income tax returns. As a result, Coe now owes the IRS $388,190.94 for the 2009 income tax year, $35,640.10 for the 2011 income tax year and $42,733.82 for the 2013 income tax year, which includes the income taxes owed plus interest and penalties.
Coe also owes restitution to the IRS for the taxes due and owing as a result of his 2008 and 2010 tax returns, which said amount will be determined at the time of sentencing.
"All taxpayers, regardless of their profession, must comply with their federal tax obligations," said Kathy A. Enstrom, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. “As is evident from Mr. Coe’s guilty plea, schemes to evade the payment of taxes are a violation of the Federal Tax laws and postpones the eventual need to comply at an even higher cost, including federal criminal prosecution and having to pay back taxes with interest and steep penalties."
This case was prosecuted by Assistant United States Attorney Jessica W. Knight and was investigated by special agents of IRS-Criminal Investigation.
Sunbury Man Indicted for Distribution, Receipt, Possession of Child PornographyRead the Press Release
COLUMBUS, Ohio – A federal grand jury has charged Mark W. Wolfe, 50, of Sunbury, Ohio, with distribution, receipt and possession of 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) announced the indictment returned yesterday.
According to court documents, undercover investigators observed files containing child pornography being shared through an IP address belonging to Wolfe. During a search warrant executed on July 31 at Wolfe’s residence, investigators discovered a laptop containing approximately 486 videos and 203 images of child pornography. The files were located in several folders on the computer under the user name “Mark.” Some of the videos showed children as young as eight-to-10 months old being sexually abused.
Further forensic analysis of the computer revealed Skype chat messages between Wolfe and several other individuals. In these conversations, Wolfe allegedly distributed child pornography files and claimed to have previously engaged in sex acts with minors and stated that his favorite age is five to ten years old.
The three-count indictment charges Wolfe with one count of distribution and one count of receipt of child pornography, each crimes punishable by at least five years up to a potential maximum of 20 years in prison, and one count of possession of child pornography, which carries a potential maximum sentence of 10 years imprisonment.
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/.
Stewart commended the investigation by the FBI Columbus Child Exploitation Task Force, which includes officers from the Westerville Police Department, Reynoldsburg Police Department, Powell Police Department and Belmont County Sheriff’s Office, as well as Assistant U.S. Attorney Heather A. Hill, who is prosecuting the case.
Charges contained in an indictment are merely allegations. All defendants are presumed innocent until and unless proven guilty in court.
Cincinnati Area Residents Charged in Puerto Rican ID Theft RingRead the Press Release
CINCINNATI – A federal grand jury has charged nine individuals in an indictment related to the trafficking of real, Puerto Rican identities in the Cincinnati area. Defendants were arrested in Cincinnati and in Puerto Rico today.
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), Cincinnati Field Division, Christopher White, Assistant Inspector in Charge, U.S. Postal Inspection Service (USPIS), Marlon Miller, Special Agent in Charge, Homeland Security Investigations (HSI), and Elias Papoulias, Resident Agent in Charge, Social Security Administration Office of Inspector General announced the indictment and arrests.
The indictment alleges that the defendants are linked in a vast document trafficking organization, wherein defendants obtained birth certificates and Social Security cards in the names of real individuals from Puerto Rico, shipped those document sets to Southern Ohio and then sold the document sets in the Cincinnati area. The defendants allegedly sold the document sets for $900-$1200 each.
The defendants include:
- Cipriano Diaz, 38, of Cincinnati
- Ramon E. Fuentes Morillo, 49, of Puerto Rico
- Oris Mercedes Baez Ramirez, 49, of Hamilton
- Jorge Roblero, 34, of Cincinnati
- Kathya Roblero, 50, of Cincinnati
- Chilango Zuniga, 40, of Hamilton
- Esmeralda Hernandez Cervantes, 36, of Cincinnati
- Susana Angiolina Urena, 44, of Hamilton
- Fernano Evelio Velasquez-Morales, 31, of Cincinnati
Each of the defendants was charged with conspiracy to commit wire and mail fraud, a crime punishable by up to 20 years in prison. The indictment also includes 29 counts of aggravated identity theft, a crime punishable by a mandatory two years imprisonment for each count, and two counts of money laundering, which each carry a maximum sentence of 20 years in prison.
U.S. Attorney Stewart commended the investigation of this case by law enforcement, and Assistant U.S. Attorney Jessica W. Knight and Cincinnati Branch Chief Emily N. Glatfelter, who are prosecuting the case.
An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
Gahanna Woman Charged with Illegally Receiving VA BenefitsRead the Press Release
COLUMBUS, Ohio – A federal grand jury has charged Rita Green, 55, of Gahanna, Ohio, with illegally receiving Department of Veterans Affairs Dependency and Indemnity Compensation benefits in an indictment returned in Columbus, Ohio.
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), and Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Division, announced the indictment returned yesterday.
The indictment alleges that Green kept $89,646.22 of Department of Veterans Affairs Dependency and 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.
It is alleged that after Green’s mother died in 2009, Green continued to withdraw the benefits from the bank account of her mother and use the money via a debit card in her mother’s name.
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.
An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
Columbus Man Pleads Guilty to Marijuana, Money Laundering, Gun ChargesRead the Press Release
COLUMBUS, Ohio – Richard Spriggs, Sr., 47, of Columbus, pleaded guilty in U.S. District Court to conspiracy to possess with intent to distribute marijuana, conspiracy to commit money laundering and unlawful possession of a firearm.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Joseph P. Reagan, Special Agent in Charge, Drug Enforcement Agency (DEA), Kathy A. Enstrom. Special Agent in Charge, Internal Revenue Service (IRS) Criminal Investigation, Cincinnati Field Office and Columbus Police Chief Kim Jacobs, announced the plea entered into yesterday before U.S. Magistrate Judge Terence P. Kemp.
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 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.
Spriggs used the drug proceeds to purchase at least two residences by paying cash. He used pre-paid debit cards which he funded in another person’s name as his personal credit card, buying air travel, rental vehicles and cellular telephone bills.
Spriggs pleaded guilty to one count of possession with intent to distribute marijuana, one count of money laundering and one count of unlawful possession of a firearm by a convicted felon.
The marijuana charge carries a potential maximum sentence of 40 years imprisonment, and conspiracy to commit money laundering and unlawful possession of a firearm each carry a potential maximum sentence of 10 years in prison.
Spriggs has agreed to forfeit approximately $86,000 in cash, firearms and ammunition.
“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 Kathy A. Enstrom, 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.
Four Individuals Sentenced for Biodiesel Production FraudRead the Press Release
WASHINGTON – Dean Daniels, 52, Richard Smith, 57, Brenda Daniels, 45 and William Bradley, 58, all of Florida, pleaded guilty and were sentenced today in U.S. district court for charges related to a scheme involving the false production of biodiesel.
Dean Daniels was sentenced to 63 months incarceration, Bradley was sentenced to 51 months incarceration, Smith was sentenced to 41 months incarceration and Brenda Daniels was sentenced to 366 days incarceration.
Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division, U.S. Attorney Carter M. Stewart for the Southern District of Ohio, Acting Special Agent in Charge Troy N. Stemen for the Internal Revenue Service Criminal Investigation (IRS) and Acting Special Agent in Charge Jeffrey Martinez of the Environmental Protection Agency’s (EPA) Criminal Enforcement Program in Ohio and Regional Special Agent in Charge Max D. Smith of the Department of Transportation’s Office of Inspector General announced the sentences handed down today by Senior U.S. District Court Judge James L. Graham.
According to court documents, the defendants profited by unjustly generating and selling biodiesel credits (RINs) and unjustly claiming biodiesel tax credits for the production and blending of fuel that was not actually biodiesel.
“Congress enacted incentives for the production of biofuels to make the United States stronger and more energy independent and to move our energy economy into the 21st century,” said Assistant Attorney General Cruden. “The fraud perpetrated by the defendants threatens these important public policies. The Justice Department will vigorously prosecute those seeking to line their pockets using scams like this one.”
The defendants were all employees and officers of New Energy Fuels LLC, a business in Waller, Texas, that claimed to process animal fats and vegetable oils into biodiesel. The defendants subsequently relocated, operating a similar scheme at Chieftain Biofuels LLC in Logan, Ohio.
The defendants would purchase low-grade feedstock and perform minimal processing to produce a low-grade fuel. The fuel was not biodiesel, however, the defendants would represent to the EPA that they had produced biodiesel. They would generate fraudulent biodiesel RINs and sell them to various third parties. Biodiesel RINs cannot be generated unless the biodiesel produced meets industry standards. In total, the defendants sold over $15 million worth of fraudulent biodiesel RINs.
The defendants also made false claims to the IRS in order to obtain the biodiesel tax credit that they were not eligible to receive. Throughout 2009, 2010 and 2011, refundable tax credits were available for renewable fuel producers. If companies complied with IRS regulations, they could earn one dollar per gallon of biodiesel. It was illegal to claim this tax credit unless the biodiesel was produced, blended and sold in compliance with rules and regulations. Among other requirements, the biodiesel had to meet industry standards, which the defendant’s fuel did not. In total, the defendants claimed over $7 million in false biodiesel tax credits.
In addition, New Energy Fuels’ production process generated substantial hazardous by-products. Defendant Dean Daniels arranged for an employee of New Energy Fuels to transport the wastes off-site at night. That employee, Lonnie Perkins, previously pleaded no-contest in Texas to several charges related to the dumping of hazardous waste in and around the city of Houston.
“The Renewable Fuel Standard helps reduce the climate impact of transportation fuel sold in this country,” said Acting Special Agent in Charge Martinez. “The criminal activity by these defendants has real consequences. The defendants manipulated and utilized federal governmental programs to line their pockets by fraud. These guilty pleas demonstrate EPA’s commitment, working closely with our partners at the Department of Justice, to pursue these criminal cases vigorously. Companies and their managers need to understand there are serious consequences to skirting the rules and undermining the integrity of an EPA program.”
“Today’s sentencings mark the successful end of an investigation that uncovered a complicated fraudulent scheme that generated millions of dollars through false biodiesel tax credits,” said Acting Special Agent in Charge Stemen. “We want everyone to take advantage of the deductions and credits to which they are entitled by law; however, no one is entitled to defraud the government."
“The Office of Inspector General is committed to investigating and seeking prosecution of those who choose to endanger the public by illegally transporting, distributing, or disposing of hazardous materials,” said Regional Special Agent in Charge Smith. “Today’s sentencing should send a clear warning that these fraudulent actions and illegal hazmat violations will not be tolerated.”
Each of the defendants pleaded guilty to conspiracy to commit wire fraud and to defraud the United States. Dean Daniels also pleaded guilty to offering a hazardous material for transport without providing or affixing proper placards.
Assistant Attorney General Cruden and U.S. Attorney Stewart commended the cooperative investigation by law enforcement, including the Houston Police Department, as well as Department of Justice Trial Attorney Adam Cullman and Assistant U.S. Attorney J. Michael Marous, who represented the United States in this case.
Two Ohio-Based Tax Return Preparation Business Executives Indicted for Nationwide Conspiracy and Other Tax-Related CrimesRead the Press Release
WASHINGTON – Two Ohio residents were arrested today after being indicted on Aug. 25, by a federal grand jury sitting in Dayton, Ohio, for conspiracy and tax-related crimes, announced Acting Deputy Assistant Attorney General Bruce M. Salad of the Justice Department’s Tax Division.
According to the 23-count indictment, Fesum Ogbazion, of Beavercreek, Ohio, and Kyle Wade, formerly of West Chester, Ohio, were indicted on one count of impeding the administration of the Internal Revenue Code, one count of conspiracy to commit wire fraud and five counts of wire fraud. Ogbazion is also charged with six counts of money laundering, one count of evasion of payment of employment taxes, eight counts of failure to collect and pay over employment taxes and one count of bank fraud.
According to the allegations in the indictment, Ogbazion owned and controlled ITS Financial LLC, which was the national franchisor of Instant Tax Service (ITS), a tax preparation business Ogbazion founded that claimed to have more than 1,100 franchise locations throughout the United States in 2009. Wade was the vice president of financing for ITS and owned multiple ITS franchises.
From about January 2004 through November 2012, Ogbazion and Wade executed a scheme to obstruct the Internal Revenue Service (IRS), wherein numerous ITS franchises filed false federal income tax returns without valid Forms W-2 and without the permission of their taxpayer clients. The false returns included false and inflated sole proprietorship Schedule C income in an attempt to increase the Earned Income Tax Credit. Over the course of several years, Ogbazion also instructed an ITS employee to electronically file large volumes of unsigned tax returns on the first day of the “tax filing season,” then falsely backdated customer filing authorizations. In an attempt to obstruct IRS civil compliance audits, ITS maintained and filed false documents with the IRS, including fabricated Forms W-2 created by ITS employees using tax preparation software, and forged client signatures on various false IRS forms.
From about December 2009 through November 2012, Ogbazion and Wade also conspired to generate loan and tax return preparation fees for ITS and its franchises by luring low-income and unsophisticated taxpayers into ITS franchises through a nationwide advertising campaign that offered customers tax refund anticipation loans. Despite the fact that ITS did not have an independent lender that could fund the promised loans, ITS collected loan application and tax preparation fees from its customers. For the 2011 tax filing season, Ogbazion and Wade represented to ITS staff, franchises and customers that refund anticipation loans were obtained through an independent lender, even though Ogbazion owned the purported lender, which had limited lending capabilities. Ogbazion knew that the overwhelming majority of loan applications would be denied. In total, the indictment alleges that ITS generated more than $12.5 million in fees in 2010, and more than $3.1 million in fees in 2011 from this loan scheme.
