Eastern District of Tennessee
Press releases recorded for this federal judicial district.
Large-Scale Cocaine Trafficking Organization DismantledRead the Press Release
KNOXVILLE, Tenn. - A federal grand jury in Knoxville returned a 58-count indictment on Dec. 3, 2013, against Jesus Hernandez, a.k.a. “Chucho,” 31; Juan Julian Felipe, 26; Alfredo Casteneda, a.k.a. “Boludo,” 20; Faustino Ramirez Ponciano, a.k.a. “El Toño,” 18; Fernando Amayo Gonzalez, a.k.a. “Zeta,” 26; Gonzalo Garcia Gines, a.k.a. “Puebla,” 31; Felipe De Jesus Banales, a.k.a. “Guero,” 29; Elder Vasquez, 34; Johnny Soto-Quintana, a.k.a. “Ponzoña,” a.k.a. “Ponzi,” 23; Nahun Oliva, a.k.a. “El Perro,” 24, Gilberto Fuentes Dominguez, 27, Jesus Amustio Panoja, a.k.a. “Chuy,” 21; Anael Anariba, a.k.a. “Guero,” 35; Geyser Deleon, a.k.a. “Chiquilin,” a.k.a. “Chaparo,” 26; Jose Luis Aguilar, a.k.a. “Diego,” 34; Gelber Deleon, a.k.a. “Tarzan,” a.k.a. “Burro,” 21; Justin Moore, 28; Malcolm Jones, 21; David Lamb, 23; Monty Cooper, 42; and James Handly, a.k.a. “Flaco,” 54; all of whom were residing in Knoxville, Tenn., at the time of their arrests, charging them with conspiracy to distribute cocaine and cocaine base, money laundering, and gun charges.
These individuals appeared in court before U.S. Magistrate Judges this week and entered pleas of not guilty to the charges in the indictment. All of them have been ordered held without bond pending trial, which has been set for Feb. 11, 2013 in U.S. District Court, in Knoxville.
The first count of the indictment alleges that the members of the conspiracy are responsible for distributing in excess of five kilograms of cocaine and more than 280 grams of crack cocaine. If convicted, each faces a mandatory minimum prison term of at least 10 years and up to life and a fine of up to $10,000,000. The indictment alleges that the value of the drugs trafficked by all defendants was at least $17,500,000. One individual, Geyser Deleon, is charged with possessing a firearm in furtherance of a drug trafficking crime, and if convicted, faces a mandatory minimum prison term of at least five years and up to life, to be served consecutively to any other prison term imposed, and a fine of up to $250,000.
This indictment is the result of an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives; Department of Homeland Security – Immigration Customs Enforcement; Drug Enforcement Administration; Federal Bureau of Investigation; Tennessee Bureau of Investigation; Alcoa Police Department; Clinton Police Department; Harriman Police Department; Knoxville Police Department; Maryville Police Department; Oak Ridge Police Department; Anderson County Sheriff’s Office; Blount County Sheriff’s Office; Knox County Sheriff’s Department; Loudon County Sheriff’s Department; Roane County Sheriff’s Department; Fifth Judicial District Drug Task Force; and Ninth Judicial District Drug Task Force. Assistant U.S. Attorneys Tracy L. Stone and Brooklyn Sawyers will represent the United States.
Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until their guilt has been proven beyond a reasonable doubt.
Knoxville Attorney Pleads Guilty to Federal Tax OffenseRead the Press Release
KNOXVILLE, Tenn. – Johnny V. Dunaway, 65, of Knoxville, Tenn., pleaded guilty on Dec. 2, 2013, in the U.S. District Court for the Eastern District of Tennessee at Knoxville, to filing a false tax return. Sentencing has been set for 11:00 a.m., Apr. 23, 2014, in U.S. District Court in Knoxville.
Dunaway faces a term of three years in prison. In addition, he may be ordered to pay restitution to the Internal Revenue Service for unpaid taxes.
According to a one-count information filed by the U.S. Attorney in October 2013, Dunaway submitted a false tax return for the 2008 tax year. In conjunction with his guilty plea, Dunaway admitted that his 2008 return failed to declare truthfully the business income that he had received from his law practice.
This conviction is the result of an investigation by the Internal Revenue Service. Assistant U.S. Attorney Frank M. Dale, Jr. represented the United States.
