Eastern District of Tennessee
Press releases recorded for this federal judicial district.
Reputed Member of Mafia Insane Vice Lords Convicted for Heroin DistributionRead the Press Release
CHATTANOOGA, Tenn. – On November 13, 2018, after a five-day jury trial before the Honorable Curtis L. Collier, Senior U.S. District Judge, James Silas, 50, of the Chicago suburb of Dolton, Illinois, was convicted of conspiring to distribute one kilogram or more of heroin.
Sentencing is set for 2:00 p.m., April 24, 2019 in U.S. District Court in Chattanooga. Based on a prior drug conviction and a corresponding notice of enhancement filed by the United States, Silas faces a statutory mandatory minimum of 20 years to life in prison, to be followed by no fewer than 10 years of supervision by U.S. Probation. He also faces a fine of up to $20,000,000.
Witnesses at trial testified that Silas, who is reputed to be a member of the nationwide street gang Mafia Insane Vice Lords and known by the moniker “the Prince,” served as a multi-kilogram source of supply to heroin distributors and fellow gang members based in Chattanooga, Tennessee; Knoxville, Tennessee; Atlanta, Georgia; and elsewhere. Beginning in 2016, the Drug Enforcement Administration (DEA) conducted a series of court-authorized wiretaps on a number telephones belonging to gang members as a component of the large-scale investigation. Through these wiretaps, they discovered the involvement of Silas in this interstate conspiracy. Silas was arrested in Illinois and brought to the Eastern District of Tennessee for trial.
This investigation was conducted by the DEA, in conjunction with the Hamilton County Sheriff’s Office, and with the assistance of local and federal law enforcement agencies in the Chicago area. Assistant U.S. Attorneys Kyle Wilson and Scott Winne represented the United States at trial. Assistant U.S. Attorney Michael Porter indicted the case and handled pre-trial matters.
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West Virginia Residents Indicted for Kidnapping and Firearms Offenses Committed in Tennessee, Virginia and West VirginiaRead the Press Release
KNOXVILLE, Tenn. – On October 16, 2018, a federal grand jury in Knoxville returned a 16-count superseding indictment against Josh Small, 51, of Princeton, West Virginia, and Joni Amber Johnson, 35, of Princeton, West Virginia, charging them with kidnapping, conspiracy to commit kidnapping, using firearms during crimes of violence, and being felons in possession of firearms. Both appeared before U.S. Magistrate Judge Deborah Poplin in U.S. District Court on November 6, 2018, and pleaded not guilty to the charges included in the indictment.
Trial is set for April 30, 2018, in U.S. District Court. If convicted, Small faces 97 years in mandatory minimum sentences for the firearms-related charges and up to life in prison for each kidnapping charge. Johnson faces 82 years in mandatory minimum sentences for the firearms charges, plus an additional 10 years for each felon in possession charge and up to life in prison for each of the kidnapping charges.
Details of the charges against Small and Johnson are contained in the indictment, which is on file with the U.S. District Court and available to the public. According to the indictment, Small worked for a family member on small paving jobs, such as paving or repaving driveways, for single-family households in Tennessee. The customers were often retirees and the elderly who paid cash for the work. After returning to West Virginia from Tennessee following the paving work, Small traveled back to Tennessee with Johnson where they committed home invasions of elderly Tennessee residents, including some for which paving work had been done. The residents were confined to their own homes where Small and Johnson allegedly tied them up, held them at gunpoint and stole their valuables, which they later sold to pawn shops in West Virginia. In addition to the offenses committed in Tennessee, the indictment also alleges a conspiracy to commit similar crimes in Virginia and West Virginia.
Agencies whose investigation led to the indictment of Small and Johnson include the FBI, Giles County Sheriff's Office in Virginia; Carroll County Sheriff's Office in Virginia; Montgomery County Sheriff's Office in Virginia; Bland County Sheriff's Office in Virginia; Virginia State Police; Mercer County Sheriff's Department in West Virginia; Campbell County Sheriff's Office in Tennessee; and, Jefferson County Sheriff's Office in Tennessee. Assistant U.S. Attorneys Tracy Stone and Cynthia Davidson will represent the United States in court proceedings.
Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until his or her guilt has been proven beyond a reasonable doubt.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. Attorney General Jeff Sessions reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
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Former VA Field Examiner and OPM Investigator Kenneth Richard Devore Sentenced to Serve 96 Months in Prison for FraudRead the Press Release
GREENEVILLE, Tenn. - On November 5, 2018, Kenneth Richard Devore, a/k/a Kenneth Waters, 44, of Jonesborough, Tennessee, was sentenced by the Honorable Pamela L. Reeves to serve 96 months in federal prison. In July 2018, following a six-day trial, Devore was convicted by a federal jury of wire fraud, mail fraud, financial conflict of interest, theft of public money, and making false statements in matters within the jurisdiction of the United States.
According to evidence presented at trial, in 2015, while acting as a Field Examiner for the Department of Veterans Affairs (VA), Devore schemed to defraud an elderly and disabled veteran of over $680,000. Under the VA’s Fiduciary Program, Field Examiners are employed to help protect the financial assets of veterans who are unable to take care of themselves. As such, Field Examiners conduct on-site fact-finding examinations to ascertain the veteran’s income and assets and to observe his mental condition, living arrangement, and social adjustment. While assigned to a disabled veteran in Knoxville, Tennessee, Devore used his position to convince that veteran that he needed a Last Will and Testament (will). Devore then drafted the will and deceptively inserted his own name as the sole beneficiary of the veteran’s financial bank accounts and investments, which totaled over $680,000. Devore falsified the victim’s initials on the will and mailed it to his legal guardian, Regions Bank.
As a result of his conduct, Devore was forced to resign from the VA. Shortly thereafter, in early 2016, he applied for a position as an investigator for the National Background Investigations Bureau (NBIB), an agency within the U.S. Office of Personnel Management (OPM) that conducts investigations for positions of public trust and security clearances. In his application for the job and security clearance, he lied about his own educational and employment history, intentionally withholding that he had been forced to resign from the VA for misconduct and falsely claiming that he had received a college degree from the so-called “Canterbury University.” By his misrepresentations and omissions, Devore was hired for the job and worked through 2017.
Additionally, in 2009 and 2010, Devore lied about his own purported disabilities in order to obtain a 100% “total and permanent” disability rating by the VA. While he claimed to be unemployed and unable to work because of service-connected ailments, he worked gainfully and almost continuously in various federal and private sector jobs from 2009 through 2017. During that period, he received monthly disability compensation from the VA to which he was not entitled.
“Protecting our seniors is a top priority of the U.S. Attorney’s Office for the Eastern District of Tennessee. While we take any fraud case against an elderly victim very seriously, this case was particularly disturbing as it involved an individual in a position of trust, employed by the VA, defrauding a disabled veteran. Our office will continue to vigorously prosecute these types of cases, when they are investigated and presented to our office by one of our local, state or federal law enforcement partners,” said U.S. Attorney J. Douglas Overbey.
“VA officials are entrusted to make sure our veterans are taken care of,” said Kim R. Lampkins, Special Agent in Charge of the VA-OIG Mid-Atlantic Field Office. “Mr. Devore took advantage of one of our vulnerable heroes, and today justice was served.”
“It is essential that federal employees execute their duties with complete integrity,” observed Thomas W. South, OPM Deputy Assistant Inspector General for Investigations. “This outcome is a testament to the excellent work performed every day by the Department of Justice, OPM OIG criminal investigators, and our law enforcement partners, as well as our collective commitment to holding accountable anyone who would seek to take advantage of federal employment.”
This case was investigated by the VA, Office of Inspector General, NBIB Integrity Assurance, and OPM, Office of Inspector General. Assistant U.S. Attorneys David L. Gunn and T.J. Harker coordinated the investigation and represented the United States at trial.
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Department of Justice and United States Attorney’s Office to Oversee November 2018 ElectionsRead the Press Release
KNOXVILLE, Tenn. – U.S. Attorney J. Douglas Overbey announced today that Assistant U.S. Attorney (AUSA) Perry Piper will lead the efforts of his office in connection with the Justice Department’s nationwide Election Day Program for the upcoming November 6, 2018, general elections. AUSA Piper has been appointed to serve as the District Election Officer (DEO) for the Eastern District of Tennessee, and in that capacity is responsible for overseeing the District’s handling of complaints of election fraud and voting rights abuses in consultation with Justice Department Headquarters in Washington.
“Every United States citizen must be able to vote without interference or discrimination and to have that vote counted without it being stolen because of fraud,” said U.S. Attorney Overbey. “Aggressive and prompt action will be taken by the Department of Justice to protect the integrity of the election process.”
The Department of Justice has an important role in deterring election fraud and discrimination at the polls, and combating these violations whenever and wherever they occur. The Department’s long-standing Election Day Program furthers these goals, and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open on Election Day.
Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input. It also contains special protections for the rights of voters, and provides that they can vote free from acts that intimidate or harass them. For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting may violate federal voting rights law. Further, federal law protects the right of voters to make their own ballot or to be assisted by a person of their choice.
The franchise is the cornerstone of American democracy. We all must ensure that those who are entitled to the franchise exercise it if they choose, and that those who seek to corrupt it are brought to justice. In order to respond to complaints of election fraud or voting rights abuses on November 8, 2018, and to ensure that such complaints are directed to the appropriate authorities, U.S. Attorney Overbey stated that AUSA/DEO Piper will be on duty in this district while the polls are open. He can be reached by the public at 423-385-1332.
In addition, the FBI will have special agents available in each field office and resident agency throughout the country to receive allegations of election fraud and other election abuses on election day. The local FBI field office can be reached by the public at 865-544-0751.
Complaints about possible violations of the federal voting rights laws can be made directly to the Civil Rights Division’s Voting Section in Washington, DC by phone at 1-800-253-3931 or (202) 307-2767, by fax at (202) 307-3961, by email to [email protected] or by complaint form at http://www.justice.gov/crt/complaint/votintake/index.php.
U.S. Attorney Overbey added, “To ensure free and fair elections it is imperative that those who have specific information about discrimination or election fraud make that information available immediately to the U.S. Attorney’s office, FBI, or Department of Justice Civil Rights Division.”
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Justice Department’s Criminal Division Creates Appalachian Regional Prescription Opioid Strike Force to Focus on Illegal Opioid PrescriptionsRead the Press Release
KNOXVILLE, Tenn. - Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division today announced the formation of the Appalachian Regional Prescription Opioid Strike Force (ARPO Strike Force), a joint law enforcement effort that brings together the resources and expertise of the Health Care Fraud Unit in the Criminal Division’s Fraud Section (HCF Unit), the U.S. Attorney’s Offices for nine federal districts in five states, as well as law enforcement partners at the FBI, U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) and U.S. Drug Enforcement Administration (DEA). The mission of the ARPO Strike Force is to identify and investigate health care fraud schemes in the Appalachian region and surrounding areas, and to effectively and efficiently prosecute medical professionals and others involved in the illegal prescription and distribution of opioids.
Assistant Attorney General Benczkowski was joined in the announcement by U.S. Attorney Robert M. Duncan Jr. for the Eastern District of Kentucky; U.S. Attorney Russell M. Coleman for the Western District of Kentucky; U.S. Attorney Benjamin C. Glassman for the Southern District of Ohio; U.S. Attorney William J. Powell for the Northern District of West Virginia; U.S. Attorney Michael B. Stuart for the Southern District of West Virginia; U.S. Attorney J. Douglas Overbey for the Eastern District of Tennessee; U.S. Attorney Donald Q. Cochran for the Middle District of Tennessee; U.S. Attorney D. Michael Dunavant for the Western District of Tennessee; U.S. Attorney Jay E. Town for the Northern District of Alabama; Assistant Director Robert Johnson of the FBI’s Criminal Investigative Division; Deputy Inspector General for Investigations Gary L. Cantrell of the Department of Health and Human Services Office of Inspector General (HHS-OIG) and Assistant Administrator John J. Martin of the DEA Diversion Control Division.
“While the opioid epidemic continues to inflict untold pain and suffering on people across the country, the devastation in the Appalachian region and adjacent areas has been particularly staggering,” said Assistant Attorney General Benczkowski. “It is all the more reprehensible when unscrupulous physicians and pharmacies contribute to the epidemic by illegally supplying dangerous prescription painkillers. Working with our partners in U.S. Attorney’s Offices and law enforcement, the Appalachian Regional Prescription Opioid Strike Force will combat illegal prescription opioids and health care fraud by holding accountable corrupt medical professionals who seek to profit off the crisis of opioid addiction.”
“The Appalachian Region, which includes the Eastern District of Tennessee, is unfortunately a ‘hot spot’ for drug abuse and overdose related deaths in the country,” said U.S. Attorney J. Douglas Overbey. “We welcome the opportunity to work with our law enforcement partners in the Appalachian Regional Prescription Opioid Strike Force to identify and prosecute those unscrupulous medical professionals and others engaged in health care fraud schemes involving illegal prescription, distribution, possession, and use of opioids.”
“The creation of the Appalachian Regional Prescription Opioid Strike Force will bring together critical resources from the FBI and our partners to fight health care fraud in this region and the growing opioid epidemic that faces the United States,” said FBI Assistant Director Johnson. “Healthcare fraud touches every corner of the United States, and through this strike force, the FBI will continue our tireless work to combat illegal opioid prescriptions and bring to justice those medical professionals who put their greed over the health and wellbeing of their patients.”
“The opioid epidemic has had a devastating impact on Americans across the country, including the people of the Appalachian region,” said HHS-OIG Deputy Inspector General for Investigations Cantrell. “The Strike Force model is a proven mechanism to target illicit conduct and hold accountable criminals involved in illegal opioid prescription and distribution schemes. We will continue to work closely with our federal, state, and local law enforcement partners to curb this damaging epidemic.”
“Our nation’s opioid crisis requires us to work with unprecedented urgency in attacking drug diversion at every level,” said DEA Assistant Administrator Martin. “These joint strike force efforts will save lives, while allowing us to better target and bring to justice those who facilitate addiction and profit at the expense of the weakest and most afflicted.”
Prior to this announcement, the HCF Unit operated Medicare Fraud Strike Force’s in 12 locations across the United States including Miami, Florida; Los Angeles, California; Detroit, Michigan; Houston, Texas; Brooklyn, New York; Baton Rouge and New Orleans, Louisiana; Tampa/Orlando, Florida; Chicago, Illinois; and Dallas, Texas, along with a Corporate Strike Force located in Washington, D.C., and the Newark/Philadelphia Regional Medicare Fraud Strike Force. The Strike Forces represent a partnership between the Criminal Division, U.S. Attorney’s Offices, the FBI, HHS-OIG and the DEA.
The ARPO Strike Force will be made up of prosecutors and data analysts with the HCF Unit, prosecutors with the nine U.S. Attorney’s Offices in the region, and special agents with the FBI, HHS-OIG and DEA. The ARPO Strike Force will operate out of two hubs based in the Cincinnati/Northern Kentucky, and Nashville, Tennessee, areas, supporting the nine districts that make up the ARPO Strike Force region. In addition, the APRO Strike Force will work closely with other various federal law enforcement agencies, including the U.S. Postal Inspection Service and IRS Criminal Investigation, and State Medicaid Fraud Control Units.
The ARPO Strike Force will target criminal conduct associated with the improper prescription and distribution of prescription opioids and other dangerous narcotics throughout the Appalachian region and surrounding areas – focusing on criminal conduct by physicians, pharmacists, and other medical professionals. The ARPO Strike Force will also investigate and prosecute violations of health care fraud whenever such fraud is detected throughout the region.
In June, Attorney General Jeff Sessions and Department of Health and Human Services (HHS) Secretary Alex M. Azar III noted the success of the Strike Force model while announcing the largest ever health care fraud enforcement action involving 601 charged defendants across 58 federal districts, including 165 doctors, nurses and other licensed medical professionals, for their alleged participation in health care fraud schemes involving more than $2 billion in false billings. Of those charged, 162 defendants, including 76 doctors, were charged for their roles in prescribing and distributing opioids and other dangerous narcotics. More information can be obtained at https://www.justice.gov/opa/documents-and-resources-june-28-2018.
In August, Assistant Attorney General Benczkowski announced the Newark/Philadelphia Medicare Fraud Strike Force, which focuses on health care fraud and illegal opioid prescriptions in the Newark/Philadelphia region.
The Strike Force operations are part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Since its inception in March 2007, the prosecutors in the 12 Medicare Fraud Strike Force locations have charged over 4,000 defendants who collectively have falsely billed the Medicare program for over $14 billion. Since January 2017, the HCF Unit has charged over 85 defendants, including 33 doctors with the illegal prescription of opioids (nearly 30 million pills).
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Lenoir City Resident Indicted for Fraud Scheme Involving Elderly VictimsRead the Press Release
KNOXVILLE, Tenn. – On October 16, 2018, a federal grand jury in Knoxville returned a six-count indictment against Christina Erin Myers, 36, of Lenoir City, Tennessee, charging her with wire fraud and money laundering. Myers appeared before U.S. Magistrate Judge Deborah Poplin in U.S. District Court on October 18, 2018, and pleaded not guilty to the charges included in the indictment.
Myers trial is set for December 18, 2018, in U.S. District Court. If convicted, she faces 20 years in prison.