The indictment also alleges that Ogbazion was responsible for ITS’ and TaxMate LLC’s federal employment payroll taxes. He failed to pay over approximately $1.26 million in payroll taxes due from these businesses during four tax quarters in 2009 and 2010. Ogbazion also evaded the IRS’ attempts to collect ITS and TaxMate federal payroll taxes by directing business revenue to nominee accounts, placing assets in the names of nominee entities and making false statements to an IRS revenue officer during the course of collection activity, among other acts of concealment.
If convicted of impeding the administration of the Internal Revenue Code, the defendants face a statutory maximum sentence of three years in prison and a fine of up to $250,000. If convicted of conspiracy to commit wire fraud and wire fraud, the defendants face a statutory maximum sentence of 30 years in prison and a fine of up to $1 million for each count. If Ogbazion is convicted of money laundering, he faces a statutory maximum sentence of 20 years in prison and a fine of up to $500,000. If convicted of tax evasion and failure to pay over employment taxes, Ogbazion faces a statutory maximum sentence of five years in prison and up to a $250,000 fine for each count. Finally, Ogbazion faces a statutory maximum sentence of 30 years in prison and up to a $1 million fine if he is convicted of bank fraud.
The Tax Division commended the special agents of IRS – Criminal Investigation, who investigated the case, and Senior Litigation Counsel Corey Smith and Trial Attorney Mark S. McDonald of the Tax Division and Assistant U.S. Attorney Jessica Knight of the Southern District of Ohio, who are prosecuting the case.
An indictment merely alleges that crimes have been committed. The defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Former Ohio Deputy Treasurer Extradited from Pakistan to Serve 15-Year Sentence for BriberyRead the Press Release
A former deputy treasurer of Ohio has been extradited from Pakistan to the United States to serve a 15-year prison sentence for his role in a bribery and money laundering scheme involving the Ohio Treasurer’s Office.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, First Assistant U.S. Attorney Mark T. D’Alessandro of the Southern District of Ohio, Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Division, Attorney General Mike DeWine of Ohio and U.S. Marshal Peter C. Tobin of the Southern District of Ohio made the announcement.
Amer Ahmad, 40, of Chicago, pleaded guilty in December 2013 to federal program bribery and conspiracy to commit federal program bribery, honest services wire fraud and money laundering. Following his guilty plea, Ahmad fled the United States and was arrested by Pakistani authorities while attempting to illegally enter that country. He has remained in custody and the U.S. government requested his extradition. On Dec. 1, 2014, Ahmad was sentenced in abstentia by U.S. District Judge Michael H. Watson of the Southern District of Ohio to 15 years in prison and ordered to forfeit $3.2 million in illicit proceeds.
A remand hearing has been scheduled for 10:00 a.m. on Friday, August 28, before U.S. District Judge Watson.
According to admissions in connection with his guilty plea, from January 2009 through January 2011, Ahmad used his position as deputy treasurer to direct official state of Ohio business to securities broker Douglas E. Hampton in return for bribes. Ahmad and Chicago businessman Joseph Chiavaroli concealed the payments they received from Hampton by passing them through the accounts of their landscaping business. Hampton also funneled more than $123,000 to Mohammed Noure Alo, an attorney and lobbyist who was Ahmad’s close personal friend and business associate. Over the course of the scheme, Hampton paid in excess of $500,000 in bribes and received, in exchange, approximately $3.2 million in commissions for 360 securities trades on behalf of the Ohio Treasurer’s Office.
In November 2014, Hampton and Alo were sentenced to 45 months and 48 months in prison, respectively, for their roles in the scheme. Chiavaroli was sentenced in December 2014 to 18 months in prison.
The case was investigated by the FBI’s Central Ohio Public Corruption Task Force, which includes special agents from the FBI and the Ohio Bureau of Criminal Investigation. The U.S. Marshals Service joined the investigation after Ahmad fled the United States. The Criminal Division’s Office of International Affairs provided significant assistance in this matter. The case is being prosecuted by Trial Attorneys Eric L. Gibson and Menaka Kalaskar of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Douglas W. Squires of the Southern District of Ohio.
Former Ohio Deputy Treasurer Extradited from Pakistan to Serve 15-Year Sentence for BriberyRead the Press Release
WASHINGTON – A former Deputy Treasurer of Ohio has been extradited from Pakistan to the United States to serve a 15-year prison sentence for his role in a bribery and money laundering scheme involving the Ohio Treasurer’s Office.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, First Assistant U.S. Attorney Mark T. D’Alessandro of the Southern District of Ohio, Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Division, Attorney General Mike DeWine of Ohio and U.S. Marshal Peter C. Tobin of the Southern District of Ohio made the announcement.
Amer Ahmad, 40, of Chicago, pleaded guilty in December 2013 to federal program bribery and conspiracy to commit federal program bribery, honest services wire fraud, and money laundering. Following his guilty plea, Ahmad fled the United States and was arrested by Pakistan authorities while attempting to illegally enter that country. He has remained in custody and the U.S. government requested his extradition. On Dec. 1, 2014, Ahmad was sentenced in abstentia by U.S. District Judge Michael H. Watson of the Southern District of Ohio to 15 years in prison and ordered to forfeit $3.2 million in illicit proceeds.
“Today’s extradition demonstrates the never-ceasing efforts by investigators at home and abroad to bring to justice those who abuse positions of power to defraud,” said First Assistant U.S. Attorney Mark T. D’Alessandro of the Southern District of Ohio.
“Amer Ahmad abused the public’s trust and ran halfway across the globe to hide,” stated FBI Cincinnati Special Agent in Charge Angela L. Byers. “Tenacious FBI Special Agents and investigators continued to pursue Ahmad until he could be returned to face justice. Now he will have plenty of time to reflect on his corrupt actions while serving out his lengthy prison sentence.”
“Deputy U.S. Marshals and FBI Special Agents worked hand in hand to track fugitive Ahmad and return him to justice,” said Pete Tobin, U.S. Marshal, Southern District of Ohio. “If you violate the trust of the American public and the laws of the land, we will pursue you wherever you may be found.”
According to admissions in connection with his guilty plea, from January 2009 through January 2011, Ahmad used his position as Deputy Treasurer to direct official state of Ohio business to securities broker Douglas E. Hampton in return for bribes. Ahmad and Chicago businessman Joseph Chiavaroli concealed the payments received from Hampton by passing them through the accounts of their landscaping business. Hampton also funneled more than $123,000 to Mohammed Noure Alo, an attorney and lobbyist who was Ahmad’s close personal friend and business associate. Over the course of the scheme, Hampton paid in excess of $500,000 in bribes and received, in exchange, approximately $3.2 million in commissions for 360 securities trades on behalf of the Ohio Treasurer’s Office.
Hampton and Alo were sentenced in November 2014 to 45 months in prison and 48 months in prison, respectively, for their roles in the scheme. Chiavaroli was sentenced in December 2014 to 18 months in prison.
A remand hearing is being scheduled to be held at 10am on Friday in front of U.S. District Court Judge Michael H. Watson.
The case was investigated by the FBI’s Central Ohio Public Corruption Task Force, which includes special agents from the FBI and the Ohio Bureau of Criminal Investigation. The U.S. Marshals Service joined the investigation after Ahmad fled the United States. The Criminal Division’s Office of International Affairs provided significant assistance in this matter. The case is being prosecuted by Assistant U.S. Attorney Douglas W. Squires of the Southern District of Ohio and Trial Attorneys Eric L. Gibson and Menaka Kalaskar of the Criminal Division’s Public Integrity Section.
14 Arrest Warrants Issued in Alleged Food Stamp Fraud, Drug Trafficking ConspiracyRead the Press Release
DAYTON, Ohio – An investigation by federal, state and local law enforcement in Butler County has led to the issuance of 14 arrest warrants on people charged in a conspiracy to defraud the United States, wire fraud, illegal use of Food Stamp benefits, theft of public money, money laundering and possession with intent to distribute a controlled substance (including near schools and playgrounds).
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Harold Torrens, Agent in Charge, Ohio State Highway Patrol, Ohio Investigative Unit, Anthony Mohatt, Special Agent in Charge, United States Department of Agriculture (USDA) Office of Inspector General, Mark Porter, Special Agent in Charge, United States Secret Service, Butler County Sheriff Richard Jones, Hamilton County Sheriff Jim Neil, Fairfield Police Chief Mike Dickey, Cincinnati Police Chief Jeffrey Blackwell and Warren County Sheriff Larry Sims and other members of the Southern District of Ohio Task Force announced the arrests that took place today.
This morning federal, state and local law enforcement officials executed 19 search warrants, 14 arrest warrants and four seizure warrants against the owners, operators and employees of Butcher Shop Food Distributors, LLC of 300 Commercial Drive, Fairfield, OH and US Beef of Cincinnati, LLC of 3210 Profit Drive, Fairfield, OH.
Locations searched included business premises, residences and vehicles. Today’s raid culminated an 18-month undercover investigation into the suspected criminal practices of both of these retail meat home delivery services that operate in an approximate 50-mile radius of Fairfield. Their door-to-door retail sales of beef, poultry, pork and sea food products have impacted residential customers in Butler, Hamilton, Warren, Montgomery and Greene Counties.
Court documents allege that since 2011, individuals associated with Butcher Food Shop Distributors LLC and U.S. Beef Cincinnati LLC in Fairfield, Ohio actively engaged in illegal/fraudulent SNAP EBT (Food Stamp) transactions in exchange for cash. It is alleged that the owners, managers and other employees of the door-to-door meat retailers repeatedly, continually and illegally acquired and redeemed SNAP benefits in exchange for ineligible items, including money, Oxycodone, heroin and marijuana.
USDA records show that between December 2011 and May 2015, approximately 8,145 suspected fraudulent SNAP EBT transactions were completed via voucher for U.S. Beef employees for a total amount of approximately $1.1 million. The total estimated fraud for the Butcher Shop is approximately $382,000 and the total estimated number of SNAP EBT transactions for that shop is 7,912.
Initial court appearances for the arrestees are scheduled for 1:30 PM on August 27, 2015 before U.S. Magistrate Judge Michael J. Newman. They include:
- Steven E. Mueller, 61, of Fairfield
- Joseph Raymond Gray, 34, of Fairfield
- Jeffrey C. Knab, 58, of Cincinnati
- Andrie Lamarr Scott, 22, of Cincinnati
- Francis E. Racicot, IV, 32, of Cincinnati
- Rici Lynn Hopkins, 25, of Cincinnati
- Christopher Doane, 29, of Cincinnati
- Scott Andrew Traum, 45, of Cincinnati
- Joey Lightcap-Traum, 43, of Cincinnati
- Dalton Andrew Traum, 19, of Cincinnati
- Keith Blankenship, 35, of Loveland
- Gregory M. Brown, 35, of Cincinnati
- Jordan A. Kaiser, 22, of Fairfield
- William N. King, 22, of Fairfield
The Southern District of Ohio Task Force is an electronic and financial crimes task force made up of approximately 60 federal, state, and local law enforcement agencies in Ohio. This task force, along with an additional 80 electronic and financial networks across the United States, has been established to prevent, detect and investigate various forms of criminal activity that have large community impact.
U.S. Attorney Stewart commended the cooperative investigation by the local, state and federal law enforcement, as well as Assistant U.S. Attorney Dwight Keller, who is prosecuting the case.
Charges contained in a complaint are allegations. All defendants should be presumed innocent until and unless proven guilty in court.
Co-Founder of OXYwater and Wife Sentenced for Wire Fraud, Money Laundering and Tax CrimesRead the Press Release
WASHINGTON – A husband and wife residing in Lewis Center, Ohio, were sentenced to prison in U.S. District Court today for their roles in a fraud scheme related to the company Imperial Integrative Health Research and Development LLC (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.
Preston J. Harrison, 43, and Lovena Harrison, 42, were sentenced by U.S. District Judge Gregory L. Frost of the Southern District of Ohio. Preston Harrison was sentenced to serve 83 months in prison and three years of supervised release, and ordered to pay $375,985.15 in restitution to the Internal Revenue Service (IRS) and $8,840,706 to victims of the fraud, and to forfeit $1.1 million, including two vehicles, eight weapons, cash and the contents of a bank account. Lovena Harrison, Preston Harrison’s wife, was sentenced to serve one year and one day in prison and three years of supervised release, and ordered to pay $375,985.15 in restitution to the IRS.
“The sentences imposed today reflect the department’s commitment to investigating and vigorously prosecuting individuals who defraud investors, misappropriate funds to finance lavish lifestyles and file false tax returns to conceal their ill-gotten gains,” said Acting Assistant Attorney General Ciraolo. “Like the Harrisons, those who engage in such conduct will pay a heavy price.”
The couple went to trial in March and were convicted of multiple crimes. Preston Harrison’s business partner, Thomas E. Jackson, 40, of Powell, Ohio, was also convicted at trial for his role in the scheme and is scheduled to be sentenced on Oct. 1. Preston Harrison was convicted of conspiracy to defraud the United States and 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 and filing a false income tax return, and structuring financial transactions to evade currency reporting requirements. 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.
“Preston Harrison and his co-conspirators made OXYwater appear to be a lucrative and profitable financial investment, touting investments and endorsements from athletes, a musician and others,” said U.S. Attorney Stewart. “After they convinced folks to invest, they misappropriated that money to fuel their own lavish lifestyle, buying items like jewelry, luxury vehicles, weapons and swimming pools.”
“Today’s sentencings mark the successful end of an investigation that uncovered an investment fraud scheme laced with a web of financial lies that generated millions of dollars through false promises and deceit,” said Acting Special Agent in Charge Troy N. Stemen of the IRS-Criminal Investigation (CI) Cincinnati Field Office. “Investment fraud schemes are often described as a house of cards. The underlying structure can fall apart at any time and expose the individuals responsible.”
“The Harrisons and their business partner took advantage of unsuspecting investors to line their own pockets,” said Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Division. “Hopefully they will now understand that their irresponsible actions have real consequences.”