Bristol, Tennessee, Couple Sentenced in Connection with Meth Lab ExplosionRead the Press Release
GREENEVILLE, Tenn. – James Hulon Steadman, 41, and Amanda Beth Kiser Steadman, 32, both of Bristol, Tenn., were sentenced on Nov. 26, 2013, by the Honorable J. Ronnie Greer, U.S. District Court Judge, to serve 77 months in prison, to be followed by four years of supervised release, for conspiring to manufacture methamphetamine and creating a substantial risk of harm to human life while manufacturing methamphetamine. The Steadmans were also ordered to pay $98,911.13 in restitution for clean-up costs and damage to an apartment building as a result of multiple explosions and a fire caused by a methamphetamine laboratory.
The Steadmans and Jason Anthony Carter were indicted in November 2012 for conspiring to manufacture methamphetamine, possessing equipment, chemicals, materials, and products to be used in the manufacture of methamphetamine, and creating a substantial risk of harm to human life. Carter was convicted on Oct. 31, 2013, following a two-day jury trial, and is scheduled for sentencing on Mar. 3, 2014. He faces a possible sentence of up to 40 years in federal prison and up to $1,500,000 in fines.
According to the evidence presented at Carter’s trial, the Steadmans and Carter planned to manufacture methamphetamine at an apartment building where the Steadmans resided in Bristol, Tenn., in August 2012. They purchased the supplies needed to manufacture methamphetamine at various businesses in Bristol before returning to the apartment to begin cooking methamphetamine utilizing the “one-pot” or “shake and bake” method. Once at the apartment, they prepared the materials to manufacture methamphetamine and began cooking methamphetamine. The evidence further reflected that while the methamphetamine was cooking, several explosions occurred, resulting in a fire in the apartment, extensive damage to the apartment building, and serious injuries to Amanda Steadman.
“Manufacturing methamphetamine is an inherently dangerous process and can result in explosions, fires, and serious injuries, as evidenced by this case. Our office takes cases involving the manufacture of methamphetamine very seriously and will continue aggressively prosecute these offenses. Public safety is our highest priority,” stated United States Attorney William C. Killian.
This investigation was a joint effort of the Bristol Tennessee Police Department, Tennessee Methamphetamine Task Force, Drug Enforcement Administration, 2nd Judicial District Drug Task Force, and Sullivan County Sheriff’s Office. Assistant U.S. Attorney Suzanne Kerney-Quillen represents the United States.
United States Attorney William C. Killian Participates in Awareness and Knowledge Building Conference on Counterfeit Household Products and Fake Automotive Parts in Alicante, SpainRead the Press Release
U.S. Attorney William C. Killian, Eastern District of Tennessee, was featured on a panel discussing counterfeit automotive parts at the Awareness and Knowledge Building Conference on Counterfeit Household Products and Fake Automotive Parts, held November 4-6, 2013, in Alicante, Spain.
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Federal Jury Convicts Joshua Roberts in Crack Cocaine ConspiracyRead the Press Release
GREENEVILLE, Tenn. – On Nov. 20, 2013, following a two day trial in U.S. District Court, a jury convicted Joshua Roberts, 28, of Knoxville, Tenn., of conspiring to possess with the intent to distribute over 28 grams of cocaine base, also known as crack.
Sentencing is set for Mar. 24, 2013 at 1:30 p.m., in U.S. District Court in Greeneville. Roberts faces a minimum mandatory 10 year sentence up to life in prison, a fine of up to $8,000,000 and at least eight years up to life on supervised release following the prison term.
The investigation of Roberts and his co-conspirators, all of whom entered guilty pleas prior to Roberts’ trial, began when Johnson City Police Officers responded to a request from the Motel 6 in Johnson City that officers investigate suspicious activity in a room. There, officers found Roberts and three of his four co-defendants in a room with packages of crack cocaine and tools of the drug trade. Another room rented by the group also contained crack cocaine. In all, nearly 3.5 ounces or 97.97 grams of crack cocaine, having a street value of approximately $10,000, was found in the rooms. Testimony at trial established that Roberts, and the others, came to Johnson City from Knoxville to sell crack cocaine, initially staying at the Red Roof Inn. After selling out of crack cocaine at the Red Roof Inn, the group returned to Knoxville to get more crack, then returned to Johnson City, this time staying at the Motel 6, where law enforcement intervened.
U.S. Attorney, William C. Killian, stated: “This should send a message to drug dealers wishing to peddle their poison on the streets of East Tennessee. You are not welcome here.”
Law enforcement agencies participating in the joint investigation which led to indictment and subsequent conviction of Roberts included the Johnson City Police Department, First Judicial District Drug Task Force, and Tennessee Bureau of Investigation. Assistant U.S. Attorney J. Gregory Bowman represented the United States.