The indictment alleges that from May 2014 through July 2018, Myers engaged in a scheme to defraud elderly individuals under the guise of selling them residential properties at Williams Ferry Pointe (WFP), which is a senior living community in Lenoir City, Tennessee. WPF is operated by Tennessee Baptist Adult Homes (TBAH), a provider of residential care for senior adults and adults with exceptional needs. She allegedly implemented her scheme by diverting funds that were for the purchase of the real estate to her own personal use and marketing non-existent senior community housing. The indictment further alleges that Myers promoted and sold fictitious investment opportunities and diverted those funds to her own personal use instead of investing them for the victims. In total, Myers fraudulently obtained approximately $518,000. Additional details of her scheme are outlined in the indictment, which is on file with the U.S. District Court and available to the public.
Agencies whose investigation led to indictment of Myers include the Internal Revenue Service - Criminal Investigation and the Lenoir City Police Department. Assistant U.S. Attorney Frank Dale will represent the United States in court proceedings.
Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until his or her guilt has been proven beyond a reasonable doubt.
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Jerry Bowman Arrested for Armed Robbery of Carter County BankRead the Press Release
GREENEVILLE, Tenn. – On October 17, 2018, Jerry Bowman, 58, of Johnson City, Tennessee, was arrested for the robbery of the Carter County Bank on Milligan Highway in Johnson City, Tennessee.
U.S. Magistrate Judge Clifton L. Corker issued a criminal complaint, charging Bowman with the armed robbery of the bank and with brandishing a firearm in furtherance of the robbery. The complaint, on file with the U.S. District Court, alleges that at approximately 1:30 p.m. on October 17, 2018, Bowman entered the Carter County Bank branch, displayed a firearm, and demanded money from the bank tellers. After taking the cash from the tellers, Bowman fled in a blue Ford Fusion. Later that evening, officers stopped a blue Ford Fusion, being driven by another individual, who admitted to residing with Bowman and knowing about the robbery. That stop led to the arrest of Bowman at his residence, where officers recovered money taken in the robbery and the firearm he used.
If convicted, Bowman faces up to 25 years in prison for the robbery. Additionally, he faces a consecutive mandatory minimum sentence of seven years up to life for the firearms charge. Upon his release from prison, he will be subject to up to five years of supervised release by U.S. Probation.
The investigation leading to the arrest was the product of the combined efforts of the Elizabethton Police Department, Carter County Sheriff’s Office, Johnson City Police Department, and FBI. Assistant U.S. Attorneys J. Gregory Bowman will represent the United States in court proceedings.
Members of the public are reminded that a complaint constitutes only charges and that every person is presumed innocent until his or her guilt has been proven beyond a reasonable doubt.
This case was brought as part of Project Safe Neighborhoods (PSN), a comprehensive national strategy that creates local partnerships with law enforcement agencies to effectively enforce existing gun laws. It provides more options to prosecutors, allowing them to utilize local, state, and federal laws to ensure that criminals who commit gun crime face tough sentences. PSN gives each federal district the flexibility it needs to focus on individual challenges that a specific community faces.
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Four Men and Seven Companies Indicted for Billion-Dollar Telemedicine Fraud Conspiracy, Telemedicine Company and CEO Plead Guilty in Two Fraud SchemesRead the Press Release
GREENEVILLE, Tenn.– On October 12, 2018, the District Court for the Eastern District of Tennessee unsealed a 32-count indictment charging four individuals and seven companies in a $1 billion health care fraud scheme. The court also unsealed an additional two plea agreements and an information charging another individual and his company for their role in the scheme.
Andrew Assad, 33, of Palm Harbor, Florida, Peter Bolos, 41, of Lutz, Florida, and Michael Palso, 44, of Odessa, Florida, were indicted along with their compounding pharmacies, Synergy Pharmacy Services, located in Palm Harbor, and Precision Pharmacy Management, located in Clearwater. Co-conspirator Larry Everett Smith, 48, of Pinellas Park, Florida, also a pharmacy compounder, and his companies Tanith Enterprises, ULD Wholesale Group, Alpha-Omega Pharmacy, all located in Clearwater, Germaine Pharmacy located in Tampa, Florida, and Zoetic Pharmacy located in Houston, Texas, were all also named as defendants. All the defendants were charged with conspiracy to commit health care fraud, mail fraud, and introducing misbranded drugs into interstate commerce.
On September 26, 2018, HealthRight LLC, a telemedicine company with locations in Pennsylvania and Florida, and Scott Roix, 52, of Seminole, Florida, and the CEO of HealthRight, pleaded guilty to felony conspiracy for their roles in the telemedicine health care fraud scheme in a criminal information. Roix and HealthRight LLC, also pleaded guilty to conspiring to commit wire fraud in a separate scheme for fraudulently telemarketing dietary supplements, skin creams, and testosterone.
The indictment alleges that from June 1, 2015 through April 1, 2018, these individuals and companies, together with other persons and companies known to the grand jury, conspired to deceive tens of thousands of patients and more than 100 doctors located in the Eastern District of Tennessee and across the country for the purpose of defrauding private health care benefit programs such as Blue Cross Blue Shield of Tennessee out of approximately $174,000,000. The indictment further alleges that the defendants submitted not less than $931,000,000 in fraudulent claims for payment.
According to the indictment, the defendants set up an elaborate telemedicine scheme in which HealthRight fraudulently solicited insurance coverage information and prescriptions from consumers across the country for prescription pain creams and other similar products. The indictment states that doctors approved the prescriptions without knowing that the defendants were massively marking up the prices of the invalidly prescribed drugs, which the defendants then billed to private insurance carriers.
Assad, Bolos, Palso, and Smith appeared in court on October 11, 2018 before U.S. Magistrate Judge Anthony E. Porcelli in the U.S. District Court for the Middle District of Florida. All four individual defendants were released on bond and are scheduled for an initial appearance and arraignment in the U.S. District Court in the Eastern District of Tennessee before U.S. Magistrate Judge Clifton Corker on October 25, 2018.
If convicted, Assad, Bolos, Palso, and Smith face a term of up to 20 years in prison as to each mail fraud charge, up to 10 years in prison for the conspiracy, and up to three years in prison for introducing misbranded drugs into interstate commerce. Additionally, they face fines of up to $250,000 and up to three years of supervised release as to each count. The companies face fines of up to twice the gross loss sustained as a result of the conspiracy. The indictment also seeks forfeiture of approximately $154,000,000.
In addition to their roles in the health care fraud conspiracy, the Information filed against Roix and HealthRight charged each of them with conspiring to commit wire fraud as part of a scheme to use HealthRight’s telemarketing facilities to fraudulently sell millions of dollars’ worth of products such as weight loss pills, skin creams, and testosterone supplements through concocted claims of efficacy and intentionally deficient customer service designed to stall consumer complaints.
Roix and HealthRight pleaded guilty before U.S. District Judge J. Ronnie Greer of the Eastern District of Tennessee. Roix faces a statutory maximum sentence of 5 years of imprisonment for each conspiracy. The Court set sentencing for February 13, 2019.
The investigation was coordinated by Assistant U.S. Attorneys T.J. Harker, David Gunn, and Anne-Marie Svolto of the U.S. Attorney’s Office for the Eastern District of Tennessee, and Trial Attorney John Claud for the Department’s Consumer Protection Branch. Assistant U.S. Attorneys T.J. Harker and David Gunn will prosecute the telemedicine conspiracy for the U.S. Attorney's Office for the Eastern District of Tennessee. Trial Attorney John Claud will represent the Department's Consumer Protection Branch in court proceedings.
The investigation was conducted by the Nashville, Tennessee, office of the U.S. Department of Health & Human Services Office of Inspector General; Nashville, Tennessee, office of the Food and Drug Administration Office of Criminal Investigations; Buffalo, New York, office of the U.S. Postal Service, Office of Inspector General; Knoxville and Johnson City, Tennessee, offices of the Federal Bureau of Investigation; Atlanta, Georgia, Office of Personnel Management Office of the Inspector General; and Tampa, Florida, office of Homeland Security Investigations. The U.S. Marshals Service also assisted in the investigation and the forfeiture of assets.
Members of the public are reminded that an indictment constitutes only charges and that every person or company is presumed innocent until guilt has been proven beyond a reasonable doubt.
For more information about the U.S. Attorney’s Office for the Eastern District of Tennessee, visit its website at https://www.justice.gov/usao-edtn. Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch.
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Four Men and Seven Companies Indicted for Billion-Dollar Telemedicine Fraud Conspiracy, Telemedicine Company and CEO Plead Guilty in Two Fraud SchemesRead the Press Release
On October 12, 2018, the District Court for the Eastern District of Tennessee unsealed a 32-count indictment charging four individuals and seven companies in a $1 billion health care fraud scheme. The court also unsealed an additional two plea agreements and an information charging another individual and his company for their role in the scheme.
Andrew Assad, 33, of Palm Harbor, Florida, Peter Bolos, 41, of Lutz, Florida, and Michael Palso, 44, of Odessa, Florida, were indicted along with their compounding pharmacies, Synergy Pharmacy Services, located in Palm Harbor, and Precision Pharmacy Management, located in Clearwater. Co-conspirator Larry Everett Smith, 48, of Pinellas Park, Florida, also a pharmacy compounder, and his companies Tanith Enterprises, ULD Wholesale Group, Alpha-Omega Pharmacy, all located in Clearwater, Germaine Pharmacy located in Tampa, Florida, and Zoetic Pharmacy located in Houston, Texas, were all also named as defendants. All the defendants were charged with conspiracy to commit health care fraud, mail fraud, and introducing misbranded drugs into interstate commerce.
On September 26, 2018, HealthRight LLC, a telemedicine company with locations in Pennsylvania and Florida, and Scott Roix, 52, of Seminole, Florida, and the CEO of HealthRight, pleaded guilty to felony conspiracy for their roles in the telemedicine health care fraud scheme in a criminal information. Roix and HealthRight LLC, also pleaded guilty to conspiring to commit wire fraud in a separate scheme for fraudulently telemarketing dietary supplements, skin creams, and testosterone.
The indictment alleges that from June 1, 2015 through April 1, 2018, these individuals and companies, together with other persons and companies known to the grand jury, conspired to deceive tens of thousands of patients and more than 100 doctors located in the Eastern District of Tennessee and across the country for the purpose of defrauding private health care benefit programs such as Blue Cross Blue Shield of Tennessee out of approximately $174,000,000. The indictment further alleges that the defendants submitted not less than $931,000,000 in fraudulent claims for payment.
According to the indictment, the defendants set up an elaborate telemedicine scheme in which HealthRight fraudulently solicited insurance coverage information and prescriptions from consumers across the country for prescription pain creams and other similar products. The indictment states that doctors approved the prescriptions without knowing that the defendants were massively marking up the prices of the invalidly prescribed drugs, which the defendants then billed to private insurance carriers.
Assad, Bolos, Palso, and Smith appeared in court on October 11, 2018 before U.S. Magistrate Judge Anthony E. Porcelli in the U.S. District Court for the Middle District of Florida. All four individual defendants were released on bond and are scheduled for an initial appearance and arraignment in the U.S. District Court in the Eastern District of Tennessee before U.S. Magistrate Judge Clifton Corker on October 25, 2018.
If convicted, Assad, Bolos, Palso, and Smith face a term of up to 20 years in prison as to each mail fraud charge, up to 10 years in prison for the conspiracy, and up to three years in prison for introducing misbranded drugs into interstate commerce. Additionally, they face fines of up to $250,000 and up to three years of supervised release as to each count. The companies face fines of up to twice the gross loss sustained as a result of the conspiracy. The indictment also seeks forfeiture of approximately $154,000,000.
In addition to their roles in the health care fraud conspiracy, the Information filed against Roix and HealthRight charged each of them with conspiring to commit wire fraud as part of a scheme to use HealthRight’s telemarketing facilities to fraudulently sell millions of dollars’ worth of products such as weight loss pills, skin creams, and testosterone supplements through concocted claims of efficacy and intentionally deficient customer service designed to stall consumer complaints.
Roix and HealthRight pleaded guilty before U.S. District Judge J. Ronnie Greer of the Eastern District of Tennessee. Roix faces a statutory maximum sentence of 5 years of imprisonment for each conspiracy. The Court set sentencing for February 13, 2019.
The investigation was coordinated by Assistant U.S. Attorneys T.J. Harker, David Gunn, and Anne-Marie Svolto of the U.S. Attorney’s Office for the Eastern District of Tennessee, and Trial Attorney John Claud for the Department’s Consumer Protection Branch. Assistant U.S. Attorneys T.J. Harker and David Gunn will prosecute the telemedicine conspiracy for the U.S. Attorney's Office for the Eastern District of Tennessee. Trial Attorney John Claud will represent the Department's Consumer Protection Branch in court proceedings.
The investigation was conducted by the Nashville, Tennessee office of the U.S. Department of Health & Human Services Office of Inspector General; the Nashville office of the Food and Drug Administration Office of Criminal Investigations; the Buffalo, New York, office of the U.S. Postal Inspection Service; the Knoxville and Johnson City, Tennessee, offices of the Federal Bureau of Investigation; the Atlanta, Georgia, Office of Personnel Management Office of the Inspector General; and the Tampa, Florida, office of Homeland Security Investigations. The U.S. Marshals Service also assisted in the investigation and the forfeiture of assets.
Members of the public are reminded that an indictment constitutes only charges and that every person or company is presumed innocent until guilt has been proven beyond a reasonable doubt.
For more information about the U.S. Attorney’s Office for the Eastern District of Tennessee, visit its website at https://www.justice.gov/usao-edtn. Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch.
Pilot Flying J’s Former President Hazelwood Sentenced to 12.5 Years, Former Vice President Wombold Sentenced to 6 Years, and Former Customer Account Representative Heather Jones Sentenced to More Than 2.5 YearsRead the Press Release
CHATTANOOGA, Tenn. – On September 26, 2018, the Honorable Curtis L. Collier sentenced Mark Hazelwood to serve 12.5 years in prison and imposed a $750,000 fine. On October 4, 2018, Judge Collier sentenced codefendant Scott Wombold to serve six years in prison and imposed a $75,000 fine, and sentenced codefendant Heather Jones to more than 2.5 years in prison.
Following a multi-month trial, on February 15, 2018, Hazelwood, former president of Pilot Flying J, was convicted of conspiracy to commit mail fraud and wire fraud as charged in count 1 of the indictment, wire fraud as charged in count 8 of the indictment, and witness tampering as charged in count 14 of the indictment. Wombold, a former vice president of Pilot Flying J, was convicted in the same trial of wire fraud as charged in count 2 of the indictment. Jones, a former customer account representative for Pilot Flying J, also was convicted in that trial of conspiracy to commit mail fraud and wire fraud as charged in count 1 of the indictment.
Evidence presented at trial proved a scheme to defraud certain Pilot Flying J trucking company customers through false and fraudulent representations and promises of diesel fuel discounts that were intended to induce victim customers to purchase diesel fuel from Pilot Flying J rather than a competitor. The scheme resulted in victim customers being cheated out of their promised diesel fuel discounts. The evidence at trial showed that the scheme’s goals were to increase Pilot’s market share of diesel fuel sales over its competitors, maximize Pilot’s profits, and maximize the scheme-participants’ potential for profit- and commission-based compensation from trucking companies targeted through the scheme to defraud.
Before trial, 14 other former Pilot Flying J executives and employees had already pleaded guilty to conspiracy charges related to the same scheme to defraud. They are awaiting sentencing. In July 2014, Pilot Flying J entered into a Criminal Enforcement Agreement with the United States in which the company agreed that some of its employees in its Direct Sales group engaged in fraudulent conduct in the payment of diesel fuel discounts for certain targeted Pilot customers. Pilot Flying J agreed that the conduct of those employees resulted in $56 million in loss to affected customers. In accordance with that agreement, Pilot Flying J agreed to pay full restitution to all victim customers in addition to paying a $92 million monetary penalty. Additionally, according to the terms of the Criminal Enforcement Agreement, this federal investigation not only resulted in the payment of full restitution to the scheme’s victims, but also created protection for trucking companies going forward through greater transparency in their future fuel pricing arrangements with Pilot Flying J.
Law enforcement agencies participating in this joint investigation included the FBI and IRS- Criminal Investigation. Assistant U.S. Attorneys F.M. (Trey) Hamilton III and David P. Lewen, Jr. represented the United States.
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Amir Hossain Rasekh Sentenced to Serve 33 Months in Prison for Defrauding Social SecurityRead the Press Release
KNOXVILLE, Tenn. – On October 2, 2018, Amir Hossain Rasekh, 40, of Las Vegas, Nevada, was sentenced by the Honorable Thomas A. Varlan, Chief U.S. District Judge, to serve 33 months in federal prison for stealing Social Security benefits from unsuspecting seniors through a conspiracy involving theft of their personal information. He was also ordered to pay restitution in the amount of $547,719.20.
Rasekh pleaded guilty in May 2018, to conspiracy to commit mail fraud and wire fraud. From 2012 until his arrest in June 2017, Rasekh engaged in a scheme involving the theft of Social Security Administration (SSA) benefits from unsuspecting victims, including using their personal identification information (PII) to sign up for benefits online. He and other individuals, who are currently unknown to law enforcement, then directed the payment of the monthly SSA benefits to prepaid debit cards issued by Green Dot and under their control. Over the five-year period of the scheme, Rasekh stole $547,719.20 in SSA benefits.
“The U.S. Attorney’s Office will continue to pursue prosecution of individuals who commit crimes against our district’s older residents,” said U.S. Attorney J. Douglas Overbey. “We encourage anyone near retirement age to protect themselves from fraudulent acts such as these by contacting the Social Security Administration to ensure that their personal identification information has not been used without their knowledge.”