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 the investors in Imperial 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, including the purchase of 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.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Stewart commended special agents of IRS-CI and FBI, who investigated the case, as well as Assistant United States Attorney Jessica Kim of the Southern District of Ohio and Trial Attorney Jason Scheff of the Tax Division, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Columbus Man Sentenced to 50 Months for Failure to Update Sex Offender RegistrationRead the Press Release
COLUMBUS, Ohio – Robert Jarrod Johnson, 33, most recently of Columbus, Ohio, was sentenced in U.S. District Court to 50 months in prison and five years of supervised release for failure to comply with the Sex Offender Registration and Notification Act.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, and Peter Tobin, U.S. Marshal, Southern District of Ohio, announced the sentence handed down yesterday by Senior U.S. District Judge Peter C. Economus.
According to court documents, Johnson was convicted of Second Degree Rape of a female juvenile in North Carolina in 2001. For at least the next 30 years, he was ordered to register as a sex offender in any state in which he lived or worked. Johnson moved to Columbus, Ohio and obtained employment and an Ohio state ID card, but never registered as a sex offender in Ohio. He was indicted in December 2014 on a federal Sex Offender Registration and Notification Act violation and pleaded guilty to that offense in February 2015.
During the course of the case, investigators discovered that between May 2013 and October 2013, Johnson allegedly committed multiple sex offenses against a girl between the ages of 12 and 13 in Columbus, Ohio, during the period in which he was not registering as a sex offender. Judge Economus ruled that it was appropriate to increase Johnson’s sentence based on that conduct.
In April 2015, Johnson was indicted in Franklin County on counts of Rape, Gross Sexual Imposition, and Unlawful Sexual Conduct with a Minor. That case remains pending. An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
U.S. Attorney Stewart commended the investigation by Senior Inspector Nicole Ralston, as well as Assistant United States Attorney Brian Martinez, who represented the United States in this case.
Sunbury Man Charged with Receipt and Distribution of Child PornographyRead the Press Release
COLUMBUS, Ohio – Mark W. Wolfe, 50, of Sunbury, Ohio, surrendered this morning to the U.S. Marshal Service in Columbus, Ohio, after being charged by criminal complaint for receipt and distribution of 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) announced the arrest.
According to the complaint, undercover investigators observed files containing child pornography being shared through an IP address belonging to Wolfe. During a search warrant executed on July 31 at Wolfe’s residence, investigators discovered a laptop containing approximately 486 videos and 203 images of child pornography. The files were located in several folders on the desktop of the computer under the user name “Mark.” Some of the videos showed children as young as eight-to-10 months old being sexually exploited.
Further forensic analysis of the computer revealed Skype chat messages between Wolfe and several other individuals. In these conversations, Wolfe allegedly claimed to have previously engaged in sex acts with minors and stated that his favorite age is five to ten years old.
Wolfe is scheduled for an initial appearance at 1:30pm today in front of Magistrate Judge Norah McCann King.
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/.
Stewart commended the investigation by the FBI Columbus Child Exploitation Task Force, which includes officers from the Westerville Police Department, Reynoldsburg Police Department and the Powell Police Department, as well as Assistant U.S. Attorney Heather A. Hill, who is prosecuting the case.
Charges contained in a criminal complaint are merely allegations. All defendants are presumed innocent until and unless proven guilty in court.
Jackson County Man Pleads Guilty to Illegally Purchasing Native American Human RemainsRead the Press Release
COLUMBUS, Ohio – Mark M. Beatty, 56, of Wellston, Ohio, pleaded guilty in U.S. District Court to violating the Native American Graves Protection and Repatriation Act by purchasing human remains of Native Americans. The case is the first criminal enforcement of the Native American Graves Protection and Repatriation Act in the Southern District of Ohio.
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, Jackson County Sheriff Tedd Frazier and Rick Perkins, Chief Ranger, National Park Service at Hopewell Culture National Historical Park, announced the plea entered into today before U.S. Magistrate Judge Elizabeth Preston Deavers.
According to court documents, individuals were observed digging in a rock shelter in Salt Creek Valley in Jackson County, Ohio. When they were approached, they ran off into the woods and left behind shovels, dirt sifters, buckets and trash. Investigators confirmed that at least two individuals were digging on the property and had unburied human remains. Beatty admitted to purchasing those remains.
An anthropologist confirmed that the human remains were consistent with Native Americans, specifically identifiable by cradle boarding, a cultural activity used only by Native American Indians in North America. The identity of the remains was also confirmed by an archeologist, who verified that rockshelters were used extensively for burials in Southern Ohio and specifically in Jackson County.
DNA testing concluded a direct connection to present day Native American Indians living in the United States today.
“We are going to continue to investigate crimes against the Native American Graves Protection and Repatriation Act,” Jackson County Sheriff Tedd Frazier said.
The parties involved in the case have agreed to a proposed sentence of three years of probation including three months home confinement, a $3,500 fine and restitution in the amount of $1,000 to the Miami Tribe of Oklahoma, to be used for re-burial of the Native American remains. The remains will be transferred to the federally recognized tribes who have assisted with this case, and re-buried in Ohio at an undisclosed location and in private once all the court proceedings are completed.
Beatty has also agreed to publish an advertisement in a circulation warning others not to engage in illegal excavation of Native American bones and artifacts. As part of his plea, he has agreed to perform 100 hours of community service for a program that protects or promotes the interests of Native Americans.
U.S. Attorney Stewart commended the investigation by the Jackson County Sheriff’s Office and FBI and the participation from an archeologist from Wayne National Forest and researchers from Ohio University, The Ohio State University and Washington State University, as well as Assistant United States Attorneys J. Michael Marous and Brian Martinez, who are representing the United States in this case.
Father and Son Sentenced for Illegal Deer TraffickingRead the Press Release
COLUMBUS, Ohio – Donald W. Wainwright Sr., 49, of Live Oak, Fla., was sentenced in U.S. District Court to 21 months in prison and a $125,000 fine for 12 charges related to violating the Lacey Act, one count of conspiracy and one count of wire fraud. His son, Donald W. Wainwright, Jr., 29, of Live Oak, Fla., was sentenced to four months of house arrest and three years of probation for eight charges related to violating the Lacey Act.
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 sentences handed down by U.S. District Chief Judge Edmund A. Sargus, Jr.
According to court documents, the co-conspirators 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. Wainwright Jr. was part-time resident and part-time operator of the site in Ohio.
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 shipment of deer to be certified to be disease free. As a result, deer herds in Florida were potentially exposed to these diseases. His attempted shipment to Georgia was intercepted on I-71 South, about 50 miles from the Ohio River, when Ohio Wildlife officers noticed deer noses and antlers inside a cargo trailer and pulled over a truck driven by Wainwright Sr.’s employees.
“Trophy-sized white-tailed deer can sell for hundreds of thousands of dollars apiece if the animals come from herds that have been certified by government agricultural officials to be free from disease,” U.S. Attorney Stewart said. “Farmers are intensely interested in the disease status of white-tailed deer herds because their diseases can be transmitted to cattle and humans with potentially fatal results.”
Wainwright Sr. placed federal identification tags from a certified deer that had previously died into the ear of uncertified deer they were selling. He 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.
"Chronic wasting disease can decimate wild deer and elk populations and we take egregious violations like this very seriously," said U.S. Fish and Wildlife Service Special Agent in Charge Gregory Jackson. "We would like to thank our law enforcement counterparts in Ohio, Florida and Georgia for sharing their expertise and resources to fully investigate this case.”
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 also sentenced to 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 violating the Lacey Act.
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 Peter Glenn-Applegate and J. Michael Marous, who are representing the United States in this case.
Hilliard Man Sentenced to 216 Months for Producing Images of Child PornographyRead the Press Release
COLUMBUS, Ohio – Jeremiah R. Malfroid, 34, of Hilliard, Ohio, was sentenced in U.S. District Court to 216 months in prison for production of child pornography.
Carter M. Stewart, U.S. 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), and members of the Franklin County Internet Crimes Against Children Task Force announced the sentence handed down today by U.S. District Judge Gregory L. Frost.
According to court documents, investigators with the Franklin County Internet Crimes Against Children (ICAC) task force connected files containing child pornography to the defendant’s computer. While executing a search warrant and forensic examination of Malfroid’s computer, investigators discovered 281 files of child pornography, 77 of which depicted children who have been identified by the National Center for Missing and Exploited Children (NCMEC).
Numerous additional images on Malfroid’s computer depicted Malfroid sexually abusing a female child. It was confirmed that Malfroid had access to the juvenile female between approximately 2007 and 2013, when the child was three to nine years old.
Malfroid was charged by criminal complaint in October 2014 and absconded during the investigation. He turned himself in to local authorities in California in December 2014, after being profiled on the U.S. Immigration and Customs Enforcement (ICE) Operation Predator smartphone app. A user-generated Facebook post indicating Malfroid’s fugitive status had been created the same month and shared nearly 200,000 times.
Malfroid pleaded guilty to production of child pornography on April 2, 2015.
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
Upper Arlington Police Department
Grove City Police Department
Columbus Police Department
Grandview Heights Police Department
Whitehall Police Department
Hilliard Police Department
Westerville Police Department
Homeland Security Investigations
U.S. Secret Service
Ohio ICAC
Franklin County Prosecutor's Office
This case was 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 cooperative investigation by HSI and the Franklin County ICAC Task Force, as well as Assistant United States Attorneys Heather A. Hill and Jessica H. Kim, who represented the United States in this case.
Marietta Industrial Enterprises, Inc. Pleads Guilty to Causing Oil Spill on Ohio RiverRead the Press Release
COLUMBUS, OHIO -- Marietta Industrial Enterprises, Inc. (MIE) pleaded guilty today in U.S. District Court in Columbus to charges related to an oil spill on the Ohio River caused by MIE on October 2, 2013.
Carter Stewart, U.S. Attorney for the Southern District of Ohio, Jason D. Wimer, Special Agent in Charge, United States Coast Guard Investigative Service (CGIS), Ohio Attorney General Mike DeWine, and Justin A. Oesterreich, Acting Special Agent in Charge of the U.S. Environmental Protection Agency (U.S. EPA) announced the guilty plea today by MIE in front of U.S. District Chief Judge Edmund A. Sargus, Jr.
According to court documents, MIE owned and operated a barge which was located on the Ohio River, near the MIE facility in Marietta, Ohio. On October 1, 2013, an MIE employee pumped out the ballast tanks of the barge which contained a significant amount of oil, without first checking the tanks. By 11:00 a.m. on the day of the spill, an oil sheen could be seen on the Ohio River approximately 75 feet downstream of the barge.
In the first count of the information, MIE is charged with violating the Oil Pollution Act for negligently causing an oil spill on the Ohio River. Also related to the oil spill, in the second count, MIE is charged with violating the Refuse Act, which prohibits the discharge of oil or oily wastewater from a barge into navigable waters of the United States.
A plea agreement, which has been submitted for the Court’s approval, provides that MIE will be fined $35,000, implement a compliance program, and be placed on probation for one year. In addition, the plea agreement provides that $7,500 of the fine will be paid to the individual who reported the spill to the Coast Guard, and that MIE will make a community service payment of $1,000 to an organization to be named at the time of sentencing.
This case was jointly investigated by the Coast Guard and the U.S. EPA Criminal Investigation Division, all members of the Central Ohio Environmental Crimes Task Force, and is being prosecuted by Senior Trial Attorney Christopher J. Costantini, Special Assistant U.S. Attorney Brad Beeson and Assistant U.S. Attorney J. Michael Marous.
Former Upper Arlington Financial Advisor Pleads Guilty to Defrauding InvestorsRead the Press Release
COLUMBUS – Jason W. Cox, 39, now of Dublin, Ohio pleaded guilty to two counts of money laundering, two counts of mail fraud, and one count of wire fraud relative to a scheme to defraud his clients, one of which was an impaired adult, of the funds they had invested through him as their financial advisor.
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 plea entered into today before 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 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.
Cox was arrested on December 11, 2014 and indicted on January 8, 2015.
“Jason Cox took advantage of an impaired individual for his own financial gain, which is reprehensible,” said Kathy A. Enstrom, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. “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.”
Money laundering carries a maximum sentence of 10 years in prison and a $250,000 fine. Mail fraud and wire fraud are crimes punishable by up to 20 years in prison and a $250,000 fine.
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 is prosecuting the case.
16 Convicted in Joint Federal and State Drug Trafficking InvestigationRead the Press Release
More than $30,000 in drug proceeds and 10 firearms seized and forfeited in charges stemming from heroin connection between Chicago and Steubenville, Ohio
STEUBENVILLE, Ohio – Local, state and federal law enforcement agencies were recognized today for their efforts in the eventual conviction of 16 individuals and the seizure and forfeiture of more than $30,000 and 10 firearms.
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, commended the two-year investigation by law enforcement in Steubenville and Jefferson County, Ohio; Weirton, W. Va. and Chicago, Ill.
The investigation, dubbed “Chicago Boys” due to significant ties between the drug traffickers in the Steubenville area and suppliers and traffickers from the Greater Chicago area, led to the conviction of 16 individuals on federal and state charges related to narcotics trafficking and evidence tampering, as well as the seizure and forfeiture of more than $30,000 and 10 firearms. Leaders of the drug organization ultimately admitted responsibility for distributing as much as 30 kilograms of heroin in the Steubenville area during an approximate two year period.
“Heroin is impacting the lives of Americans in every state, in every region, and from every background and walk of life,” U.S. Attorney Stewart said. “The Steubenville area is no exception to this, which is why cooperative law enforcement efforts such as this one are so needed. The coordination represented by this effort illustrates a serious law enforcement commitment to loosening the grip that heroin has on our communities.”
“Whenever drug traffickers travel to the Ohio Valley from places like Chicago to sell heroin, significant federal resources will be allocated to disrupt and dismantle their operation,” said U.S. Attorney Ihlenfeld. “The convictions and sentences announced today are proof that great results can be achieved by combining intelligence and resources from law enforcement agencies that span multiple jurisdictions. My office in Northern West Virginia will continue to work with Mr. Stewart’s office in Southern Ohio to investigate and prosecute these cases, and in the end the communities that we serve will be safer places to live and raise a family.”