Father, Two Sons Sentenced to A Total of 85 Years in Prison for Involvement in Oxycodone and Money Laundering ConspiraciesRead the Press Release
“Doctor Shopping” Trips to Florida Involved Over $3M Worth of Drugs
KNOXVILLE, Tenn.-- Jackie Mize, 64, and his two sons, Kelvin Mize, 35, and James Mize, 40, all of Claiborne County, Tenn., were recently sentenced in the U.S. District Court for the Eastern District of Tennessee at Knoxville, by the Honorable Thomas A. Varlan, U.S. District Judge. Jackie and Kelvin Mize were each sentenced to serve 30 years in prison while James Mize received a sentence of 25 years. An order of forfeiture awarding the United States a money judgment of $3M was entered as to each defendant.
The sentences were imposed after all three individuals were convicted by a jury on June 14, 2013, of conspiracy to distribute oxycodone and conspiracy to commit money laundering. The evidence presented at trial showed that Jackie Mize, his two sons and others made regular “doctor shopping” trips to Florida over an 18-month period to acquire prescriptions for oxycodone and other controlled substances, had the prescriptions filled at pharmacies there, and used and sold the pills in and around Claiborne County. The evidence further demonstrated that the drug conspiracy involved over 75,000 oxycodone tablets and more than 25,000 doses of Xanax.
The indictment and subsequent convictions of the Mizes were the result of a lengthy investigation conducted by agents of the Eighth Judicial District Drug Task Force, Drug Enforcement Administration and Internal Revenue Service-Criminal Investigations.
U.S. Attorney Bill Killian said, “I want to thank the agents from all of these law enforcement agencies for their tireless efforts in bringing the Mizes to justice. These lengthy sentences should demonstrate that the U. S. Attorney’s Office will continue to work with its colleagues in the state judicial districts to severely punish those persons who are involved in spreading the epidemic of opiate addiction in the Eastern District of Tennessee.”
“These sentences send a clear message that drug and money laundering violations are serious crimes. IRS Criminal Investigation is proud to work with our law enforcement partners, by providing our financial investigative expertise, to stop the flow of illegal drugs into our communities,” stated Christopher A. Henry, Special Agent in Charge.
Erwin Residents Sentenced for Conspiracy to Manufacture MethamphetamineRead the Press Release
GREENEVILLE, Tenn.- Three individuals involved in a conspiracy to manufacture methamphetamine were sentenced on Nov. 6, 2013, by the Honorable J. Ronnie Greer, U.S. District Judge. Timothy Dunbar, 42 of Erwin, Tenn., was sentenced to 84 months prison. Darren Hensley, 27 of Erwin, Tenn., was sentenced to 75 months in prison. Nathaniel Effler, 23, of Erwin, Tenn., was sentenced to 60 months in prison.
Each of these individuals pleaded guilty to a March 2013 federal indictment charging a total of 25 individuals with conspiracy to manufacture methamphetamine. Three additional separate but related conspiracies to manufacture methamphetamine cases from in and around the Erwin area were also recently prosecuted in U.S. District Court, resulting in the conviction of a total of 52 individuals. Sentencing is currently pending for nine of the individuals involved in these conspiracies.
The methamphetamine manufacturing conspiracy that these individuals admitted to being a part of involved a network of overlapping associates that relied on coordinated efforts to procure methamphetamine precursors which they then used to make methamphetamine using a "shake and bake" manufacturing method. The drugs the conspirators were responsible for making were being distributed both for profit and for use by people within the conspiracy.
The indictment and subsequent conviction of these individuals was the result of an ongoing and collaborative investigation conducted by the Unicoi County Sheriff’s Department, Washington County Sheriff’s Department, Erwin Police Department, First Judicial District Drug Task Force, Tennessee Bureau of Investigation, and Drug Enforcement Administration. Assistant U.S. Attorney J. Christian Lampe represented the United States.
Randall Michael Lawson Sentenced to 216 Months in Prison and Lifetime Supervision for Narcotics, Firearms, Money Laundering, and Social Security Fraud ConvictionsRead the Press Release
GREENEVILLE, Tenn. – Randall Michael Lawson, 58, of Limestone, Tenn., was sentenced on Nov. 6, 2013, to serve 216 months in prison, followed by lifetime of supervised release, by the Honorable J. Ronnie Greer, U.S. District Judge. Lawson was also ordered to pay restitution to the Social Security Administration in the amount of $10,784.16; forfeit two firearms, and pay a $3 million judgment to the United States.