Agencies involved in this investigation included the SSA, Office of the Inspector General and U.S. Postal Inspection Service. Assistant U.S. Attorneys Frank M. Dale, Jr. and Jennifer Kolman represented the United States in court proceedings.
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U.S. Attorney’s Office Commits to Help Further Reduce Chattanooga Violent CrimeRead the Press Release
Recently, the Chattanooga Police Department announced crime statistics showing reductions in violent crime from 2017 to 2018. According to the statistics, criminal homicides were down 61%; gang member involved homicides were down 53%; and non-fatal shootings involving gang members were down 35%. Overall, persons shot in Chattanooga, both fatal and non-fatal, were reduced by 27%.
These significantly reduced numbers are due, in part, to the collaborative efforts of local, state and federal law enforcement and state and federal prosecutors. Effective violence reduction depends on working in partnership with a wide range of engaged stakeholders.
While these numbers are encouraging, we cannot afford to be complacent. The violent crime rate is still too high. However, local, state and federal resources, working in partnership to address the drivers of violent crime in our communities, will continue to make our neighborhoods safer for everyone. As United States Attorney, I am committed to working to drive down violent crime even further.
Last fall, Attorney General Sessions announced the expansion of Project Safe Neighborhoods (PSN), which encourages U.S. Attorneys’ Offices to work with the communities they serve to develop customized crime reduction strategies. The PSN program has always been strong in this district and will continue to thrive during this reinvigoration of our crime reduction strategy.
While PSN has been implemented by every U.S. Attorney’s office across the country, it is not a one-size-fits-all solution to reduce crime everywhere. It is about local needs, resources, and partners. Recently, the Eastern District of Tennessee formed a PSN Task Force consisting of representatives from local, state and federal law enforcement across our district. Led by the U.S. Attorney’s Office, the PSN Task Force includes representatives from the Chattanooga Police Department, Knoxville Police Department, Greeneville Police Department, First, Second, Sixth, and Eleventh District Attorney’s Offices, Tennessee Bureau of Investigation, Tennessee Probation and Parole, Bureau of Alcohol, Tobacco, Firearms, and Explosives, Federal Bureau of Investigation, Drug Enforcement Administration, U.S. Marshals Service, Homeland Security, and U.S. Probation Office.
As a district, the plan is to attack the violent crime problem by identifying significant offenders and targeting them for either federal or state prosecution. By using the most effective tools and techniques, we target the offenders for prosecution in the jurisdiction that can provide the most certain and appropriate sanction.
One recent example of this was in March 2018, when 31-year old Chris Rayvon Starks of Shelbyville, Tennessee, was sentenced under the Armed Career Criminal Act to serve 180 months in federal prison for unlawfully possessing a firearm and ammunition in violation of the Gun Control Act. His sentence was enhanced based on his three prior convictions for aggravated robbery.
Since 2013, the City of Chattanooga has funded an attorney position that serves as a Special Assistant U.S. Attorney and focuses on violent crime cases to help lower shootings and overall violent crime in the City of Chattanooga. Under the reinvigorated PSN program, we hope to maintain this partnership for many years to come. Our goal is to continue working together with all of our law enforcement partners and community leaders and use all available resources to help reduce the violent crime statistics in Chattanooga even further in the coming year.
J. Douglas Overbey, United States Attorney, Eastern District of Tennessee
Trinity Scott Johnson Sentenced to Serve 17 Years in Prison for Conspiring to Distribute Methamphetamine and Possession of FirearmRead the Press Release
GREENEVILLE, Tenn. – On October 3, 2018, Trinity Scott Johnson, 39, of Morristown, Tennessee, was sentenced by the Honorable J. Ronnie Greer, U.S. District Court Judge, to serve 17 years in federal prison. Johnson pleaded guilty in July 2018 to conspiracy to distribute over 50 grams of methamphetamine (meth) or “Ice” and possession of a firearm in furtherance of a drug trafficking offense.
In February 2018, following an investigation conducted by the Hamblen County Sheriff’s Department, a suspicious person report to police caused Johnson to be arrested at an unoccupied residence in Morristown, Tennessee. When officers arrived, it appeared that the front door of the residence had been kicked in and Johnson was leaving the residence.
During a consent search of that residence, officers found a plastic grocery bag containing a large sealed bag of meth, a black bag containing four separate bags of meth, a camera case containing another bag of meth, a glass jar containing 15 bags of marijuana, and another separate bag of marijuana. The meth was field tested and weighed 1,169 grams. The marijuana weighed 25 grams. Officers also found drug paraphernalia, digital scales, two pistols, 17 guns, two shotgun barrels, numerous shotgun shells, 9mm rounds, and three .380 caliber rounds of ammunition in the residence. Johnson was interviewed and admitted ownership of the meth.
Johnson said he began using and selling gram quantities of meth in August 2016. After his first supplier was arrested, he found a new supplier who provided him larger quantities of meth. He admitted to purchasing ounce and half-kilogram quantities of meth from his second supplier on multiple occasions for approximately six months. After this supplier was arrested, Johnson found a third supplier who provided half-kilogram quantities of meth. Over the next six months, he purchased multiple half-kilograms of meth from the third supplier, until that supplier was also arrested.
While dealing with the third supplier Johnson met his fourth supplier who sold kilogram and half-kilograms of meth to him. Johnson stated that he always paid cash, $11,000 for a half-kilogram of meth, but could not recall how many times he purchased half-kilograms from this fourth supplier. He estimated he purchased at least 15, but not as many as 20, kilograms of meth from this supplier.
Johnson consented to a search of his residence in Morristown, Tennessee. During that search, officers located a safe in the bedroom closet containing seven guns and ammunition, 13 bags of meth, 12 bags of marijuana, a bag of cocaine, and drug paraphernalia (digital scales, empty bags, pipes). Field weight of the methamphetamine was 175.4 grams, field weight of the marijuana was 194.7 grams, and field weight of the cocaine was 8.1 grams.
All of Johnson’s co-defendants have pleaded guilty to offenses related to this conspiracy and are awaiting sentencing. Truman Lee Jones, 33, of Russellville, Tennessee, is set to be sentenced on November 11, 2018, and faces 10 years to life in federal prison. Amanda Marie Hilton, 36, of Whitesburg, Tennessee, is set to be sentenced on November 19, 2018, and faces five to 40 years in federal prison. Colby McGwire Scarlett, 20, of Morristown, Tennessee, faces 10 years to life in federal prison and is set to be sentenced on January 6, 2019. Jessica James, 30, of Morristown, Tennessee, also faces 10 years to life in federal prison and is set to be sentenced on February 6, 2019. Finally, sentencing for Megan Gilliam, 25, of Morristown, Tennessee, is set for February 11, 2019. She also faces 10 years to life in federal prison.
Agencies involved in this investigation included the Hamblen County Sheriff’s Department and FBI. Assistant U.S. Attorney Robert. M. Reeves represented the United States in court proceedings.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. Attorney General Jeff Sessions reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
This case was also the result of the Department of Justice’s Organized Crime and Drug Enforcement Task Force (OCDETF) program, the centerpiece of the Department of Justice’s drug supply reduction strategy. OCDETF was established in 1982 to conduct comprehensive, multi-level attacks on major drug trafficking and money laundering organizations. Today, OCDETF combines the resources and expertise of its member federal agencies in cooperation with state and local law enforcement. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.
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Justice Department Awards More Than $30 Million to Project Safe Neighborhoods to Combat Violent CrimeRead the Press Release
KNOXVILLE, Tenn. – Attorney General Sessions today commemorated the reinvigoration of Project Safe Neighborhoods (PSN), the centerpiece of the Department of Justice’s violent crime reduction efforts. In support of the Department’s PSN programs throughout the country, the Attorney General also announced awards of almost $28 million in grant funding to combat violent crime through PSN and another $3 million for training and technical assistance to develop and implement violent crime reduction strategies and enhance services and resources for victims of violent crime. Over the past year, the Department has partnered with all levels of law enforcement, local organizations, and members of the community to reduce violent crime and make American neighborhoods safer.
The Eastern District of Tennessee was awarded $294,968 for use by the recently formed PSN Task Force, consisting of representatives from local, state and federal law enforcement, in its efforts to reduce violent crime in the district. Led by the U.S. Attorney’s Office, the PSN Task Force includes representatives from the Chattanooga Police Department, Knoxville Police Department, Greeneville Police Department, First, Second, Sixth, and Eleventh District Attorney’s Offices, Tennessee Bureau of Investigation, Tennessee Probation and Parole, Bureau of Alcohol, Tobacco, Firearms, and Explosives, Federal Bureau of Investigation, Drug Enforcement Administration, U.S. Marshals Service, Homeland Security, and U.S. Probation Office.
“Project Safe Neighborhoods is a proven program with demonstrated results,” Attorney General Jeff Sessions said. “We know that the most effective strategy to reduce violent crime is based on sound policing policies that have proven effective over many years, which includes being targeted and responsive to community needs. I have empowered our United States Attorneys to focus enforcement efforts against the most violent criminals in their districts, and directed that they work together with federal, state, local, and tribal law enforcement and community partners to develop tailored solutions to the unique violent crime problems they face. Each United States Attorney has prioritized the PSN program, and I am confident that it will continue to reduce crime, save lives, and restore safety to our communities.”
“We are committed to driving down violent crime across the Eastern District of Tennessee,” said U.S. Attorney J. Douglas Overbey. “The PSN Task Force plans to attack the violent crime problem by identifying significant offenders and targeting them for prosecution. Though collaboration and cooperation with our local, state and federal law enforcement and prosecutorial partners, our goal is to reduce violent crime and make our neighborhoods safer.”
PSN is an evidence-based program proven to be effective at reducing violent crime. Through PSN, a broad spectrum of stakeholders work together to identify the most pressing violent crime problems in the community and develop comprehensive solutions to address them. As part of this strategy, PSN focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.
Through the enhanced PSN, the Department is targeting the most violent criminals in the most violent areas, utilizing policing tools that did not exist even a few years ago. Tools like crime gun intelligence centers (CGIC), which combine intelligence from gunshot detection systems, ballistics, gun tracing, and good old-fashioned police work, help to develop real-time leads on the “traffickers and trigger pullers” who are fueling the violence in their communities. By using modern technologies and cutting-edge police work, the Justice Department is deploying resources strategically to provide the greatest return on our community-based anti-violence efforts.
United States Attorneys across the country are using powerful federal laws against the criminals driving the violent crime in their communities. In fiscal year 2018, the Department brought cases against more violent criminals than ever before—increasing by approximately 15 percent than the Department’s previous record set just last year. Additionally, in 2018 the Department set another record by charging approximately 20 percent more criminals with federal firearms offenses than it had in 2017, which is the most in the Department’s history.
The Department has already started to observe positive signs of progress. The FBI’s official crime data for 2017 reflects that, after two consecutive, historic increases in violent crime, in the first year of the Trump Administration the nationwide violent crime rate began to decline. The nationwide violent crime rate decreased by approximately one percent in 2017, while the nationwide homicide rate decreased by nearly one and a half percent. The preliminary information for 2018 shows that the Department’s efforts are continuing to pay off. Public data from 60 major cities show that violent crime decreased by nearly five percent in those cities in the first six months of 2018 compared to the same period one year earlier.
The grants announced today build on Attorney General Sessions’ commitment to reducing violent crime in America, as directed by President Trump’s February 2017 Executive Order. The Department has distributed additional resources and built up strong partnerships with local law enforcement in communities plagued by violent crime. Since the announcement of the reinvigoration of the PSN program in October 2017, the Department of Justice has increased the number of federal prosecutors focused on violent crime by over 300, directed its resources to improving cooperation between federal and local law enforcement agencies, restored local control of police agencies by reining in excessive use of consent decrees, reformed civil asset forfeiture and restored asset-sharing with state and local law enforcement, and helped fund over 800 hundred officers in police departments across America.
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Department of Justice Announces More Than $70 Million to Support School Safety and $64 Million to Improve State Criminal Record SystemsRead the Press Release
KNOXVILLE, Tenn. – U.S. Attorney J. Douglas Overbey joined the Department of Justice today in announcing more than $70 million in grant funding to bolster school security, educate and train students and faculty, and support law enforcement officers and first responders who arrive on the scene of a school violence incident. Two cities in the Eastern District of Tennessee received 2018 COPS School Violence Prevention Program Grants. The City of Knoxville received $240,345 and the City of Newport received $20,419.
These grants are in addition to the funding to the National Association of School Resource Officers (NASRO), announced by Attorney General Sessions last week, to expand and update their curriculum to better support training programs. These grants combined will better protect students, teachers, faculty, and first responders across the United States. Additionally, the Department is awarding more than $64 million to state agencies to improve the completeness, quality, and accessibility of the nation’s criminal record systems, which will help law enforcement and increase the effectiveness of background checks.
“President Trump and his administration will ensure the safety of every American school," Attorney General Jeff Sessions said. "Earlier this year he signed into law the STOP School Violence Act, which provides grant funding to develop anonymous school threat reporting systems, to implement school building security measures, and to train students, school personnel, and law enforcement on how to prevent school violence. Today I am announcing $70 million in these grants to hundreds of cities and states across America. These grants will go a long way toward giving young people and their families both safety and peace of mind.”
“I am proud to announce the 2018 COPS School Violence Prevention Program funding for the City of Knoxville and the City of Newport,” said J. Douglas Overbey, U.S. Attorney for the Eastern District of Tennessee. “This funding will allow each jurisdiction to increase school safety by providing more coordination and training for local law enforcement, as well as upgrading technology to help prevent acts of violence from occurring and improve response capabilities in the event of an emergency.”
The Office of Justice Program’s (OJP) Bureau of Justice Assistance (BJA) and the Office of Community Oriented Policing Services (COPS Office) together are making more than 220 awards to jurisdictions across the country to help make schools more secure. The awards, granted through three funding streams, will provide new technology for reporting systems and other threat deterrent measures and create school safety training and education programs for school administrators, staff, students, and first responders. This includes the support for existing crisis intervention teams and the creation of new ones.
- BJA’s STOP School Violence Threat Assessment and Technology Reporting Program will provide 68 awards valued at more than $19 million. This funding supports training to create and operate threat assessment and crisis intervention teams and to develop technology for local or regional anonymous reporting systems. This technology may be in the form of a mobile phone application, hotline, or website.
- The STOP School Violence Prevention and Mental Health Training Program, also managed by BJA, will provide training and education on preventing violence and effectively responding to related mental health crises. This program will fund 85 awards at nearly $28 million.
- The COPS Office School Violence Prevention Program (SVPP) will provide nearly $25 million to 91 jurisdictions for school safety measures including coordination with law enforcement, training for law enforcement to prevent student violence against others and self, target hardening measures, and technology for expedited notification of law enforcement during an emergency.
The grants are authorized by the STOP School Violence Act, which are intended to improve school security by helping students and teachers reduce exposure to risks, prevent acts of violence, and quickly recognize and respond to violent attacks.
The Department also announced that it has awarded more than $64 million to state agencies to improve the completeness, quality, and accessibility of the nation’s criminal record systems. These grants are administered by the Bureau of Justice Statistics, part of OJP. Approximately $43 million in funding will be administered through the National Criminal History Improvement Program (NCHIP), and nearly $21 million will be awarded under the National Instant Criminal Background Check System (NICS) Act Record Improvement Program. These grant programs help states automate and upgrade records accessed by the firearms background check system. This year, at the direction of the Attorney General, the Department prioritized funding for projects that improve accessibility of criminal history records, domestic violence convictions, and information on persons who are prohibited from possessing firearms for mental-health related reasons.
The Department is also investing over $1 million in research to better understand the factors behind mass shooting incidents. The grant awards, made by the Department’s National Institute of Justice (NIJ), part of OJP, support scientific investigations that will examine factors that contribute to mass violence, identify any patterns in mass shootings, analyze psychological and social life histories of mass shooters and community-level predictors of mass violence, and will examine firearm purchasing patterns of known mass shooters in order to create a risk prediction tool.
For additional information on today’s grant announcements visit www.bja.gov or www.cops.usdoj.gov.
NOTE: The breakdown of the STOP School Violence Grants can be found here: STOP School Violence Threat Assessment and Technology Reporting Program, STOP School Violence Prevention and Mental Health Training Program, and COPS Office School Violence Prevention Program
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Benjamin Joel Brooks Sentenced to Serve Ten Years in Prison for Armed Robbery of Morristown PharmacyRead the Press Release
GREENEVILLE, Tenn. – On October 2, 2018, Benjamin Joel Brooks, 40, of Newport, Tennessee, was sentenced by the Honorable R. Leon Jordan, U.S. District Judge, to serve ten years in federal prison. Upon his release from prison, he will be supervised by U.S. Probation for five years. Brooks pleaded guilty in March 2018 to armed robbery of a pharmacy and using, carrying and brandishing a firearm during the robbery.
In October 2017, Brooks entered the East End Pharmacy in Morristown, Tennessee, with his face and head covered, wearing a sweatshirt, and brandishing a small silver handgun. He demanded the pharmacy staff give him various opioid narcotics.
Officers with the Morristown Police Department and Hamblen County Sheriff’s Office arrived at the pharmacy within minutes of the robbery and set up a perimeter. A K9 officer helped apprehend Brooks, who was found a short distance away, hiding in a thicket of Kudzu vines along railroad tracks directly behind the pharmacy. His capture was recorded on an officer-worn body camera. The K9 recovered some of the clothing Brooks wore during the robbery. Some of the pills that were stolen from the pharmacy were also recovered.