Stewart and Ihlenfeld, joined by officials from the Federal Bureau of Investigation (FBI), United States Marshal Peter Tobin, Cincinnati Field Division, representatives of the Ohio State Highway Patrol, Jefferson County Prosecutor Jane M. Hanlin, Jefferson County Sheriff Fred Abdalla, Steubenville Police Chief Bill McCafferty, Wintersville Police Chief Edward Laman and Toronto Police Chief Randy Henry praised the investigative and prosecutorial efforts of the coalition of agencies, and recognized the Jefferson County Prosecutor’s Office, the Jefferson County Drug Task Force, the Hancock-Brooke-Weirton Drug Task Force, and agents in the Cambridge FBI Office, recognizing their collaboration, professionalism and effectiveness in the investigation.
Convicted of federal charges for conspiracy to possess with intent to distribute heroin were:
Kinlawyed Hendrix, aka “Lo”, 27, Steubenville, Ohio
Calvin D. Bryant Jr., aka “Gunz”, 26, Canton, Ohio
Robert L. Simmons Jr., aka “Chase”, 19, Steubenville, Ohio
Jessie O. Birden, aka “J-Money”, 21, Steubenville, Ohio
Berryon F. Moore, III, aka “Pumpkin”, 25, Steubenville, Ohio
Joseph L. Dennis, 30, aka “JD” Toronto, Ohio
Sean Loveless, 29 aka “Puff” Steubenville, Ohio
Steven James, 36, Chicago, Ill.
Kyle M. Irvin, 30, Chicago, Ill.
Charles H. Thompson, 28, Chicago, Ill.Convicted of state charges related to drug trafficking and tampering with evidence were:
Lavinia Hearon, 29, Chicago, Ill.
Jacari Benson, 30, Weirton, W. Va.
Frederick L. McGowan, 39, Madison WI
Robert Jackson, 32, Steubenville, Ohio
Harry E. Stackhouse, 25, Steubenville, Ohio
Rashann D. Mukes, 28, Steubenville, Ohio
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. Possession of a firearm in furtherance of a drug trafficking crime carries a maximum federal sentence of 40 years in prison.U.S. Attorneys Stewart and Ihlenfeld also commended the cooperative efforts of the Ohio State Highway Patrol in the investigation and the U.S. Marshals Service in Ohio and Illinois who participated in the arrests in the case, as well as Assistant United States Attorney Michael Hunter and Special Assistant United States Attorney Jane Hanlin who prosecuted the federal cases.
Jury Convicts Dayton Man of Distribution and Possession of Child PornographyRead the Press Release
DAYTON – A United States District Court jury convicted Demian Pina, 34, of Dayton, Ohio of distribution and possession of child pornography.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Angela Byers, Special Agent in Charge, Federal Bureau of Investigations (FBI), Troy Police Chief Charles Phelps, Dayton Police Chief Richard Biehl, and members of the Internet Crimes Against Children (ICAC) task force, announced verdict reached today, which was returned following a trial that began on May 18 before U.S. District Judge Thomas M. Rose.
In November 2010, an undercover investigator working for the Cuyahoga County, Ohio ICAC was investigating individuals sharing child pornography using peer-to-peer networks. The investigator downloaded 12 image and video files containing child pornography from a person using a particular IP address. Records from the Internet Service Provider determined that the IP addressed received service at Demian Pina’s residence. A search warrant was executed at Mr. Pina’s residence in February 2011, in which various electronic media were seized. Subsequent examination of this computer media identified that two of the desktop computers contained images of child pornography.In November 2012, another undercover investigator working for the Cuyahoga County ICAC downloaded five image files containing child pornography from a person using a different IP address on the same peer-to-peer network. This IP address also received service at Mr. Pina’s residence. On three dates in March 2013, an undercover officer working for the Troy Police Department downloaded via the peer-to-peer network seven image files containing child pornography from the IP address receiving service at Mr. Pina’s residence. A search warrant was executed at Mr. Pina’s residence in June 2013 in which various electronic media were seized. Subsequent examination of this computer media identified that a desktop computer, laptop, and an external hard drive contained images and videos of child pornography.
Mr. Pina was identified as the individual distributing child pornography on the peer-to-peer network. He was indicted in February 2014 on five counts of distribution of child pornography and two counts of possession of child pornography. On June 25, 2015, following a four day jury trial, Mr. Pina was found guilty of all seven counts.
Pina faces between 5 and up to 20 years in prison on the distribution counts and up to 10 years imprisonment on the possession counts. He has been in custody since his arrest on February 26, 2014 and is scheduled for sentencing on October 16, 2015.
U.S. Attorney Stewart commended the cooperative investigation of this case by the FBI, Troy and Dayton Police Departments, and ICAC task force members. Assistant United States Attorneys Christy L. Muncy and Alex Sistla are representing the government in this case.
For-profit Education Company to Pay $13 Million to Resolve Several Cases Alleging Submission of False Claims for Federal Student AidRead the Press Release
WASHINGTON – Education Affiliates (EA), a for-profit education company based in White Marsh, Maryland, has agreed to pay $13 million to the United States to resolve allegations that it violated the False Claims Act by submitting false claims to the Department of Education for federal student aid for students enrolled in its programs. EA operates 50 campuses in the United States under various trade names, including All State Career, Fortis Institute, Fortis College, Tri-State Business Institute Inc., Technical Career Institute Inc., Capps College Inc., Driveco CDL Learning Center, Denver School of Nursing and Saint Paul’s School of Nursing, which provide post-secondary education training programs in several professions in the states of Alabama, Florida, Maryland, Ohio and Texas.
“Today’s settlement is an excellent example of cooperation among multiple offices of the federal government to achieve a result that protects federal student aid funding and the interests of individual students,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Schools have an obligation to live up to their commitment to the government and their students when they accept federal student aid funds.”
The government alleged that employees at EA’s All State Career campus in Baltimore altered admissions test results so as to admit unqualified students, created false or fraudulent high school diplomas and falsified students’ federal aid applications, and that multiple EA schools referred prospective students to “diploma mills” to obtain invalid online high school diplomas. These allegations also led to criminal convictions of two All State Careers admission representatives, Barry Sugarman and Jesse Moore, and a test proctor, Jacqueline Caldwell.
“Students who apply for federal financial aid to attend trade and professional schools are required to show that they have the necessary skills to complete the educational program and work in the field,” said U.S. Attorney Rod J. Rosenstein of the District of Maryland. “This settlement resolves the government's allegations that Education Affiliates defrauded the government by changing students' test scores and enrolling students with invalid diploma mill high school ‘diplomas’ ordered online.”
“The various cases that were settled here include numerous allegations of predatory conduct that victimized students and bilked taxpayers,” said Under Secretary Ted Mitchell of the U.S. Department of Education. “In particular, the settlement provides for repayment of $1.9 million in liabilities ordered by Secretary of Education Arne Duncan that resulted from EA awarding federal financial aid to students at its Fortis-Miami campus based on invalid high school credentials issued by a diploma mill. Secretary Duncan made clear that such abusive behavior would not be tolerated, and we will continue to work with the Justice Department and other federal agencies to ensure that postsecondary institutions face consequences when they violate the law.”
The settlement agreement also resolves allegations related to EA schools in Birmingham, Alabama, Houston and Cincinnati, including violations of the ban on incentive compensation for enrollment personnel, misrepresentations of graduation and job placement rates, alteration of attendance records and enrollment of unqualified students.
“Using fake high school diplomas is a particularly insidious abuse of the federal student aid system,” said Inspector General Kathleen Tighe of the U.S. Department of Education’s Office of Inspector General (OIG). “Students received only a worthless piece of paper.” Tighe commended the efforts of OIG staff and Department of Justice attorneys, whose outstanding investigative work led to this significant settlement.
The settlement resolves five lawsuits filed under the whistleblower provisions of the False Claims Act, which permit private citizens to sue on behalf of the United States and share in the recovery. As part of this resolution, the five whistleblowers will receive payments totaling approximately $1.8 million.
The settlements were the result of a coordinated effort by the U.S. Attorneys’ Offices of the District of Maryland, the Southern District of Texas, the Northern District of Alabama, Southern District of Ohio and the Middle District of Tennessee, as well as the Civil Division’s Commercial Litigation Branch, and the Department of Education and its OIG.
The cases are captioned United States ex rel. Roman v. All State Career, Inc. and Education Affiliates, Inc.,Civil Case No. JKB-10-1730 (D.Md.); United States ex rel. Thomas v. Education Affiliates, Inc., Civil Case No. JKB-14-332 (D.Md.); United States ex rel. Andrews v. Education Affiliates, Inc., et al., Civil Case No. H-13-2366 (S.D. Tex.); United States ex rel. Atkins, et al. v. Fortis Institute and Education Affiliates, LLC, Civil Case No. CV-14-1107-S (N.D. Ala.); and United States ex rel. McArthur, Gruff & Associates LLC v. Education Affiliates, Inc., Civil Case No. 1:14-CV-977 (S.D. Oh.). The False Claims Act claims resolved by the settlement are allegations only, and there has been no determination of liability.
Twenty Sentenced in Drug Trafficking ConspiracyRead the Press Release
COLUMBUS, Ohio – Twenty people indicted in December 2013 have been sentenced in U.S. District Court as of today for participating in a drug trafficking organization in Central Ohio.
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), Franklin County Sheriff Zach Scott and Columbus Police Chief Kim Jacobs announced the sentences.
The sentences are a result of a year-long investigation into the organization by local, state and federal law enforcement.
The organization was responsible for distributing cocaine, oxycodone, crack cocaine and marijuana in the central Ohio area. Some members of the organization, including some convicted felons, possessed firearms in furtherance of the drug trafficking activities. The group supplied drug distributors with firearms to protect the distributors, the drug supply and proceeds from potential robberies. Firearms were placed in strategic places in various locations to intimidate potential robbers.
According to court documents, members of the group would torture and threaten individuals with serious physical harm who were perceived as owing money or drugs to members of – or individuals who were seen as potential witnesses against – the drug conspiracy.
Some of the defendants would launder their drug trafficking proceeds by exchanging tens of thousands of dollars for casino chips at Hollywood Casino in Columbus.
Jermonte M. Fletcher was also indicted on drug, firearm and money laundering charges in connection with the group. He was fatally injured during a shootout with law enforcement agents in Columbus on January 27, 2015. Fletcher had been facing a statutory mandatory minimum of 115 years in prison.
U.S. Attorney Stewart acknowledged the cooperative investigation by the FBI, Columbus Police, Franklin County Sheriff, DEA, ATF, the Ohio Casino Control Commission, and Franklin County Prosecutor Ron O’Brien’s Office, as well as Assistant U.S. Attorneys David DeVillers and Kevin Kelley, and Special Assistant U.S. Attorney Jimmy Lowe with Franklin County Prosecutor O’Brien’s Office, who prosecuted the case.
Local Man Sentenced for Running $8.7 Million Ponzi SchemeRead the Press Release
CINCINNATI – John R. Bullar, 53, of Cincinnati, Ohio, was sentenced to 100 months in prison, three years of supervised release, was ordered to forfeit $535,408.68, and was ordered to pay approximately $6.2 million in restitution to the victims for committing wire fraud and money laundering relative to a fraudulent investment scheme that he ran for 10 years. Bullar previously pleaded guilty to the aforementioned charges on September 23, 2014.
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, Ohio Attorney General Mike DeWine, Commissioner Andrea Seidt, Ohio Department of Commerce, Division of Securities and Joseph T. Deters, Hamilton County Prosecuting Attorney announced the sentence handed down today by U.S. District Judge Michael R. Barrett.
According to court documents, between 2003 and September 2013 Bullar devised a scheme to defraud investors by soliciting millions of dollars under false pretenses, failing to invest investors' funds as promised, and misappropriating and converting investors' funds for his own benefit without the knowledge or authorization of the investors.
Bullar was the sole owner and operator of Executive Management Advisors, LLC ("EMA"), which had its principal place of business in Cincinnati, Ohio. Bullar also was the sole owner and operator of Priapus Group, LLC. Since at least 1998, Bullar offered investment opportunities to investors through his company, EMA. Bullar marketed himself as someone experienced in the financial services industry and who was successful in investing in commodity futures.
In an effort to persuade individuals to invest with him, Bullar frequently made numerous false representations. For example, Bullar told potential clients that he never had a losing quarter. Bullar also offered potential investors a false sense of security by telling potential investors that he, himself, was the biggest investor in EMA. Bullar told the investors that he would manage their funds even though it was below his minimum level of investment.
The majority of Bullar’s investors were friends, family members and fellow church members. Bullar told his clients that he had invested their money in precious metals, gold, silver, bonds, and foreign currency and that he made money based on the volatility of the market, regardless of whether the market was up or down. Bullar told clients that he preferred to keep the number of his investor’s small, so that he could "fly under the radar." Bullar also told clients that he had a computerized algorithm system that monitored the market for patterns and alerted him to potential losses. Bullar told investors that although he had been offered millions of dollars for the system he would not sell it, because he could make more money using the system rather than selling it. These representations were false, however, because in reality, Bullar had invested only a small amount of the money that he received from clients, using the vast majority of the money to pay other investors and his own personal expenses.
To induce current clients to keep investing, Bullar provided investors with quarterly statements purporting to show their account balances. These statements often showed substantial gains over a short period of time.
Although Bullar collected over $8.7 million from investors between mid-2006 and September 2013, only $580,500.00 was sent to brokers for trading. The remaining $8.1 million was never invested at all. The small fraction of investor money that Bullar actually sent to brokers for trading failed to generate profits and the money was either lost via trading or later withdrawn by Bullar.
