District of Oregon
Press releases recorded for this federal judicial district.
Southern Oregon Lawyer Sentenced After Pleading Guilty to Tax CrimeRead the Press Release
EUGENE, Ore. - Shane Reed, 53, of Rogue River, Oregon, pleaded guilty in U.S. District Court in Eugene to willfully failing to pay $125,000 in federal income taxes. He was sentenced to five years of probation.
Reed admitted that in 2006, 2007 and 2008 he filed U.S. Income Tax returns reporting a total of $880,000. Based on that income he owed $129,000 in income taxes and did not pay those taxes. Rather, he used his substantial earnings to fund a lavish lifestyle that included mortgage payments on a million dollar home with a heated swimming pool, $110,000 in vehicle expenditures, and $40,000 to pay for purchases at high end retail stores.
According to court records, Reed has since paid all of his taxes for 2006-2008, but still owes the IRS about $150,000 in back taxes for 2012 and 2013. As a part of his probation, the Court ordered Reed to pay all of his taxes and to comply with all tax laws required to lawfully operate his law practice. Reed was additionally ordered to perform 250 hours of community service.
U. S. Magistrate Judge Thomas Coffin presided over the case, which was investigated by the Internal Revenue Service – Criminal Investigations, and prosecuted by Assistant U. S. Attorney Chris Cardani.
Five Individuals Charged in Nationwide Identity Theft SchemeRead the Press Release
Conspirators Obtain Identity Information of 125,000 Taxpayers and Submit Alleged False Federal Income Tax Returns Seeking $6.6 Million in Refunds from Internal Revenue Service
Federal law enforcement agents arrested four individuals in conjunction with a series of search and arrest warrants executed in Maryland and Georgia based on a federal grand jury indictment in the District of Oregon that was unsealed today.
The individuals arrested were:
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Lateef Aina Animawun, 34, of Smyrna, Georgia;
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Oluwatobi Rueben Dehinbo, 30, of Marietta, Georgia;
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Oluwaseunara Temitope Osanyinbi, 34, of Marietta; and
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Oluwamuyiwa Abolad Olawoye, 28, of Marietta.
A warrant has been issued for the arrest of a fifth defendant, Emmanuel Oluwatosin Kazeem, of Maryland. The remaining four defendants have made an initial appearance in Georgia, and will be arraigned in the District of Oregon at a date to be set by the court.
The indictment alleges that, beginning at least as early as tax year 2012, the named defendants, along with others, engaged in an identity theft conspiracy in Oregon and elsewhere that involved a scheme to obtain millions of dollars in fraudulent tax refunds from the Internal Revenue Service (IRS) and the Oregon Department of Revenue. The allegations of the indictment detail how the conspirators spun a complex web of fraud involving the use of stolen personal identifying information (PII), falsified wage and withholding information, fraudulently generated electronic filing PINs, disposable email addresses to conceal the co-conspirators’ identities, and the receipt of fraudulent tax refunds through prepaid debit cards and third party bank accounts.
“Attacking identity theft is among our highest priorities,” said Acting U.S. Attorney Billy J. Williams of the District of Oregon. “Those who unlawfully obtain personal identifying information wreak havoc on the lives of innocent taxpayers and will be held fully accountable.”
In total, the defendants are alleged to have unlawfully obtained the identity information from a data breach of over 125,000 taxpayers and filed over 980 false federal tax returns seeking over $6.6 million in fraudulent refunds. Although the IRS rejected $4.6 million of the claimed refunds, the indictment alleges that the defendants successfully obtained $2 million in illegal refunds.
“IRS Criminal Investigations Division is sworn to protect the tax system and bring to justice those who would steal from the Treasury,” said Assistant Special Agent in Charge Thomas Gutierrez of IRS-Criminal Investigation. “Would-be criminals should know: we’ve made identity theft related refund fraud our top priority. We understand that in these types of cases, the government is not the only victim. Identity theft can have a catastrophic emotional and financial impact on its victims. Our agents are determined to keep up the fight to eradicate identity theft and protect the honest taxpayers who would otherwise personally shoulder the immense burden of this crime.”
The indictment, which may be viewed here, charges each defendant with one count of conspiracy to commit mail and wire fraud, seven counts of mail fraud, six counts of wire fraud and thirteen counts of aggravated identity theft. The fraud and conspiracy charges are each punishable by up to 30 years in federal prison and a fine of up to $1 million. If convicted of the aggravated identity theft charges, the defendants face a mandatory minimum penalty of two years in federal prison for each count of conviction. An indictment is only an allegation of a crime. The defendants are presumed innocent until proven guilty beyond a reasonable doubt.
This case results from a joint investigation by IRS-Criminal Investigation, the U.S. Department of Health and Human Services-Office of Inspector General, and the FBI, with support provided by U.S. Immigration and Customs Enforcement, U.S. Postal Inspection Service, the U.S. State Department and the Oregon Department of Revenue Fraud Unit. This case is being prosecuted by Assistant U.S. Attorneys Byron Chatfield and Nancy Olson of the District of Oregon.
Taxpayers are reminded to be vigilant in the protection of their personal identifying information. Anyone interested in more information on preventing or reporting suspected identity theft should review the IRS website.
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Five Charged in Nationwide Identity Theft SchemeRead the Press Release
MEDFORD, Ore. - Federal law enforcement agents arrested four individuals in conjunction with a series of search and arrest warrants executed in Maryland and Georgia based on an Oregon federal grand jury indictment unsealed today.
The individuals arrested were:
- Lateef Aina Animawun, 34, of Smyrna, Georgia;
- Oluwatobi Rueben Dehinbo, 30, of Marietta, Georgia;
- Oluwaseunara Temitope Osanyinbi, 34, of Marietta, Georgia; and
- Oluwamuyiwa Abolad Olawoye, 28, of Marietta, Georgia.
A warrant has been issued for the arrest of a fifth defendant, Emmanuel Oluwatosin Kazeem of Maryland. The remaining four defendants have made an initial appearance in Georgia, and will be arraigned in the District of Oregon at a date to be set by the Court.
The indictment alleges that, beginning at least as early as tax year 2012, the named defendants, along with others, engaged in an identity theft conspiracy, in Oregon and elsewhere, involving a scheme to obtain millions of dollars in fraudulent tax refunds from the IRS and the Oregon Department of Revenue. The allegations of the indictment detail how the conspirators spun a complex web of fraud involving the use of stolen personal identifying information (PII), falsified wage and withholding information, fraudulently generated electronic filing PINs, disposable email addresses to conceal the co-conspirators’ identities, and the receipt of fraudulent tax refunds through prepaid debit cards and third party bank accounts. “Attacking identity theft is among our highest priorities. Those who unlawfully obtain personal identifying information wreak havoc on the lives of innocent taxpayers and will be held fully accountable,” said Acting U.S. Attorney Billy J. Williams.
In total, defendants are alleged to have unlawfully obtained the identity information from a data breach of over 125,000 taxpayers and filed over 980 false federal tax returns seeking over $6.6 million in fraudulent refunds. Although the IRS rejected $4.6 million of the claimed refunds, the indictment alleges that the defendants successfully obtained $2 million in illegal refunds. “IRS Criminal Investigations Division is sworn to protect the tax system and bring to justice those who would steal from the Treasury. Would-be criminals should know: we’ve made identity theft related refund fraud our top priority,” stated Assistant Special Agent in Charge Thomas Gutierrez of IRS Criminal Investigation. “We understand that in these types of cases, the government is not the only victim. Identity theft can have a catastrophic emotional and financial impact on its victims. Our agents are determined to keep up the fight to eradicate identity theft and protect the honest taxpayers who would otherwise personally shoulder the immense burden of this crime.”
The indictment, which may be viewed here "kazeem_et_al_indictment.pdf", charges each defendant with one count of conspiracy to commit mail and wire fraud; seven counts of mail fraud; six counts of wire fraud; and thirteen counts of aggravated identity theft. The fraud and conspiracy charges are each punishable by up to 30 years in federal prison and a fine of up to $1 million. If convicted of the aggravated identity theft charges, defendants face a mandatory minimum penalty of two years in federal prison for each count of conviction. An indictment is only an allegation of a crime. Defendants are presumed innocent until proven guilty beyond a reasonable doubt.
This case results from a joint investigation by IRS-Criminal Investigations Division, the U.S. Department of Health and Human Services, Office of Inspector General, and the Federal Bureau of Investigation, with support provided by U.S. Immigration and Customs Enforcement, United States Postal Inspection Service, the U.S. State Department, and the Oregon Department of Revenue Fraud Unit. This case is being prosecuted by District of Oregon Assistant U.S. Attorneys Byron Chatfield and Nancy Olson.
Taxpayers are reminded to be vigilant in the protection of their personal identifying information. Anyone interested in more information on preventing or reporting suspected identity theft should review the IRS’s website at http://www.irs.gov/uac/Taxpayer-Guide-to-Identity-Theft.
Brothers Sentenced to Federal Prison for Delivery of Heroin Resulting in DeathRead the Press Release
PORTLAND, Ore. - Gerardo Chalke Lopez (a.k.a. “La Loca”), 41, and Sergio Quezada-Lopez (a.k.a. “Cheche” , 36, of Nayarit, Mexico, appeared for sentencing on April 28 and April 29, 2015, before U.S. District Judge Michael Simon. The brothers were sentenced to 18 and 15 years prison, followed by five years of supervised release, and ordered to pay restitution for their roles in a conspiracy to distribute heroin, that resulted in death of a young woman. The brothers were also sentenced each to 27 months prison on illegal re-entry charges to run concurrent with the drug sentences.
The investigation began on April 16, 2012 when police officers responded to the Keizer, Oregon residence of 21 year old Laurin Putnam, who was found deceased. The initial investigation indicated that her death was likely caused by a heroin overdose and later confirmed by the Oregon State Medical Examiner’s Office. Soon after her death, investigators learned the identity of the last person in the chain that was responsible for distributing the heroin to Putnam that caused her death. From there, investigators were able to identify several conspirators and move six levels up the chain of distribution to brothers Gerardo Chalke Lopez and Sergio Quezada-Lopez. During the investigation, agents learned that the brothers were higher level members of a large scale conspiracy involving the distribution of significant quantities of heroin in Oregon, Washington, Nevada, and Colorado.
The investigation of the case was led by the Drug Enforcement Administration (DEA) through its Salem DEA Drug Task Force, and the Keizer Police Department with assistance from the Salem Police Department; the Marion County Sheriff's Office; the Oregon State Police; the Washington County Interagency Narcotics Team (WIN); the Portland Police Bureau; the Oregon State Medical Examiner; the Clark-Skamania Drug Task Force; the Oregon Department of Justice; and, the Portland based Highway Interdiction Team.
The case was prosecuted by Assistant U.S. Attorneys Kemp Strickland and Kathleen Bickers.
Prison Sentence Imposed on "Mr. Big" - Final Defendant in $15.5 Million Dollar Decade Long Psychic SwindleRead the Press Release
PORTLAND, Ore. – On April 30, 2015, U.S. District Judge Robert E. Jones sentenced Blancey Lee, 40, of Portland, to 24 months in prison for his role in a conspiracy to commit money laundering and his filing of false personal income taxes for 2012. Judge Robert E. Jones also ordered Blancey Lee to pay $2,599,809.07 in restitution to the victim. In addition to the prison sentence, the defendant must also serve three years of post-prison supervised release. The co-defendant, Rachel Lee, 44, of Canby, Oregon was sentenced on February 19th, 2015 by U.S. District Judge Jones to serve 100 months in federal prison, and pay $15,490,978.65 in restitution. Co-defendant, Porsha Lee, 25, of Northern California, was sentenced on March 15, 2015, by U.S. District Judge Jones to serve 33 months in federal prison and pay $12,822,262.25. The co-defendants restitution obligations are joint and several.
“Individuals who knowingly steal from the vulnerable or benefit and turn a blind eye to these predatory acts will be prosecuted to the fullest extent of the law,” said Acting U. S. Attorney Billy J. Williams. “Due to the combined efforts of federal, state, and local law enforcement, and the effective use of federal forfeiture, the victim is now safe and financially stable. We will continue to work tirelessly with our law enforcement partners to hold self-serving crooks accountable, protect victims, and seek full restitution.”
The victim met codefendant Rachel Lee in 2004 when he visited her Psychic Shop in Bend, Oregon. At the time, Blancey Lee and Rachel Lee lived together as a couple at the Psychic Shop and presented themselves as husband and wife. Between 2004 and 2006, Rachel Lee fostered a friendship with the victim for the purpose of extracting money from him. As a result of her lies and the trust she established with the victim, Rachel Lee assumed a role as paid care giver to the victim’s elderly father by 2007. Trusting her to act in his best interest, the victim also turned over all personal and business account control to Rachel Lee. While controlling the victim’s finances, Rachel Lee, Blancey Lee, and their families lived in a million-dollar home in the Portland West Hills purchased with the victim’s money.
Rachel Lee recruited members of her family to play key roles in the fraud scheme. Rachel Lee and her daughter Porsha Lee created a fake persona and introduced this character to the victim. They named the character Mary Marks. This character wore a blond wig, glasses, a hat and sported a British accent. Porsha Lee as Mary Marks met the victim and used information her mother provided her to connect with the victim. Porsha Lee as Marks claimed to be a bookkeeper, and soon after began assisting Rachel Lee with the management of the victim’s accounts.
By 2011 the victim believed he and Marks married and had a child. The child presented to the victim as his son is actually one of Rachel Lee’s grandchildren. Digital images reveal years of holidays, birthdays and events with the victim, Rachel Lee, Porsha Lee as Marks, and their purported child.
Between 2007 and 2011 Rachel Lee directed the victim to incrementally liquidate investments accounts totaling approximately $3.8 million dollars. After depleting the victim’s investment account, Rachel Lee convinced the victim he owed substantial taxes and needed to sell his family’s Tree Farm. At Rachel Lee’s direction, the Tree Farm properties were sold for a total of approximately $12.3 million dollars.
Rachel Lee, Blancey Lee, and Lee family members spent the victim’s fortune on a luxury lifestyle. Rachel Lee and Blancey Lee spent funds on high-roller trips to Las Vegas, trips to California, and a first class trip to Europe in 2013. Rachel Lee also spent her ill-gotten gains on luxury clothing and jewelry, including a $64,000 Rolex watch for Blancey Lee. While selling off the victim’s property, Rachel Lee and Blancey Lee purchased a 2012 Bentley Mulsanne and 2012 Ferrari on a single day, and plated those vehicles “MRBIG” and “MRBIG1”. Finally, between 2010 and 2013, Rachel Lee and Blancey Lee used the victim’s money to purchase at least ten properties at a cost of approximately $3.3 million dollars. Rachel Lee and Blancey Lee used four of the properties – in Bend, Portland, Canby, and Scappoose – as Psychic Shops.