Three pharmacy employees and one customer were present during the robbery. The pharmacist and a customer identified the handgun as a small silver pistol, which was later recovered by officers with the Morristown Police Department.
Randy Hurley, 47, of Newport, Tennessee, was charged with aiding and abetting Brooks in this robbery. He is set to enter a plea of guilty to these charges at 10:00 a.m., October 11, 2018, in U.S. District Court, Greeneville.
Agencies involved in this investigation included the Morristown Police Department, Bureau of Alcohol, Tobacco, Firearms and Explosives, and Hamblen County Sheriff’s Department. Assistant U.S. Attorney Robert M. Reeves represented the United States in court proceedings.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. Attorney General Jeff Sessions reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
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Ogleva Charles Mowell Sentenced to 70 Months for Child Pornography OffensesRead the Press Release
KNOXVILLE, Tenn. - On September 27, 2018, Ogleva Charles Mowell, of LaFollette, Tennessee, was sentenced by the Honorable Thomas A. Varlan, Chief U.S. District Judge, to serve 70 months in federal prison for distributing and possessing child pornography. Following his release from prison, Mowell will be supervised by the U.S. Probation Office for five years and required to register with the sex offender registry in any state in which he resides, works, or attends school.
In April 2018, Mowell pleaded guilty to federal charges stemming from an undercover investigation into the distribution of child pornography over the Internet. A search warrant was issued for Mowell’s residence and his computer was seized. A forensic examination of his computer revealed that Mowell had searched for child pornography on the Internet and saved images of child pornography on his computer. Mowell made his collection of child pornography available to others to download through the use of peer-to-peer software.
“The distribution of child pornography is a serious crime that perpetuates the victimization of children and fuels the demand for the production of more child pornography,” said J. Douglas Overbey, U.S. Attorney for the Eastern District of Tennessee. “Our office will continue to work with investigative agencies to build cases for successful prosecution of the offenders.”
This investigation was conducted by the Knoxville Police Department’s Internet Crimes Against Children Unit and the U.S. Department of Homeland Security, Homeland Security Investigations. Assistant U.S. Attorney Matthew Morris represented the United States in court proceedings.
This case was brought as part of Project Safe Childhood (PSC), a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section, PSC marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about PSC, please visit www.projectsafechildhood.gov.
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Sherry Ann Allen Sentenced to Serve 51 Months in Prison for Embezzlement and Tax EvasionRead the Press Release
GREENEVILLE, Tenn. – On September 25, 2018, Sherry Ann Allen, 49, of Johnson City, Tennessee, was sentenced by the Honorable J. Ronnie Greer, U.S. District Court Judge, to serve 51 months in federal prison, as a result of her June 2018 plea of guilty to theft by a credit union officer or employee and tax evasion. Upon her release from prison, Allen will be supervised by U.S. Probation for three years. She was also ordered to pay a total of $1,237,547.04 in restitution.
In November 2017, the Johnson City Police Department (JCPD) contacted members of the Greater Eastern Credit Union (credit union) management team after it received information regarding an abnormality in the payment to a vendor. JCPD provided the details and credit union personnel conducted an internal review of the transaction, which showed that Allen had paid a vendor and purposely and personally processed a transaction in which $10,000 was transferred to an account that she controlled. During their review, credit union personnel discovered additional transactions Allen processed in which funds were deposited into other accounts she controlled. The credit union personnel informed their Board of Directors that Allen was stealing money from the credit union and she was placed on indefinite suspension. The Board of Directors ordered that an accounting firm conduct a fraud examination. By this time, the FBI and Internal Revenue Service Criminal Investigation had joined the investigation.
The investigation revealed that Allen had embezzled $1,195,596 in calendar years 2011 to 2017. She used some of the stolen money for her personal benefit. In the beginning, she used the stolen money to pay her credit cards and later purchased an Infiniti and Ford truck for personal use. Allen and her husband also took a cruise and trips to Tucson, Arizona and Eastern Europe. Additionally, she purchased a timeshare in Orlando, Florida, a camper, clothes and jewelry.
Allen donated some of the stolen money to charitable causes. She took her church youth group on several trips, including missions to Ireland, Nicaragua, and Florida. She paid for Vacation Bible School items. She gave stolen money to people who needed groceries and purchased two vehicles for members of her church.
Allen did not report the embezzled and misapplied money as income on her joint tax returns in tax years 2011, 2012, 2013, 2014 2015 and 2016. In doing so, she and her spouse, prepared and filed, or caused to be prepared and filed false and fraudulent tax returns.
“The U.S. Attorney’s office will continue to prosecute individuals in positions of trust, who steal or misappropriate funds for their own personal use, when the cases are referred to our office,” said J. Douglas Overbey, U.S. Attorney for the Eastern District of Tennessee.
“The prosecution of individuals who intentionally conceal income and evade taxes is a vital element of the IRS' enforcement strategy,” said Matthew D. Line, Special Agent in Charge. “No matter the source of income, all income is taxable, including embezzled funds. When a bank executive, such as Ms. Allen, misuses their position, it violates the public trust and puts the financial stability of the institution at risk. IRS Criminal Investigation is committed to using our forensic accounting skills to help unravel complex fraud schemes, to investigate and prosecute individuals who attempt to enrich themselves by fraudulent means, and to help put a stop to this and other types of white collar crime."
"Solid partnerships in law enforcement are key to the success of our mission, said Troy Sowers, Special Agent in Charge of the FBI's Knoxville Field Office. The Johnson City Police Department and the IRS-Criminal Investigation agents worked tirelessly with us to help bring the accused to justice. I thank them for their efforts and look forward to working future cases."
Agencies involved in this investigation included the FBI, IRS-Criminal Investigation and Johnson City Police Department. Assistant U.S. Attorney Robert M. Reeves represented the United States in court proceedings.
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Knoxville Resident Sentenced to Ten Years in Federal Prison for Possessing Child PornographyRead the Press Release
KNOXVILLE, Tenn. – On September 24, 2018, Dean Alan Treadway, 71, of Knoxville, Tennessee, was sentenced by the Honorable Leon Jordan, Senior U.S. District Judge, to serve 120 months in prison for possessing child pornography. Upon his release from prison, Treadway will be supervised by U.S. Probation for life and be required to register as a sex offender. He will also forfeit property used to commit the offense.
Treadway pleaded guilty in February 2018 to possession of child pornography. According to documents on file with the U.S. District Court, an investigator with the Knoxville Police Department Internet Crimes Against Children Task Force (ICAC) received a lead from the National Center for Missing and Exploited Children (NCMEC) indicating that Treadway was involved in the exchange of child pornography. During the course of the investigation, ICAC Investigators learned that Treadway was a registered sex offender due to a 2006 conviction of possession of child pornography in United States District Court, Eastern District of Tennessee. The ICAC executed a federal search warrant at Treadway's residence, which led to the discovery of multiple computers and electronic devices that were later determined to contain images and videos of child pornography.
This investigation was conducted by the Knoxville Police Department ICAC in conjunction with the FBI, Knoxville Field Office. Assistant U.S. Attorney Bart Slabbekorn represented the United States in court proceedings.
This case was brought as part of Project Safe Childhood (PSC), a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section, PSC marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about PSC, please visit www.projectsafechildhood.gov.
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Knoxville Resident Convicted of Attempted Enticement of a Minor for Unlawful SexRead the Press Release
KNOXVILLE, Tenn.- On September 19, 2018, after a two-day trial before the Honorable Thomas A. Varlan, Chief U.S. District Judge, a jury found James Michael Hood, 54, of Knoxville, Tennessee, guilty of one count of attempted enticement of a minor for unlawful sex.
Sentencing has been set for February 13, 2019. Hood faces up to life in prison.
According to evidence revealed during the trial, in June 2017, Hood attempted to communicate with the 17-year-old female victim by friending her on Facebook. The victim blocked him after less than a day of him sending her inappropriate messages. The victim and her mother reported the inappropriate messages to law enforcement, who initiated an undercover operation posing as the young girl. Hood was provided with a phone number to use if he wanted to text the victim. Believing he was communicating with the young girl, within two minutes of receiving the number, he began texting her. Within 48 hours, he was sending her explicit sexual messages. Hood set up a meeting with the victim; however, instead of being met by the victim, he was met by law enforcement and arrested.
This investigation was conducted by the Knoxville Police Department Internet Crimes Against Children Task Force, University of Tennessee Police and U.S. Homeland Security Investigations. Assistant U.S. Attorney Jennifer Kolman represented the United States at trial.
This case was brought as part of Project Safe Childhood (PSC), a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section, PSC marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about PSC, please visit www.projectsafechildhood.gov.
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Roger Dale Williams Sentenced to 63 Months in Prison for Phony Investment SchemeRead the Press Release
KNOXVILLE, Tenn.- On September 13, 2018, the Honorable Pamela L. Reeves, U.S. District Judge, sentenced Roger Dale Williams, 52, of Shelbyville, Kentucky, to serve 63 months in prison for conducting a scheme to defraud investors and obstructing the administration of federal tax laws. Williams was also ordered to pay $1,373,361.96 in restitution to victims that lost money as a result of the scheme.
Williams pleaded guilty in May 2018 to federal mail fraud and tax charges stemming from his scheme to defraud victims who believed that they were investing money in an “investment club” and, later, in church bonds. He began offering bogus investment opportunities in 2001 as part of membership in an “investment club,” which included opportunities to invest in stock purchases, business start-ups, and bonds. Many of his victims were elderly. In order to perpetuate the scheme, he also provided victims with false IRS forms pertaining to their purported investments.
More recently, Williams extended his fraud scheme to members of the King Branch Road Church of Christ in Pigeon Forge, Tennessee, where he had become a pastor. He solicited funds for the purchase of purported church bonds and claimed the funds would be used for the benefit of the church, particularly to pay off the church’s debt. However, Williams diverted the funds raised for the fake church bonds to his own personal use and benefit, as well as used the funds to make payments to investment club members to make it appear that their “investments” were generating income. Williams also convinced several victims to transfer their Individual Retirement Accounts into bogus investments under his control, and then siphoned off the funds for his own use and benefit, including paying household bills, vehicle payments and taking trips.
“Protecting seniors is a top priority of the U.S. Attorney’s Office for the Eastern District of Tennessee. Victimization of our elderly citizens, by either abuse or financial exploitation, will not be tolerated and we will continue to prosecute vigorously anyone who commits these crimes,” said U.S. Attorney J. Douglas Overbey.
“For nearly 15 years, Roger Williams used every opportunity, including his position as a pastor, to victimize others for his personal gain. He preyed on the elderly and vulnerable, and obstructed the IRS in order to further his scheme. Justice was served today, as Williams has been held accountable for his actions,” said IRS, Criminal Investigation Special Agent in Charge Matthew D. Line. “We will continue to pursue those who defraud American taxpayers.”
“Unfortunately, these Ponzi schemes, driven by greed, are commonplace,” said David McGinnis, Inspector in Charge for the Charlotte Division. “Investors must not simply rely upon a reputation or relationship when entrusting their funds to others. They should verify the qualifications of those to whom they consider entrusting their funds, especially if there are claims of guaranteed returns or that the investments will outperform the market.”
Elder fraud complaints may be filed with the FTC at www.ftccomplaintassistant.gov or at 877-FTC-HELP. The Department of Justice provides a variety of resources relating to elder fraud victimization through its Office of Victims of Crime, which can be reached at www.ovc.gov.
This investigation was conducted by the Internal Revenue Service - Criminal Investigation and the U.S. Postal Inspection Service. Assistant U.S. Attorney Matthew Morris represented the United States.
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Southeastern Provision Owner James Brantley Pleads Guilty to Federal InformationRead the Press Release
GREENEVILLE, Tenn. – On September 12, 2018, James Brantley, 61, of Bean Station, Tennessee, pleaded guilty before the Honorable J. Ronnie Greer, U.S. District Judge, to tax fraud, wire fraud, and employment of unauthorized illegal aliens. Brantley is the owner of Southeastern Provision, LLC (Southeastern Provision), a slaughterhouse and meatpacking plant located in Bean Station, Tennessee.
Brantley faces up to five years in prison, a $250,000 fine, and three years of supervised release for the tax counts. He faces a maximum of 20 years in prison, a $250,000 fine, and three years of supervised release on the wire fraud charge. Finally, he faces up to six months in prison and a fine of not more than $3,000 per unauthorized alien on the employment of unauthorized alien charge. Brantley also agreed to pay restitution to the United States government in the total amount of $1,423,588 on or before the date of his sentencing. Sentencing has been set for 1:30 p.m., February 4, 2019, in U.S. District Court.
A detailed account of Brantley’s scheme is contained in his plea agreement on file with the U.S. District Court and available to the public. According to the plea agreement, beginning in 1988 and continuing through April 2018, Brantley knowingly hired, or caused others employed by him to hire, unauthorized aliens to work as employees at Southeastern Provision. The unauthorized aliens were knowingly hired to reduce Brantley and Southeastern Provision’s FICA tax obligations, unemployment insurance premiums, unemployment tax obligations, and workers’ compensation insurance premiums.
In April 2018, a federal search warrant was executed at Southeastern Provision, during which agents discovered at least 104 unauthorized aliens employed there. Evidence showed that Brantley had previously reported to the Internal Revenue Service (IRS) that he had only 44 wage-earning employees. Further investigation revealed that he paid the unauthorized aliens in cash at a rate of $8-$10 per hour. The employees were also often asked to work overtime at their standard rate of pay, rather than the “time and a half” required by the Fair Labor Standards Act for overtime work.
“The April 2018 raid on Southeastern Provision came after a lengthy investigation by the Internal Revenue Service-Criminal Investigations and Homeland Security Investigations and resulted in the discovery of the unlawful employment of many illegal aliens and the seizure of voluminous records which documented the operation of Mr. Brantley’s wire and tax fraud schemes,” said U.S. Attorney J. Douglas Overbey. “The agents and prosecutors working on this case have diligently poured over the records and evidence since the raid to ensure that charging Mr. Brantley would result in bringing him to justice and ultimately his conviction. With this guilty plea, that has been accomplished.”
“As ICE Homeland Security Investigations has stated repeatedly – this agency is equally focused in its worksite enforcement efforts on the foreign nationals who unlawfully seek employment as well as the employers who knowingly hire them. This case was a criminal investigation from day one, not simply an immigration enforcement action, and today’s guilty plea clearly illustrates HSI’s dual focus on the issue,” said ICE Homeland Security Investigations New Orleans Special Agent in Charge Jere T. Miles. “Tax fraud is an outrage to hard-working Americans directly harmed when criminals cheat their obligation to society by failing to pay their fair share, and the employment of illegal workers also poses a serious threat to public safety as the use of fraudulent identity documents exposes Americans to potential identity theft and other financial harm.”
"Tax violations have been erroneously referred to as victimless crimes, but it's the honest law-abiding citizens that are harmed when someone tries to manipulate our nation's tax system for their personal gain," said Matthew D. Line, Special Agent in Charge. "Business owners like Mr. Brantley have a responsibility to withhold income taxes for their employees and then remit those taxes to the Internal Revenue Service. Failure to do so not only results in the loss of tax revenue to the United States government, but it also harms employees who lose future social security or Medicare benefits and creates an unfair business advantage over those employers who follow the law. Investigating cases of employment tax fraud is an investigative priority for IRS Criminal Investigation.”
Being neither a flight risk nor posing a danger to the community, Mr. Brantley was released on a recognizance bond pending sentencing.
This case was investigated by IRS-Criminal Investigation, U.S. Homeland Security Investigations, and Tennessee Highway Patrol. Assistant U.S. Attorneys TJ Harker and Meghan Gomez represented the United States in court proceedings.
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Ricardo Viera and Luis Raul Hernandez-Ugando Sentenced to Serve Time in Federal Prison for Wire Fraud and Aggravated Identity TheftRead the Press Release
GREENEVILLE, Tenn. – On September 11, 2018, two co-conspirators in a wire fraud and aggravated identity theft conspiracy involving credit card skimmers were sentenced by the Honorable Leon Jordan, U.S. District Judge, to serve time in federal prison. Ricardo Viera, 49, of Homestead, Florida, was sentenced, to serve a total of 40 months. Luis Raul Hernandez-Ugando, 37, of Coral Gables, Florida, was sentenced to serve a total of 48 months. Upon their release from prison, each will be supervised by U.S. Probation for three years. Additionally, both Viera and Hernandez-Ugando were ordered to pay restitution in the amount of $1943.76.
In May 2018, Viera and Hernandez-Ugando each pleaded guilty to three counts of an August 2017 federal indictment. Details of the scheme are outlined in the plea agreements on file with the U.S. District Court. According to these plea agreements, Viera and Hernandez-Ugando, installed “skimmers” on gas pumps at various gas stations in northeast Tennessee to steal hundreds of credit card and debit card account numbers. They then re-encoded that stolen account information on gift cards, effectively changing the gift cards into stolen credit cards. After re-encoding the gift cards with the stolen credit card and debit card account information, Viera and Hernandez-Ugando used the newly encoded cards to make purchases at various retail outlets in Greeneville, Johnson City, Kingsport, Morristown, Elizabethton, and Rogersville, Tennessee and elsewhere. Viera and Ugando also admitted to engaging in these same schemes in other states throughout the country, including Virginia, Ohio, Nebraska, and Minnesota.
On July 10, 2017, police approached Viera and Hernandez-Ugando while they were swiping unlawfully re-encoded credit cards at a Walmart in Kingsport, Tennessee. They arrested Viera, who was in possession of numerous re-encoded credit cards. Hernandez-Ugando was also arrested after a pursuit.