In addition, investors actually paid taxes on the fictitious earnings. Bullar caused Forms 1099 to be issued to investors for tax purposes, which reported the fictitious gains. Investors relied on these documents to file their tax returns and investors paid taxes on the fictitious gains reported to them.
Bullar furthered his scheme by creating an appearance of legitimacy. Bullar created an investment blog for his clients (www.emafutures.com), which he updated regularly, sharing various articles and reports about the market. Bullar outfitted his home office, which investors frequented, with a television and three computer monitors to give investors the impression that he was constantly monitoring the market. Bullar’s expansive 5 bedroom/5 bathroom home also gave investors the impression that he was a successful trading advisor. In addition, Bullar also purchased an adjoining lot with investor money and used investor money to remodel the cabin on the lot, install a swimming pool and outdoor kitchen, and pay for professional landscaping on the lot. Bullar also entertained groups of investors at his home, treating investors to lavish dinners and paying for some investors to vacation with him.
In addition, Bullar used investor money to pay for the mortgage on his home, vacations, country club dues, boats, jet skis, sports tickets, and vehicles, among other things.
“Today's sentencing demonstrates how federal law enforcement, along with our State and Local law enforcement partners, band together to help put an end to the criminal behavior of those who prey on investors for their personal financial gain. IRS Criminal investigators will continue to use their financial expertise to identify and trace laundered funds in these types of investor fraud schemes,” said Kathy A. Enstrom, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office.
U.S. Attorney Stewart commended the investigation by the IRS-Criminal Investigation and Ohio Bureau of Criminal Investigation, the coordination of the Hamilton County Prosecutor’s Office, as well as Assistant United States Attorney Emily N. Glatfelter, who represented the United States in this case. U.S. Attorney Stewart also thanked the U.S. Commodity Futures Trading Commission, which has filed civil charges in a separate action.
California Man Pleads Guilty in Prescription Drug Diversion SchemeRead the Press Release
WASHINGTON – A Corona, California, man pleaded guilty today in U.S. District Court in Cincinnati to one count of conspiracy to commit mail and wire fraud for his participation in a large-scale, nationwide prescription 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 Field Office and Assistant Inspector in Charge Christopher White of the U.S. Postal Inspection Service (USPIS) Cincinnati Field Office announced the guilty plea, entered today by U.S. District Judge Timothy S. Black.
According to court documents, from May 2010 through December 2012, Vin Nguyen, 45, and others conspired to distribute illegally-diverted prescription drugs while concealing the true, illicit sources of the drugs. Nguyen purchased prescription drugs, including HIV medications, anti-psychotic medications and other brand name drugs, from various unlicensed and illegal sources in California and Florida. Working with co-conspirators, Nguyen then sold the drugs to other drug diverters without the statutorily required pedigree documents stating the origin of the drugs. Nguyen and his co-conspirators sold more than $6.5 million worth of diverted drugs.
“Illegal prescription drug diversion threatens the security of America’s drug supply chain,” said Principal Deputy Assistant Attorney General Mizer. “The Department of Justice will continue to protect American consumers by prosecuting those who engage in prescription drug diversion.”
From December 2011 through December 2012, Nguyen and others sold diverted prescription drugs to David Miller and his company, Minnesota Independent Cooperative (MIC). On May 6, David Miller and MIC 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 remain pending.
Nguyen and his co-conspirators used the company name “Modern Medical” when selling drugs to Miller and MIC. Modern Medical is a real California company that had no involvement in the drug sales. Nguyen and his co-conspirators simply hijacked the name to conceal their involvement and the true, illicit drug sources.
Miller and MIC, in turn, sold the prescription drugs obtained from Nguyen – and 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, unlicensed suppliers, including Nguyen – and falsely stated that B&Y Wholesale was an authorized distributor of the prescription drugs.
On Feb. 19, Yusef Yassin Gomez, the owner of B&Y Wholesale in Puerto Rico, pleaded guilty to one count of conspiracy to distribute prescription drugs without a wholesale license for his role in the conspiracy.
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 this case.
Former CEO Pleads Guilty to Bribery and Fraud Scheme Involving Red Light Camera ContractsRead the Press Release
WASHINGTON – A former chief executive officer of a red light camera vendor pleaded guilty today to participating in an eight-year bribery and fraud scheme, 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.
Karen L. Finley, 55, of Cave Creek, Arizona, pleaded guilty before U.S. Magistrate Judge Terence P. Kemp of the Southern District of Ohio to a one-count information charging her with conspiracy to commit federal programs bribery and honest services wire and mail fraud. Finley’s sentencing hearing will be scheduled at a later date.
From December 2005 to February 2013, Finley served as CEO of a red light camera enforcement company. As part of her plea agreement, Finley admitted that, between 2005 and 2013, she participated in a scheme in which the company made campaign contributions to elected public officials in the cities of Columbus and Cincinnati through a consultant retained by the company. According to admissions made in connection with her plea, Finley and others, including another executive of the company, agreed to provide the conduit campaign contributions with the understanding that the elected public officials would assist the company in obtaining or retaining municipal contracts, including a photo red light enforcement contract with the City of Columbus. Finley also admitted she and her co-conspirators concealed the true nature and source of the payments by the consultant’s submission and the company’s payment of false invoices for “consulting services,” which funds the consultant then provided to the campaigns of the elected public officials.
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.
Trio Charged with Running Illegal Pill Mill in Scioto CountyRead the Press Release
CINCINNATI – A federal grand jury has charged Margaret Temponeras, 50, of Portsmouth, Ohio, John Temponeras, 80, of Portsmouth, Ohio and Raymond Fankell, 60, of Wheelersburg, Ohio, with illegally running a pain clinic and distributing pain killers not for a legitimate purpose and outside the scope of medical practice in an indictment returned in Cincinnati.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Joseph P. Reagan, Special Agent in Charge, Drug Enforcement Administration (DEA), Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Division, Steven W. Schierholt, Executive Director, Ohio State Board of Pharmacy, and the Ohio High Intensity Drug Trafficking Area (HIDTA) announced the indictment returned today.
The indictment alleges that Margaret Temponeras and John Temponeras were physicians specializing in family practice and OBGYN respectively, who changed their medical focus to pain management and began operating Unique Pain Management LLC in Wheelersburg, Ohio. Margaret Temponeras also opened Unique Relief LLC in Wheelersburg, Ohio. Raymond Fankell owned and operated Prime Pharmacy Group Inc., doing business as Medi-Mart Pharmacy in Portsmouth, Ohio.
It is alleged that all three defendants dispensed diazepam, hydrocodone and oxycodone not for a legitimate purpose and outside the scope of medical practice. Margaret and John Temponeras allegedly “examined” more than 20 customers per day, and provided large amounts of prescription medications to customers that they knew or had a reasonable cause to believe were drug addicts or diverting/selling the medication.
The five-count indictment states that in furtherance of the conspiracy, the father and daughter would charge customers cash amounts that started at approximately $200 per office visit; they would not accept insurance payments. They allegedly referred patients to Fankell to have Fankell fill prescriptions. The court document also indicates that at least eight individuals were found dead after consuming medications prescribed by and dispensed from the defendants.
The three were charged with two counts of illegally distributing medication, which each carry a maximum penalty of 20 years in prison and a million dollar fine; these charges also carry an enhanced penalty of 20 years to life in prison if death resulted. John Temponeras and Raymond Fankell were charged with one count and Margaret Temponeras with two counts of maintaining a place for the purpose of distributing controlled substance, a crime punishable by up to 20 years in prison and a fine of up to $500,000.
U.S. Attorney Stewart commended the investigation of this case by the DEA, FBI, Ohio State Board of Pharmacy, and Ohio HIDTA.
An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
Cincinnati Man Sentenced to 96 Months for Dealing HeroinRead the Press Release
CINCINNATI – Joshua Walker, 24, of Cincinnati, was sentenced in U.S. District Court to 96 months in prison for possessing with intent to distribute a measurable amount of heroin and possession of a firearm in furtherance of a drug trafficking offense.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Donald J. Soranno, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Columbus Field Division, and Cincinnati Police Chief Jeffrey Blackwell announced the sentence handed down today by U.S. District Judge Susan J. Dlott.
According to court documents, on or about March 23, 2014, undercover officers observed Walker engage in several traffic violations. Officers continued to follow the defendant, and after he parked his car, they approached his vehicle. When Walker saw the officers walking toward him, he turned around, got back into his car, locked his vehicle and refused to open his door.
Officers eventually removed Walker from the vehicle and observed a pistol on the driver’s seat, along with a bag containing approximately 5.88 grams of heroin. The defendant had nearly $2,000 on his person and a digital scale was discovered in his glove compartment.
Walker pleaded guilty on March 24, 2015 to one count of possession with intent to distribute a measurable amount of heroin and one count of possession of a firearm in furtherance of drug trafficking.
U.S. Attorney Stewart commended the cooperative investigation by ATF and the Cincinnati Police Department, as well as Cincinnati Branch Chief Anthony Springer, represented the United States in this case.Columbus Man Sentenced for Six Armed Robberies in Four StatesRead the Press Release
COLUMBUS, Ohio – William J. McBride, Jr., 49, of Columbus, was sentenced in U.S. District Court to 216 months in prison for armed bank robberies in Ohio, West Virginia, Kentucky and Indiana.
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, William J. Ihlenfeld, II, United States Attorney for the Northern District of West Virginia, John E. Kuhn, Jr., Acting United States Attorney for the Western District of Kentucky, Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Joshua Minkler, United States Attorney for the Southern District of Indiana, announced the sentence handed down today by Senior U.S. District Court Judge James L. Graham.
According to court documents, between June 21, 2014 and August 23, 2014, McBride robbed six different federally insured banks in five different federal jurisdictions while armed with a dangerous weapon.
McBride, at gunpoint, demanded and received more than $21,000 in cash total from the banks. The defendant did not wear any disguise during the robberies, and witnesses in each location described him similarly.
On August 23, 2014, a witness reported McBride’s license plate number upon seeing the defendant flee in his vehicle after robbing the Wesbanco Bank in St. Clairsville, Ohio. Law enforcement officials discovered the vehicle was registered to McBride and subsequently arrested him later the same day in a hotel in Columbus, Ohio.
McBride pleaded guilty to six counts of armed robbery on February 2, 2015. He was also sentenced to five years supervised release.
U.S. Attorney Stewart commended the cooperative investigation by the FBI and other law enforcement agencies in each jurisdiction, as well as Assistant United States Attorney Salvador A. Dominguez, who represented the United States in this case.
Columbus Man Sentenced for Role in Marijuana Distribution RingRead the Press Release
COLUMBUS, Ohio – Kevin Whitely, 33, of Columbus, Ohio, was sentenced in U.S. District Court to 84 months in prison for distributing marijuana and money laundering.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Joseph P. Reagan, Special Agent in Charge, Drug Enforcement Administration (DEA), Kathy Enstrom, Special Agent in Charge, Internal Revenue Service Criminal Investigation, 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, in April 2010, DEA, IRS and Columbus Division of Police initiated an investigation into a marijuana trafficking organization. The investigation revealed that from December 2009 through September 2013 Whitely was involved with a large scale narcotics organization responsible for importing and distributing multiple kilograms of marijuana throughout central Ohio. Through surveillance, cooperating defendants, shipping documents and narcotic seizures, it was determined that this organization utilized various Ohio residences, business fronts, commercial freight, semi tractor-trailers and vehicles to store and transport narcotics and currency.
Specifically, Whitely and others received approximately 2,400 kilograms of marijuana that was transported from suppliers in Houston, Texas, to various fraudulent businesses in Columbus, Ohio. In order to conceal the identity of the marijuana, the marijuana shipments were disguised as hair care products, beauty supplies and whole grain rice in tightly wrapped packaging. During the course of the drug operation, the organization generated a significant amount of illegal proceeds from the sale of marijuana.
On September 11, 2013, DEA, IRS and Columbus Division of Police executed a search warrant at a warehouse located on North Hamilton Road in Columbus, Ohio, and a residence utilized by Whitely located on Ilene Road in Columbus, Ohio.
Upon entering the warehouse, agents observed Whitely and three other individuals removing numerous packages concealed inside approximately 12-15 pool tables. The packages contained approximately 500 kilograms of marijuana. It was determined that the marijuana originated in Texas and was delivered by commercial freight to the North Hamilton Road warehouse. Whitely and the co-conspirators intended to repackage the marijuana for the purpose of selling it to other drug traffickers in the Columbus area. In addition to the marijuana seized at the warehouse, law enforcement also seized $65,255 in U.S. currency from Whitley’s Ilene Road residence.
During the course of the drug conspiracy, Whitely earned substantial income from the sale of narcotics. Whitely used his drug proceeds to purchase assets and fund bank accounts through the use of nominees. Specifically, in March 2012 Whitley used a nominee to purchase a 2012 Infinitity G37 for approximately $44,000. Initially, Whitley paid the nominee $5,000 in cash to purchase the vehicle, and then paid the nominee $500 in cash per month until the vehicle was paid off.
Whitely also used a credit card obtained in a nominee name as his personal credit card. Whitely paid the nominee with cash earned from his drug sales for the charges he made on this credit card. In addition, Whitely deposited cash directly into the nominee’s bank account to reimburse the nominee for expenditures made by Whitley. Some of the transactions made by Whitely with this credit card included renting vehicles used to facilitate his drug trafficking activities.
Whitley pleaded guilty on October 28, 2014 to conspiracy to possess with the intent to distribute more than 1,000 kilograms of marijuana and money laundering.
He was ordered to forfeit $65,255 in cash that was seized during the execution of a search warrant on Ilene Road, Columbus, Ohio on September 11, 2013.
“All financial transactions leave a trail and we have the unique expertise to follow those leads,” said Kathy A. Enstrom, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. “Not only is a criminal going to jail for his crimes, but the government has seized a significant portion of the illegal proceeds through asset forfeiture.”