As a result of investigators’ foresight, before the defendants were arrested or charged, bank accounts worth approximately $1.9 million dollars and assets including a 2012 Ferrari California and 1955 Chevy Bel-Air were identified and immediately seized to be forfeited and returned to the victim before they could be dissipated by the defendants.
By the time of Rachel Lee’s arrest and indictment in May 2014, the victim held less than $250,000 in accounts under his control. Through the initiation of forfeiture proceedings, the Bentley, the Ferrari, the Bel-Air, and 10 real properties have already been returned to the victim, and efforts are underway to restore to the victim the $1.9 million in cash seized and forfeited from bank accounts. The government is initiating civil forfeiture proceedings to liquidate numerous Rolexes and other designer goods purchased by the defendants and will provide those proceeds to the victim.
“Greed and deceit led to incredible financial harm to the victim in this case,” said Special Agent in Charge Teri Alexander of Internal Revenue Service Criminal Investigation. “While the recovery of funds and assets could never fully heal the wounds he sustained from being robbed of earnings derived over several generations, we successfully salvaged a significant portion of the money syphoned off by the Lee’s treachery. I am pleased that we will be able to return all the recovered funds and proceeds from the sale of assets to the victim.”
Canby Police Chief Bret Smith, said: “The Canby Police would like to express our appreciation and acknowledgement to the U.S. Attorney’s Office and to the Internal Revenue Service for their support and the many extra hours of hard work it took to bring this criminal investigation to a successful resolution”.
This case was investigated by the Internal Revenue Service, Criminal Investigations and the Canby Police Department with assistance from the Multnomah County Sheriff’s Office, Social Security Administration - Office of Inspector General, the Oregon Department of Justice, and the Portland Police Department. The case is being prosecuted by Assistant U.S. Attorney Donna Brecker Maddux and Assistant U.S. Attorney AnneMarie Sgarlata.
Convicted Bank Robber, Drug Dealer and Two Others Sentenced to Prison for $1 Million Stolen Identity Tax Refund Fraud SchemeRead the Press Release
PORTLAND, Ore. – Four Portland, Oregon, residents were sentenced today in the U.S. District Court in Portland for a multi-year stolen identity tax refund scheme to defraud the United States of more than $1 million in tax refunds, announced Acting U.S. Attorney Billy J. Williams, and Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
Jheraun Dunlap, Ernest Bagsby, Jermaine Moore and Brandi McCall were collectively sentenced to serve more than 14 years in prison by U.S. District Judge Robert E. Jones. Dunlap, 32, who was previously convicted of bank robbery, was sentenced to serve five years and five months in prison. Bagsby, 37, who was previously convicted of delivery of heroin in Clackamas County, Oregon, was sentenced to serve four years and three months in prison. Moore, 34, was sentenced to serve three years and nine months in prison, and McCall, 27, was sentenced to serve 12 months and one day in prison. All four defendants were ordered to pay restitution to the Internal Revenue Service (IRS) in the amount of $427,896.
According to the plea agreements and court documents, the scheme involved the filing of 208 false federal income tax returns that included fraudulent claims for tax refunds between $3,000 and $9,000 per return. Dunlap electronically filed the false tax returns using stolen identities or identities obtained by Bagsby and Moore. McCall opened stored-value debit cards in her own name to receive the refunds. The defendants directed the IRS to deposit the tax refunds onto stored-value debit cards and then the proceeds were shared among the participants in the scheme. In total, as part of the scheme, the defendants requested more than $1 million in tax refunds.
All four defendants were captured on ATM footage withdrawing cash from stored-value debit cards that held the tax refund proceeds. As part of the investigation, a search warrant was executed on the Facebook accounts of multiple co-conspirators, from which federal agents obtained photographs of stacks of cash, among other things. The United States seized and forfeited assets traced to proceeds of the scheme, including a two-carat diamond engagement ring, a Mercedes Benz 500 and a 1971 Pontiac Firebird, both of which were purchased with $20 bills.
Acting U.S. Attorney Williams and Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation, who investigated the case as part of the Stolen Identity Refund Fraud Task Force, and Trial Attorneys Leslie A. Goemaat and Lori A. Hendrickson of the Tax Division, who are prosecuting the case.
Photo seized from Bagsby’s Facebook account with caption: “So I was unable to rubber band up do to the fact that it just keeps pouring in . . . .”
Mercedes Benz 500 purchased with $20 bills and seized from Bagsby.
Pontiac Firebird purchased with $20 bills and seized from Dunlap.
Portland Pimp Sentenced to 12 Years for Sex-Trafficking Case Involving Two Minor VictimsRead the Press Release
PORTLAND, Ore. – U.S. District Judge Michael H. Simon sentenced Antonio Vernell Porter, 28, of Portland, to 12 years in prison, followed by ten years of supervised release, for sex trafficking of a minor. Defendant pled guilty to one of three counts in October 2014.
According to court documents, the criminal conduct took place in 2009 and continued into early 2010. Although initially charged as a single-victim case in December 2012, law enforcement located a second victim while the initial case was pending. The government filed a superseding indictment in 2014 to add this second victim and two additional counts of sex trafficking. In an interview with police, the second victim disclosed that she began working for defendant when she was just 15 years old, and that she did so because defendant threatened to harm her family if she did not work for him. She performed dozens of commercial sex acts over several months in Oregon, California, Nevada, and Washington.
In August 2009, officers responded to a report that defendant allegedly struck the victim on the head with a toddler bike and then cut her hand with a knife. Officers could not locate defendant at that time, but three months later, in November 2009, the police again responded to a report that defendant had beaten the victim (then 17) when she refused to “go work” (engage in commercial sex acts). She described defendant as her “pimp” and said he punched her in the face when she refused to get out of his vehicle for work. She explained that defendant would normally drop her off on 82nd Avenue to work, and “anytime I don’t wanna work the street I get a beating.” While police were speaking with P.M., defendant called her cell phone. She put the phone on speaker so the police could hear the conversation. Officers heard defendant tell the juvenile victim that she “better be up on the avenue.”
This case was investigated by the FBI’s Child Exploitation Task Force (CETF), led by two task force detectives from the Portland Police Bureau (PPB). The FBI-sponsored CETF partners with local law enforcement agencies to combat the commercial sexual exploitation of children in the area. Partners include the Portland Police Bureau, Tigard Police Department, Beaverton Police Department, and Vancouver Police Department, who work closely with prosecutors from both the U.S. Attorney’s office and Multnomah County District Attorney’s Office. This case was prosecuted by Assistant U.S. Attorney Leah K. Bolstad.
Con Man Sentenced for Defrauding Investors of $1.3 MillionRead the Press Release
PORTLAND, Ore. – Yesterday, U.S. District Court Judge Anna J. Brown sentenced Lloyd Benton Sharp, aka Kevin Thomas, age 79, of Clackamas, Oregon, to 60 months in prison for conspiracy to defraud investors in biodiesel projects in Ghana, West Africa, and Chile. Judge Brown also sentenced Sharp to serve three years of supervised release and ordered him to pay $6,021,482 in restitution.
Between 2007 and 2013, Sharp conspired to defraud investors in a project to produce and sell biodiesel fuel in Ghana, West Africa. When this investment failed, Sharp continued to defraud those same investors by soliciting additional funds for a project to transport biodiesel fuel from Argentina to Chile, and to build biodiesel refineries in Chile. Sharp targeted a Christian men’s group in Beaverton as victims of the fraud scheme.
Sharp falsely told investors that their investment funds would be used to purchase the equipment and feedstock to operate a biodiesel refinery in Ghana. Investors were falsely told that the Ghana refinery would be up and running within two months of them investing their money. Sharp promised victims that if they each invested $50,000, they would receive a return of $7,000 per month for an indefinite period of time as soon as the biodiesel refinery was operational. Sharp guaranteed investors that they could get 100% of their money back at any time. Sharp did not use the investors’ funds to produce and sell biodiesel fuel in Ghana as promised, and the Ghana biodiesel refinery never became operational.
When questioned by investors about the Ghana refinery, Sharp claimed that a more promising investment opportunity had been found in Chile, and that a successful investment there would provide sufficient funds to get the Ghana refinery operational. Sharp solicited and received additional funds from investors for investments in five biodiesel plants in Chile, and for the purchase of Argentinian biodiesel fuel to be trucked to Chile. However, the Argentinian biodiesel was never purchased, and the Chilean biodiesel plants were never built. Sharp used most of his share of the investors’ funds for his personal benefit. In all, investors in the Ghana and Chile biodiesel schemes were defrauded of approximately $1.3 million.
Sharp has operated various fraud schemes in the western United States since at least 1984. These schemes include the marketing and sale of investments in real estate, paulownia trees, luxury vacation condos, gold ore, and gold mines, in addition to the biodiesel project. As part of his plea agreement, Sharp agreed to pay restitution in the amount of $6,021,482, which includes restitution to the victims of all his fraudulent schemes.
This case was investigated by the United States Postal Inspection Service and the Oregon Division of Finance and Corporate Securities, and was prosecuted by Assistant U.S. Attorneys Claire M. Fay and Donna B. Maddux.
Contractor Charged with Bribing Former City of Portland Smart Parking Meter ManagerRead the Press Release
PORTLAND, Ore. – Billy J. Williams, Acting U.S. Attorney for the District of Oregon, today announced the unsealing of a criminal Information charging George R. Levey, 58, of Tarpon Springs, Florida, with honest services wire fraud in connection with Levey allegedly bribing Ellis McCoy, the former City of Portland Bureau of Transportation Manager in charge of Portland’s smart parking meter program.
The Information alleges that from 2002 through July 2011, Levey, formerly an executive with Schlumberger Industries, Inc. and later the owner and president of Cale Parking Systems, USA, Inc., bribed McCoy with golf trips, gambling trips, vacation trips, $56,675 in phony consulting fees paid to EKM Consulting, a business McCoy set up to receive and disguise these payments, and the promised payment of $137,100 when McCoy ended his employment with the City of Portland.
It is further alleged that Levey bribed McCoy so McCoy would speak favorably about Levey’s companies to other cities interested in buying smart parking meters. Additionally, McCoy would disclose to Levey information he learned from counterparts in other cities that would help Levey’s companies secure smart parking meter contracts with those cities, and would help Levey’s companies secure, keep, and expand contracts to supply smart parking meters to the City of Portland. In return for the bribes, McCoy gave Levey advice about how to draft contract proposals to be submitted to the City of Portland, disclosed to Levey internal deliberations of the Portland City Council and the Portland Bureau of Transportation, and testified before the Portland City Council in favor of awarding contracts to Levey’s companies.
“The citizens of every city in Oregon are entitled to honesty and transparency every time public money is spent,” said Acting U.S. Attorney Billy J. Williams. “The bribing of public officials involved in contracting corrupts the contracting process, harms honest contractors and citizens, and diminishes public trust in local government. This office, working with its law enforcement partners, makes it a priority to aggressively investigate and prosecute those who bribe public officials and the public officials themselves.”
Ellis McCoy has pleaded guilty to accepting bribes from previously undisclosed contractors and is scheduled to be sentenced on May 27, 2015.
This case was investigated by the FBI and the IRS-Criminal Investigation Division. The case is being prosecuted by Assistant U. S. Attorney Seth D. Uram.
Click here to see the attached information for additional details
Portland Area Drug Dealer Sentenced to 80 Months in Prison Following Federal Wiretap InvestigationRead the Press Release
PORTLAND, Ore. – April 8, 2015, Pedro Cervantes-Urbina, 34, originally from the State of Michoacán, Mexico, was sentenced to 80 months in prison after his federal conviction for conspiracy to distribute and possess with the intent to distribute methamphetamine. When the defendant is released from prison he will serve an additional three years of supervised release.
In March 2011, the U.S. Attorney’s Office and the Portland Police Bureau requested the assistance of Homeland Security Investigations (HSI), and then later the Drug Enforcement Administration (DEA) and Westside Interagency Narcotics (WIN) Team, in investigating a large-scale methamphetamine and heroin drug trafficking organization operating in the greater Portland, Oregon metropolitan area. Between the spring of 2011 and the summer of 2012, law enforcement authorities investigated the organization using informants and conducting controlled drug purchases from members of the organization. In September 2012, the government sought and received permission to start using the first of eight federal wiretaps targeting the organization.
Wire intercepts confirmed that the defendant purchased pound level quantities of methamphetamine from the drug trafficking organization for purposes of further distribution within Oregon. On February 15, 2013, as a result of this investigation, federal agents arrested the defendant in the parking lot of a Portland hotel. Subsequent searches of the defendant, his hotel room, his residence and a storage shed found $4,814 in cash, cocaine, four handguns, a rifle, a shotgun, drug packaging materials, scales, ammunition, drug ledgers and bags containing methamphetamine residue. The defendant was interviewed and admitted that he sold drugs to support himself and his family. At the time of the crime, the defendant had a prior 2008 state conviction for the delivery of a controlled substance.
“The combination of drugs and firearms is a lethal mixture that threatens the safety of our community,” stated Acting U.S. Attorney Billy Williams. “Our office will continue to work with law enforcement to find and prosecute the members of these criminal organizations who profit by selling drugs within our community."
This case resulted from an Organized Crime Drug Enforcement Task Force (OCDETF) joint investigation conducted by HSI, DEA, the Portland Police Bureau’s Drugs and Vice Division, the Westside Interagency Narcotics (WIN) Team, and the U.S. Attorney’s Office. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply. The case was prosecuted by Assistant U. S. Attorney Scott Kerin, Chief of the District of Oregon’s OCDETF program.
Four Portland-Area Strip Club Operators Charged in $500,000 Tax Cheating ConspiracyRead the Press Release
PORTLAND, Ore. - Billy J. Williams, Acting U.S. Attorney for the District of Oregon, today announced that a federal grand jury sitting in Portland returned an indictment charging defendants:
- David G. Kiraz, of Happy Valley, Oregon,
- Marci K. Kiraz, wife of David Kiraz and a resident of Happy Valley, Oregon,
- Daniel G. Kiraz, brother of David Kiraz and a resident of Portland, Oregon, and
- George D. Kiraz, father of David Kiraz and Daniel Kiraz and a resident of Estacada and Portland, Oregon
with engaging in a scheme to file false federal income tax returns that underreported $1,501,874 in cash from their operation of two Portland-area strip clubs and to cheat the IRS out of $519,503 in income taxes. The indictment identifies David Kiraz as the owner and operator of the strip clubs, Daniel Kiraz and George Kiraz as managers of the strip clubs, and Marci Kiraz as a bookkeeper for the strip clubs.