This investigation was conducted by the U.S. Secret Service and Kingsport Police Department. Assistant U.S. Attorney TJ Harker represented the United States in court proceedings.
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Craig Fine Sentenced to 153 Months in Federal Prison for Armed Robbery of First Tennessee BankRead the Press Release
KNOXVILLE, Tenn. – On September 10, 2018, Craig, Fine, 48, of Knoxville, Tennessee, was sentenced by the Honorable Thomas Phillips, Senior U.S. District Judge, to serve 153 months in federal prison for armed bank robbery and brandishing and discharging a firearm during a crime of violence. Upon his release from prison, he will be supervised by U.S. Probation for three years. Fine was also ordered to pay $10,417.44 in restitution.
Details of the robbery can be found in the criminal complaint and supporting affidavit on file with the U.S. District Court. According to the affidavit, in March 2018, Fine entered the First Tennessee Bank on Merchants Drive in Knoxville with a firearm and demanded money from the bank teller. During the incident, Fine discharged a firearm. Additionally, he pointed the firearm directly at the victim teller and customers inside the bank. Before leaving the bank, Fine also claimed to have a pipe bomb.
This case was the result of an investigation by the FBI Safe Streets Task Force, which consists of FBI Special Agents, Knox County Sheriff’s Deputies, and Knoxville Police Department Officers. Assistant U.S. Attorneys Kelly A. Norris and Cynthia Davidson represented the United States in court proceedings.
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Corrie Gillispie, a/k/a "Bigg Tyme", Sentenced to Serve Thirty-Two Years in Prison for Kidnaping and Commercial Sex TraffickingRead the Press Release
CHATTANOOGA, Tenn. – On September 7, 2018, Corrie Gillispie, 42, of Chattanooga, Tennessee, was sentenced by the Honorable Travis R. McDonough, U.S. District Court Judge, to serve 396 months in federal prison.
After a seven-day jury trial in April 2018, Gillispie was convicted of kidnaping, two counts of commercial sex trafficking, transportation for prostitution, and money laundering. According to documents on file with U.S. District Court and evidence produced during the trial, Gillispie romantically pursued a victim and convinced her to travel to another state to meet him. When the victim arrived, Gillispie informed her that he was a pimp and restrained and assaulted the victim when she attempted to leave his vehicle. The victim was ultimately held against her will by Gillispie and forced to engage in commercial sex, from which he benefitted financially, through threats of force, fraud and coercion.
During the trial and the sentencing hearing, Judge McDonough found Gillispie acted disrespectfully with an intention to obstruct the administration of justice and sentenced Gillispie to an additional 12 months in prison for contempt.
Agencies involved in this investigation included U.S. Homeland Security Investigations, Chattanooga Police Department, FBI, Hamilton County Sheriff’s Office, and Tennessee Bureau of Investigation. Assistant U.S. Attorney Jay Woods represented the United States in court proceedings.
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Graham Mitchell Clark, A/K/A “Molly Poppins” Pleads Guilty to Drug Trafficking ChargesRead the Press Release
CHATTANOOGA, Tenn. – On August 29, 2018, Graham Mitchell Clark, a/k/a “Molly Poppins,” pleaded guilty before the Honorable Susan Lee, U.S. Magistrate Judge, to possessing with the intent to distribute MDMA and LSD at the Bonnaroo Music Festival (Bonnaroo), in Manchester, Tennessee.
Sentencing is set for November 30, 2018, in U.S District Court, Chattanooga. Clark faces a federal prison term of up to 40 years and at least four years supervision by U.S. Probation upon his release from prison.
According to documents on file with the U.S. District Court, agents with the Tennessee Bureau of Investigation (TBI) conducted an undercover drug buy from Clark at the 2017 Bonnaroo. At the time, Clark was known to federal law enforcement as an individual who distributed drugs at various music festivals under the trade name “Molly Poppins.” After his arrest, officers inventoried his car and found approximately a half-pound of MDMA and over five gross grams of LSD. In his plea agreement, Clark admitted that he used cryptocurrency to purchase the drugs via the “dark web.”
This investigation was conducted by the TBI, FBI, U.S. Postal Inspection Service, and Manchester Police Department. Assistant U.S. Attorney Kyle Wilson represented the United States in court proceedings.
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Amaurys Mendez Campanon Sentenced to Serve 57 Months in Federal Prison for Wire Fraud and Aggravated Identity TheftRead the Press Release
GREENEVILLE, Tenn. – On August 29, 2018, Amaurys Mendez Campanon, 40, of Miami, Florida, was sentenced by the Honorable J. Ronnie Greer, U.S. District Judge, to serve a total of 57 months in federal prison for his role in a wire fraud and aggravated identity theft conspiracy involving credit card skimmers. Upon his release from prison, he will be supervised by U.S. Probation for three years. Campanon was also ordered to pay restitution in the amount of $21,114.84.
In April 2018, Campanon pleaded guilty to three counts of a September 2017 federal indictment. Details of the scheme are outlined in his plea agreement on file with U.S. District Court. According to the plea agreement, between August 7, 2017 and August 10, 2017, Campanon and Odemnis Prats Leiva purchased credit and debit card account information pertaining to numerous persons without their knowledge. They used the fraudulently obtained information to re-encode unloaded gift cards, which they shoplifted from various retail establishments. The re-encoded cards – which were, in effect, converted credit cards bearing the account information of the victims - were then used to purchase loaded gift cards and other consumer items at various retail establishments across east Tennessee and elsewhere.
As a result of an ongoing investigation by law enforcement, Campanon and Leiva were arrested in Rogersville, Tennessee, on August 10, 2017. At the time of their arrest, Leiva was in possession of nine unlawfully re-encoded devices, $7,020.25 in cash, numerous gift cards, all of which he had obtained as part of the conspiracy, as well as other items used in furtherance of their conspiracy. Leiva also pleaded guilty to these charges and was sentenced in July 2018 to serve 54 months in prison.
This investigation was conducted by the U.S. Secret Service, Johnson City Police Department and Rogersville Police Department. Assistant U.S. Attorney TJ Harker represented the United States in court proceedings.
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Chris Jones and Kezia Dover Sentenced to Prison for Their Roles in Johnson City Eastman Credit Union RobberyRead the Press Release
GREENEVILLE, Tenn. – Two individuals have been sentenced for their roles in the April 2016 robbery of the Eastman Credit Union (credit union) in Johnson City, Tennessee. On August 16, 2018, Kezia Dover, 37, of Johnson City, Tennessee, was sentenced to serve 60 months in prison. Chris Jones, 29, of Johnson City, Tennessee, was sentenced on August 27, 2018, to serve 98 months in federal prison.
In March 2017, a federal grand jury charged both Dover and Jones with conspiracy to commit bank robbery and bank robbery. Jones was also charged with being a felon in possession of a firearm and ammunition. Dover pleaded guilty in April 2018 to one count of conspiracy to commit bank robbery. Jones also pleaded guilty in April 2018 to conspiracy to commit bank robbery, bank robbery and being a felon in possession of a firearm.
According to their plea agreements on file with U.S. District Court, Dover and Jones conspired to rob the credit union and split the proceeds. Dover drove Jones to the credit union in a borrowed vehicle and parked in a nearby parking lot. Jones entered the credit union and gave the teller a note that said, “got BoomB NO Cop’s No Dye PACK’s Put MONey in Bag.” He subsequently put a white bag on the counter, in which the teller placed money and handed it back to him. Jones exited the building and departed in the vehicle that Dover was waiting in to drive them away.
On the day following the credit union robbery, Jones took possession of a Smith & Wesson 9mm semi-automatic pistol and ammunition, knowing he was not permitted to possess a firearm because of a prior felony conviction. The following day Dover and Jones were involved in a high-speed pursuit by the police in which Dover lost control and crashed the vehicle that she and Jones occupied. After the crash, Jones ran from the passenger side of the vehicle, carrying the firearm and ammunition. He was pursued on foot by the police and eventually apprehended, still in possession of the firearm and ammunition.
These charges and subsequent sentencings were the result of an investigation by the FBI, Tennessee Bureau of Investigation and Johnson City Police Department. Assistant U.S. Attorney TJ Harker represented the United States in court proceedings.
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Ricky James Bennefield Sentenced to Serve Ten Years in Prison for Conspiracy to Commit Wire and Mail Fraud,Theft of Government Property, and Aggravated Identity TheftRead the Press Release
KNOXVILLE, Tenn. – On August 22, 2018, Ricky James Bennefield, 53, of Pigeon Forge, Tennessee, was sentenced by the Honorable Thomas W. Phillips, U.S. District Judge, to serve 96 months for mail and wire fraud and theft of government money, followed by a consecutive sentence of 24 months for aggravated identity theft, for a total of 120 months in federal prison. Additionally, his federal sentence will run consecutive to a four-year sentence Bennefield is currently serving in the state system on unrelated charges.
Ricky Bennefield pleaded guilty in March 2018 to a three-count indictment charging him with mail and wire fraud, theft of government money and aggravated identity theft. Documents on file with U.S. District Court detail the conspiracy committed by Bennefield and his wife, Erika Nicole Bennefield. Erika Bennefield previously pleaded guilty to one count of aggravated identity theft and was sentenced to serve two years in federal prison.
During a December 2016 state investigation of Ricky Bennefield, on unrelated charges, local agents uncovered evidence that he engaged in theft of funds from the Social Security Administration (SSA) and committed aggravated identity theft involving his father-in-law. A subsequent investigation by agents with the SSA Office of Inspector General revealed that the victim had passed away on a family trip in 2010 and Ricky Bennefield buried his body along the side of the road. After driving away for approximately an hour and a half, with his wife and minor children in the car, he returned to the location where the body was buried, removed it, placed it back in the car, and drove to another location, where he reburied the body. This was all done to conceal the victim’s death so that Ricky and Erika Bennefield could receive his Social Security benefits. From approximately June 2010 through December 2016, the Bennefields continued to fraudulently receive Social Security benefits along with a monthly pension, also belonging to the victim, and deposited the funds in their own accounts or cashed the checks for their personal use.
In handing down the lengthy sentence, Judge Phillips noted that Ricky Bennefield’s actions “were disturbing and beyond imagination,” adding that they were “truly outrageous.”
Agencies involved in this investigation included the SSA Office of Inspector General, Gatlinburg Police Department and Pigeon Forge Police Department. Assistant U.S. Attorney Jennifer Kolman represented the United States in court proceedings.
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Donnie Taylor Sentenced to Fourteen Years in Prison for Distribution of Child PornographyRead the Press Release
GREENEVILLE, Tenn. – On August 20, 2018, Donnie Taylor, 44, of Bean Station, Tennessee, was sentenced by the Honorable J. Ronnie Greer, U.S. District Judge, to serve 168 months in federal prison, followed by a lifetime of supervised release, for distribution of child pornography in east Tennessee.
According to his plea agreement on file with U.S. District Court, Taylor admitted to sending multiple images of child pornography via social media. A special agent with the Department of Homeland Security logged into a social media account to interact and identify potential possessors and distributors of child pornography. The agent encountered Taylor and began a private message conversation. Taylor sent multiple private messages containing child pornography to the agent. In addition, agents determined that Taylor distributed child pornography to other persons on social media.
This investigation was the product of a partnership between the U.S. Department of Homeland Security, Knoxville Police Department’s Internet Crimes Against Children task force and Tennessee Highway Patrol. Assistant U.S. Attorney Meghan Gomez represented the United States in court proceedings.
This case was brought as part of Project Safe Childhood (PSC), a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section, PSC marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about PSC, please visit www.projectsafechildhood.gov.
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It’s Time to Restore a Valuable Tool to Prosecutors by Fixing the ACCARead the Press Release
Violent crime rates in our country tripled from 1964 to 1980. Robbery tripled, murder doubled, and aggravated assault nearly tripled. This was an alarming time for communities across our nation.
To fight back, Congress passed the Armed Career Criminal Act (ACCA) in 1984, giving federal prosecutors a powerful new tool to deal with the growing rate of violent crime. The ACCA gave prosecutors the ability to take the most violent criminals off the streets by requiring courts to impose a minimum 15-year sentence for felons who were caught with a firearm and had a criminal history of three or more violent felonies.
Federal prosecutors across the county aggressively used this new tool, charging and convicting violent offenders and taking them out of the communities they were terrifying. By 1992, violent crime had begun a historic decline. From 1991 to 2014, violent crime and murder fell by half, aggravated assault fell by 47 percent, and robbery fell by nearly two thirds.
While some debate how much of this dramatic decline was caused by the enactment of the ACCA, the United State Sentencing Guidelines (when their application was mandatory across the country), and a number of other things, there really is no doubt the most significant factor in the decline in the rate of violent crime was due to keeping the most violent criminals off the streets longer.
In 2015—after 30 years on the books—a critically important part of the ACCA was struck down by the Supreme Court in Johnson v. United States as being vague. Lawyers, judges, and scholars can disagree about whether the Court got it right, but one thing not up for reasonable debate is the dire fallout resulting from the Johnson decision.
Invalidating a portion of the ACCA nullified many violent offenders’ sentences, causing their release to be earlier than intended. This resulted in real consequences across the nation and has led directly to an increase in crime. The defendants released as a result of this ruling have already victimized hundreds of persons: 10 defendants were arrested for murder, 14 for kidnapping, 11 for sexual assault, 37 for robbery, 218 for assault, 56 for burglary, 156 for larceny, and 13 for stolen cars. In addition, 53 defendants were re-arrested for drunk driving, 81 defendants went back to drug trafficking, and 166 were re-arrested for other drug charges. Ironically, 100 defendants were also re-arrested for weapons offenses.
In the Eastern District of Tennessee, at least 37 defendants were granted relief in light of the Johnson ruling. Twenty-seven have already been released from prison. Of those, at least 14—more than half—have already had their terms of supervised release revoked or modified due to noncompliance. Three of the 14 referenced above have actually had their supervised release revoked twice and are back in jail today.
Placing career violent criminals back on the street before their time is served should be unacceptable to everyone. More than 1,400 criminals—each convicted of three felonies—have been let out of jail since the Court ruling. So far, more than 600 have been arrested again. On average, these 600 criminals have been arrested, rearrested, or reoffended three times since 2015. A majority of those who have been out of prison for two years have already been arrested again.
While these numbers are shocking, experience tells us they are likely an underrepresentation of the illegal activity committed by these criminals. In the short three years since the ruling by the Supreme Court, released violent felons have already needlessly victimized hundreds of Americans. How many more will be victimized this year, or the next, or the next? As the top federal law enforcement official in our District, I shudder to think we will only see history repeat itself again and again.
Thankfully, the problem is solvable. Congress can fix the problem created by the Johnson decision. Congress has the ability to amend the ACCA so that prosecutors can continue to keep the most violent offenders behind bars and out of our neighborhoods and communities. It’s not for me to say how Congress should go about this fix—I understand that there are many options on the table. But, in my opinion, one more victim is one too many.
J. Douglas Overbey, United States Attorney
Justice Department, DEA Propose Significant Opioid Manufacturing Reduction in 2019Read the Press Release
WASHINGTON -- The Department of Justice and U.S. Drug Enforcement Administration (DEA) have proposed a reduction for controlled substances that may be manufactured in the U.S. next year. Consistent with President Trump’s “Safe Prescribing Plan” that seeks to “cut nationwide opioid prescription fills by one-third within three years,” the proposal decreases manufacturing quotas for the most six frequently misused opioids for 2019 by an average ten percent as compared to the 2018 amount. The Notice of Proposed Rulemaking (NPRM) marks the third straight year of proposed reductions, which help reduce the amount of drugs potentially diverted for trafficking and used to facilitate addiction.
On July 11, 2018, the Justice Department announced that DEA was issuing a final rule amending its regulations to improve the agency’s ability consider the likelihood of whether a drug can be diverted for abuse when it sets annual opioid production limits. The final rule also promotes greater involvement from state attorneys general, and today’s proposed reduction will be sent to those offices.
In setting the aggregate production quote (APQ), DEA considers data from many sources, including estimates of the legitimate medical need from the Food and Drug Administration; estimates of retail consumption based on prescriptions dispensed; manufacturers’ disposition history and forecasts; data from DEA’s own internal system for tracking controlled substance transactions; and past quota histories.
The DEA has proposed to reduce more commonly prescribed schedule II opioids, including oxycodone, hydrocodone, oxymorphone, hydromorphone, morphine, and fentanyl.
Ultimately, revised limits will encourage vigilance on the part of opioid manufacturers, help DEA respond to the changing drug threat environment, and protect the American people from potential addictive drugs while ensuring that the country has enough opioids for legitimate medical, scientific, research, and industrial needs.
"The opioid epidemic that we are facing today is the worst drug crisis in American history," Attorney General Jeff Sessions said. "President Trump has set the ambitious goal of reducing opioid prescription rates by one-third in three years. We embrace that goal and are resolutely committed to reaching it. According to the National Prescription Audit, we have already made significant progress in reducing prescription rates over the past year. Cutting opioid production quotas by an average of ten percent next year will help us continue that progress and make it harder to divert these drugs for abuse. The American people can be confident that federal law enforcement and the Trump administration are taking action to protect them from dangerous drugs. These smarter limits bring us one big step closer to President Trump's goal of finally ending this unprecedented crisis. I congratulate Acting Administrator Uttam Dhillon and his team for taking action.”