U.S. Attorney Stewart commended the cooperative investigation by the DEA, IRS-Criminal Investigation and the Columbus Division of Police, as well as Assistant United States Attorney Kenneth F. Affeldt, who is representing the United States in this case.
Short North Posse Fugitive Arrested in North CarolinaRead the Press Release
COLUMBUS, Ohio – Andre M. Brown, aka ‘Paco’, 33, of Columbus, Ohio was arrested this morning by FBI agents in Charlotte, North Carolina. Brown had been a fugitive since October 2014 when he was charged with nine counts in a superseding indictment that related to his role in the Short North Posse. With the arrest of Brown, there are no longer any indicted Short North Posse members at large.
Seventeen individuals were originally indicted in the racketeering case in July 2014. All of the defendants were accused of being an organized criminal enterprise known as the Short North Posse.
Brown was one of three more people indicted in October 2014 in connection with a series of violent crimes including 13 previously unsolved murders as well as other attempted murders, drug trafficking, weapons trafficking, extortion and robbery. The addition to the indictment included an additional 23 felonies, including one murder and nine attempted murders.
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 arrest.
The superseding indictment which names Brown alleges that beginning in 2005, members of the enterprise originally referred to themselves solely as the Short North Posse. Later some members began subsets of the Short North Posse referring to themselves as the Cut Throat Committee and later the Homicide Squad. Still within the Short North Posse, Cut Throat Committee and Homicide Squad specialized in murders and robberies of rival gang members, other drug dealers, and targets thought to have large sums of cash or firearms. The Short North Posse also identified themselves nationally with the Crips street gang.
The superseding indictment was a result of a 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 joined U.S. Attorney Stewart in announcing the original charges.
Brown was charged in the superseding indictment with one count of racketeering conspiracy and three counts of use and discharge of a firearm during and in relation to a crime of violence, each crimes punishable by up to life in prison; one count of attempted possession with intent to distribute cocaine, a crime punishable by up to 20 years in prison; and three counts of possession with intent to distribute and one count of attempted possession with intent to distribute a detectable amount of marijuana, each crimes punishable by up to five years in prison.
Stewart commended Assistant United States Attorneys David DeVillers and Kevin Kelley and Special Assistant United States Attorney 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.
Charges contained in an indictment are allegations. All defendants should be presumed innocent until and unless proven guilty in court.
Pennsylvania Man Sentenced for Illicit Sexual Conduct Charges, Receiving Child PornographyRead the Press Release
COLUMBUS – Jason C. Kozlowski, 32, of Glen Rock, Pennsylvania, was sentenced in U.S. District Court to 12 years in prison and 20 years supervised release for traveling interstate with the intent to engage in illicit sexual conduct and receiving child pornography.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Grove City Police Chief Steve Robinette, Pickaway County Sheriff Robert B. Radcliff, and members of the Franklin County Internet Crimes Against Children (ICAC) Task Force announced the plea entered into today before Chief U.S. District Judge Edmund A. Sargus, Jr.
According to court documents, on October 10, 2014, Grove City police officers observed Kozlowski in his vehicle behind a Target store nude from the waist down with a 15-year-old female.
Upon interviewing Kozlowski and the minor female, investigators discovered the two had been communicating since approximately March of 2014 by Facebook, e-mails, text messages and telephone calls. Text messages found on the phones of Kozlowski and the minor female revealed that Kozlowski had sent the girl sexually explicit messages. Kozlowski was aware of the female’s age and the laws in the state of Ohio regarding consent.
Kozlowski told law enforcement officials the 15-year-old was going to get a letter from her parents giving him permission to “be with” with the girl. The defendant admitted to driving from Pennsylvania to Ohio to pick up the female and explained they went to dinner, shopping, and then parked behind the Target store and engaged in sex acts.
Investigators discovered nude photographs of both the defendant and the victim had been exchanged vita text. They also discovered pornographic images of a different, 13-year-old female on Kozlowski’s computer.
Kozlowski pleaded guilty to traveling interstate with the intent to engage in illicit sexual conduct and receiving child pornography in February 2015.
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 Upper Arlington Police Department
Grove City Police Department Columbus Police Department
Grandview Heights Police Department Whitehall Police Department
Hilliard Police Department Westerville Police Department
Homeland Security Investigations U.S. Secret Service
Ohio ICAC Franklin County Prosecutor's OfficeThis case was 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 law enforcement, as well as Assistant United States Attorneys Heather Hill and Jessica Kim, who represented the United States in this case.
Father in Father-Son Sex Trafficking Operation Sentenced to 13 Years in PrisonRead the Press Release
COLUMBUS – Keith A. Arrick Sr., 47, of Ft. Mitchell, Kentucky was sentenced in U.S. District Court today to 13 years in prison for sex trafficking by force, fraud or coercion.
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, Colonel Paul Pride of the Ohio State Highway Patrol and Columbus Police Chief Kim Jacobs announced the plea entered today before Senior U.S. District Judge Peter C. Economus.
The investigation by the Central Ohio Human Trafficking Task Force found that between September 2013 and February 2014, Arrick Sr. used various hotels in the Columbus area to harbor women, including a minor female, to engage in commercial sex acts for the financial benefit of the defendant. He recruited customers through internet websites by posting photos of the women or others who resembled the women, instructing the women how much to charge for the various acts then kept a portion of the money for himself, and provided the women with illegal narcotics, including heroin. The investigation found that one victim was brought to Columbus from Kentucky. Arrick Sr. used physical violence and threats of physical violence if the victims indicated they wished to stop performing commercial sex acts.
Arrick Sr. pleaded guilty to sex trafficking by force, fraud or coercion in September 2014.
Arrick Sr.’s son, Keith A. Arrick Jr., 22, of Columbus, Ohio pleaded guilty in July 2014 to sex trafficking of children. He was sentenced to10 years in prison.
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 is representing the government in this case.
Kentucky Woman Sentenced to 30 Months for Embezzling from EmployerRead the Press Release
CINCINNATI – Michelle M. Clemons, 32, of Independence, Ky., was sentenced in U.S. District Court to 30 months in prison for three counts of wire fraud.
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 U.S. District Judge Michael R. Barrett.
According to court documents, beginning in or about July 2005, Clemons worked as the controller for Art Woodworking and Manufacturing Co. located in Cincinnati. From at least 2006 until February 2013, Clemons used wire communications to embezzle funds from Art Woodworking. During that time, she electronically transferred more than $411,000 from the company for her own financial benefit.
“As controller, the defendant oversaw payroll for the company, had access to its financial information and was responsible for directing funds for the payment of company debts,” Assistant United States Attorney Jessica Knight told the court. “Clemons abused her position of trust at Art Woodworking and began diverting unauthorized payroll and reimbursements to her personal bank account.”
Clemons would issue herself unauthorized payroll checks using the direct deposit function or through manual payroll checks deposited into her personal bank account. She also issued reimbursements for business expenses she did not incur. Clemons often manipulated the accounting software to make the checks she wrote to herself appear as if they were used for a business purpose, when in fact, Clemons was cashing or depositing the checks into her personal bank account.
Furthermore, she used three business credit cards in the name of Art Woodworking for personal expenses such as to fund a Disney Vacation Club and subsequent trip in Florida, and to pay her personal real estate tax bill.
Clemons was also sentenced to three years supervised release and ordered to pay restitution of $231,671.42 to Art Woodworking and $100,000 to Selective Insurance.
Clemons pleaded guilty on August 14, 2014 to wire fraud.
U.S. Attorney Stewart commended the cooperative investigation by the FBI, as well as Assistant United States Attorney Jessica Knight, who represented the United States in this case.
Postal Carrier Pleads Guilty to Stealing MailRead the Press Release
DAYTON, Ohio – Terrence P. Young, 37, of Dayton, pleaded guilty in U.S. District Court to a charge of delay or destruction of mail, in violation of 18 U.S.C. § 1703(a).
Carter M. Stewart, United States Attorney for the Southern District of Ohio, and Scott Balfour, Assistant Special Agent in Charge, U.S. Postal Service Office of the Inspector General, (USPS OIG), announced the plea entered into Tuesday before U.S. District Court Judge Walter H. Rice.
According to court documents, Young, a United States Postal Service carrier, stole Kroger coupons, a Kroger gift card, and a Walmart gift card from mail that had been entrusted to him to deliver. He later used the gift cards at these stores to purchase personal items. When law enforcement officers confronted him, he was found with a mail tub containing more than 200 pieces of first-class mail and approximately 178 pieces of presorted standard mail in the back of his personal car.
Young was employed by the United States Postal Service as a postal carrier from 2010 until March 2015, when he was terminated due, in part, to his theft of mail. His primary job function was to deliver mail along postal route 6, which falls within zip code 45417.
At least 11 customers made complaints at the P.L. Dunbar station in reference to their carrier not delivering their mail. The complaints were similar in nature in that residents advised they were not receiving any mail – including utility bills, business mail, pension checks, insurance correspondence, housing information, court documents and their children’s school information.
“Several customers advised that due to the non-receipt of their mail, they had utilities shut off, lost insurance, missed appointments and court dates, lost out on benefits for their children and were in the process of being evicted from their home without ever receiving notification through the mail,” Assistant United States Attorney Vipal Patel said. “Many had to pay penalties for late payments.”
The parties involved with this case have agreed to a sentencing range of at least one year probation and up to 10 months in prison. Sentencing has been scheduled for 10am on September 8, 2015.U.S. Attorney Stewart commended the cooperative investigation by the USPS OIG, as well as Assistant United States Attorney Vipal Patel, who is representing the United States in this case.
Owners of Lawrence County Medical Clinics Sentenced for Conspiracy to Commit Health Care FraudRead the Press Release
CINCINNATI – Four people involved in the operation of Advanced Family Medical Center and Watkins-Tsai Imaging in Coal Grove, Ohio were sentenced today for conspiracy to commit health care fraud. They improperly charged government insurance programs for medically unnecessary procedures, most of which were related to the overuse of a CT scan machine.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Ohio Attorney General Mike DeWine, Lamont Pugh III, Special Agent in Charge, U.S. Department of Health and Human Services Office of Inspector General, Bret Flinn, Resident Agent in Charge, Defense Criminal Investigative Service, and Antoinette V. Henry, Special Agent in Charge, U.S. Food and Drug Administration Office of Criminal Investigations, announced the sentences handed down today by U.S. District Judge Susan Dlott.
Peter Tsai, 46, owner of Advanced Family Medical Center, his father and mother, Tahsiung Tsai, 74, and Ruey Tsai, 68, who owned Watkins-Tsai Imaging, and Peter Tsai’s cousin, Wei Lih Sheih, aka “Wendy”, 43, who worked for both clinics, had conspired to defraud health care benefit programs including Medicaid, Medicare and Tri-Care between 2004 and 2013 when they were indicted.
All four defendants pleaded guilty to conspiracy to commit health care fraud in August 2014 after four days of trial. Peter Tsai pleaded guilty to the illegal importing of a medical device, namely the purchase of Synvisc knee injections from Canada and Turkey.
Peter Tsai was sentenced to 78 months in prison for a conspiracy to commit health care fraud and the illegal importing of a medical device. For the conspiracy, Defendants Ruey and Tahsiung Tsai were sentenced to 3 years of supervised release, six months of house detention, and community service. As part of the plea agreement, Ruey and Tahsiung Tsai were also required to pay $999,000 towards the restitution by today, which they did. Defendant Wei Lih Sheih was also sentenced to 3 years of supervised release and 12 months of house detention for the conspiracy to commit health care fraud.
According to court documents, both clinics operated out of the same building in Coal Grove. The conspirators performed numerous CT procedures that were unnecessary. For example, Peter Tsai diagnosed most of his patients with a condition called piriformis syndrome in order to give injections guided by his CT scan machine. The defendants also performed unnecessary diagnostic CT scans that were medically unnecessary, including multiple scans of the same body part for the same patient weeks apart. They also performed and billed for CT scans for medically unnecessary injections of an osteoarthritis product, Synvisc, in knees, including injection into young adults without any proper diagnosis of osteoarthritis. One patient received 85 CT-related scans in a 35-month period.
The defendants were also charged with fraudulently inflating their bills to Medicare and Medicaid. Peter Tsai illegally imported misbranded Synvisc from other countries including Canada and Turkey, billed government insurance programs for the injections and transferred money into an account in a Canadian financial institution in order to buy the product.
Stewart commended the cooperative investigation by agents and officers of the agencies named above, as well as Assistant U.S. Attorneys Timothy Mangan and Timothy Oakley, who are representing the United States.
Anyone suspecting health care fraud, waste or abuse can report it by calling the U.S. Department of Health and Human Services, Office of Inspector General at 800-447-8477. To learn more about health care fraud prevention and enforcement go to www.stopmedicarefraud.gov. Ohioans can report suspected instances of health care fraud to Attorney General DeWine’s office by calling 1-800-282-0515.
Attorney General Recognizes Former District EmployeeRead the Press Release
WASHINGTON – Fred Alverson, former Law Enforcement Coordinator and Public Information Officer of the U.S. Attorney’s Office in the Southern District of Ohio, was one of 160 members of the Department of Justice recognized by Attorney General Loretta Lynch, Deputy Attorney General Sally Quillian Yates, and Executive Office for U.S. Attorneys (EOUSA) Director Monty Wilkinson at the 31st Director’s Awards Ceremony today in Washington D.C.
The Southern District of Ohio was one of 31 districts represented at the ceremony which was held in the Great Hall at the Robert F. Kennedy Department of Justice Building.
"Our honorees include career executives and supervisors; Assistant U.S. Attorneys and Special Assistant U.S. Attorneys; appellate attorneys and law enforcement officials; administrators, paralegals, and public affairs officers," said Attorney General Lynch. "These individuals, and so many others, have faced daunting and sometimes dangerous challenges. They have dedicated their leadership and their expertise, their time and their energy, to the service of their mission. And they have remained devoted, at all times, to the high ideals and deeply-held values that animate our country and our cause."