The indictment alleges that the defendants operated Cabaret Lounge, a strip club located at 503 W Burnside Street in Portland and Cabaret Lounge II, a strip club located at 17544 SE Stark Street in Gresham. From 2007 through mid-2011, the strip clubs collected cash through cover charges from customers and stage fees from dancers, all of which were recorded in daily records at the businesses, however, the defendants allegedly had these records destroyed.
The defendants allegedly maintained two sets of books -- one set that did not record the cover charge cash and dancer stage-fee cash and one set that did. The first set of books was a profit and loss spreadsheet kept on the businesses’ computers on which the cover charges and dancer stage-fees were not recorded.The second set of books was a profit and loss spreadsheet kept on defendant David Kiraz’s personal computer at his home on which the defendants accurately recorded the cash made through cover charges and dancer stage-fees.
The indictment further alleges that each year the defendants reported the business activity of the strip clubs on the individual income tax return of defendant David Kiraz using a Schedule C, “Profit or Loss From Business”.The defendants gave their tax return preparers false records, intentionally causing the return preparers to create tax returns for defendant David Kiraz that did not report most of the cash obtained through cover charges and dancer stage fees.This resulted in underreporting of taxable income totaling $1,501,874 and a tax loss of $519,503 for tax years 2007 through 2010.
“Adult entertainment businesses deal primarily in cash, and that makes it much easier for some owners of these businesses to cheat on their taxes,” stated Acting U.S. Attorney Billy Williams. “This office, in partnership with the IRS, will vigorously investigate and prosecute business owners who do not abide by the tax laws or pay their fair share of income taxes.”
This case was investigated by the Criminal Investigation Division of the Internal Revenue Service. The case is being handled by Assistant U. S. Attorney Seth D. Uram.
Additional details can be found in the attached indictment, here. Kiraz Indictment
Portland Man Sentenced to Ten Years in Prison for Sex Trafficking of a MinorRead the Press Release
PORTLAND, Ore. – U.S. District Judge Michael H. Simon sentenced Isaiah Michael Simpson, 30, of Portland, Oregon, to 120 months in prison for sex trafficking of a minor. Simpson will be required to serve five years on supervision following his release from prison, and will be required to register as a sex offender. Simpson will serve his sentence concurrently with a 5-15 year sentence imposed in November 2014 in state court in Las Vegas, Nevada, for carrying a concealed firearm.
Simpson pled guilty in December 2014 to trafficking a minor for the purpose of prostitution for a one-week period in 2013. According to documents filed in the case, Simpson was also responsible for trafficking three adult women, including his wife, between 2009 and 2013. Simpson would demand that the women make more money from prostitution before they could stop working for the night, and told his wife in a text message to “stay on your money till you pass out exhausted.” The term “stay on your money” is known to law enforcement to mean “continue to engage in prostitution” to those in the prostitution industry.
“The commercial sexual exploitation of children violates federal sex trafficking laws, as does sex trafficking of adult women by force and coercion, and is a heinous offense,” stated Acting U. S. Attorney Billy J. Williams. “Anyone who traffics a child or uses coercion to compel prostitution in the District of Oregon will be prosecuted and face lengthy mandatory prison sentences.”
This case stemmed from a coordinated investigation by members of the FBI’s Child Exploitation Task Force, including the FBI and the Portland Police Bureau. The FBI’s Child Exploitation Task Force marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children through sex trafficking, as well as to identify and recover victims. The case was prosecuted by former Assistant U.S. Attorney Stacie Beckerman, who was recently appointed as a United States Magistrate Judge. Assistant U.S. Attorney Jane Shoemaker, Chief of the Violent Crimes Unit, handled the sentencing.
Man Sentenced in Federal Court for Domestic Violence Assault on the Warm Springs Indian ReservationRead the Press Release
PORTLAND, Ore. – William Clements, Sr., 44, of the Warm Springs Indian Reservation, was sentenced today to 21 months in federal prison by U.S. District Judge Michael W. Mosman. In November 2014, Clements pled guilty to the felony offense of assault resulting in serious bodily injury. Clements has remained in the custody of the U.S. Marshals Service since his arrest in May of 2014.
“The epidemic of domestic violence in Tribal Nations must stop,” stated Acting U.S. Attorney Billy J. Williams. “Mr. Clements’ crime caused serious and dangerous injuries to his wife. But we know that domestic violence also negatively impacts children, families, and the entire community.”
After Clements has completed his 21 months in prison, he must serve three years of federal supervised release. While on supervised release, Clements will be required to attend drug and alcohol rehabilitation, participate in mental health treatment, and successfully complete a domestic violence counseling program.
According to the public filings in the case, on May 16, 2014, Clements intentionally assaulted his wife, causing her to suffer serious physical injuries. The investigation began when the Warm Springs Police Department responded to a report of domestic violence. The police found the victim at home, and she described how Clements had slammed her into the ground and repeatedly hit her. The victim suffered bruising and lacerations from the assault, and she was transported to the St. Charles Medical Center in Madras for treatment. Clements had fled the scene before the police arrived, but he was arrested the following week. During an interview with the police, Clements admitted to hitting the victim with his fists and elbows, and kicking her with his feet. Clements also confessed to pulling the victim by her hair.
Prior to imposing his sentence, Judge Mosman addressed Clements. “I think a man beating his wife is a terrible thing,” said Judge Mosman. “So I take that crime very seriously.”
The case was investigated by the Warm Springs Police Department and FBI Special Agents in Bend. Assistant U.S. Attorney Craig J. Gabriel prosecuted the case.
Prominent Businessman for Private Consulting Group Sentenced to Federal Prison After Bilking Elderly Victim of $1.1 MillionRead the Press Release
PORTLAND, Ore. – Robert L. Keys, 65, an Oregon resident, was sentenced today by U.S. District Judge Marco Hernandez to serve 70 months in prison, after pleading guilty to wire fraud, money laundering, and bankruptcy fraud. Keys was also ordered to serve three years supervised release, and he must pay restitution in the amount of $1.1 million. Keys was a prominent businessman who ran a company called Private Consulting Group, which at one time had assets of $400 million and managed investments for high net worth individuals around the country.
“People who prey upon our elderly citizens in this manner will be held accountable and are deserving of a lengthy prison sentence,” stated Acting U.S. Attorney Billy Williams. “This office is committed to prosecuting individuals for conduct that destroys the trust necessary for safe investments.”
Keys pled guilty to two counts of wire fraud, two counts of money laundering, and one count of bankruptcy fraud at his change of plea hearing held on September 9, 2014. At that hearing, the government contended that in 2008, as Keys’ business ventures were failing, he turned to one of his long-term clients, a widow in her mid-80s, and persuaded her to loan $1.1 million to co-defendant William Kearney, now deceased. Keys lied to his client about the terms of the loan, such as the existence of treasury bonds as collateral for the loan, and he failed to disclose important facts to her in order to fraudulently obtain money for his benefit and that of Kearney.
Keys also received over $100,000 in kickbacks as part of the scheme to defraud his long-time client. Those kickbacks were wired to him by Kearney the day after Keys persuaded his client to loan Kearney the $1.1 million.
In addition to the wire fraud and money laundering charges, Keys and his wife filed for bankruptcy in 2010, and Keys fraudulently attempted to discharge $148 million in debt by lying to the Bankruptcy Court, concealing assets and income, and filing false documents with the Court.
This case was investigated by the Internal Revenue Service, Criminal Investigation, and the United States Trustees Office. The case was prosecuted by Assistant United States Attorney and Senior Litigation Counsel Allan M. Garten.
Man Pleads to Accessory to Arson Resulting in Personal InjuryRead the Press Release
PORTLAND, Ore. – Today before U.S. District Judge Michael W. Mosman, Michael James Duncan, 32, pled guilty to accessory after the fact to arson resulting in personal injury. He is currently in the custody of the U.S. Marshals Service, and his sentencing is scheduled for July 6, 2015.
By his guilty plea, Duncan admitted that on November 15, 2013, he knew that Marcus Tyler had committed an arson inside Pal’s Shanty Tavern in NE Portland that resulted in extensive burns to Tyler. Duncan further admitted that he assisted Tyler in order to hinder and prevent Tyler’s apprehension, trial and punishment. Tyler pled guilty in federal court on November 5, 2014, to arson resulting in personal injury. He is scheduled to be sentenced on June 24, 2015, and faces a mandatory minimum sentence of seven years in prison.
With respect to Duncan’s plea to accessory after the fact to arson, Duncan drove Tyler away from Pal’s Shanty Tavern after the arson, which occurred at approximately 1:24 a.m. on November 15, 2013. Tyler was severely burned during the course of the arson after slipping on gasoline he had poured on the floor to ignite the fire. However, instead of taking Tyler to the hospital, and in order to avoid detection by the police, Duncan drove Tyler back to his house in SE Portland and attempted to treat Tyler’s burns without medical attention. Eventually, over an hour after the arson, Duncan called 911 to ask for an ambulance to transport Tyler to the hospital. Duncan, who has been friends with Tyler since high school, falsely told the 911 operator and police that he did not know Tyler and that he had simply found a badly burned, naked man in the middle of the street in SE Portland. Duncan also instructed his girlfriend to lie to the police about the circumstances around the arson at Pal’s Shanty Tavern.
“The arson fire at Pal’s Shanty caused catastrophic losses for the property owner, and the neighborhood lost a treasured establishment. The Fire Investigations Unit did what it is highly trained to do - uncover the root of arson and help bring the perpetrators to justice,” stated Portland Fire & Rescue Chief Erin Janssens.
Duncan faces a maximum sentence of 15 years in prison, a fine of up to $125,000, and three years of supervised release.
This case was investigated by the Portland Fire Bureau and the Portland Police Bureau. The case is being prosecuted by Assistant United States Attorneys Pamala Holsinger and Craig Gabriel.
Portland Resident Sentenced to Six Months in Federal Prison for Aiming a Laser Pointer at Commercial AircraftRead the Press Release
PORTLAND, Ore. - Stephen Francis Bukucs, 41, of Portland, was sentenced to six months in federal prison yesterday by U. S. District Judge Michael W. Mosman for two felony counts of aiming a laser pointer at commercial jetliners as they approached Portland International Airport for night landings in October 2013. Following the prison term, Bukucs must serve three years of supervised release.
On July 15, 2014, Bukucs pleaded guilty to aiming his green laser device at United Airlines Flight 1406 and Jet Blue Flight 1205 as they flew over his apartment in Northeast Portland on October 13, 2013. The laser struck both aircraft and distracted the pilots during their final descents to Portland. Bukucs confessed to the FBI that, over several months, he had targeted up to 25 aircraft and that he did so for entertainment and as a “cat-and-mouse” game with the police who pursued him. His arrest occurred after intense air and ground surveillance by FBI agents and police officers. Investigators reported over 100 laser strikes from the vicinity of defendant’s apartment in 2013, the government stated to the court.
Bukucs, a native of Portland, worked for Delta Airlines in the Portland ground crew from 1997 to 2004. From 2007 until his arrest, he worked for a private security firm, providing armed security in Portland and Vancouver, Washington.
Among his findings as part of the sentence, Judge Mosman found that “the offense involved recklessly endangering the safety of an aircraft.” The government noted at sentencing that aiming a laser at aircraft always jeopardizes aircraft safety, since it may impair pilots’ vision by causing glare or flash blindness. The action can force pilots to divert their eyes from their flight or landing path, startle them, and reduce their ability to observe obstacles.
The investigation was conducted by the FBI, the Portland Police Bureau, the Port of Portland Police and the Clackamas County Sheriff’s Office. The case was prosecuted by Assistant U. S. Attorney Stephen F. Peifer.
Medford Armed Career Criminal Sentenced to 15 Years in Federal PrisonRead the Press Release
MEDFORD, Ore. - On Monday, March 16, 2015, Senior U.S. District Judge Owen M. Panner sentenced Joel Daniel Dixon, 49, of Medford, Oregon, to 188 months in federal prison, after he previously pled guilty to being a felon in possession of ammunition. Dixon will be on supervised release for five years after he completes his prison sentence.
In February 2013, a Jackson County Probation officer, accompanied by Jackson County Sheriff’s deputies, conducted a home visit on a probationer. The probation officer had reason to believe that another fugitive was at the residence. A sheriff’s deputy went to the back of the residence and saw Dixon hiding by the back window in a narrow space between the fence and the house. The deputy ordered Dixon to put his hands up. Dixon turned away, reached into his pocket and threw something down, and then walked towards the deputy with his hands up. The deputy frisked Dixon and found a Colt .380 magazine loaded with five .380 rounds in his pocket. In the narrow space where Dixon was hiding, officers found a small baggie of methamphetamine that had been dropped on the ground, a gallon ziplock of marijuana bud, a backpack, and a leather satchel containing 584 grams of methamphetamine packaged for sale.
Under federal law, any person who possesses a firearm or ammunition after being previously convicted of three violent felonies or felony drug trafficking crimes is an Armed Career Criminal and faces a 15 year mandatory minimum prison sentence. Dixon’s criminal history includes over 62 arrests, with 14 felony convictions, including felony attempt to elude police, manufacture of methamphetamine, possession of a controlled substance, supplying contraband, theft in the first degree, and felon in possession of a firearm. Dixon also has 22 misdemeanor convictions, including six assault in the fourth degree convictions, resisting arrest, attempt to elude police, false information to police, and felon in possession of a restricted weapon.
This case was investigated jointly by Jackson County Parole and Probation Services, the Jackson County Sheriff’s Office, and the Bureau of Alcohol, Tobacco, and Firearms, and was prosecuted by Assistant U.S. Attorney Douglas W. Fong.
United States' Investigation of Oregon's Mental Health SystemRead the Press Release
On goingFor more information please see the attached documents linked below.
State and Feds Reach Accord on Mental Health Plan - March 3rd 2012
U.S. Attorney's Office and Civil Rights Division Sign Agreement Move Forward on State-Wide Community Mental Health Reform - November 9th 2012
Letter to John Dunbar - April 9th 2013
Oregon Mental Health Cover Letter for the Interim Report - January 2nd 2014
Oregon Mental Health Attachment to State Interim Report - January 2nd 2014
Oregonian Article - January 23rd 2014
Oregon’s Status Resolving the U.S. Department of Justice’s Investigation into Oregon’s Mental Healthcare System - March 11th 2015
Serial Bank Robber Receives 25-Year Federal Prison TermRead the Press Release
PORTLAND, Ore.—Christian Olivier DeLaurentiis, 33, of Aloha, Oregon, was sentenced today by U.S. District Judge Marco Hernandez to 25 years in prison for a series of seven bank robberies committed in Western Oregon in early 2012. Judge Hernandez ordered the sentence to be served concurrently with the sentence yet to be imposed in Washington County Circuit Court for aggravated murder and abuse of a corpse, to which defendant has also pleaded guilty.