“We’ve lost too many lives to the opioid epidemic and families and communities suffer tragic consequences every day,” said DEA Acting Administrator Uttam Dhillon. “This significant drop in prescriptions by doctors and DEA’s production quota adjustment will continue to reduce the amount of drugs available for illicit diversion and abuse while ensuring that patients will continue to have access to proper medicine.”
“The U.S. Attorney’s Office for the Eastern District of Tennessee fully supports the Department’s goal to reduce opioid manufacturing rates in 2019. Our communities are currently facing the deadliest drug crisis in American history and Tennessee has already been established as an acute ‘hot spot’ for prescription opioid abuse and opioid overdose deaths,” said U.S. Attorney J. Douglas Overbey. “Reducing the availability of powerfully addictive prescription opioids will help our efforts to combat this growing opioid addiction crisis and save lives,” added U.S. Attorney Overbey.
Once the aggregate quota is set, DEA allocates individual manufacturing and procurement quotas to those manufacturers that apply for them. DEA may revise a company’s quota at any time during the year if change is warranted due to increased or decreased sales or exports, new manufacturers entering the market, new product development, or product recalls.
When Congress passed the Controlled Substances Act, the quota system was intended to reduce or eliminate diversion from “legitimate channels of trade” by controlling the quantities of the basic ingredients needed for the manufacture of controlled substances.
The Proposed Aggregate Production Quotas for schedule I and II controlled substances published in the Federal Register reflects the total amount of controlled substances necessary to meet the country’s medical, scientific, research, industrial, and export needs for the year and for the establishment and maintenance of reserve stocks. DEA establishes an APQ for more than 250 schedule I and II controlled substances annually.
In 2016, the Centers for Disease Control and Prevention issued guidelines to practitioners recommending a reduction in the prescribing of opioid medications for chronic pain. DEA and its federal partners have increased efforts in the last several years to educate practitioners, pharmacists, manufacturers, distributors, and the public about the dangers associated with the misuse of opioid medications and the importance of proper prescribing.
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Physician and Wife Pay $428,000 to Settle False Claims Act Allegations for Billing Government Programs for Unapproved DrugsRead the Press Release
CHATTANOOGA, Tenn. – U.S. Attorney J. Douglas Overbey announced today that Dr. Donald Chamberlain and Karen Chamberlain have paid $428,700, to resolve state and federal False Claims Act allegations. It is alleged that from January 7, 2009 through May 2, 2012, their medical practice billed Medicare, Tennessee Medicaid (TennCare), and the Federal Employees Health Benefit Program (FEHBP) for foreign-sourced anticancer drugs not approved by the U.S. Food and Drug Administration (FDA) for marketing in the United States. Dr. Chamberlain owned and operated Chattanooga Gyn-Oncology, P.C., located in Chattanooga, Tennessee. Mrs. Chamberlain managed Dr. Chamberlain’s medical practice since the time of its inception.
The United States alleged that the unapproved drugs the Chamberlains provided to patients and billed to Medicare, TennCare, and FEHBP were not reimbursable under those programs. The United States further alleged that the Chamberlains purchased unapproved drugs because they were less expensive than the drugs approved by FDA for marketing in the United States. Thus, the Chamberlains allegedly profited by administering the cheaper unapproved drugs.
“Administering oncology drugs manufactured in other countries and not approved by the FDA, risks the safety of our citizens,” said U.S. Attorney J. Douglas Overbey. “We will continue to pursue aggressively, medical providers who improperly put their own financial interests ahead of the safety of their patients and who ignore rules instituted to protect the taxpayer funded healthcare system.”
This investigation was a coordinated effort by the U.S. Attorney’s Office for the Eastern District of Tennessee, U.S. Department of Health and Human Services Office of Inspector General, U.S. Food and Drug Administration Office of Criminal Investigations, U.S. Office of Personnel Management, the Knoxville Division of the FBI, and the Tennessee Attorney General’s Office. The United States was represented by Assistant U.S. Attorney Jeremy Dykes.
The claims settled by this agreement are allegations only; there has been no determination of liability.
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Former CEO of Defense Contractor, Wellco Enterprises, Inc., Sentenced to 41 Months in Federal Prison for “Made in the USA” Marketing and Contract FraudRead the Press Release
GREENEVILLE, Tenn. – On August 6, 2018, the former President and Chief Executive Officer of Wellco Enterprises, Inc. (Wellco), and Tactical Holdings Operations, Inc. (Tactical Holdings), Vincent Lee Ferguson, 66, of Knoxville, Tennessee, was sentenced by the Honorable J. Ronnie Greer, U.S. District Judge, to serve 41 months in federal prison for his role in a wire fraud conspiracy.
Wellco’s former Senior Vice President of Sales, Matthew Lee Ferguson, 41, of Geneva, Illinois, and former Director of Marketing and Communications, Kerry Joseph Ferguson, 36, of Houston, Texas, were previously sentenced in June 2018 to each serve six months in federal prison for the same crime. There is no parole in the federal system.
Wellco was a leading manufacturer and supplier of military footwear to the U.S. Department of Defense (DoD) and to civilian customers for over 70 years. From 2006 through 2012, DoD alone paid in excess of $138 million to Wellco for the supply of combat boots. From December 2008 through August 2012, CEO Vincent Lee Ferguson conspired with his executive team to import military-style boots that were made in China into the U.S. and then deceptively market and sell those boots to DoD, government contractors, and the general public as “Made in the USA” and as compliant with the Berry Amendment and the Trade Agreements Act (TAA). The company sold over $8.1 million in fraudulent boots.
To conceal the fraud, the conspirators required the Chinese manufacturing facility to include “USA” on labels of boot uppers. After two shipments of these deceptively marked boots were seized by the U.S. Department of Homeland Security’s Customs and Border Protection, the conspirators ordered the Chinese facility to stitch tear-away “Made in China” labels in Wellco boot uppers. After importation, the conspirators instructed Wellco factory workers in Morristown, Tennessee, to tear out the “Made in China” tags prior to shipping the boots to government and commercial purchasers.
“The U.S. Attorney’s Office will prosecute aggressively, dishonest companies and individuals who take advantage of the United States, and potentially put our military men and women in danger, by fraudulently selling them counterfeit equipment which does not meet the standards set by the Berry Amendment and the TAA,” said U.S. Attorney J. Douglas Overbey.
John F. Khin, Special Agent in Charge, Southeast Field Office, Defense Criminal Investigative Service (DCIS) said, “While the United States continues to combat enemies foreign and domestic, corrupt individuals attempt to take advantage of our service members and exploit our Defense Department’s supply chain. DCIS investigations relentlessly pursue allegations of fraud, waste and abuse. This sentencing is one of countless examples of the impact DCIS and its law enforcement partners have to aggressively investigate these crimes and prosecute those responsible to the fullest extent of the law.”
“Ensuring the authenticity of the products within the military’s supply chain is of paramount importance to Homeland Security Investigations (HSI),” said Assistant Special Agent in Charge Robert Hammer, who oversees HSI’s operations in Tennessee. “Falsely selling our military millions of dollars of combat boots by saying they were ‘Made in the USA’ when they are actually Chinese-knockoffs not only defrauds the government, but it also defrauds the American soldier. Our soldiers rely on their equipment from their guns to their boots to protect this country and counterfeit products could fail at a moment when they need them the most.”
“The General Services Administration (GSA) Office of Inspector General will continue to work with our law enforcement partners to aggressively investigate contractors who fraudulently circumvent the federal procurement process,” said Special Agent in Charge, Floyd Martinez.
This case was investigated by HSI, DCIS, Air Force Office of Special Investigations, GSA Office of Inspector General, and Defense Contract Audit Agency. Assistant U.S. Attorneys David L. Gunn and Timothy Harker represented the United States in court proceedings.
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Bradley Gene Romero Sentenced to Serve 19 Years in Federal Prison on Methamphetamine Conspiracy and Firearm ChargesRead the Press Release
GREENEVILLE, Tenn. – On August 7, 2018, Bradley Gene Romero, 32, of Newport, Tennessee, was sentenced by the Honorable R. Leon Jordan, U.S. District Judge, to serve 228 months in federal prison for his role in a significant methamphetamine (meth) conspiracy and for possessing a firearm in furtherance of his drug trafficking.
According to the plea agreement on file with the U.S. District Court, Romero admitted that he was responsible for conspiring to distribute at least 500 grams, but less than 1.5 kilograms, of meth. He was arrested in September 2017 at a motel in White Pine, Tennessee, with co-defendant Amanda Cureton, 34, of Newport, Tennessee, after a search of the room uncovered a quantity of meth and a firearm. An additional quantity of meth was found hidden within the person of Romero after his arrival at the jail.
A search warrant was obtained and executed on the contents of Romero’s cell phone. Three clear photographs of Romero holding a firearm were found as well as a photo of Romero holding up a large amount of cash. Three other photographs show varying quantities of meth in Romero’s hands. One other photograph showed meth in various stages of the distribution process.
Others who were previously sentenced in this meth trafficking conspiracy include Randall James Stephens, 34, of Cosby, Tennessee, who was sentenced to 100 months; Christopher Justin Mixon, 33, of Parrottsville, Tennessee, who was sentenced to 110 months; Larry Michael Allison, 37, of Newport, Tennessee, who was sentenced to 98 months; and Taylor Denee Gudger, 24, of Newport, Tennessee, who was sentenced to 168 months. Cureton’s sentencing hearing is set in September 2018.
Law enforcement agencies participating in the investigation included the FBI, Bureau of Alcohol, Tobacco, Firearms, and Explosives, Hamblen County Sheriff’s Office, Jefferson County Sheriff’s Office, White Pine Police Department, Tennessee Bureau of Investigation, Tennessee National Guard Counter Drug Task Force, Fourth District Judicial Drug Task Force, Cocke County Sheriff’s Office and the Newport Police Department. Assistant U.S. Attorney Wayne Taylor represented the United States.
This case was a result of the Department of Justice’s Organized Crime and Drug Enforcement Task Force (OCDETF) program, the centerpiece of the Department of Justice’s drug supply reduction strategy. OCDETF was established in 1982 to conduct comprehensive, multi-level attacks on major drug trafficking and money laundering organizations. Today, OCDETF combines the resources and expertise of its member federal agencies in cooperation with state and local law enforcement. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.
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Michael J.W. Potter Sentenced to Life in Prison for Conspiring to Distribute MethamphetamineRead the Press Release
GREENEVILLE, Tenn.- On August 1, 2018, Michael J.W. Potter, 36, of Kingsport, Tennessee, was sentenced by the Honorable J. Ronnie Greer, U.S. District Judge, to serve the remainder of his life in federal prison. There is no parole in the federal system.
Potter was sentenced pursuant to a federal statute which provides for a mandatory sentence of life in prison for individuals convicted of a drug trafficking offense after having previously been convicted of two or more felony drug trafficking offenses in state or federal court.
Evidence presented trial revealed that an investigation into a large scale methamphetamine distribution ring in northeast Tennessee and southwest Virginia led to the execution of search warrants by agents with the Second Judicial Drug Task Force, working with the Drug Enforcement Administration (DEA), Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), and Tennessee Bureau of Investigation (TBI). Nearly five kilograms of crystal methamphetamine were seized as a result of these searches. During the investigation, agents identified numerous members of the organization, which was supplied primarily by Nathan Hogan of Villa Rica, Georgia, who was also indicted in this case.
Potter and his co-conspirators were responsible for transporting hundreds of pounds of crystal methamphetamine, a highly addictive controlled substance, from northern Georgia into Sullivan County, Tennessee, and the surrounding area for distribution. Only Potter proceeded to trial. The other 24 individuals indicted in the conspiracy entered guilty pleas, with the exception of Shawn Dumitras, who died prior to arrest.
Law enforcement agencies participating in this joint investigation were the Second Judicial District Drug Task Force, Sullivan County Sheriff’s Office, Kingsport, Police Department, TBI, ATF and DEA. Assistant U.S. Attorney J. Gregory Bowman represented the United States in court proceedings.
This case was a result of the Department of Justice’s Organized Crime and Drug Enforcement Task Force (OCDETF) program, the centerpiece of the Department of Justice’s drug supply reduction strategy. OCDETF was established in 1982 to conduct comprehensive, multi-level attacks on major drug trafficking and money laundering organizations. Today, OCDETF combines the resources and expertise of its member federal agencies in cooperation with state and local law enforcement. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.
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Federal Jury Convicts Former VA Field Examiner and OPM Investigator Kenneth Richard Devore of FraudRead the Press Release
GREENEVILLE, Tenn. - On July 25, 2018, following a six-day trial in U.S. District Court, Kenneth Richard Devore, 44, of Jonesborough, Tennessee, was convicted of wire fraud, mail fraud, financial conflict of interest, theft of public money, and making false statements in matters within the jurisdiction of the United States.
Sentencing is set for 10:00 a.m., November 5, 2018, before the Honorable Judge Pamela L. Reeves in U.S. District Court in Greeneville. Devore was detained pending sentencing.
Wire fraud and mail fraud both carry a maximum penalty of 20 years in prison and a fine of up to $250,000. Theft of public money carries a maximum penalty of 10 years in prison and a fine of up to $250,000. Financial conflict of interest and false statements both carry a maximum penalty of 5 years in prison and a fine of up to $250,000.
According to evidence presented at trial, in 2015, while acting as a field examiner for the Department of Veterans Affairs (VA), Devore schemed to defraud a disabled and incompetent veteran of over $680,000. Under the VA’s Fiduciary Program, field examiners are employed to help protect the financial assets of veterans who are unable to take care of themselves. As such, field examiners conduct on-site fact-finding examinations to ascertain the veteran’s income and assets and to observe his mental condition, living arrangement, and social adjustment. While assigned to a disabled veteran in Knoxville, Tennessee, Devore used his position to convince that veteran that he needed a Last Will and Testament (will). Devore then drafted the will and deceptively inserted his own name as the sole beneficiary of the veteran’s financial bank accounts and investments, which totaled over $680,000. Devore falsified the victim’s initials on the will and mailed it to his legal guardian, Regions Bank.
As a result of his conduct, Devore was forced to resign from the VA. Shortly thereafter, in early 2016, he applied for a position as an investigator for the National Background Investigations Bureau, an agency within the U.S. Office of Personnel Management (OPM) that conducts investigations for positions of public trust and security clearances. In his application for the job and security clearance, he lied about his own educational and employment history, intentionally withholding that he had been forced to resign from the VA for misconduct and falsely claiming that he had received a college degree from the so-called “Canterbury University.” By his misrepresentations and omissions, Devore was hired for the job and worked through 2017.
Additionally, in 2009 and 2010, Devore lied about his own purported disabilities in order to obtain a 100% “total and permanent” disability rating by the VA. While he claimed to be unemployed and unable to work because of service-connected ailments, he worked gainfully and almost continuously in various federal and private sector jobs from 2009 through 2017. During that period, he received monthly disability compensation from the VA to which he was not entitled.
This case was investigated by the VA, Office of Inspector General and OPM, Office of Inspector General. Assistant U.S. Attorneys David Gunn and T.J. Harker represented the United States at trial.
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British Man Sentenced to Ten Years for Traveling to Tennessee for Sex with a Minor and Attempting to Entice a Minor to Have SexRead the Press Release
KNOXVILLE, Tenn. - On July 26, 2018, Roy Anthony Williams, of the Isle of Wight, United Kingdom, was sentenced by the Honorable Thomas A. Varlan, Chief U.S. District Judge, to serve 120 months in federal prison for traveling from the United Kingdom to Tennessee for the purpose of having sex with a minor and attempting to persuade and entice the minor to have sex with him. Following his release from prison, Williams will be supervised by the U.S. Probation Office for 10 years and required to register with the sex offender registry in any state in which he resides, works, or attends school. Williams will also be subject to deportation from the United States following his release from prison.
In March 2018, Williams pleaded guilty to federal charges stemming from his travel from the United Kingdom to Lenoir City, Tennessee, for the purpose of having sex with a 13-year-old girl and then communicating with the girl via text messages in order to arrange for the girl to meet him at a local motel to have sex. The girl’s mother discovered the text messages from Williams on her daughter’s phone and reported the contact to the Lenoir City Police Department. A search of his cellular telephone and computer resulted in the discovery of evidence confirming that Williams had been grooming the girl online for several months, via various social media platforms, to have sex with her.
“Sexual predators like Williams use the Internet and social media to find children, particularly teenagers, to groom and entice for illicit sexual activity. Parents should be vigilant to protect their children from would-be child molesters who are prowling the Internet for young victims,” said J. Douglas Overbey, U.S. Attorney for the Eastern District of Tennessee. “Our office will continue to work with investigative agencies to build cases and prosecute the offenders of these heinous crimes,” added U.S. Attorney Overbey.
This investigation was conducted by the FBI and the Lenoir City Police Department. Assistant U.S. Attorney Matthew Morris represented the United States in court proceedings.
This case was brought as part of Project Safe Childhood (PSC), a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section, PSC marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about PSC, please visit www.projectsafechildhood.gov.
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Owner of City Drug Co. in Maryville Pleads Guilty to Federal Drug and Firearms ChargesRead the Press Release
KNOXVILLE, Tenn. – On July 19, 2018, Randall Scott Jenkins, 55, of Maryville, Tennessee, pleaded guilty in U.S. District Court to an Information charging him with two counts of aggravated theft of pre-retail medical products from City Drug Co., and one count of unlawfully possessing firearms and ammunition while being an unlawful user of a controlled substance.
Sentencing is set for 10:00 a.m., Thursday, December 13, 2018. Jenkins faces up to five years in prison and a fine of up to $250,000, for each of the aggravated drug theft charges. He also faces up to 10 years in prison and a fine of up to $250,000 on the firearms charge. Additionally, he will be subject to supervision by U.S Probation for up to three years upon his release from prison.