Alverson, a Hilliard, Ohio resident, was awarded for Superior Performance in Public Affairs. Prior to his retirement in August 2014, he served the U.S. Attorney’s Office Southern District of Ohio for nearly 20 years.
“Fred had an outstanding grasp of the priorities of the Department and the District, and was pivotal in promoting the mission of keeping our communities safe,” said U.S. Attorney Carter Stewart. “The District’s message, as delivered by Fred, was always clear, concise, direct and helpful.”
EOUSA provides oversight, general executive assistance, and direction to the 94 United States Attorneys’ offices around the country. For more information on EOUSA and its mission, visit http://www.justice.gov/usao.
Jury Convicts Trio of Public Corruption in Connection with Charter School KickbacksRead the Press Release
COLUMBUS, Ohio – A United States District Court jury convicted three people of offering and accepting kickbacks as part of a public corruption conspiracy involving a Dayton, Ohio charter school. Two defendants were public officials who ran the school and the other secured a lucrative consulting contract in exchange for bribes to school officials.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Ohio Attorney General Mike DeWine whose office oversees the Ohio Bureau of Criminal Investigation (BCI), and Ohio Auditor Dave Yost announced the verdicts reached today which was returned following a trial that began on May 18, 2015 before U.S. District Judge Algernon L. Marbley.
The jury convicted Shane K. Floyd, 42, Strongsville, Ohio, who served as superintendent of Arise, Arise board chairman Christopher D. Martin, 44, Springfield, Ohio, and Carl L. Robinson, 47, Durham, North Carolina, who operated an educational consulting business called Global Educational Consultants.
According to court testimony, Floyd and Martin solicited and accepted bribes from Robinson in exchange for awarding a lucrative, unbid consulting contract to Global. Arise paid Global $420,919 over 15 months starting in September 2008 at a time when Arise was in a financial crisis unable to pay other vendors and teachers pay and benefits were cut. In exchange for the consulting contract, Robinson paid Floyd and Martin large amounts of cash and other benefits, like an all-expense -paid Las Vegas trip taken by Martin.
All three were convicted of conspiracy, a crime punishable by up to five years in prison, and with federal programs bribery, which is punishable by up to 10 years in prison. In addition, Floyd and Martin were each convicted of one count of making false statements to the FBI, punishable by up to five years imprisonment.
The trio also faces a $420,919 forfeiture, which represents the amount of money derived from the crimes.
A co-defendant, Kristal N. Screven, also known as Kristal Allen, of Dayton, Ohio admitted her role as an Arise board chairman who was bribed by pleading guilty to conspiracy to commit federal programs bribery on May 8, 2015, before U.S. District Judge Marbley.
Arise! Academy was an Ohio Community School, commonly known as a charter school, which operated with federal funds provided through the state of Ohio.
U.S. Attorney Stewart commended the investigation by Special Agents of the FBI and Ohio BCI, who are a part of the FBI’s Public Corruption Task Force, as well as Assistant United States Attorneys Doug Squires and Peter Glenn-Applegate and Special Assistant United States Attorney Kim Robinson, who prosecuted the case.
Westerville Man Charged with Defrauding Elderly Victim Out of $1.3 MillionRead the Press Release
COLUMBUS, Ohio – A federal grand jury in Columbus, Ohio has charged Mark Preston French, 40, of Westerville, Ohio, with scheming to defraud an elderly individual by advising the person to invest in gold and silver through him as an investment advisor, then keeping for himself money, gold, and silver from precious metals commodity transactions that were funded by the individual.
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 indictment returned yesterday.
The indictment alleges that French acted as a broker for the victim, who was a client at a time when French worked at Investors Security Company, Inc. French held himself out at an investment advisor for the elderly victim, who he advised to open with him joint bank accounts in their names so that French could receive funds for purchases of gold and silver. Once French opened to those joint bank accounts the elderly victim transferred money to the accounts so that French could use the money to invest in precious metals, including gold and silver. He also had the elderly victim agree not to tell people about their investment arrangement.
According to the indictment, after opening a joint checking account and a joint savings account with his victim, the defendant spent more than $1.3 million of the victim’s money to purchase gold and silver and have it delivered to French’s residence in Westerville. French thereafter used the funds in the joint accounts to buy and sell gold and silver, while keeping some of the gold and silver for himself at his residence, and some of the profit from the transactions in his own personal bank accounts.
French was charged in the indictment with five counts of wire fraud and two counts of mail fraud, each crime punishable by up to 20 years in prison, as well as with five counts of interstate transportation securities taken by fraud and four counts of money laundering, each crime punishable by up to 10 years in prison.
U.S. Attorney Stewart commended the investigation of this case by the FBI, and Assistant United States Attorney Dale Williams, who is prosecuting the case.An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
Jury Convicts Akron Man of Production of Child PornographyRead the Press Release
COLUMBUS, Ohio – A United States District Court jury convicted Antonio L. Sibley, 38, of Akron, Ohio with 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 verdict reached today, which was returned following a trial that began on May 18 before U.S. District Judge Frost.
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.“Cases such as this one highlight the importance of collaboration among various law enforcement agencies and with service providers like the Salvation Army,” said Assistant United States Attorney Heather A. Hill. “This case would not have been possible without all of the tremendous work of all of the members of the Human Trafficking Task Force, the Salvation Army, and the special assistance of Brant Cook, the director of the Ohio Attorney General’s Crimes Against Children Initiative.”
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, and remains in custody. 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, 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 represented the government in this case.
Chillicothe Man Sentenced for Possessing Pornographic Pictures of Young ChildrenRead the Press Release
COLUMBUS, Ohio – Daniel J. Akehurst, 46, of Chillicothe, Ohio, was sentenced in U.S. District Court to 84 months’ imprisonment for possessing child pornography.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, and members of the Franklin County Internet Crimes Against Children (ICAC) Task Force, announced the sentence handed down today by U.S. District Senior Judge George C. Smith.
According to court documents, in September 2013, investigators connected 59 images of child pornography to Akehurst’s IP address. The files depicted nude or partially nude pre-pubescent females, approximately one to seven years old, being sexually abused.
When a search warrant was executed at the defendant’s residence, ICAC Task Force officers discovered more than 16,000 images and videos of child pornography on a computer and thumb drive.
Akehurst pleaded guilty on December 22, 2014, to knowingly possessing visual depictions of child pornography.
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 OfficeUpper Arlington Police Department Grove City Police DepartmentColumbus Police Department Grandview Heights Police DepartmentWhitehall Police Department Hilliard Police DepartmentWesterville Police Department Homeland Security InvestigationsU.S. Secret Service Ohio ICACFranklin 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 the cooperative investigation by the Franklin County ICAC Task Force, as well as Assistant United States Attorneys Jessica H. Kim and Heather A. Hill, who are representing the United States in this case.
Georgia Man Sentenced in Securities Fraud SchemeRead the Press Release
CINCINNATI, Ohio - Charles H. Sheehan III a/k/a “Duke Sheehan,” 69, of Cumming, Georgia was sentenced to 36 months in prison for his role in a securities fraud scheme, in which a Cincinnati company lost $1 million in investment funds.
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 by Judge Timothy S. Black.
According to court documents, Sheehan represented himself to be the President and CEO of a purported charity called the Southern Foundation for the Advancement of Arts and Education, Inc., based in Georgia. Sheehan promised a Cincinnati-based real estate development group that he would invest $1 million from the group along with funds from the Southern Foundation in a series of purported investments. However, rather than investing the $1 million that had been wired to the defendant, Sheehan distributed the funds to himself and others.
Sheehan pleaded guilty in November 2014 to defrauding investors with respect to the Southern Foundation and the use of the investor funds. He was ordered to pay restitution in the amount of $1 million.
U.S. Attorney Stewart commended the investigation by the FBI, as well as Assistant United States Attorney Timothy Mangan, who represented the United States in this case.
Troy Man Pleads Guilty to Child ExploitationRead the Press Release
DAYTON, Ohio –Jack A. Manning, 61, of Troy, Ohio, pleaded guilty in U.S. District Court to producing child pornography and attempting to produce 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, and Troy Police Chief Charles Phelps announced the plea entered into yesterday before U.S. District Judge Timothy S. Black.
In February 2014, the defendant knowingly coerced a child under the age of 10 to engage in sexually explicit conduct for the purpose of taking pictures of such conduct. According to court documents, “they were taken to gratify his own sexual desires.” In the same month, the defendant attempted to obtain a video of two minors engaging in sexually explicit conduct.
Manning was arrested on October 3, 2014 and has been in custody since.
The parties involved in Manning’s case have agreed to a 25-year binding prison sentence, pending U.S. District Judge approval.
Manning is scheduled for sentencing on September 14, 2015 before U.S. District Judge Timothy S. Black.
This case was 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 investigation of this case by the FBI and Troy Police Department, and Assistant United States Attorneys Kyle Healey and Vipal Patel, who are prosecuting the case.
Hilliard Man Sentenced for Selling Counterfeit Nike GoodsRead the Press Release
COLUMBUS, Ohio – Rami Hisham Mohammad, 34, of Hilliard, Ohio, was sentenced in U.S. District Court to 18 months in prison and a $150,000 fine for trafficking in counterfeit goods.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, and Marlon V. Miller, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), announced the sentence handed down today by U.S. District Senior Judge James L. Graham.
According to court documents, Mohammad operated a retail clothing business in Columbus, Ohio known as Rock Star Fashions. Upon completing a federal search warrant on January 28, 2012, federal agents seized 1,063 pairs of Nike Air Jordan shoes and 4,408 pairs of Nike Air Swoosh shoes at Rock Star Fashions.
Mohammad pleaded guilty on September 15, 2014 to intentionally trafficking goods and knowingly using counterfeit marks in connection with the Nike “Swoosh” and “Air Jordan” marks. These marks were identical or substantially indistinguishable from genuine marks registered with the United States Patent Trademark Office.Mohammad was also ordered to pay $7,939.62 in restitution to Nike for their investigative costs. The government also forfeited $35,828 in cash along with the entire inventory from the store.
U.S. Attorney Stewart commended the cooperative investigation by HSI, as well as Assistant United States Attorney Deborah Solove, who is representing the United States in this case.
Central Ohio Trio Charged with Crimes Arising Out of Credit Card FraudRead the Press Release
COLUMBUS, Ohio – A federal grand jury has charged Francois G. Toure, 25, of Reynoldsburg, Robert A. Kamara, 26, of Canal Winchester, and Enouch J. Kermue, 26, of Columbus, in a wire fraud conspiracy in an indictment returned in Columbus. Toure is also charged in a second wire fraud conspiracy, as well as a money laundering conspiracy. Additionally, Toure and Kamara are charged with aggravated identity theft.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Mark Porter, Special Agent in Charge, U.S. Secret Service, and Kathy Enstrom, Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), announced the indictment returned yesterday.
The indictment alleges that from April 2012 through March 2015, the defendants knowingly conspired to commit wire fraud to defraud financial institutions and their customers. The three did so by producing, using, trafficking in and possessing stolen credit card numbers, knowing the credit card information was stolen from other individuals.
Toure, Kamara and Kermue allegedly obtained stolen credit card numbers over the Internet and used an encoding device to re-encode the magnetic strips of genuine prepaid/gift cards to reflect the stolen credit card numbers. It is alleged that they used the re-encoded cards to purchase merchandise. Banks suffered loss when they reimbursed their customers for unauthorized purchases.
The indictment alleges that the defendants used a convenience store’s merchant credit card processing accounts to redeem genuine prepaid/gift cards, knowing that the cards had been purchased with stolen credit card account information. It is alleged that the store did not provide any legitimate goods or services in exchange for the value of the prepaid/gift cards.
Toure also allegedly engaged in a conspiracy that used stolen personally identifiable information to file fraudulent United States Individual Income Tax Returns, in an effort to obtain fraudulent refunds. It is alleged that Toure used counterfeit identification documents to open bank accounts, and that fraudulently obtained refunds were deposited into these accounts.
The defendants were charged with one count of conspiracy to commit wire fraud affecting a financial institution, a crime punishable by up to 30 years in prison. Toure was also charged with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering, each punishable by up to 20 years in prison. Toure and Kamara are each also charged with one count of aggravated identity theft, which carries a mandatory sentence of two years in prison, to be served consecutive to any sentence for the other offenses.
“This investigation succeeded due to the cooperation of all the agencies in the Southern District of Ohio Task Force (SDOHTF), which was created in 2012 to prevent, detect and investigate various forms of electronic crimes,” U.S. Secret Service Special Agent in Charge Mark Porter said. “The SDOHTF is an electronic/financial crimes task force made up of 65 federal, state, and local agencies in the Columbus, Dayton and Cincinnati area. Furthermore, our partnership with the IRS’ Criminal Investigative Division in Ohio continues to produce arrests in high impact economic crimes across the state.”
“Stealing identities and filing false tax returns is a serious crime that hurts innocent taxpayers,” said Kathy A. Enstrom, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. “Today’s indictment, in cooperation with the U.S. Secret Service and the U.S. Attorney’s Office, should serve as a strong warning to those who are considering similar conduct. Law enforcement is serious about investigating these crimes and holding those accountable who would defraud the government.”
U.S. Attorney Stewart commended the investigation of this case by the Secret Service and IRS, and David J. Bosley and Peter K. Glenn-Applegate, who are prosecuting the case.
An indictment merely contains allegations, and the defendants are presumed innocent unless proven guilty in a court of law.