DeLaurentiis pleaded guilty in federal court on November 17, 2014, to the following bank robberies:
- January 2, 2012, at U.S. Bank in Medford, Oregon;
- February 8, 2012, at U.S. Bank in Hillsboro, Oregon;
- February 13, 2012, at U.S. Bank in Clackamas, Oregon;
- February 24, 2012, at U.S. Bank in Beaverton, Oregon;
- February 28, 2012, at Wells Fargo Bank in Troutdale, Oregon;
- March 19, 2012, at U.S. Bank in Wilsonville, Oregon;
- April 3, 2012, at Washington Federal Bank in Woodburn, Oregon.
The first five robberies involved demand notes with representations that DeLaurentiis was armed, but the tellers saw no weapons.In the Wilsonville robbery DeLaurentiis was armed with a purported bomb which turned out to be a hoax device.In the Woodburn robbery he was armed with a handgun which he waved at the tellers.
DeLaurentiis is awaiting sentencing in Washington County on his guilty pleas to the murder and dismemberment of an accomplice in the bank robberies. In May 2012 law enforcement officers found the remains of the accomplice in a freezer in DeLaurentiis’ Aloha residence.
The bank robbery investigations were conducted by the FBI in conjunction with local law enforcement agencies in each jurisdiction. The federal case was prosecuted by Assistant U. S. Attorney Stephen F. Peifer.
Eugene Gang Member Sentenced to 10 Years for Possessing a Firearm as a FelonRead the Press Release
EUGENE, Ore. – On March 11, 2015, Gary Lee Walls, 39 years old, of Eugene, Oregon, was sentenced by U.S. District Judge Michael McShane to 10 years in federal prison for unlawful possession of a firearm. Upon his release from prison, Walls will be on supervised release for three years.
On August 29, 2013, Eugene Police Department officers arrested Walls for an outstanding parole violation and found him carrying a loaded handgun, knife, and methamphetamine. Walls is a member of the gang called the Insane Peckerwood Syndicate and has a lengthy criminal history, including prior felony convictions for robbery and kidnapping.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Eugene Police Department, and was prosecuted by Assistant U.S. Attorney Nathan J. Lichvarcik.
Bend Drug Dealer Sentenced to 72 Months in Federal PrisonRead the Press Release
EUGENE, Ore. – On March 5, 2015, Gavin Fraser, 27, of Bend, Oregon, was sentenced by U.S. District Judge Michael McShane to 72 months in federal prison for possessing with the intent to distribute methamphetamine. Upon his release from prison, Fraser will be on federal supervised release for four years.
On July 1, 2013, members of the Central Oregon Drug Enforcement Team (CODE) observed Fraser’s vehicle as it engaged in a trip to Portland – a trip which officers believed was for the purpose of picking up drugs and transporting them back to the Bend area for distribution. Officers stopped and searched the vehicle as it returned to Bend and discovered Fraser was transporting approximately 25 grams of methamphetamine, 24 grams of heroin, scales, packaging materials, and a .22 caliber handgun.
Fraser has prior convictions for unlawful delivery of methamphetamine and heroin and has been the subject of several investigations by CODE, which also investigated and handled the July 1, 2013 case. The CODE team is a multi-jurisdictional narcotics task force supported by the following Central Oregon law enforcement agencies: Bend Police Department, Deschutes County Sheriff’s Office, Redmond Police Department, Prineville Police Department, Crook County Sheriff’s Office, Jefferson County Sheriff’s Office, Madras Police Department, Oregon State Police, Sunriver Police Department, Black Butte Police Department, United States Drug Enforcement Administration (DEA), Warm Springs Tribal Police Department, Deschutes, Crook, and Jefferson County District Attorney’s Offices, and the Oregon National Guard.
This case was prosecuted by Assistant U.S. Attorney Nathan J. Lichvarcik.
Prison Sentence Imposed on $15.5 Million Dollar Psychic SwindlerRead the Press Release
PORTLAND, Ore. – U.S. District Court Judge Robert E. Jones today sentenced Rachel Lee, 44 of Canby, Oregon, to 100 months in prison for her lead role in a conspiracy to commit wire fraud, money laundering, and her failure to file personal income taxes. Judge Jones also ordered Lee to pay $15,490,978.65 in restitution to the victim. In addition to the prison sentence, she must serve three years of post-prison supervised release.
“Fueled by greed and a complicated web of deceit, Rachel Lee gained control of her victim, liquidated his fortune, and left him nearly penniless,” said United States Attorney Amanda Marshall. “Due to the combined efforts of federal, state, and local law enforcement, the victim is now safe and financially stable. We will continue to work tirelessly with our law enforcement partners to hold self-serving crooks accountable, protect victims, and seek full restitution.”
According to documents filed with the court, the victim met Lee in 2004 when he visited her Psychic Shop in Bend, Oregon. Between 2004 and 2006, Lee fostered a friendship with the victim for the purpose of extracting money from him and falsely claimed that she provided care for her dying husband. She also falsely claimed that she assisted with bookkeeping for her husband’s business. As a result of these lies and the trust she established with the victim, Lee assumed the role as a paid caregiver to the victim’s elderly father by 2007. Trusting her to act in his best interests, the victim turned over all personal and business account control to Lee. While controlling the victim’s finances, Lee and her family lived in a million-dollar home in the Portland West Hills purchased with the victim’s money.
As part of the fraud scheme, Rachel Lee recruited members of her family to play key roles in carrying out the deception. She and her daughter, Porsha Lee, created a fake persona named Mary Marks and introduced this character to the victim. This character wore a blond wig, glasses, a hat, and sported a British accent. Porsha Lee, as Mary Marks, met the victim and used information her mother provided her to connect with him. She claimed to be a bookkeeper, and soon after began assisting Rachel Lee with the management of the victim’s accounts.
By 2011 the victim believed he and Mary Marks had married and had a child. The child presented to the victim as his son is actually one of Rachel Lee’s grandchildren. Digital images reveal years of holidays, birthdays and events with the victim, Rachel Lee, Porsha Lee as Marks, and their purported child.
Between 2007 and 2011, Rachel Lee directed the victim to incrementally liquidate investment accounts totaling approximately $3.8 million dollars. After depleting the victim’s investment accounts, Rachel Lee convinced the victim he owed substantial taxes and needed to sell his family’s tree farm. At Lee’s direction, the tree farm properties were sold for approximately $12.3 million dollars.
Rachel Lee and her family spent the victim’s fortune on a luxury lifestyle. Lee directed funds for high-roller trips to Las Vegas, trips to California, and a first class trip to Europe. She also spent her ill-gotten gains on luxury clothing and jewelry, including a $64,000 Rolex watch. While selling off the victim’s property, Rachel Lee and her co-defendant, Blancey Lee, purchased a Ferrari and a Bentley on a single day. Finally, between 2010 and 2013, Lee and her co-defendants used the victim’s money to purchase at least 10 properties at a cost of approximately $3.3 million dollars. She and her family used three of the properties – in Bend, Canby, and Scappoose – as Psychic Shops.
By the time of Rachel Lee’s arrest in May 2014, the victim held less than $250,000 in assets under his control. As a result of the investigation, the 10 properties purchased with the victim’s money will be sold for the victim’s benefit. Internal Revenue Service criminal agents seized approximately $1.9 million in cash from bank accounts in the name of Rachel Lee, as well as the Ferrari, the Bentley, and other items. All federally seized assets will be returned to the victim after all defendants are sentenced. Co-defendants Porsha Lee and Blancey Lee are scheduled for sentencing in April.
“This is a heartbreaking crime,” said Special Agent in Charge Teri Alexander of IRS Criminal Investigation. “The level of deceit that Rachel Lee and her family resorted to is almost unconscionable. I am proud our agents could work alongside our law enforcement partners to dismantle this scam.”
“This investigation is an example of outstanding achievement in respect to the investigative efforts by the Canby Police Department, the U.S. Attorney’s Office, and the Internal Revenue Service,” said Canby Police Chief Bret Smith. “This was a complicated investigation requiring expertise and patience from everyone involved in order to bring it to a successful resolution.”
The case was investigated by the Internal Revenue Service, Criminal Investigations and the Canby Police Department, with assistance from the Social Security Administration, Office of Inspector General; the Multnomah County Sheriff’s Office; Portland Police Bureau; and the Oregon Department of Justice. The case is being prosecuted by Assistant U.S. Attorneys Donna Maddux and AnneMarie Sgarlata.
Portland City Council Votes to Join the JTTFRead the Press Release
PORTLAND, Ore. – On Thursday, February 19, 2015, the Portland City Council voted 3-2 to assign two Portland Police Bureau (PPB) officers to the Joint Terrorism Task Force. Mayor Charlie Hales joined Commissioners Dan Saltzman and Nick Fish in voting to allow PPB officers to participate in the JTTF. PPB officers will join other regional law enforcement partners involved in the JTTF.
U.S. Attorney Amanda Marshall joins in applauding the vote of the Portland City Council to rejoin the JTTF. “Our thanks to the leadership of Mayor Hales, Commissioner Dan Saltzman, and Commissioner Nick Fish in taking this historic step to work with other regional law enforcement partners to ensure the public safety of the citizens of Portland and the surrounding communities. Law enforcement in this era is dependent upon effective and committed partnerships. The involvement of PPB with their federal and regional law enforcement partners is a crucial component for effective investigative activities, critical oversight of the investigations, and will improve the transparency of the JTTF partners. PPB’s involvement provides community-based assistance with detection, prevention, as well as timeliness in responding and apprehending suspects in the event of an act of terrorism. Combined with the community outreach efforts of the Department of Justice and the FBI to counter violent extremism at the local, national, and international levels, we are committed to work together with the City of Portland to ensure public safety and protect civil liberties.”
Greg Bretzing, Special Agent in Charge of the FBI Oregon stated that, “We work day in and day out with Portland Police on many different levels – from the street to the chief’s office. Together, we address crime problems that affect the people who live and work in Portland: gang crimes, drug trafficking, child sex trafficking, child predators and more. “Today’s vote to allow Portland Police Bureau to rejoin the JTTF will serve to strengthen that relationship in a critical area – preventing acts of terrorism. It is our mission to keep our shared community safe while at the same time protecting the freedoms we all enjoy in this country.”
"The 104 FBI led Joint Terrorism Task Forces (JTTF) around the nation are staffed with federal, state and local law enforcement professionals who share the common goal of protecting our national security and public safety," said John Carlin, Assistant Attorney General for National Security. "I commend the Portland City Council's decision to allow their police department to rejoin the local JTTF and look forward to having them back on board."
Oregon's United States Attorney Joins President Obama at White House Summit on Countering Violent ExtremismRead the Press Release
PORTLAND, Ore. – United States Attorney Amanda Marshall is pleased to be in attendance at a Summit on Countering Violent Extremism being hosted by the White House today in Washington, D.C. The Summit will highlight domestic and international efforts to prevent violent extremists and their supporters from radicalizing, recruiting, or inspiring individuals or groups in the United States and abroad to commit acts of violence, efforts made even more imperative in light of recent, tragic attacks in Ottawa, Sydney, Paris, and Copenhagen. It is expected that Summit participants will include President Barack Obama, Vice-President Joe Biden, Secretary of State John Kerry, Attorney General Eric Holder, and many others, from all over the world, deeply involved in the efforts to prevent such acts of violence.
The Summit is focused on developing an action agenda to address the rise in violent extremism by bringing together key stakeholders from national and local governments around the world, the private sector, civil society, and religious and youth leaders by identifying and addressing the conditions that can lead individuals to commit violent actions, as well as ways to prevent and intervene where appropriate – both of which are key elements of President Obama’s comprehensive national security strategy, and elements of the U.S. Attorney's strategy here in Oregon.
Individual United States Attorneys’ offices play a role in these efforts, as a critical part of President Obama’s national strategy to prevent violent extremism domestically focuses on partnering on a local level with social service providers, religious leaders, community members and law enforcement agencies to address violent extremism as part of the broader mandate of providing public safety and crime prevention in each of our communities. A focus of the Summit, and of efforts by U.S. Attorneys, is developing ways to empower local communities by raising awareness and providing them with useful information so that they are better equipped to protect young people from the lure of radicalization.
Recognizing that preventing the spread of violent extremism requires localized, specialized, and expanded efforts, things that the U.S. Attorneys’ offices – along with many of our federal, state and local law enforcement partners – have been fully committed to for several years, and we continue to strive for enhanced open communication and transparency in Oregon.
“Protecting our citizens and our communities means more than finding ways to respond to terrorist incidents,” said U.S. Attorney Amanda Marshall. “It requires working hand-in-hand with diverse communities to help further our understanding and ability to identify and address the various factors that can lead to radicalization and violence. My office will continue to fight for those who are threatened because of their ethnicity, race, religion, gender or sexual orientation, and against all violent extremists who threaten the very core of Oregon’s culture of celebrating diversity and renouncing oppression. I am honored to participate in this Summit, and I look forward to working with Oregonians to carry out this very important work.”
Additional information concerning efforts to prevent violent extremism can be found in an editorial by President Obama, published in today’s edition of the Los Angeles Times.
Marshall was one of five U.S. Attorneys who were invited to attend the Summit.
Oregon Resident Pleads Guilty to Accessory After the Fact in Connection with 2009 Suicide Bombing of ISI Headquarters in PakistanRead the Press Release
PORTLAND, Ore. – Reaz Qadir Khan, 51, a naturalized U.S. citizen residing in Portland, pleaded guilty to the crime of accessory after the fact for the assistance he provided to individuals connected to the May 27, 2009, suicide bomb attack at the headquarters of Pakistan’s intelligence service in Lahore, Pakistan, that killed approximately 30 individuals and injured 300 more.
In entering his plea before U. S. District Court Judge Michael Mosman, Khan admitted arranging for suicide bomber Ali Jaleel to receive approximately $2,450 inside of Pakistan prior to Jaleel’s participation in the May 27, 2009 bombing. Khan further admitted to providing advice and financial assistance to Jaleel’s wives after the bombing knowing that such assistance would hinder and prevent the apprehension of Jaleel’s wives and others in the Maldives who may have been involved with Jaleel.