According to the plea agreement on file with U.S. District Court, since approximately 2002 Jenkins was a licensed pharmacist and co-owner of City Drug Co. In April 2018, surveillance cameras caught him, on two separate occasions, stealing bottles of pre-retail oxycodone from the controlled substance vault of the business. Jenkins had no prescription for the oxycodone and subsequently admitted to stealing the drugs to satisfy his own personal addiction to the painkillers.
In May 2018, law enforcement agents questioned Jenkins about additional stolen prescription painkillers, including empty prescription bottles. While Jenkins admitted to having a drug addiction problem, he told investigators he did not keep “trophies,” referring to the empty prescription painkiller bottles. That same day, a bottle containing oxymorphone and a bottle containing oxycodone were found in his home, and a loaded semi-automatic pistol was found in his vehicle. Jenkins had no valid prescription for either drug. Later in May 2018, a federal search warrant executed at his home in Maryville, Tennessee, revealed hydrocodone in an unlabeled pill bottle, oxycodone in two pre-retail pill bottles hidden under clothes in his master bedroom, and 19 firearms and ammunition.
“The U.S. Attorney’s office will continue to use all criminal and civil remedies available under federal law to combat the rapidly growing drug crisis in America,” said U.S. Attorney J. Douglas Overbey. “Prescription opioids, such as oxycodone and oxymorphone, are potent, powerful, addictive and easily abused painkillers which are only available by a prescription issued by a licensed physician for a legitimate medical purpose. Our office will prosecute aggressively individuals in the health care industry, including physicians and pharmacists, who choose to abuse their authority and commit unlawful actions in furtherance of the opioid epidemic in east Tennessee,” added U.S. Attorney Overbey.
“This case reflects the level of cooperation between the men and women of the Drug Enforcement Administration and our law enforcement partners, as we work together to stop the diversion of dangerous pharmaceuticals,” said D. Christopher Evans, Special Agent In Charge of the Drug Enforcement Administration’s Louisville Field Division. “The DEA is proud to participate in the Opioid Fraud and Abuse Detection Unit, and remains committed to using every weapon in our arsenal to combat America’s deadly opioid epidemic.”
Agencies involved in this investigation include DEA-Tactical Diversion Squad and the Bureau of Alcohol, Tobacco, Firearms, and Explosives. Assistant U.S. Attorney David Lewen, Jr. represents the United States in court proceedings.
In August 2017, Attorney General Jeff Sessions announced the formation of the Opioid Fraud and Abuse Detection Unit to help combat the devastating opioid crisis that is ravaging families and communities across America. This unit focuses specifically on opioid-related health care fraud using data to identify and prosecute individuals that are contributing to this prescription opioid epidemic. Federal prosecutors, working with FBI, DEA, HHS, as well as state and local partners, will help target and prosecute these doctors, pharmacies, and medical providers who are furthering this epidemic to line their pockets. The U.S. Attorney’s Office for the Eastern District of Tennessee was one of 12, out of 94 districts across the country, chosen to participate in this program.
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Attorney General Sessions Announces Operation Synthetic Opioid SurgeRead the Press Release
KNOXVILLE, Tenn.– Attorney General Jeff Sessions and U.S. Attorney J. Douglas Overbey today announced Operation Synthetic Opioid Surge (S.O.S.), a new program that seeks to reduce the supply of deadly synthetic opioids in high impact areas and to identify wholesale distribution networks and international and domestic suppliers.
As part of Operation S.O.S., the Department will launch an enforcement surge in ten districts with some of the highest drug overdose death rates, including the Eastern District of Tennessee.
Each participating U.S. Attorney’s Office (USAO) will choose a specific county and prosecute every readily provable case involving the distribution of fentanyl, fentanyl analogues, and other synthetic opioids, regardless of drug quantity. The surge will involve a coordinated DEA Special Operations Division operation to insure that leads from street-level cases are used to identify larger scale distributors. Operation S.O.S. was inspired by a promising initiative of the U.S. Attorney’s Office in the Middle District of Florida involving Manatee County, Florida.
"When it comes to synthetic opioids, there is no such thing as a small case," Attorney General Sessions said. "In 2016, synthetic opioids killed more Americans than any other kind of drug. Three milligrams of fentanyl can be fatal--that's not even enough to cover up Lincoln's face on a penny. Our prosecutors in Manatee County, Florida have shown that prosecuting seemingly small synthetic opioids cases can have a big impact and save lives, and we want to replicate their success in the districts that need it most. This new strategy—and the new prosecutors who will help carry it out—will help us put more traffickers behind bars and keep the American people safe from the threat of these deadly drugs."
“According to statistics from the Knox County Drug Related Task Force, already in 2018 there have been 164 overdose deaths in Knox County alone. This alarming number is from only one of the 41 counties that make up the Eastern District of Tennessee. Sadly, statistics show that Tennessee, and in particular east Tennessee, has one of the highest overdose death rates in the country. The U.S. Attorney’s Office welcomes the opportunity to participate in Operation S.O.S. and will work with our federal, state and local law enforcement partners to prosecute every readily provable case involving the distribution of synthetic opioids in Knox County, regardless of drug quantity,” stated U.S. Attorney J. Douglas Overbey.
In addition, the Organized Crime Drug Enforcement Task Forces (OCDETF) Executive Office will provide funding for an additional two-year term Assistant U.S. Attorney to each participating district to assist with drug-related prosecutions.
The ten participating districts are:
- Northern District of Ohio
- Southern District of Ohio
- Eastern District of Tennessee
- Eastern District of Kentucky
- Southern District of West Virginia
- Northern District of West Virginia
- District of Maine
- Eastern District of California
- Western District of Pennsylvania
- District of New Hampshire
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Odemnis Prats Leiva Sentenced to Serve 54 Months in Federal Prison for Wire Fraud and Aggravated Identity TheftRead the Press Release
GREENEVILLE, Tenn. – On July 9, 2018, Odemnis Prats Leiva, 31, of Pompano Beach, Florida, was sentenced by the Honorable J. Ronnie Greer, U.S. District Judge, to serve 54 months in federal prison for his role in a wire fraud and aggravated identity theft conspiracy involving credit card skimmers. Upon his release from prison, he will be supervised by U.S. Probation for three years. Leiva was also ordered to pay restitution in the amount of $21,114.84.
In March 2018, Leiva pleaded guilty to three counts of a September 2017 federal indictment. Details of the scheme are outlined in his plea agreement on file with U.S. District Court. According to the plea agreement, between August 7, 2017 and August 10, 2017, Leiva and Amaurys Mendez Campanon used skimming devices on gas pumps at retail gas stations to obtain the credit/debit card account information of numerous people without their knowledge. They used the fraudulently obtained information to re-encode unloaded gift cards, which they shoplifted from various retail establishments. The re-encoded cards were then used to purchase loaded gift cards and other consumer items at various retail establishments across east Tennessee and elsewhere.
As a result of an ongoing investigation by law enforcement, Leiva and Campanon were arrested in Rogersville, Tennessee, on August 10, 2017. At the time of the arrest, Leiva was in possession of nine unlawfully re-encoded devices, $7,020.25 in cash, numerous gift cards, all of which he had obtained as part of the conspiracy, as well as other items used in furtherance of their conspiracy. Campanon, who was also charged in the indictment and has pleaded guilty, was arrested at the same time. He is awaiting sentencing in U.S. District Court.
This investigation was conducted by the U.S. Secret Service, Johnson City Police Department and Rogersville Police Department. Assistant U.S. Attorney TJ Harker represented the United States in court proceedings.
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Caris Agrees to Pay $8.5 Million to Settle False Claims Act Lawsuit Alleging That it Billed for Ineligible Hospice PatientsRead the Press Release
WASHINGTON – Caris Healthcare, L.P. and its wholly-owned subsidiary, Caris Healthcare, LLC (“Caris Healthcare”), have agreed to resolve allegations that they violated the False Claims Act by knowingly submitting false claims, and knowingly retaining overpayments, for the care of patients who were ineligible for the Medicare hospice benefit because they were not terminally ill, the Department of Justice announced today. Under the settlement agreement, Caris Healthcare, a for-profit hospice chain that operates in Tennessee, Virginia, and South Carolina, has agreed to pay $8.5 million.
The settlement resolves allegations that Caris Healthcare admitted and recertified patients for hospice care that were ineligible for the hospice benefit. The government’s complaint alleged that, in an effort to meet the aggressive admissions and census targets set by the company, Caris admitted patients whose medical records did not support a terminal prognosis. The government’s complaint further alleged that when Caris was alerted to the ineligibility of these patients—via internal audits, concerns raised by its Chief Medical Officer, and recommendations of its nurse employees who actually examined the patients—Caris not only continued to submit hospice claims to Medicare for the patients, but also took no meaningful action to determine whether it had previously received improper payments for these and other patients that should have been returned to Medicare.
“Today’s settlement is an important reminder that compliance programs and activities cannot exist in name only. When a healthcare provider is put on notice that a patient is ineligible for a particular Medicare benefit or service, the healthcare provider cannot turn a blind eye to that information but, instead, must take reasonable steps to stop the improper conduct and to determine whether that conduct resulted in prior overpayments,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Moreover, when internal audit results or other information reveals the existence of a compliance issue that is not limited to a particular claim, as was the case here, it is incumbent on providers to exercise due diligence to determine how widespread the problem is and to return any overpayments.”
“It is completely unacceptable for providers to retain overpayments from Medicare after being put on notice of the likelihood of such overpayments. Under the law, providers must go beyond merely conducting audits and providing forums for employee concerns. Rather, when Medicare rule violations have been revealed, the provider must take meaningful action to correct them, including repaying Medicare for funds they improperly received. Such corrective actions are vital to the integrity of the Medicare program, and the U.S. Attorney’s Office will continue to use the resources available to it to ensure the government is properly reimbursed for funds it is owed,” said J. Douglas Overbey, U.S. Attorney for the Eastern District of Tennessee.
“We have significant expertise in investigating hospice fraud, as this part of the country unfortunately has seen more than its share of these schemes,” said Special Agent in Charge Derrick L. Jackson for the Office of Inspector General for the region including Tennessee. “When hospices increase their bottom lines by billing taxpayers for unneeded services, they are diverting money from vulnerable, terminally-ill individuals. Worse yet, these patients may not be receiving care for medical needs that would otherwise be covered in a non-hospice setting.”
The settlement resolves allegations filed in a lawsuit by Barbara Hinkle, a registered nurse who formerly worked for Caris Healthcare, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The Act also allows the government to intervene and take over the action, as it did in this case. The whistleblower’s share will be $1,402,500.
This matter was handled on behalf of the government by the U.S. Attorney’s Office for the Eastern District of Tennessee, the Justice Department’s Civil Division, and the Department of Health and Human Services Office of the Inspector General.
The case is captioned United States ex rel. Hinkle v. Caris Healthcare, L.P., et al., Case No. 3:14-cv-212 (E.D. Tenn.). The claims resolved by the settlement are allegations only, and there has been no determination of liability.
Caris Agrees to Pay $8.5 Million Court Settle False Claims Act Lawsuit Alleging That it Billed for Ineligible Hospice PatientsRead the Press Release
KNOXVILLE, Tenn. – Caris Healthcare, L.P. and its wholly-owned subsidiary, Caris Healthcare, LLC (“Caris Healthcare”), have agreed to resolve allegations that they violated the False Claims Act by knowingly submitting false claims, and knowingly retaining overpayments, for the care of patients who were ineligible for the Medicare hospice benefit because they were not terminally ill, the Department of Justice announced today. Under the settlement agreement, Caris Healthcare, a for-profit hospice chain that operates in Tennessee, Virginia, and South Carolina, has agreed to pay $8.5 million.
The settlement resolves allegations that Caris Healthcare admitted and recertified patients for hospice care that were ineligible for the hospice benefit. The government’s complaint alleged that, in an effort to meet the aggressive admissions and census targets set by the company, Caris admitted patients whose medical records did not support a terminal prognosis. The government’s complaint further alleged that when Caris was alerted to the ineligibility of these patients—via internal audits, concerns raised by its Chief Medical Officer, and recommendations of its nurse employees who actually examined the patients—Caris not only continued to submit hospice claims to Medicare for the patients, but also took no meaningful action to determine whether it had previously received improper payments for these and other patients that should have been returned to Medicare.
“Today’s settlement is an important reminder that compliance programs and activities cannot exist in name only. When a healthcare provider is put on notice that a patient is ineligible for a particular Medicare benefit or service, the healthcare provider cannot turn a blind eye to that information but, instead, must take reasonable steps to stop the improper conduct and to determine whether that conduct resulted in prior overpayments,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Moreover, when internal audit results or other information reveals the existence of a compliance issue that is not limited to a particular claim, as was the case here, it is incumbent on providers to exercise due diligence to determine how widespread the problem is and to return any overpayments.”
“It is completely unacceptable for providers to retain overpayments from Medicare after being put on notice of the likelihood of such overpayments. Under the law, providers must go beyond merely conducting audits and providing forums for employee concerns. Rather, when Medicare rule violations have been revealed, the provider must take meaningful action to correct them, including repaying Medicare for funds they improperly received. Such corrective actions are vital to the integrity of the Medicare program, and the U.S. Attorney’s Office will continue to use the resources available to it to ensure the government is properly reimbursed for funds it is owed,” said J. Douglas Overbey, U.S. Attorney for the Eastern District of Tennessee.
“We have significant expertise in investigating hospice fraud, as this part of the country unfortunately has seen more than its share of these schemes,” said Special Agent in Charge Derrick L. Jackson for the Office of Inspector General for the region including Tennessee. “When hospices increase their bottom lines by billing taxpayers for unneeded services, they are diverting money from vulnerable, terminally-ill individuals. Worse yet, these patients may not be receiving care for medical needs that would otherwise be covered in a non-hospice setting.”
The settlement resolves allegations filed in a lawsuit by Barbara Hinkle, a registered nurse who formerly worked for Caris Healthcare, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The Act also allows the government to intervene and take over the action, as it did in this case. The whistleblower’s share will be $1,402,500.
This matter was handled on behalf of the government by the U.S. Attorney’s Office for the Eastern District of Tennessee, the Justice Department’s Civil Division, and the Department of Health and Human Services Office of the Inspector General.
The case is captioned United States ex rel. Hinkle v. Caris Healthcare, L.P., et al., Case No. 3:14-cv-212 (E.D. Tenn.). The claims resolved by the settlement are allegations only, and there has been no determination of liability.
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Maryville Resident Arrested for Child Pornography OffensesRead the Press Release
KNOXVILLE, Tenn..- On June 21, 2018, George Robert Everhart, 29, of Maryville, Tennessee, was arrested following the return of a four-count indictment by a federal grand jury on June 19, 2018, alleging that Everhart committed child pornography offenses. Counts One and Two of the indictment, on file with the U.S. District Court, allege that Everhart used two minors, ages seven- and 10-years-old, to produce and attempt to produce child pornography in the Eastern District of Tennessee. The indictment also alleges that Everhart distributed child pornography in interstate commerce and that he possessed child pornography depicting prepubescent minors or minors who had not attained 12 years of age.
A trial date of August 28, 2018, before the Honorable Chief District Judge Thomas A. Varlan was set. Everhart was detained in U.S. Marshal’s Service custody pending trial.
If convicted of the use of a minor to produce or attempt to produce child pornography, Everhart faces a minimum mandatory 15 years and up to 30 years in prison, at least five years up to life of supervised release, a fine of $250,000, and forfeiture and a $5,100 special assessment per count. The punishment for distributing child pornography in interstate commerce is a minimum mandatory five years and up to 20 years in prison, at least five years up to life of supervised release, a fine of $250,000, and forfeiture and a $5,100 special assessment. The punishment for possessing child pornography is up to 20 years in prison, at least five years up to life of supervised release, a fine of $250,000, and forfeiture and a $5,100 special assessment.
Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until his or her guilt has been proven beyond a reasonable doubt.
The investigation leading to the indictment was conducted by the Knoxville Police Department’s Internet Crimes Against Children Task Force, with assistance from the U.S. Department of Homeland Security. Assistant U.S. Attorney Matthew Morris will represent the United States in court proceedings.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
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Federal Grand Jury Indicts Sixteen in Methamphetamine Distribution ConspiracyRead the Press Release
GREENEVILLE, Tenn. – On June 12, 2018, a federal grand jury in Greeneville returned a 38-count indictment against the following individuals for their roles in the distribution of methamphetamine:
- Leonard Wayne Mullinax, 48, of Gaffney, South Carolina
- Jamie Nicole Wilson, 41, of Surgoinsville, Tennessee
- Edward Ray Walters, 47, of Surgoinsville, Tennessee
- Michael James Walters, 44, of Church Hill, Tennessee
- Corey Aaron Morelock, 29, of Surgoinsville, Tennessee
- Amber Lynn Hall, 29, of Surgoinsville, Tennessee
- Matthew Glenn Russell, 26, of Rogersville, Tennessee
- Christopher Lee Pyles, 43, of Rogersville, Tennessee
- Destiny Lashay Lawson, 25, of Rogersville, Tennessee
- Megan Rose Moore, 39, of Rogersville, Tennessee
- Matthew Jacob Keirsey, 23, of Rogersville, Tennessee
- Jason Ronald Burchfield, 39, of Rogersville, Tennessee
- Beverly Ann Brooks, 33, of Kingsport, Tennessee
- Jimmy Lee Gray, 35, of Kingsport, Tennessee
- Jacob Donald Meyers, 25, of Church Hill, Tennessee
- Jeannie Michelle Bowman, 45, of Surgoinsville, Tennessee
A trial date before the Honorable J. Ronnie Greer, U.S. District Court Judge, has not yet been set.