Owner of Fairfield Ohio Car Dealership Indicted on Money Laundering and Currency Transaction Report ChargesRead the Press Release
CINCINNATI – A federal grand jury has charged Bryan Barbarawi, 35, of West Chester, Ohio with committing money laundering and with filing a false currency transaction report in an indictment returned in Cincinnati.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Joseph P. Reagan, Special Agent in Charge, Drug Enforcement Administration (DEA) and Kathy A. Enstrom, Special Agent in Charge, Internal Revenue Service (IRS), Criminal Investigation, Cincinnati Field Office, announced the indictment that was unsealed on May 8, 2015 following the arrest of Barbarawi on May 7, 2015.
The indictment alleges that 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.
Upon receiving more than $10,000 in cash in a trade or business, the trade or business is required to file a currency transaction report, specifically a Form 8300, with the Internal Revenue Service (IRS) or the Financial Crimes Enforcement Network (FINCEN) by the 15th day after the date the cash was received.
It has been alleged that in November 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.
Also, in November 2014, it has been alleged that Barbarawi received approximately $21,533.50 in cash from two related transactions in connection with the sale of a vehicle and Barbarawi filed, and caused the employees of his car dealership to file, a false currency transaction report, Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business. Barbarawi falsely reported, and caused his employees to falsely report, the purchaser of the vehicle and the source of the funds used to purchase the vehicle.
Money laundering carries a maximum sentence of 20 years imprisonment and failing to file a currency transaction report carries a maximum sentence of five years imprisonment.
“Federal laws that regulate the reporting of financial transactions are in place to detect and stop illegal activities,” said Kathy A. Enstrom, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. “IRS Criminal Investigation is committed to enforcing these laws and following the money, wherever it leads.”
Barbarawi was released on bond following his arraignment before U.S. Magistrate Judge Stephanie K. Bowman.
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.
An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
Cincinnati Woman Pleads Guilty to Role in Illegal Money Laundering SchemeRead the Press Release
‘Work From Home’ Jobs Actually Fraudulent Scheme
CINCINNATI – Shawnell Evans, 28, of Cincinnati, pleaded guilty in U.S. District Court for operating an unlicensed money transmitting business.
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 plea entered into today before U.S. District Senior Judge Sandra Beckwith.
Evans admitted to serving as a “money mule” for multiple fraudulent schemes through “work from home” jobs from approximately 2011 through 2013. According to court documents, during that time, Evans received instructions from a variety of different individuals via email regarding transfers of money and goods in exchange for a payment to Evans. Per the instructions, Evans would wait for money to show up on debit cards, transfer most of the money via Western Union or MoneyGram, and keep a percentage of the funds.
The defendant was also instructed to print fake company checks by downloading certain bank logos. On certain occasions, Evans received stolen credit cards as part of her money mule services and used the stolen credit cards. Evans was warned by the FBI that she was participating in facilitating certain fraud rings, but even after the warnings, Evans continued to wire the fraudulent funds and help the schemes.
Evans pleaded guilty to one count of knowingly conducting, controlling, managing, supervising, directing and owning all or part of an unlicensed money transmitting business, a crime punishable by up to five years in prison.U.S. Attorney Stewart commended the cooperative investigation by the FBI, as well as Assistant United States Attorney Timothy Mangan, who is representing the United States in this case.
Three California Men and Minnesota Corporation Indicted in Nationwide Prescription Drug Diversion SchemeRead the Press Release
WASHINGTON – Three California men and a Minnesota company were charged in an indictment today in the Southern District of Ohio for their roles in a massive prescription drug diversion scheme.
The indictment alleges that David Jess Miller, 50, of Santa Ana, California; Artur Stepanyan, 38, and Mihran Stepanyan, 29, both of Encino, California, and Minnesota Independent Cooperative Inc. (MIC) engaged in a conspiracy to sell prescription drugs from illegal, unlicensed sources to wholesalers and pharmacies throughout the United States. The 12-count indictment charges the defendants with conspiracy to commit mail and wire fraud, multiple counts of mail fraud, and conspiracy to distribute prescription drugs without a license and to make false statements.
Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division, U.S. Attorney Carter M. Stewart of the Southern District of Ohio, Director George M. Karavetsos of the U.S. Food and Drug Administration (FDA)’s Office of Criminal Investigations and Assistant Inspector in Charge Christopher White of the U.S. Postal Inspection Service (USPIS) announced the charges.
According to the indictment, from 2007 through April 2014, David Miller and his company, MIC, of Eagan, Minnesota, purchased prescription drugs from a network of illegal and unlicensed sources in New York, Florida and California. Artur Stepanyan and Mihran Stepanyan, worked together to sell drugs from illegal sources to Miller and MIC. Artur and Mihran Stepanyan, using a variety of company names, including Panda Capital Group, Red Rock Capital Group, Trans Atlantic Capital Group and GC National Wholesale, were Miller’s largest source of illegal drugs. During the course of the conspiracy, Miller and MIC paid the Stepanyans approximately $160 million for these prescription drugs.
“American consumers should be able to rely on the prescription drug supply chain,” said Principal Deputy Assistant Attorney General Mizer. “Prescription drug diversion schemes like the one charged in this indictment undermine that supply chain and increase the risk that counterfeit, adulterated, misbranded, sub-potent or expired drugs will be sold to patients and consumers.”
To hide the true, illegal sources of their prescription drugs, David Miller and MIC falsified so-called drug pedigree documents. Pedigrees are documents required by law that show the source of drugs. For most of the conspiracy, the fraudulent pedigrees falsely listed B&Y Wholesale, a company located in Puerto Rico and co-owned by co-conspirator Yusef Yassin Gomez (Yassin) as the source of the drugs. The pedigree documents also falsely stated that Yassin’s company was an authorized distributor of the drugs. On Feb. 19, 2014, Yassin pleaded guilty in U.S. District Court for the Southern District of Ohio to conspiracy to engage in the wholesale distribution of prescription drugs without a wholesale license. In connection with his guilty plea, Yassin admitted the he agreed to allow Miller and MIC to use his company’s name on pedigree documents to hide the true drug sources. In exchange, Miller and MIC paid Yassin a commission on all of the drug sales.
“Once a prescription drug is diverted outside of the regulated distribution channels, it becomes difficult, if not impossible, for regulators, law enforcement and end-users to know whether the prescription drug package actually contains the correct drug or the correct dose,” said U.S. Attorney Stewart. “We will aggressively prosecute individuals and companies that ignore the law and sell illegally diverted prescription drugs to pharmacies, and ultimately, to American consumers.
“We are committed to protecting the integrity of the pharmaceutical supply chain, especially as criminals go to more extreme measures to subvert it,” said FDA’s Office of Criminal Investigations Director Karavetsos. “We will continue to pursue these criminals and work to bring them to justice.”
“The Postal Inspection Service is proud to partner with the FDA Office of Criminal Investigations to bring to bear our mail fraud expertise to help the fight against drug diversion,” said USPIS Assistant Inspector in Charge White.
Throughout the course of the conspiracy charged in the indictment, using these fraudulent pedigree documents, Miller and MIC sold approximately $393 million worth of prescription drugs to wholesalers and retail pharmacies throughout the United States, including to multiple customers in the Southern District of Ohio.
In addition to Yassin, two of Miller’s other illegal drug suppliers, Peter Kats and Joseph Dallal, previously pleaded guilty to conspiracy to commit mail and wire fraud for their sales of illegally-diverted prescription drugs to Miller and MIC.
This matter is being investigated by the FDA and 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 prosecuting this case.
David Miller, Artur Stepanyan, and Mihran Stepanyan were charged amongst 30 other individuals in the Northern District of California in a separate indictment on charges including federal Racketeer Influenced and Corrupt Organizations (RICO) Act; conspiracy to commit identity theft; conspiracy to commit access device fraud; conspiracy to commit mail, wire, and bank fraud; money laundering conspiracy; and conspiracy to distribute prescription drugs without a wholesale license.
The charges in the indictment are merely allegations, and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
Cincinnati-Area Man Charged with Attempting to Provide Material Support to ISILRead the Press Release
WASHINGTON – A federal grand jury has brought additional charge against Christopher Lee Cornell, 21, of Green Township, Ohio. In a superseding indictment returned in Cincinnati, he is now also charged with attempting to provide material support to a designated foreign terrorist organization.
The charge is in addition to the original Jan. 21, 2015, indictment that charged Cornell with attempting to kill officers and employees of the United States, solicitation to commit a crime of violence and possession of a firearm in furtherance of a crime of violence. Cornell was charged for his alleged participation in a plot to attack the U.S. Capitol Building and kill government officials.
The superseding indictment, which was returned today, was announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Carter M. Stewart of the Southern District of Ohio, Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Field Division and Special Agent in Charge Mark Porter of the U.S. Secret Service.
The four-count superseding indictment alleges that on or about August 2014 through January 2015, Cornell allegedly plotted, planned and attempted to attack the U.S. Capitol.
The defendant is also alleged to have attempted to provide material support and resources to a foreign terrorist organization, specifically the Islamic State of Iraq and the Levant (ISIL), knowing that the organization was a designated foreign terrorist organization and that the organization had engaged in and was continuing to engage in terrorist activity. Material support and resources consisted of personnel in the form of the defendant himself by plotting and attempting to execute an attack on the U.S. Capitol.
Cornell allegedly attempted to kill officers and employees of the United States during their official duties, specifically by attempting to attack the U.S. Capitol Building. During that same time, the defendant allegedly attempted to persuade others to kill officers and employees of the United States. Cornell also allegedly possessed two semi-automatic rifles and approximately 600 rounds of ammunition.Providing material support to a designated foreign terrorist organization carries a potential maximum sentence of 15 years in prison. Attempted murder of government employees and officials is a crime punishable by up to 20 years in prison. Solicitation to commit an attempted murder is a crime punishable by 20 years in prison. Possession of a firearm in furtherance of an attempted crime of violence is a crime punishable by a mandatory sentence of five years in prison.
Cornell was arrested on Jan. 14, 2015, by the FBI’s Joint Terrorism Task Force (JTTF). The JTTF is made up of officers and agents from the Cincinnati Police Department; Colerain, Ohio, Police Department; Dayton, Ohio, Police Department; Ohio State Highway Patrol; U.S. Immigrations and Customs Enforcement; U.S. Secret Service; and West Chester, Ohio, Police Department.
Assistant Attorney General Carlin and U.S. Attorney Stewart commended the investigation of this case by the JTTF. The case is being prosecuted by Trial Attorney Michael Dittoe of the Justice Department’s National Security Division and Assistant U.S. Attorney Tim Mangan of the Southern District of Ohio.
An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
Huber Heights Man Pleads Guilty to Online Child EnticementRead the Press Release
COLUMBUS, Ohio – Keegan L. Sipe, 31, of Huber Heights, Ohio, pleaded guilty in United States District Court to attempted coercion and enticement of minors to engage in unlawful sexual activity.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Upper Arlington Police Chief Brian Quinn, Marlon Miller, Special Agent in Charge, Homeland Security Investigations (HSI), and other members of the Franklin County Internet Crimes Against Children (ICAC) Task Force, announced the plea entered into today before U.S. District Judge Michael H. Watson.
According to court documents, in December 2014, Sipe attempted to persuade an individual via the Internet to engage in sexual activity with females he believed to be 10 and 14 years old. Investigators discovered an advertisement on Craigslist soliciting a “taboo mother and daughter” that stated, “Get with me if you and daughter would like to have some fun. Kinky and taboo age no matter.”
When an undercover investigator responded to the advertisement, Sipe engaged in conversation with the law enforcement official. He believed the investigator was a father arranging for Sipe to meet with his two minor daughters to engage in sexual activity.
On December 20, 2014, Sipe arranged to meet the undercover officer in the Bob Evans parking lot in Hilliard, Ohio. Upon his arrival, he was taken into custody.
The parties involved in this case have agreed to a 10-year prison sentence for Sipe.
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 Upper Arlington Police Department
Grove City Police Department Columbus Police Department
Grandview Heights Police Department Whitehall Police Department
Hilliard Police Department Westerville Police Department
Homeland Security Investigations U.S. Secret Service
Ohio ICAC Franklin County Prosecutor's OfficeThis 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 cooperative investigation by the Franklin County ICAC Task Force, as well as Assistant United States Attorneys Jessica H. Kim and Heather A. Hill, who are representing the United States in this case.Jury Convicts Hilliard Man for Role in Cocaine Distribution RingRead the Press Release
COLUMBUS, Ohio – A United States District Court jury convicted Osvaldo Ortega-Amaya, 29, of Hilliard, Ohio, of conspiracy to possess with intent to distribute and possession with intent to distribute 500 grams or more of cocaine.
Carter M. Stewart, United States Attorney for the Southern District of Ohio; Joseph P. Reagan, Special Agent in Charge, Drug Enforcement Administration (DEA) and Franklin County Sheriff Zach Scott, which was returned following a trial that began on April 20 before U.S. District Judge Gregory L. Frost.
According to court testimony, agents obtained baggies with cocaine residue during a trash retrieval at a Galloway, Ohio residence in December 2014 and January 2015. When law enforcement officials executed a search warrant at the Galloway residence they located approximately 1,100 grams of cocaine, multiple firearms and a large sum of U.S. currency.
Further surveillance led investigators to a residence in Hilliard, Ohio, where Ortega-Amaya resided and stored cocaine for the trafficking ring. There, agents found approximately 594 grams of cocaine, which was hidden in a closet with baby clothes in the residence, several hours after conducting a controlled purchase of another 500+ grams earlier the same day.
The jury convicted Ortega-Amaya of one count of conspiracy to possess with intent to distribute and one count of possession with intent to distribute 500 grams or more of cocaine. Both crimes are punishable by up to 40 years in prison and a $5 million fine.
Ortega-Amaya was indicted by a grand jury on March 5, 2015, charging him and co-defendant Ezequiel Bonilla-Berrios in a two-count indictment. Bonilla-Berrios was not tried in this proceeding.
Stewart commended the cooperative investigation by the DEA and Franklin County Sheriff’s Office, as well as Assistant United States Attorney Mike Hunter and Special Assistant United States Attorney Brian Martinez, who prosecuted the case.