On May 27, 2009, Jaleel and two others conducted the suicide attack at the ISI Headquarters in Lahore. The blast resulted in the death of approximately 30 people and injured 300 more. In a video released by the media outlet of al-Qaeda shortly after the attack, Jaleel made a statement taking responsibility for the attack and he was shown preparing for the attack at a training camp in what is believed to be the Federally Administered Tribal Area of Pakistan.
The maximum sentence for accessory after the fact is 15 years in prison and a fine of up to $125,000. The parties have agreed to jointly request that the Court impose a sentence of 87 months in prison at defendant’s sentencing, which is set for June 8, 2015.
This case was investigated by the FBI’s Joint Terrorism Task Force. The prosecution is being handled by Assistant U.S. Attorneys Ethan D. Knight and Charles F. Gorder, Jr. from the U.S. Attorney’s Office for the District of Oregon. Trial Attorney David P. Cora, from the Counterterrorism Section of the Justice Department’s National Security Division, is assisting.
Identity Theft and Bank Fraud Convictions Result in a Federal Prison SentenceRead the Press Release
Counterfeit Checks and Victim Identification Used in Scheme to
Defraud Banks and BusinessesMEDFORD, Ore. - Ryan Juan Pitcher, 38, and Shawn Francis Farrell, 31, both from Medford, Oregon, and Logan Chad Clark, 25, Rogue River, Oregon were sentenced to federal prison Tuesday by U.S. District Judge Owen M. Panner for their convictions for conspiracy to commit bank fraud, aggravated identity theft and possessing and passing counterfeit checks. Pitcher was sentenced to 94 months; Farrell was sentenced to 36 months; and, Clark was sentenced to 24 months in addition to the time he had already served in federal custody. As part of each sentence, each defendant received a mandatory consecutive term of two years in prison required by federal statute where a victim’s identification was possessed or used in committing bank fraud.
According to documents filed with the court, Assistant U. S. Attorney Byron Chatfield said Pitcher was instrumental in committing all of the offenses that occurred in the latter part of 2013. He stole mail from postal collection boxes and mailboxes belonging to businesses and individuals and then used the personal identification to create various counterfeit identification and numerous counterfeit checks. In accomplishing the scheme, he used computers, printers, check-making software and paper stock to make the checks. He provided the items to other co-conspirators instructing them on how and where to negotiate the counterfeit checks. As part of their compensation, he provided them with drugs and/or money. Pitcher also has four prior state convictions for identity theft that included the use of stolen mail in passing fraudulent checks, as well as one other federal conviction in Oregon for possessing stolen mail.
Also according to court documents, Farrell committed much of the criminal activity on his own without participation of the other co-conspirators. He made counterfeit identification from a victim’s driver’s license he had stolen from the mail and used it multiple times to negotiate counterfeit payroll checks including opening a bank account in the victim’s name and, after depositing counterfeit checks, withdrawing money from bank branches in Ashland and Grants Pass, Oregon. Police arrested Farrell when he attempted to cash a counterfeit payroll check at another bank in Grants Pass. When police arrived, he assumed the identity of the victim, presenting the victim’s US Passport he had used in attempting to pass the counterfeit check. Several months earlier, Farrell was also convicted of identity theft in Jackson County, Oregon and was currently on probation when he committed the federal offenses.
Also according to court documents, defendant Clark traveled with Pitcher to various locations in Southern Oregon cashing counterfeit checks at businesses and banks. Clark was apprehended following a vehicle crash, but Pitcher eluded police on foot. Print logs from a laptop computer recovered from the vehicle revealed that out of 98 counterfeit checks, 37 checks were made payable to Clark. There were also other numerous counterfeit checks recovered from the vehicle made payable to Clark.
The other federally charged defendants, Shayna Campos, 23, and Nathan David Meyer, 29, are scheduled to be sentenced in the next few months. Cinnamon Danielle Duck, 23, is pending trial.
This case was investigated by the Medford Police Department, the Douglas County Sheriff’s office, Grants Pass Department of Public Safety and the U.S. Postal Inspection Service and prosecuted by Assistant U. S. Attorney Byron Chatfield.
Illegal Criminal Alien Sentenced to Federal PrisonRead the Press Release
Deported Alien Returns to Southern Oregon and Continues Trafficking HeroinMEDFORD, Ore. – Zeus Apolo Guzman-Aguilar, 37, from Mexico was sentenced to federal prison for illegally reentering the United States. On Tuesday, January 20th, Senior U. S. District Judge Owen M. Panner sentenced Guzman-Aguilar to 57 months in prison following an earlier deportation and conviction for drug trafficking.
On December 17, 2013, the Medford Police executed a search warrant at Guzman-Aguilar’s residence in Medford after receiving information that he had heroin packaged for sale at the residence. Police seized heroin and digital scales during the search. Defendant had acquired both heroin and cocaine and was breaking them down for sale. On February 5, 2014, he was convicted in state court for delivery of heroin and sentenced to 21 months in prison.
Immigration and Custom Enforcement agents became aware that Guzman-Aguilar was detained in state custody after the state drug conviction and also confirmed he had been sent back to Mexico on six prior occasions after earlier drug convictions. On June 17, 2013, he was deported from the United States following his release from state prison. Within four months of his deportation, he again illegally reentered the United States and returned to Medford for the specific purpose of continuing to sell and distribute heroin in the Medford area.
The case was investigated by Immigration and Customs Enforcement and was prosecuted by Assistant U.S. Attorney Byron Chatfield.
Medford Felon Sentenced to 77 Months in Prison for Possessing FirearmRead the Press Release
MEDFORD, OR— On Tuesday, January 13, 2015, Senior U.S. District Judge Owen M. Panner sentenced Vincent Leon Johnson, 26, recently of Medford, Oregon, to 77 months in prison after he pled guilty to being a felon in possession of a firearm. Defendant will be on three years of post-prison supervision upon completing his sentence.
On February 16, 2014, Medford police were dispatched to a report of drug dealing in the Taco Bell parking lot. Police arrived and found the suspect automobile occupied by four people; three of them had arrest warrants. Johnson was the front passenger. Officers frisked Johnson and found $3,401 cash, digital scales, and a small amount of marijuana. Officers seized a backpack found at Johnson’s feet and found a loaded Glock .40-caliber pistol, 50 grams of heroin, $260 cash, and photographs of Johnson. Johnson admitted that he intended to deliver the heroin to another person and carried the loaded Glock .40 caliber handgun. He has prior felony convictions for assault with firearm on a person and two separate convictions for felon in possession of a firearm.
Johnson was recently convicted in the Jackson County Circuit Court of racketeering and two counts of conspiracy to distribute heroin for arranging drug deals while incarcerated in the Jackson County Jail. He was sentenced to 87 months in state prison. As part of his plea agreement, his federal sentence will run concurrent with his state prison sentence.
This case was investigated jointly by the Medford Police Department and the Bureau of Alcohol, Tobacco, and Firearms (ATF), and was prosecuted by Assistant U.S. Attorney Douglas W. Fong.
Lane County Man Pleads Guilty in Federal Court to Being a Fellow in Possession of a FirearmRead the Press Release
EUGENE, Ore. – On Tuesday, January 13, 2015, Christopher Shaun Kanatzar, 28, a resident of Springfield, Oregon, appeared before U. S. District Court Chief Judge Ann Aiken and pled guilty to felon in possession of a firearm. Kanatzar admitted possessing a loaded 9 mm caliber pistol and faces a ten-year maximum prison term and three years of post-prison supervision.
After accepting the guilty plea, Chief Judge Aiken scheduled Kanatzar’s sentencing hearing for March 17, 2015.
According to court documents and statements made in court, on October 1, 2012, Springfield police attempted to stop Kanatzar who was driving a stolen car. Kanatzar attempted to elude police and after a violent struggle, was taken into custody. Inside the stolen vehicle, police located a pistol which Kanatzar had used to rob a man.
In 2012, Kanatzar was charged in state court with robbery, assault and driving offenses. His guilty plea and admissions were part of a resolution of his federal and state charges.
Kanatzar was also convicted in 2006 for shooting at a man and a school administration building, first degree burglary and first degree theft.
This case was investigated by the U.S. Bureau of Alcohol, Tobacco and Firearms, and the Springfield Police Department. Assistant U.S. Attorney Frank R. Papagni, Jr., with the assistance of Lane County Deputy District Attorney Erik Hasselman, prosecuted the case.
Four Portland Residents Plead Guilty to $1 Million Tax Fraud SchemeRead the Press Release
WASHINGTON - Acting Deputy Assistant Attorney General Larry J. Wszalek for the Department of Justice's Tax Division, U.S. Attorney S. Amanda Marshall for the District of Oregon and Chief Richard Weber for the Internal Revenue Service-Criminal Investigation (IRS-CI) announced that Jheraun Dunlap, Ernest Bagsby, Jermaine Moore and Brandi McCall pleaded guilty today to a $1 million federal tax refund fraud scheme.
Dunlap admitted to filing 208 false federal income tax returns with false wages, false withholding and false refundable credits that claimed a total of more than $1 million in fraudulent refunds. Dunlap filed false tax returns using the names and social security numbers of other individuals obtained directly and through Bagsby, Moore and McCall. Dunlap filed a number of false tax returns using identities stolen by co-defendant Carolyn Gallagher, who previously pleaded guilty to identity theft. Dunlap also used addresses obtained by Bagsby, Moore and McCall to receive stored-value debit cards loaded with fraudulent income tax refunds.
On Jan. 12, all four defendants pleaded guilty before Senior District Judge Robert E. Jones in the District of Oregon. Dunlap pleaded guilty to conspiracy to defraud the government, wire fraud and aggravated identity theft. Bagsby and Moore pleaded guilty to conspiracy to defraud the government, theft of government funds and aggravated identity theft. McCall pleaded guilty to conspiracy to defraud the government. All four defendants have agreed to pay full restitution to the U.S. Treasury in the amount of $427,896.
This case was investigated by the IRS-CI's Stolen Identity Refund Fraud Task Force. Trial Attorneys Leslie A. Goemaat and Lori A. Hendrickson of the Tax Division are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division's website http://www.justice.gov/tax.
Former Crater Lake Chef Sentenced to 18 Months Prison for Fighting Park RangersRead the Press Release
MEDFORD, Ore. - On Tuesday, January 13, 2015, Senior U.S. District Judge Owen M. Panner sentenced John Charles Saubert, 47, to 18 months in federal prison for forcibly resisting federal officers. Saubert will be on three years of supervised release after he completes his prison term.
On September 23, 2014, Saubert was terminated as a cook with Xanterra Parks and Resorts at Crater Lake National Park due to excessive alcohol and performance issues. During a shuttle ride back to his dorm, Saubert was disturbing other riders and allegedly fondled a woman’s leg after being told to stop. Park rangers and the Xanterra manager contacted Saubert at his dorm room and warned that Saubert would be allowed to remain on the premises until the next day, but only if he remained in his dorm room.
Approximately 10 minutes later, the park rangers observed Saubert staggering outside and being very loud. When the rangers told Saubert he was under arrest, Saubert responded, “I’m not going without a fight.” Saubert jerked his hand away from a ranger’s grasp, hitting the ranger in the face, and shoved another ranger against the patrol car. Saubert was wrestled to the ground but continued to fight despite the officers’ commands to stop resisting. One ranger suffered bruised knees as a result of the fight. After rangers placed Saubert in a patrol car, Saubert continued screaming profanities, banging his head against the window, and threatening to kill the officers and their families.
At Saubert’s initial federal court appearance the next day, he was released from custody and required to re-appear a week later. Saubert failed to appear, and an arrest warrant was issued. The U.S. Marshal’s tracked Saubert to a luxury resort in southern Utah, where he began working as a chef. The U.S. Marshal’s arrested Saubert on October 5th and transported him back to Oregon.
This case was investigated by the Crater Lake Park Rangers and the U. S. Marshal’s Service, and was prosecuted by Assistant U.S. Attorney Douglas W. Fong.
Coos Bay Man Sentenced for StructuringRead the Press Release
EUGENE, Ore. – Roger Paul Villeneuve, 72, of Coos Bay, Oregon was sentenced on Wednesday, January 14, 2015, to thirteen months in prison after pleading guilty to structuring a currency transaction. Villeneuve was given 45 days to self-surrender.
Federal regulations require banks to report currency transactions over $10,000, and willfully structuring a transaction to avoid a currency transaction report is a federal offense punishable by up to five years in prison and a $250,000 fine.
For the past 40 years, Villeneuve has worked as a private consultant and solicited investments for various gold and nickel mining claims located in the United States and Canada. When Villeneuve entered his guilty plea last September, he admitted to Chief U. S. District Court Judge Ann Aiken that in October 2012 he had advised an acquaintance to withdraw $9,950 in the form of a cashier’s check from Northwest Community Credit Union and told the acquaintance to keep the amount under $10,000 to prevent a currency transaction report.
The offense occurred while Villeneuve was serving a probationary sentence from a previous structuring conviction in 2011. In the previous case, he received a sentence of five years of probation. This time, he received prison sentences of seven months for the new offense and six months for the related probation violation, with the sentences to run consecutively.
This case was investigated by the FBI, Internal Revenue Service Criminal Investigation and the Oregon Division of Finance and Corporate Securities. Assistant U.S. Attorney William “Bud” Fitzgerald prosecuted the case.
Portland Gang Associate Sentenced to Ten Years in Prison for Being a Felon in Possession of a FirearmRead the Press Release
The case arose from a Metro Gang Task Force drug investigationPORTLAND, Ore. – January 15, 2015, Clark Allen Bailey, 37, of Portland, Oregon, was sentenced to 120 months in prison after his federal conviction for felon in possession of a firearm. When the defendant is released from prison he will serve an additional three years of supervised release.
The defendant’s conviction stemmed from a Metro Gang Task Force drug investigation which identified the defendant, a local gang associate, to be an active cocaine dealer. On January 31, 2012, law enforcement officers executed a search warrant on the defendant and his residence. Inside the defendant’s residence officers recovered cocaine, scales, drug packaging materials, and a loaded firearm. The firearm, a loaded 9mm Ruger pistol, was found inside a stocking cap concealed between the mattresses in the defendant’s bedroom. The defendant’s fingerprint was found on the gun magazine.
At the time of the crime, the defendant had multiple prior felony convictions for delivery of a controlled substance. The defendant pled guilty to the charge of being a felon in possession of a firearm on September 30, 2014.