The indictment, on file with the U.S. District Court, alleges that each of these individuals was involved in a conspiracy to distribute 50 grams or more of methamphetamine in the Eastern District of Tennessee and elsewhere. Edward Walters, Morelock, Hall, Russell, Bowman, Wilson, Meyers, and Michael Walters are also charged with possession of a firearm in furtherance of a drug trafficking crime. Edward Walters, Russell, and Bowman are each charged with an additional count of possession of a firearm in furtherance of a drug trafficking crime. The indictment also alleges other charges related to the distribution and possession with the intent to distribute methamphetamine as well as the unlawful possession of firearms and money laundering.
If convicted of the methamphetamine conspiracy charge, each faces a minimum mandatory prison term of at least 10 years and up to life, at least five years of supervised release, a fine of up to $10,000,000, any applicable forfeiture, and a $100 special assessment. The punishment for the firearm charges returned against Edward Walters, Morelock, Hall, Russell, Bowman, Wilson, Meyers, and Michael Walters is a minimum mandatory term of at least five years and up to life in prison, which must be served consecutively to any other prison term imposed, up to five years supervised release, a fine of up to $250,000, and a $100 special assessment. Edward Walters, Russell, and Bowman, on the second firearms charge returned against them, face a minimum mandatory 25 years imprisonment up to life imprisonment, which must be served consecutively to any other prison term.
The ongoing investigation leading to the indictment was the product of a partnership between the Hawkins County Sheriff’s Department, Hamblen County Sherriff’s Department, Jefferson County Sherriff’s Department, Third Judicial Drug Task Force, Cherokee County Sherriff’s Department, U.S. Marshal Service, Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Postal Inspector, and the Federal Bureau of Investigation. Assistant U.S. Attorney Donald Wayne Taylor will represent the United States in court proceedings.
Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until his or her guilt has been proven beyond a reasonable doubt.
The investigation is a result of the Department of Justice’s Organized Crime and Drug Enforcement Task Force (OCDETF) program, the centerpiece of the Department of Justice’s drug supply reduction strategy. OCDETF was established in 1982 to conduct comprehensive, multi-level attacks on major drug trafficking and money laundering organizations. Today, OCDETF combines the resources and expertise of its member federal agencies in cooperation with state and local law enforcement. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.
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Gorge “Chico” Duarte Sentenced to 262 Months in Prison for Methamphetamine Distribution ConspiracyRead the Press Release
GREENEVILLE, Tenn. – On June 20, 2018, Gorge “Chico” Duarte, 42, of Mohawk, Tennessee, was sentenced by the Honorable J. Ronnie Greer, U.S. District Court Judge, to serve 262 months in federal prison for his role in a conspiracy to distribute methamphetamine (meth) in the Eastern District of Tennessee. According to his plea agreement on file with U.S. District Court, Duarte admitted that he was responsible for at least 500 grams but less than 1.5 kilograms of actual meth.
In early 2015, local, state, and federal law enforcement agencies collaborated and began an investigation into an evolving meth distribution network that distributed multiple kilogram quantities of meth in and around Hamblen County, Tennessee. Duarte served a local source of supply. He obtained meth from a larger trans-national criminal organization and in turn supplied the meth to other local distributors. During the course of committing the offense, Duarte was serving a term of supervised release for a prior federal conviction, conspiracy to distribute cocaine in the Eastern District of Tennessee. He was ordered to serve an additional 37 months consecutive to the 262 months for violating his supervised release.
This investigation was the product of a partnership between the FBI, Hamblen County Sheriff’s Department and Third Judicial Drug Task Force. Assistant U.S. Attorney J. Christian Lampe represented the United States in court proceedings.
The investigation is a result of the Department of Justice’s Organized Crime and Drug Enforcement Task Force (OCDETF) program, the centerpiece of the Department of Justice’s drug supply reduction strategy. OCDETF was established in 1982 to conduct comprehensive, multi-level attacks on major drug trafficking and money laundering organizations. Today, OCDETF combines the resources and expertise of its member federal agencies in cooperation with state and local law enforcement. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.
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Former Greater Eastern Credit Union CEO Pleads GuiltyRead the Press Release
GREENEVILLE, Tenn. – On June 20, 2018, Sherry Ann Allen, 49, of Johnson City, Tennessee, pleaded guilty to an information charging her with embezzling $1,195,596.00 from Greater Eastern Credit Union and tax evasion. Sentencing is set for 9:00 a.m., September 26, 2018, in U.S. District Court in Greeneville.
Allen faces a maximum term of 30 years in prison and will have to pay restitution to Greater Eastern Credit Union and the Internal Revenue Service.
This plea was the result of an investigation by the FBI, Internal Revenue Service - Criminal Investigation and the Johnson City Police Department. Assistant U.S. Attorney Robert Reeves represented the United States in court proceedings.
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U.S. Attorney’s Office for Eastern District of Tennessee Supports World Elder Abuse Awareness DayRead the Press Release
KNOXVILLE, Tenn. - Each year, June 15 is recognized as World Elder Abuse Awareness Day. On this day, our nation joins the world in voicing our opposition to elder abuse, neglect, and financial exploitation.
As part of the Elder Abuse Prevention and Prosecution Act, which the president signed into law last October, U.S. Attorney General Jeff Sessions appointed a career prosecutor as the Department’s Elder Justice Coordinator to support and coordinate the Department’s many elder justice efforts. Additionally, Attorney General Sessions directed the Department to appoint an Elder Justice Coordinator in every U.S. Attorney’s Office in the country to work on the elder justice issues most pressing in those communities while also collaborating with state and local partners in combating all forms of elder abuse and fraud. Assistant U.S. Attorney Jennifer Kolman was designated as the Elder Justice Coordinator for the Eastern District of Tennessee.
According to statistics, each year, an estimated $3 billion are stolen or defrauded from millions of American seniors. Criminals prey on some of the most vulnerable Americans to steal their hard-earned savings and their peace of mind through “grandparent scams,” fake prizes or even threats. In a matter of minutes, criminals can take away the secure retirement for which many seniors have spent most of their lives working, saving, and sacrificing.
“Protecting our seniors is a top priority of the U.S. Attorney’s Office for the Eastern District of Tennessee. We will work with our local, state and federal law enforcement partners to prosecute vigorously anyone who chooses to victimize the elderly citizens of our district,” said U.S. Attorney J. Douglas Overbey.
Currently, there are many ways in which our elderly communities in our district are targeted in fraud schemes, committed by family, friends, neighbors and even strangers the elderly victims have never met. One of the most prevalent schemes involves a bogus Lottery Sweepstakes in which elderly victims, who are vulnerable and often isolated from friends and family, receive a phone call informing them that they have won a large sum of money in a lottery specific to senior citizens. They are told that being a senior citizen automatically enrolled them in the sweepstakes. The victims are bombarded with calls telling them to send money for taxes, processing costs, and other bogus charges, often resulting in the depletion of the entire savings of the victims over the course of time. The perpetrators of this fraud are difficult for law enforcement to identify as they often operate outside the country and use phones that cannot be tracked.
Another prevalent fraud scheme targets elderly individuals through the internet. Victims receive a pop up message that their computer has a virus that can be removed for a fee. There is, of course, no virus; however, the victims are often scared into believing there is an urgency to get the virus removed immediately. Depending on the vulnerability of the victim, perpetrators of the fraud will up charge for a continued service for future problems and bombard the victim with instructions to get the money to them in the mail immediately and by overnight services so the victim is less likely to stop payment.
The U.S. Attorney’s Office for the Eastern District of Tennessee has had several successful prosecutions involving elderly victims. Additionally, there are several open cases involving pending litigation, as well as ongoing investigations that may lead to future charges.
In May 2018, Roger Dale Williams pleaded guilty to conducting a Ponzi scheme to defraud primarily elderly individuals, as well as obstructing and impeding the Internal Revenue Service. His sentencing is set for September 13, 2018.
In his plea agreement, on file with U.S. District Court, Williams admitted that he began offering bogus investment opportunities in 2001 as part of membership in an “investment club, “ which included opportunities for stock purchases, business start-ups, and bonds in solicitations that he mailed to victims. In order to perpetuate the scheme, he would also provide victims with false IRS forms pertaining to the purported investments. More recently, Williams extended his fraud scheme to members of the King Branch Road Church of Christ in Pigeon Forge, Tennessee, where he had become a pastor. He solicited funds for the purchase of purported church bonds and claimed the funds would be used for the benefit of the church, particularly to pay off the church’s debt. However, Williams diverted the funds raised for purported church bonds to his own personal use and benefit, as well as used the funds to make lulling payments to investment club members. He convinced several victims to transfer their Individual Retirement Accounts into bogus investments under his control, then he siphoned off the funds for his own use and benefit. Due to Williams’ fraud, several elderly victims lost their entire retirement savings. Assistant U.S. Attorney Matthew Morris represented the United States in these court proceedings.
Also in May 2018, Cynthia Brooks Holt, was sentenced to serve 24 months in prison and ordered to pay $294,470.69 in restitution for aggravated identity theft involving an elderly neighbor.
According to her plea agreement on file with U.S. District Court, Holt and the 92-year-old victim were neighbors in Oak Ridge, Tennessee. After an arson at the victim’s home in November 2011, Holt took on the role of contractor in the rebuilding of the victim’s home. During this time, she had the victim write checks to her for construction costs incurred. However, after the completion of the construction, Holt continue to have the victim write checks to her. Between May 2012 and February 2017, she stole books of checks from two of the victim’s accounts, wrote checks to herself, and had the victim sign. She eventually began forging his signature on these checks resulting in hundreds of unauthorized checks written to herself from the victims account. The total amount of the fraud was $294,470.69. Assistant U.S. Attorney Jennifer Kolman represented the United States in these court proceedings.
“Fraud targeting seniors is so common that no victim should feel ashamed to come forward and report it. It can happen to anyone,” said Attorney General Sessions in his recent remarks to the Elder Justice Coordinating Council.
Elder fraud complaints may be filed with the FTC at www.ftccomplaintassistant.gov or at 877-FTC-HELP. The Department of Justice provides a variety of resources relating to elder fraud victimization through its Office of Victims of Crime, which can be reached at www.ovc.gov.
Five Defendants in Methamphetamine Distribution ConspiracyRead the Press Release
GREENEVILLE, Tenn. – During the week of May 21, 2018, five defendants in an east Tennessee methamphetamine (meth) conspiracy were sentenced by the Honorable R. Leon Jordan, Senior, U.S. District Court Judge to serve time in federal prison. James Dwayne Byington, 50, Rogersville, Tennessee, was sentenced to serve 210 months. Edward Smith, 52, Rogersville, Tennessee, was sentenced to serve 70 months. Frankie Benton, 34, Bulls Gap, Tennessee, was sentenced to serve 188 months. Clay Seals, Jr., Surgoinsville, Tennessee was sentenced to serve 120 months. Curtis Carpenter, 43, of Whitesburg, Tennessee, was sentenced to serve 172 months.
In 2016, local, state and federal law enforcement agencies working together began an investigation into an evolving meth distribution network that was distributing multiple kilogram quantities of meth in and around Hawkins County, Tennessee. David Jones, 61, who lived in Chatsworth, Georgia, supplied this organization with kilograms of meth that were distributed by members of the conspiracy, most of whom were from Hawkins County, Tennessee. Jones was sentenced in April 2018 to serve 180 months in federal prison.
The convictions of Byington, Smith, Carpenter, Benton, and Seals are the result of a 49-count indictment that also charged the following individuals for their roles in the conspiracy:
- David Jones, 61, of Chatsworth, Georgia;
- Jonathan Delph, 51, of Rogersville, Tennessee;
- Stephanie Bailey, 50, of Hawkins County, Tennessee;
- Donna Strong, 54, a/k/a Donna Dunbar, of Surgoinsville, Tennessee;
- Jerry Robinette, 48, of Rogersville, Tennessee;
- Tyler Delph, 25, of Rogersville, Tennessee;
- Scottie Delph, 49, of Rogersville, Tennessee;
- James Michael Whitaker, 55, of Rogersville, Tennessee;
- Paul Bledsoe Jr., 44, of Morristown, Tennessee
- William West, 58, a/k/a Bump, of Rogersville, Tennessee;
- Leonard Brad Eidson, 43, of Bull’s Gap, Tennessee
- Phillip Burton, 49, a/k/a Burger, of Rogersville, Tennessee; and
- Toby Jones, 40, of Chatsworth, Georgia;
All of the individuals charged in this case have been convicted of conspiring to distribute meth. Many have already been sentenced in U.S. District Court and the remainder are scheduled to be sentenced between now and June 12, 2018.
The ongoing investigation leading to the indictment was the product of a partnership between Hawkins County Sheriff’s Department, Third Judicial Drug Task Force, Hamblen County Sheriff’s Department, Tennessee Highway Patrol, Appalachian High Intensity Drug Trafficking Area - Rocky Top Task Force, Third Judicial District Attorney General’s Office, U.S. Marshals Service, Bureau of Alcohol, Tobacco, Firearms and Explosives, and Federal Bureau of Investigation. Assistant U.S. Attorney J. Christian Lampe represents the United States in court proceedings.
The investigation is a result of the Department of Justice’s Organized Crime and Drug Enforcement Task Force (OCDETF) program, the centerpiece of the Department of Justice’s drug supply reduction strategy. OCDETF was established in 1982 to conduct comprehensive, multi-level attacks on major drug trafficking and money laundering organizations. Today, OCDETF combines the resources and expertise of its member federal agencies in cooperation with state and local law enforcement. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.
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Charles Turner and Donald Kevin Collins Sentenced for Mail Fraud Conspiracy to Defraud Mountain Empire Surgery CenterRead the Press Release
GREENEVILLE, Tenn. – On May 23, 2018, two individuals were sentenced by the Honorable J. Ronnie Greer, U.S. District Judge, for their roles in a conspiracy to commit mail fraud. Donald Kevin Collins, 41, of Elizabethton, Tennessee, was sentenced to serve 51 months in federal prison. Upon his release, he will be supervised by U.S. Probation for three years. He was also ordered to pay $1,381,552 in restitution. Charles Turner, 43, of Chattanooga, Tennessee, was sentenced to serve six months in prison, followed by six months home detention with electronic monitoring. Turner must also perform 150 hours of community service, be supervised by U.S. Probation for three years and pay $1,381,552 in restitution.
Turner pleaded guilty in October 2017, to one count of a 16-count indictment charging him and Collins with conspiracy to commit mail fraud. The indictment also charged Collins with 15 counts of mail fraud. Collins also pleaded guilty in January 2018 to one count of conspiracy to commit mail fraud and 15 counts of mail fraud. Details of the scheme are outlined in their plea agreements on file with U.S. District Court. According to these documents, Turner became involved in a conspiracy with Collins to defraud Mountain Empire Surgery Center (MESC) in Johnson City, Tennessee. Beginning in mid-2009, Collins, who was the materials manager for MESC, devised a scheme to defraud MESC by submitting false invoices to MESC purporting to show that MESC had purchased and received supplies from a vendor called Turner Distributors, LLC (Turner Distributors). In fact, MESC never received any supplies from Turner Distributors. Instead, at the instruction of Collins, Turner established Turner Distributors as a shell company. When MESC received legitimate medical supplies from companies like Cardinal Health, Collins falsified invoices and packing slips to make it appear as though the supplies originated from Turner Distributors. Collins then submitted these falsified invoices and packing slips to the accounts payable personnel at MESC.
Beginning in July 2009 and continuing through March 2016, MESC paid Turner Distributors after receiving the falsified invoices and packing slips submitted by Collins. To make payment, MESC mailed checks to the mailing address for Turner Distributors in east Tennessee. Upon receipt, Turner deposited the checks into a Carter County Bank account he opened in the name of Turner Distributors, withdrew cash, and split the proceeds with Collins. Collins was then supposed to pay Cardinal Health for the cost of the supplies; however, since there was never any real agreement with Cardinal Health, the money was retained by Turner and Collins.
Although Turner initially believed that the business relationship was legitimate, he realized around April 2010 that he was involved in a criminal conspiracy with Collins after receiving a 1099 (an IRS form used to report miscellaneous payments made to nonemployee individuals during the calendar year) from MESC. By this time, Turner, through Turner Distributors, had deposited 19 fraudulently obtained checks from MESC totaling approximately $74,146. Although now aware of the conspiracy, Turner continued to participate in the conspiracy by depositing or cashing an estimated 161 additional MESC checks, totaling approximately $1,307,406, from April 2010 through March 2016. In total, Turner and Collins fraudulently obtained 180 MESC checks amounting to $1,381,552.
“The U.S. Attorney’s Office will continue to work with our federal and state partners to prosecute those who conspire to use the U.S. Mail to commit fraud against legitimate businesses,” said U.S. Attorney J. Douglas Overbey.
FBI Special Agent in Charge, Renae McDermott said, “This investigation is but another example of our commitment to investigating fraud and rooting out those who willfully commit such crimes. We will continue working with our law enforcement partners to identify and stop those who defrauded their employer at the expense of others.”
Agencies participating in this investigation included the FBI and Tennessee Bureau of Investigation-Medicaid Fraud Control Unit. Assistant U.S. Attorney TJ Harker represented the United States in court proceedings.
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