“The combination of gangs, drugs and firearms is a lethal mixture that threatens the safety of our community,” stated U. S. Attorney Amanda Marshall. “My office will continue to work with law enforcement to find and prosecute armed criminals."
This case was investigated by the Metro Gang Task Force. The case was prosecuted by Assistant U. S. Attorney Scott Kerin, the Chief of the U.S. Attorney’s Office Drug Unit.
Medford Drug Dealer Sentenced to More Than 12 Years in Federal PrisonRead the Press Release
MEDFORD, Ore. - On Monday, January 12, 2015, Senior U.S. District Judge Owen M. Panner sentenced Steven Allen Longbrake, 28, of Medford, Oregon, to 12 1/2 years in federal prison for possession of methamphetamine with intent to distribute. Longbrake had previously pled guilty to that offense on September 15, 2014. After he completes his prison sentence, Longbrake will be on supervised release for five years.
On October 15, 2013, a Central Point Police Officer stopped a vehicle driven by Longbrake. After developing information that there may be drugs in Longbrake’s vechicle police searched it, and discovered approximately four ounces of methamphetamine on Longbrake’s person and in his car. Police also found digital scales and drug packaging in Longbrake’s backpack, and a trash bag full of marijuana plants in the back of the car.
Longbrake is a Federal Career Offender based upon his prior felony convictions for burglary in the first degree, manufacture of a controlled substance, and delivery of a controlled substance. His criminal history additionally includes previous convictions for assault in the fourth degree, strangulation, escape in the third degree, and possession of a controlled substance.
This case was investigated jointly by the Central Point Police Department and the Drug Enforcement Administration, and was prosecuted by Assistant U.S. Attorney Judith R. Harper.
Grants Pass Brothers Sentenced to Federal Prison for Drug TraffickingRead the Press Release
MEDFORD, Ore— On Monday, January 12, 2015, Senior U.S. District Judge Owen M. Panner sentenced Marco Antonio Gutierrez, 36, of Grants Pass, Oregon, to 14 years in federal prison, and his brother Samuel De La Cruz Gutierrez, 43, to 10 years federal prison, after they pled guilty to possession of methamphetamine and heroin with intent to distribute. Both will be on five years of supervised release after they complete their prison terms.
On January 21, 2014, the Rogue Area Drug Enforcement Team (RADE) executed a search warrant at the Gutierrez’ residence in Grants Pass, Oregon. The search warrant was based on information that the Gutierrez brothers were selling methamphetamine and heroin, possessed numerous firearms, and were frequently armed. Samuel and Marco Gutierrez were arrested just outside the front door. Samuel Gutierrez possessed $808 cash and several oxycodone pills. Marco Gutierrez possessed $4,982 cash and a user amount of methamphetamine. Inside the trailer officers found 116 grams actual methamphetamine, 870 grams of heroin, packaging materials, scales, and drug records. Officers also found several loaded firearms throughout the trailer, including a sawed-off shotgun, a stolen Colt .45 handgun, a .25 handgun, a .22 caliber revolver, a Smith and Wesson 9mm handgun, a Ruger .380 handgun, and a stolen Ruger Mini 14 assault rifle in a gun bag with three loaded high capacity magazines. Officers also found other stolen property, including a quad ATV and motorcycle.
Marco Gutierrez’s previous felony convictions include sale or transportation of marijuana in 1996, inflicting corporal injury on spouse in 2008, and transportation of a controlled substance in 2008. Marco Gutierrez also had a pending California charge from September 2013 in which multiple firearms and several rounds of ammunition were discovered in his vehicle during a traffic stop. Samuel Gutierrez has no prior criminal history.
This case was investigated jointly by the Rogue Area Drug Enforcement Team, the U.S. Drug Enforcement Administration (DEA), Bureau of Alcohol, Tobacco, and Firearms (ATF), Immigration and Customs Enforcement (ICE), and was prosecuted by Assistant U.S. Attorney Douglas W. Fong.
Jon Harder Former CEO of Sunwest Management, Enters Guilty Pleas to Federal Fraud OffensesRead the Press Release
Government’s Evidence Shows This Is the Largest Investor Fraud Case in Oregon historyPORTLAND, Ore. – Jon Michael Harder, 49, a resident of North Dakota, plead guilty today before the Honorable Michael Simon to one felony count of mail fraud and one felony count of money laundering.
Harder controlled a network of companies which bought, constructed, and managed a nationwide collection of assisted living facilities. At its height, the corporate organization that Harder controlled, Sunwest Management and its related companies, owned approximately 300 assisted living facilities, serving over 15,000 residents with an average age of 85. Harder admitted in federal court today that beginning in late 2007 through February 2008, he lied to more than 50 investors to obtain more than five million dollars. In committing his fraud, Harder promised the investors that their money would go towards specific assisted living facilities when in fact the money was going to pay Harder’s personal expenses and the business expenses of other Sunwest entities.
The entire scope of the defendant’s fraud will be determined by the court following a multi-day sentencing hearing set to begin on May 12, 2015. The government believes and intends to prove to the court that, beginning no later than 2006 and continuing through 2008, Harder defrauded more than 1,000 investors out of approximately $130 million, making this the largest investor fraud prosecution in Oregon history. The scheme to defraud was based on materially false promises made to investors, including that they would be investing money in specific assisted living facilities and that the Sunwest enterprise was a successful business. In reality, the money that investors thought was going into specific facilities was commingled with money coming in from all investors and banks and Harder laundered the proceeds of this fraud by diverting large amounts of money to support his lavish lifestyle. Additionally, at least as far back as 2006, Sunwest was losing millions of dollars despite Harder’s representations that Sunwest was a successful business.
“The scope of the defendant’s fraud is truly staggering, as are the effects it has had on the victims of his crime,” stated U.S. Attorney Amanda Marshall. “This conviction demonstrates that no one – regardless of title or position – is above the law and that individuals who steal and defraud investors will be held accountable.”
Under the terms of the plea agreement, the government will ask the Court to impose a sentence of not less than 15 years in prison and have the Court order the defendant pay full restitution to his victims.“The FBI's investigation has proven that, over a number of years, Jon Harder was responsible for running one of the largest frauds in Oregon history,” said Greg Bretzing, Special Agent in Charge of the FBI in Oregon. “A fraud of this size brings with it many victims – more than 1,000 in this case. Today represents an important step as we work to bring justice to those victims, many of whom watched their life savings disappear.”
“Investment frauds such as the one perpetrated by Harder undermine the integrity of our economy causing a rippling effect of financial ruin and distrust,” stated Special Agent in Charge Teri Alexander of IRS Criminal Investigation. “But as destructive as this scam was to the overall economy, the untold harm to the victim investors is simply heartbreaking. IRS Criminal Investigation is devoted to fighting alongside our law enforcement partners to bring to justice those like Harder whose greed erodes the trust and pilfers the resources of would-be investors.”
This case was investigated by the U. S. Postal Inspection Service, Federal Bureau of Investigation, Internal Revenue Service, Criminal Investigation, and the United States Bankruptcy Trustee’s Office. The case is being prosecuted by Allan M. Garten, Senior Litigation Counsel, and Assistant U. S. Attorney Michelle Holman Kerin
Illegal Criminal Alien Sentenced to Federal PrisonRead the Press Release
Repeat Illegal Reentry Offender Caught During I-5 Traffic Stop and Drug SeizureMEDFORD, Ore. –Julio Gonzalez-Zamudio, 44, from Mexico was sentenced to federal prison for illegally reentering the United States. Senior United States District Judge Owen M. Panner sentenced Gonzalez-Zamudio to 72 months in prison following earlier deportations and his recent arrest by Oregon State Police for drug trafficking.
On January 30, 2014, the Oregon State Police stopped a vehicle during the early morning hours for a traffic violation on I-5 in Douglas County, Oregon. Gonzalez-Zamudio, a passenger in the vehicle, initially identified himself with a false name and Mexican driver’s license. Following the arrest of the driver for possessing a methamphetamine pipe, defendant took off running across I-5 when the officer attempted to arrest him. He was subsequently tackled by police and arrested. A search of the vehicle resulted in the seizure of over two and a half pounds of methamphetamine.
Immigration and Custom Enforcement agents found Gonzalez-Zamudio lodged in the county jail. They determined that he had been deported from the United States on four previous occasions. During the various times he has been in the United States, he has repeatedly committed various drug offenses and crimes of violence including residential burglaries and menacing with a firearm and he served a 65 month sentence in state prison. Following his release from prison in 2006, he was again deported. In 2010, he was found in the United States in the Washington County Jail, Oregon and was later convicted of illegal reentry in Federal District Court in Portland. Defendant received a lower 27-month fast-track sentence and was warned about not illegally returning again to the United States. He was deported in November 2011. In sentencing Gonzalez-Zamudio, the Court sentenced him to 57 months for his current illegal reentry conviction and 15 months for violating the terms and conditions of his release from custody in 2011, both sentences served consecutively.
The case was investigated by the Oregon State Police and Immigration and Customs Enforcement and was prosecuted by Assistant U.S. Attorney Byron Chatfield.
Manufacturer Fiskars Brands Inc. Agrees to Pay $2.6 Million Civil Penalty for Delay in Reporting "Gator Combo Axe" Safety HazardRead the Press Release
WASHINGTON – The Department of Justice has announced today that Gerber Legendary Blades, a division of Fiskars Brands Inc., of Madison, Wisconsin, has agreed to pay a civil penalty of $2.6 million to settle allegations that it knowingly failed to immediately report to the U.S. Consumer Product Safety Commission (CPSC) a safety hazard associated with Fiskars’ Gator Combo Axe. Fiskars has also agreed to establish and maintain a compliance program with internal recordkeeping and monitoring systems to keep track of information about product safety hazards. The settlement agreement is awaiting judicial approval.
“Fiskars received numerous reports from consumers who were harmed by this product,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “The company had an obligation to immediately report to the CPSC and it failed to do so. We will take action against those who fail to abide by the law so that our partners at the CPSC can protect consumers from injuries.”
The Axe was a combination product that had a knife embedded in its handle that was supposed to be secured by two small magnets. In a complaint filed on behalf of the CPSC in U.S. District Court for the District of Oregon, the United States alleged that Fiskars became aware that the knife in the Axe handle could and did dislodge from the Axe’s handle when the Axe was in use, causing serious injuries to consumers. Fiskars imported approximately 103,000 Axes from Taiwan through its Gerber Legendary Blades division in Portland, and distributed those Axes to retail sporting good chains and stores throughout the United States.
Under the Consumer Product Safety Act (CPSA), manufacturers, distributors and retailers are required to report product hazards to the CPSC. A knowing violation of the CPSA subjects a firm to civil penalties. The United States alleged that beginning as early as 2005 and continuing over the next several years, Fiskars received consumer complaints and warranty claims indicating that the knife fell out of the Axe handle while the Axe was being used to chop, pound or hammer. In several instances, the knife dislodged from the handle during use and caused injuries including lacerations requiring stitches, permanent nerve damage and surgery to repair severed tendons.
“In this case, Fiskar's failure to report to the CPSC not only put consumers at risk, it contributed to people being injured as a result of the unsafe product design,” said U.S. Attorney S. Amanda Marshall for the District of Oregon. “The settlement not only addresses the product safety issue, but also holds the company accountable and sends a message to others that these violations will be taken seriously.”
In March 2011, Gerber and the CPSC announced a voluntary recall of the Axe. At that time, consumers were advised to remove the knife from the axe handle and contact Gerber to receive a free handle cap for holding the knife in the axe handle during transport and storage, instructions and a warning label. Information on the recall can be found on the CSPC website.
The matter is being handled by Trial Attorney Roger Gural of the Civil Division’s Consumer Protection Branch, Assistant U.S. Attorney Neil J. Evans for the District of Oregon and Harriet Kerwin of the CPSC Office of the General Counsel.
In agreeing to settle this matter, Fiskars has not admitted that it knowingly violated the CPSA.
To view the Consent please click here.
To view the Complaint please click here.
Change of Plea Hearing Scheduled January 8, 2015 at 12:30pm for Defendant John HarderRead the Press Release
A hearing before Judge Michael Simon is scheduled on January 8, 2015, 12:30 PM at Mark O Hatfield Courthouse, Courtroom 13B, for the case which involves defendant Jon Harder. The purpose of this hearing is for the defendant to enter a plea of guilty.
Jon Harder is scheduled to plead guilty to one count of mail fraud and one count of money laundering. The prosecutors would like to meet with victims to describe the entry of plea and the sentencing process. The meeting will take place at the U.S. Attorney's Office, Suite 600, at 10:30am.
Coos Bay Company, its Owner and Four Employees Plead Guilty to Fraud on Defense ContractsRead the Press Release
PORTLAND, Ore. — A Coos Bay business, its owner, and four employees were sentenced by the Honorable Michael J. Mosman in federal court on December 12, 2014 for their roles in a conspiracy to defraud the United States by supplying knock-off vehicle and aviation parts to the United States Department of Defense (DOD).
Harold Ray Bettencourt II, 60, of Coos Bay, Oregon and the owner of Kustom Products, Inc.(KPI), was sentenced to 45 months in custody. His sons were also sentenced to prison terms: Nicholas Ryan Bettencourt, 32, was sentenced to 27 month in prison; Bo Bettencourt, 34, was sentenced to a term of 25 months; and Peter Tracy Bettencourt, 28, was sentenced to 12 months in custody. KPI’s office manager, Margo Antoinette Densmore, 43, also of Coos Bay, Oregon, was sentenced to a 12 month prison term. The business, KPI, was sentenced to pay a fine of $150,000. All of the defendants were ordered to pay restitution to the military in the amount of $5,000,000.
The United States Attorney charged that KPI, Bettencourt, and the others conspired to commit wire fraud, money laundering, and trafficking in counterfeit goods and services. As part of the plea, the defendants agreed to forfeit all proceeds traceable to the fraud, including $365,503.26 in funds from 20 bank accounts, eight vehicles, one boat, two boat trailers, two jet skis, and three all-terrain vehicles.
U.S. Attorney, Amanda Marshall, expressed satisfaction with the outcome. “Prison sentences for these defendants are entirely appropriate. They put their own greed before the safety of military personnel. They promised to provide our troops with quality equipment then substituted knock-off parts solely to line their own pockets,” Marshall stated. “The United States will not hesitate to prosecute those who cheat the government, especially when the lives of our service members are at stake.”
The defendants’ scheme, as laid out in Court during the three-day sentencing hearing, related to the defendants’ actions while contracting to provide supplies to the Department of Defense (DOD) from approximately 2006 through 2010. The DOD sought equipment, supplies, and services that were filled through purchase orders awarded to DOD contractors, including KPI. Some of these products were identified as critical application items, meaning that they were items essential to weapons systems performance or operation, or to preserve the life and safety of military personnel. The contracts were awarded through a web-based posting of contract solicitations. Each contained the specific details about the items to be procured, including the requirements related to the specific part desired by Original Equipment Manufacturer (OEM) part number and by approved OEM vendor, whether the part was a critical application, and whether the part was required to be manufactured in the United States. In solicitations for specific products, the contractor was required to supply the “exact product” and to certify that fact by stating that the bid was “without exception.” The solicitation made clear that submitting alternate products could result in criminal and civil penalties.
KPI, acting through the individual defendants, lied to the DOD in order to secure what the government found to include 750 fraudulent contracts with a value in excess of $10,000,000 and used wire communications in interstate and foreign commerce to carry out the scheme. In addition, the defendants knowingly engaged in approximately $8,000,000 in monetary transactions in amounts greater than $10,000 derived from the wire fraud scheme. Finally, in some contracts, the defendants supplied counterfeit Freightliner parts and shipped some parts on pallets that falsely contained the logo and heat treatment certification stamp of Timber Products Inspection, Inc. In essence, the defendants bid to supply a specific OEM part from an approved vendor at a price consistent with an OEM part, but instead knowingly provided a knock-off part from an unapproved vendor that cost them significantly less. This allowed them to under-bid the competition, and generated substantial profits for KPI and the individual defendants.
To highlight one contract, the United States set out the defendants’ actions related to the provision of aviation locknuts. In 2008, KPI was awarded contracts to supply aviation locknuts to the DOD, which were used to secure the blades to the main rotary assembly of the Kiowa Helicopter. The locknuts were flight critical and of proprietary design to be acquired from only two approved manufacturers, SPS or Bristol Industries. Rather than obtain the locknuts from one of the approved sources, Nicholas Bettencourt contacted Coloc Manufacturing in Texas and arranged with them to make and deliver thousands of non-conforming locknuts for fulfillment of the contract. Coloc was unaware that the parts they were contracted to manufacture were proprietary and were to be used in a flight-critical military application. In August 2008, the defective locknuts were detected throughout the military supply chain, which triggered the issuance of a DOD-wide safety alert, a worldwide inspection of all aircraft and stockpiles. After DOD notified KPI about the defective parts, Nicholas Bettencourt provided the DOD officials with false information in an attempt to cover up the acquisition of the defective locknuts.
KPI was also contacted by a DOD inspector, who requested KPI officials provide a written response as to the cause of the deficiency. KPI provided the DOD with a false explanation as to why the locknuts were not in compliance with the contract requirements, explaining that the parts were pulled from the wrong storage bin. Even after the defendants were notified of the deficiency, instead of replacing the defective parts with authentic parts from the approved manufacturers, they went back to Coloc and directed them to re-machine another batch of non-conforming locknuts to more closely resemble the authentic part. The additional defective locknuts were shipped to the DOD, all with complete disregard for the contract specifications on this critical application and the potential for catastrophic failure to the helicopter and injury or death to the occupants as a result.
Again, when the second batch of defective locknuts was detected in the supply chain, DOD officials requested acquisition records from KPI. In response, Nicholas Bettencourt, in conjunction with Margo Densmore, created false records that reflected that the correct parts were ordered by KPI and supplied to the military. Several more requests for records were made by DOD officials, and in response to these requests, Harold Bettencourt II provided the DOD with falsified records and false explanations as to the origin of the defective locknuts. KPI, through Margo Densmore, altered purchase orders to indicate that the correct parts were ordered, and produced those altered documents to DOD officials and investigators. Harold Bettencourt II also provided DOD officials with these false purchase orders and provided DOD officials with a price quote from a parts dealer for authentic conforming parts that KPI never actually ordered. Harold Bettencourt II obtained this quote for the purpose of deceiving the DOD into believing that the correct parts had been ordered.
The United States alleged that these actions by the defendants compromised the integrity of the aviation supply chain and put service members in harm's way by knowingly placing defective and unsafe aviation components into the supply chain and attempting to conceal their actions by falsifying records, and misleading DOD officials and investigators with false statements and information.
Chris Hendrickson, Special Agent in Charge, Defense Criminal Investigative Service, Western Field Office said, “We are extremely pleased at this outcome, which yet again sends the message that fraud and corruption will be vigorously investigated and prosecuted. This is an unfortunate example of a corrupt contractor who recklessly risked the safety of our troops by selling counterfeit and defective parts, including flight critical parts, to the Department of Defense. Cases such as these are not motivated by need or other difficult personal circumstances; they are the product of simple greed. This investigation should serve as a warning for those intent on defrauding the U.S. military and American public that the Defense Criminal Investigative Service (DCIS) and our law enforcement partners will pursue these crimes relentlessly.”
Those with information relating to fraud, corruption or waste in government contracting should contact the DoD Hotline at www.dodig.mil/hotline or should call (800) 424-9098.
Financial fraud is a serious crime and it deserves serious punishment, but the real impact of Kustom Product’s actions could have been disastrous,” stated Special Agent in Charge Teri Alexander of IRS Criminal Investigation. “We are proud to have worked beside our law enforcement partners in this effort to protect our military personnel.”
“While our warfighters were in Iraq and Afghanistan putting their lives on the line and depending on the Bettencourts’ counterfeit parts, the defendants were in Oregon ripping off taxpayers and enjoying the proceeds of their multimillion dollar scam,” said Brad Bench, Special Agent in Charge of Homeland Security Investigations in Seattle, which oversees Oregon investigations. “These prison sentences should make clear, those who violate the public’s trust will be held accountable for their actions.”
“The financial cost of this fraud – more than $10 million – is significant, but the human cost could have been much higher,” said Greg Bretzing, Special Agent in Charge of the FBI in Oregon. “The counterfeit hardware that Kustom Products passed off as real could have led to catastrophic failures of trucks and helicopters used by our military. This case shows that we – with many partners at the Departments of Defense and Homeland Security as well as the IRS – will not allow anyone to make what they believe to be an easy buck on the backs of our service members.”
The case was investigated by the Department of Defense/Office of Inspector General/Defense Criminal Investigative Service, the Army Criminal Investigative Division Major Procurement Fraud Unit, the Federal Bureau of Investigation, the Internal Revenue Service, Criminal Investigation Division, and Immigration and Customs Enforcement. The case was prosecuted by Assistant U.S. Attorney Scott Erik Asphaug.
Albany Oregon Man Sentenced to 60 Months in Federal Prison for $5 Million Securities FraudRead the Press Release
EUGENE, Ore. –U.S. District Court Judge Ann Aiken sentenced Joseph Anthony LaCoste, 50, of Albany, Oregon, to 60 months in prison and ordered him to pay $1.6 million in restitution for securities fraud violations. LaCoste, the former chief executive officer of Willamette Development Services (WDS), a real estate development company based in Albany, Oregon, had previously pleaded guilty to conspiracy to commit securities fraud for his conduct associated with WDS.
According to court documents, LaCoste, a former high school teacher and coach, lured individuals to invest with him and WDS be telling a series of lies: he lied about his educational background; he lied about the financial condition of WDS; he lied about the rate of return on the investments; and he lied about the nature and use of the investments. LaCoste also failed to inform his investors that he had been fired from U.S. Bank for dishonest and unethical conduct and that he had previously filed for bankruptcy. Based on his misrepresentations, LaCoste, between 2006 and 2008, duped more than 50 people to invest more than $5.2 million with him and WDS.
In reality, WDS and its alleged real estate projects were undercapitalized, and the projects were not progressing. To avoid detection and to further the scheme, LaCoste and others commingled investor money and transferred investor money between various projects and businesses to make it appear as if the projects were on schedule and the company was profitable. In 2008, LaCoste’s scheme collapsed. At that time, he had failed to complete a single project, and the investors lost their money.
After his WDS scheme collapsed, LaCoste engaged in a new scheme to induce four property owners in Washington to transfer ownership of their property to his control by falsely representing that he had the experience and skills to develop their property into a profitable real estate venture. Similar to his WDS investors, LaCoste falsely promised these property owners a huge return and failed to tell them that he had been fired from U.S. Bank for dishonest and unethical conduct and that he had previously filed for bankruptcy. In the end, this scheme also collapsed, and the property owners lost more than $150,000.
LaCoste’s codefendants, Angela McCoy and Anthony Tuomi, are scheduled to be sentenced on January 28, 2015, at 1:30 pm before the Honorable Thomas M. Coffin.
This case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigation, and the Oregon Division of Finance and Corporate Securities.
Federal Charges Filed in Two Separate Hash Oil ExplosionsRead the Press Release
PORTLAND, Ore. – Federal prosecutors charged three people in connection with two separate explosions tied to the illegal and dangerous practice of extracting hash oil from marijuana, announced U.S. Attorney S. Amanda Marshall.
“Manufacturing hash oil poses a significant risk to families, neighbors and the general public and is illegal under federal law,” said U.S. Attorney Marshall. “An explosion and fire caused by hash oil production at a Portland apartment complex and a Tigard 76 gas station could have caused serious injuries to unaware bystanders. We will not allow this dangerous conduct to endanger the public.”
Hash oil is produced by extracting the cannabinoids from plant material with a solvent. The explosions are caused by the chemical extraction process in which butane gas is used to extract the tetrahydrocannabinol or THC from the marijuana plant. During the extraction process, the gas can quickly fill an enclosed space, and be ignited by something as ordinary as a pilot light, a spark from an electrical outlet, or someone lighting a cigarette or joint.
Two people were charged in connection with an explosion and fire at a Tigard, Oregon 76 gas station on November 23, 2014. Police and Fire were called to the 76 station at 10775 SW Greenburg Road, in response to an explosion in the bathroom of the gas station. Jose Rios-Soto and Dennis Tapia-Garcia are charged with endangering human life while manufacturing controlled substances, and manufacturing hash oil.
One person was charged in connection with an explosion and fire at a Portland apartment complex on December 8, 2014. Police were called to a disturbance at the complex and found damage from an explosion. The explosion occurred when the defendant lit a cigarette while using butane gas to manufacturing hash oil. The explosion was severe enough to blow out an exterior wall one to two feet. Edwin Stacy is charged with endangering human life while manufacturing controlled substances, and manufacturing hash oil.
“These incidents present a very real danger to the public. In our most recent case one man suffered serious burns and several people were displaced from their homes because of damage created by the explosion,” said Portland Fire Investigator Rick McGraw.
Endangering human life while manufacturing controlled substances is punishable by up to ten years in prison and three years of supervised release, and manufacturing hash oil is punishable by up to five years in prison and three years of supervised release.
The charges in the indictment are only allegations and a person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.
These two cases were investigated by Tigard Police Department, Tualatin Valley Fire & Rescue, Portland Police Bureau and Portland Fire & Rescue. Assistant U.S. Attorneys Pamala Holsinger and Scott Kerin are handling the prosecution.
Defendant Sentenced in International Multi-Million Dollar Conspiracy to Manufacture and Distribute Designer DrugsRead the Press Release
Largest Synthetic Drug Prosecution in the District of OregonPORTLAND, Ore. – Ryan Ahidjou “Bo” Scott, 34, of Lake Oswego, Oregon, was sentenced by Honorable Ancer L. Haggerty to 96 months in prison following his convictions for conspiracy to distribute controlled substances and conspiracy to commit money laundering. The convictions stemmed from his role in leading an international drug-trafficking organization responsible for distributing over $5 million of synthetic designer drugs. The defendant was charged in federal court in May 2012, and pled guilty on May 27, 2014.
“This long-term investigation took down one of the largest synthetic drug manufacturers on the West Coast,” said U. S. Attorney Amanda Marshall. “These synthetic designer drugs are dangerous and we are fortunate to have partner agencies – HSI, IRS, and the DEA – who are committed to stopping the distribution of these poisons to our kids.”
The investigation began in 2011 when Customs and Border Protection (CBP) agents detected suspicious shipments imported from Peru destined for defendant Ryan Bo Scott’s company KTW Enterprises. Agents with Homeland Security Investigations (HSI), working with the Portland Police Bureau (PPB), executed a search warrant at defendant’s company in April 2011. There, they seized over 500 pounds of synthetic drug products packaged in 1 gram packets labeled as “K2” and “not for human consumption.” During the next several months, forensic experts employed by the Drug Enforcement Administration (DEA) confirmed the presence of over a dozen types of chemical compounds in the seized drug products that were both scheduled drugs and analogues of the same.
Through the remainder of 2011 and into early 2012, HSI and IRS agents, working closely with financial analysts from the Organized Crime and Drug Enforcement Task Force (OCDETF), gathered evidence that Scott was running a worldwide drug trafficking and money laundering conspiracy selling various synthetic designer drugs. Members of the conspiracy mixed chemical compounds together with herb extracts and marketed the resulting “K2” products as “incense.” Additionally, the defendants used the internet to market and distribute “K2” and purchased dozens of domain names, including “k2drugs.com” and “k2incense.org” to obtain a monopoly on the market for K2. The investigation culminated on May 15, 2012, with the execution of search warrants at the defendants’ residences and a warehouse in Vancouver, Washington, where agents seized hundreds of pounds of dried plant materials, packaging equipment, and chemicals. Pictures from the search warrants are attached:
The harmful and sometimes fatal consequences of synthetic drugs have been gaining attention nationally and beyond. In March 2011, the United States Drug Enforcement Administration (DEA) exercised its emergency scheduling powers placing these synthetic cannabinoids into Schedule I of the Controlled Substances Act (CSA) because it was necessary to avoid an imminent hazard to the public safety. Schedule I is the most restrictive category under the Controlled Substances Act, and it is reserved for those substances with a high potential for abuse, no accepted medical use for treatment in the United States, and a lack of accepted safety for use of the drug under medical supervision.
Synthetic cathinones (also known as “bath salts”) act as central nervous system stimulants causing rapid heart rate (which may lead to heart attacks and strokes), chest pains, nosebleeds, sweating, nausea, and vomiting. People who abuse these substances have reported agitation, insomnia, irritability, dizziness, depression, paranoia, delusions, suicidal thoughts, seizures, and panic attacks. Users have also reported effects including impaired perception of reality, reduced motor control, and decreased ability to think clearly. One of the most recent exposes on the dangers of synthetic drugs was aired last week on CNN, entitled “How Synthetic Drugs are Killing Kids.” http://www.cnn.com/2014/12/01/us/synthetic-drugs-investigation. Other national and local news agencies have reported the dangers and epidemic of synthetic drugs. http://time.com/57167/rise-of-fake-pot/#57167/rise-of-fake-pot (noting that the “most complicated drug problem in the world right now is not meth or cocaine or heroin. It is synthetic drugs, also known as legal highs or designer drugs”); http://eugenedailynews.com/2012/10/synthetic-drug-spice-linked-to-harmful-highs
http://www.katu.com/news/medicalalert/Synthetic-drug-spice-linked-to-kidney-failure-172872251.html (linking a half-dozen kidney failures in Oregon and Southwest Washington to local synthetic drug use).
“The loop hole the defendants thought they were exploiting closed in on them, but not before they made millions marketing illegal ‘incense’ to young people and military members,” said Brad Bench, special agent in charge of Homeland Security Investigations in Seattle. “This was a despicable act considering the proof-positive evidence we now have of the harmful effects of the drug analogs associated with their illicit products. Fortunately, the investigative efforts of HSI and the IRS dismantled this major supplier of Spice.”
This case was investigated by the Department of Homeland Security (DHS), Internal Revenue Service (IRS), Drug Enforcement Administration (DEA), Customs and Border Protection (CBP). The case was prosecuted by Assistant United States Attorneys Leah K. Bolstad and Michelle H. Kerin.
Albany Woman Sentenced for Bomb ThreatRead the Press Release
EUGENE, Ore. – Jenelle Robyn Pinkston, age 47, of Albany, Oregon was sentenced today to 37 months in federal prison after earlier pleading guilty to calling in a bomb threat. Chief U.S. District Court Judge Ann Aiken imposed conditions of post-prison supervision requiring Pinkston to undergo mental health treatment.
On April 16, 2013, Pinkston used her cell phone to call in a bomb threat to Waverly Elementary School in Albany. Using a disguised voice, Pinkston said “this building is going to blow up in ten minutes.” School authorities activated the fire alarm and called for emergency responders. Approximately 270 students and staff evacuated the school. After investigating, police determined the threat was a hoax.
On May 23, 2013, Pinkston repeated her threat to Waverly Elementary School and called in another false bomb threat to Periwinkle Elementary School in Albany. As with the initial threat, fire alarms were activated, emergency responders were called to the scene and students and staff were evacuated.
Pinkston later confessed to law enforcement and was arrested.
A representative from the Albany School District wrote a letter to the judge explaining the impact of Pinkston’s crimes, calling the threats “disruptive to education, upsetting to students, alarming to parents, and fear causing to staff.” The fire response cost $1,825, which is the amount Pinkston was ordered to pay back as restitution.
The FBI, Linn County Sheriff’s Office and Albany Police Department conducted the investigation. Assistant U.S. Attorney William “Bud” Fitzgerald prosecuted the case.
Former School Janitor Sentenced to Eight Years in Prison for Possession and Distribution of Child PornographyRead the Press Release
EUGENE, Ore. – Bryan Cramer, 37, of Springfield, Oregon, was sentenced to eight years in prison following his plea of guilty to distribution of child pornography. At the sentencing hearing, U.S. District Judge Michael McShane sentenced Cramer to 96 months in prison, followed by a 21-year term of supervised release. Cramer will be subject to stringent conditions of supervision and will be required to register as a sex offender.
The Federal Bureau of Investigation determined that Cramer made child pornography available for download on a file sharing site. Following the execution of a search warrant on Cramer’s residence in 2012, it was determined that he possessed over 900 images of child pornography on his computer. He carried on his possession and distribution activities while serving as a custodian in a local school, and admitted to authorities that he sexually abused two relatives many years ago.
The nature of the offense – possessing and trading images of child sexual abuse – supported the significant sentence in this case. Possession and distribution of child pornography is a serious offense involving real children who have been subject to horrific abuse.
This case was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant U.S. Attorney Amy Potter.
Former Carson Helicopter Vice President Pleads Guilty to Conspiring to Defraud the United States Forest ServiceRead the Press Release
Government to Seek Sentence Enhancement for the Reckless Risk of Death and Serious Bodily Injury Involved in the OffenseMedford, Ore. – Steven Metheny, 44, of Medford, Oregon pleaded guilty to Conspiracy to Commit Mail and Wire Fraud and the Making of False Statements in defrauding the United States Forest Service in procuring helicopter firefighting contracts in 2008.
In entering his guilty pleas before United States Magistrate Judge Mark D. Clarke, Metheny admitted to conspiring in the submission of false empty helicopter weights in Carson Helicopter’s contract bid proposals to the Forest Service in order to meet minimum contract specifications, thereby enabling Carson Helicopters to receive contract awards and money from the Forest Service that it would not have received otherwise. United States Attorney Amanda Marshall said, “This is a particularly important case. Submitting false information about helicopter payload capabilities in the bid process both defrauded the Forest Service and created a reckless risk of harm to those who used the information in firefighting operations. This includes those who were relying on the false information when a Carson helicopter crashed near Weaverville, California on August 5, 2008, killing nine and seriously injuring four others.” According to the plea agreement in this case, the U. S. Attorney’s Office will be seeking an enhancement to defendant’s sentence based on the offense involving the reckless risk of death or serious bodily injury.
Metheny Plea Agreement
Metheny IndictmentThe maximum sentence for the Conspiracy is 20 years in prison and Making False Statements is 5 years in prison with fines up to $250,000 for each offense. Sentencing is set for March 2, 2015, at 10:00 a.m. before U.S. District Court Judge Owen M. Panner. Levi Phillips, former Carson Helicopter Director of Maintenance, pled guilty to Conspiracy to Commit Mail and Wire Fraud previously and his sentencing is currently scheduled for February 2, 2015.
The U. S. Attorney’s Office has worked with the Offices of Inspector General for both the Department of Agriculture and the Department of Transportation in Portland, Oregon and Seattle, Washington, and the FBI and the IRS in Medford, Oregon in the investigation and prosecution of this case. The case is being prosecuted by Assistant U. S. Attorney Byron Chatfield.
Oregon's U.S. Attorney's Office Collects Almost $12 Million in Civil and Criminal Actions for U.S. Taxpayers in Fiscal Year 2014Read the Press Release
PORTLAND, Ore. - U.S. Attorney Amanda Marshall announced today that the District of Oregon collected $11,936,070.53 in criminal and civil actions in Fiscal Year 2014. Additionally, Oregon worked with other U.S. Attorneys’ offices and components of the Department of Justice to collect an additional $1,228,648.04 in cases pursued jointly with these offices.
Attorney General Eric Holder announced on November 19 that the Justice Department collected $24.7 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2014. The more than $24 billion in collections in FY 2014 represents more than eight times the appropriated $2.91 billion budget for the 94 U.S. Attorneys’ offices and the main litigating divisions in that same period.
“Every day, the Justice Department’s prosecutors and trial attorneys work hard to protect our citizens, to safeguard precious taxpayer resources, and to provide a valuable return on investment to the American people,” said Attorney General Eric Holder. “Their diligent efforts are enabling us to achieve justice and recoup losses in virtually every sector of the U.S. economy. And as a result, I can report today that – during Fiscal Year 2014 – the Justice Department collected a total of $24.7 billion in civil and criminal actions.”
“Recovering this money is a critical piece of the mission of the U.S. Attorney’s Office, and reflects the hard work our office performs tracing assets and relentlessly following leads,” said U.S. Attorney Amanda Marshall. “As our numbers show year after year, investing in our skilled investigators and prosecutors reaps enormous financial benefit to the taxpayers, to say nothing of helping to take the profit out of criminal activity in Oregon.”
Some of the cases involving significant collections activity in the past year have included:
- In the case of U.S. v. Rich, Phyllis and Michael Rich and their company, PAC Equities, were convicted of securities fraud back in 2007. The conviction resulted in a judgment for $13,400,138.79 in restitution to the more than 200 victims of their crime. In March 2014, the Financial Litigation Unit garnished $1,034,022.00 in insurance proceeds payable to Phyllis Rich after Michael Rich passed way. That garnishment---along with proceeds from sales of various real estate holdings and other collection efforts---has resulted in a total of over $9,000,000.00 in assets returned to victims of the fraud in the seven years since the convictions, providing just one example of how the U.S. Attorney’s Office continues its collection efforts on cases even years after a conviction.
- In U.S. v. Hossein Lahiji and Najmeh Vahid, a Texas attorney and her physician husband were convicted of a conspiracy to launder money and to defraud the U.S. Treasury by using a Portland-based charity to falsely claim charitable tax deductions on money that they wired to Iran in violation of the embargo. The Financial Litigation Unit collected forfeiture, restitution, and fines totaling $1,973,903 from the defendants.
- In U.S. v. Seaside Association, after the Forest Service’s Wallowa Mountains Office and Visitor Center burned to the ground, the U.S. Attorney’s Office filed suit against the building’s owner, Seaside Association, for the negligence of its contractors in causing the fire by leaving combustible drop clothes, rags and tools on a porch on a hot day. The case settled for $1,401,000, all of which has been collected, with the majority of the settlement amount paid to the Wallowa Whitman Forest for the loss of its items in the building, the costs to relocate the facility as well as reimbursement to the employees for lost personal items.
- U.S. v. Cabello – On Wednesday, March 20, 2013, a Portland family---Archie Cabello, his wife Marian and son Vincent---were convicted of stealing $3 million from an armored car that Archie Cabello was driving in December 2005. Archie Cabello was convicted of additional crimes against armored car businesses and banks. The three were ordered to pay restitution in the amount of $3,755,000 to the victims of their elaborate armored car theft scheme. During the investigation, over $1,995,000 of the stolen money was recovered from the Cabellos and forfeited. The Financial Litigation Unit facilitated the restoration of those forfeited fund to the victims of the crimes.
The U.S. Attorneys’ offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Additionally, the U.S. Attorney’s office in Oregon, working with partner agencies and divisions, collected $2,885,771.00 in asset forfeiture actions in FY 2014. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes. Of the $2,885,771.00 collected as part of asset forfeiture actions in the past fiscal year, $1,997,458.90 was applied to restitution to crime victims. “This provision of forfeited funds to victims of crime is a critical fact that has been largely ignored in recent negative national press reports regarding civil forfeiture actions,” said U.S. Attorney Marshall. “We cannot collect on victim restitution orders until after a defendant has been convicted and sentenced. By that point, it is usually too late to provide much financial relief to the defendant’s victims, as defendants have often hidden or transferred their remaining assets by that point. By contrast, our judicious use of civil asset forfeiture laws has allowed our office to move more quickly to secure those assets pending the resolution of a case, and to then restore those assets to the victims after the government has met its burden of proof.”
"John" Who Purchased 14-Year-Old for Commercial Sex Sentenced to Two Years in Federal PrisonRead the Press Release
PORTLAND, Ore. — Senior U.S. District Court Judge Robert E. Jones yesterday sentenced Ben Allen Riggs, 64, of Oregon City, to serve 24 months in federal prison. Riggs is the first “john” to be prosecuted in the District of Oregon for violating federal sex trafficking laws.
In September 2012, co-defendant Laura Lambden drove a 14-year-old girl from Vancouver, Washington, to Riggs’ home in Oregon City, to perform commercial sex acts. Riggs paid the 14-year-old girl to perform oral sex. Throughout the case, Riggs has denied knowing that the girl was a minor, but the government alleged at the sentencing hearing that Riggs should have known from her appearance that she was a child. Riggs pleaded guilty to violating the Mann Act, which prohibits the interstate transportation of any person for the purpose of prostitution. When Riggs is released, he will be required to serve five years of supervised release, and will be required to register as a sex offender.
“Buyers beware: if you purchase sex with a minor, you will be held accountable,” stated U.S. Attorney S. Amanda Marshall. “We cannot eradicate child sex trafficking until we find a way to reduce demand, and we know that exposure to prosecution and possible imprisonment will cause buyers to think twice when a young woman shows up at their door.”
Riggs’ co-defendant, Laura Lambden, was sentenced last month to serve 48 months in federal prison.
This case stemmed from a coordinated investigation by members of the Federal Bureau of Investigation’s (FBI) Child Exploitation Task Force, including the FBI and the Vancouver Police Department. The FBI’s Child Exploitation Task Force marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children through sex trafficking, as well as to identify and recover victims. The case was prosecuted by Assistant U.S. Attorney Stacie Beckerman.
Felon Sentenced to Federal Prison for Brookings Gun PossessionRead the Press Release
MEDFORD, Ore. - On Monday, November 10, 2014, Senior U.S. District Judge Owen M. Panner sentenced Tyson Maurice Brown, 27, of Portland, Oregon, to 57 months in federal prison, after he pleaded guilty to being a felon in possession of a firearm. Brown will also be on three years of supervised release after he completes his prison term.
On June 6, 2013, a Brookings Police Department Sergeant stopped a stolen vehicle that Brown was driving. Brown and his two passengers were arrested. Police searched the vehicle and found a Ruger 9mm handgun with two loaded magazines in Brown’s bag. Police traced the weapon and determined that Brown was present when the firearm was purchased at a store in Medford, Oregon.
Police also found approximately ten grams of methamphetamine, cocaine, marijuana, digital scales, drug paraphernalia, ammunition, five cell phones, and over $2,000 cash in various locations in the vehicle.
Brown has prior felony convictions for unlawful manufacture/delivery/possession of cocaine in 2009 and robbery in the second degree in 2004.
This case was investigated jointly by the Brookings, Oregon Police Department and the U.S. Bureau of Alcohol, Tobacco, and Firearms, and was prosecuted by Assistant U.S. Attorney Judith R. Harper.
Former Youth Counselor Sentenced to Seven Years in Prison for Possession and Distribution of Child PornographyRead the Press Release
EUGENE, Ore. – On November 5, 2014, Michael Shane Olson, 46 years, of Lebanon, Oregon, was sentenced by U.S. District Chief Judge Ann Aiken to seven years in federal prison for possessing and distributing child pornography. After serving his sentence, Olson will be on lifetime supervised release.
In August and September 2010, several FBI online undercover investigations around the country revealed that Olson was utilizing a peer-to-peer website to share and download hundreds of child pornography images. On April 27, 2011, FBI agents executed a search warrant at Olson’s residence in Lebanon, Oregon and seized computer equipment and storage devices that contained additional images and videos of child pornography. Olson was thereafter federally indicted for distribution and possession of child pornography and, on June 12, 2014, he pled guilty to all five counts of the Indictment.
Prior to his offense conduct in this case, Olson had worked in Oregon as a residential counselor for at-risk youth.
This case was investigated by the FBI and the Linn County Sheriff’s Office, and was prosecuted by Assistant U.S. Attorney Nathan J. Lichvarcik.