Lawson pleaded guilty in August 2012 to a federal indictment charging him with conspiracy to distribute and to possess with the intent to distribute 1,000 kilograms or more of marijuana; conspiracy to distribute and possess with intent to distribute five kilograms or more of cocaine; conspiracy to commit money laundering; social security fraud; and, being a felon in possession of firearms.
Lawson admitted to conspiring to distribute approximately 14,400 pounds, or 6,545 kilograms, of marijuana and 24 kilograms of cocaine between December 2002 and December 2010. Additionally, in a related case, Lawson was convicted in North Carolina of possessing two firearms after having been convicted of a prior felony offense.
As a result of this investigation, several other individuals have been convicted and sentenced for their involvement in the drug conspiracies.
On Apr. 25, 2013, Michael L. Dykes, 51, of Rogersville, Tenn., was sentenced to serve 37 months in prison, followed by one year of supervised release. Dykes was allowed to remain on bond until reporting to the Bureau of Prisons to serve his sentence. He pleaded guilty in January 2013 to conspiracy to distribute and possess with intent to distribute marijuana and conspiracy to distribute and possess with intent to distribute oxycodone pills.
On Apr. 16, 2013, Lorne L. Loucel, 32, of Rogersville, Tenn., was sentenced to serve 108 months in prison, followed by three years of supervised release. Loucel pleaded guilty in December 2012 to conspiracy to distribute and possess with intent to distribute oxycodone pills.
On Apr. 16, 2013, Daniel L. Dykes, 29, of Rogersville, Tenn., was sentenced to serve 37 months in prison, followed by three years of supervised release. Dykes pleaded guilty in December 2012 to conspiracy to distribute and possess with intent to distribute marijuana and conspiracy to distribute and possess with intent to distribute oxycodone pills.
On Apr. 2, 2013, Christy D. Dykes, 32, of Rogersville, Tenn., was sentenced to serve 40 months in prison, followed by three years of supervised release. Dykes pleaded guilty in November 2012 to conspiracy to distribute and possess with intent to distribute oxycodone pills.
On Mar. 21, 2013, Christy R. Seay, 39, of Greeneville, Tenn., was sentenced to serve 57 months in prison, followed by three years of supervised release. Seay pleaded guilty in September 2012 to conspiracy to distribute and possess with intent to distribute oxycodone pills.
On Mar. 11, 2013, Ella Maria Camacho Garcia, 30, of Burlington, N.C., was sentenced to serve 78 months in prison, followed by two years of supervised release. Garcia pleaded guilty in August 2012 to conspiracy to distribute and possess with intent to distribute marijuana and a conspiracy to distribute and to possess with the intent to distribute cocaine. Garcia also pleaded guilty to money laundering and received a money judgment in the amount of $815,000.00.
On Mar. 7, 2013, Jonathan L. Light, 24, of Kingsport, Tenn., was sentenced to serve 84 months in prison, followed by three years of supervised release. Light pleaded guilty in August 2012 to conspiracy to distribute and possess with intent to distribute oxycodone pills.
On Mar. 7, 2013, Levi D. Love, 24, of Kingsport, Tenn., was sentenced to serve 37 months in prison, followed by three years of supervised release. Love was allowed to remain on bond until reporting to the Bureau of Prisons to serve his sentence. Love pleaded guilty in August 2012 to conspiracy to distribute and possess with intent to distribute oxycodone pills.
On Mar. 4, 2013, Charles Thomas Laing, 30, of Rogersville, Tenn., was sentenced to serve 157 months in prison, followed by four years of supervised release. Laing pleaded guilty in September 2011, to conspiracy to distribute and possess with intent to distribute oxycodone pills, possession of a firearm in furtherance of a drug trafficking offense, and money laundering.
On Feb. 28, 2013, Jessica R. Bernard, 23, of Greeneville, Tenn., was sentenced to serve 37 months in prison, followed by three years of supervised release. Bernard pleaded guilty in September 2012 to conspiracy to distribute and possess with intent to distribute oxycodone pills.
On Feb. 28, 2013, Amanda D. Bernard, 23, of Afton, Tenn., was sentenced to serve 37 months in prison, followed by three years of supervised release. Bernard pleaded guilty in August 2012 to conspiracy to distribute and possess with intent to distribute oxycodone pills.
On Feb.26, 2013, Shandeeda M. Compton, 31, of Rogersville, Tenn., was sentenced to serve 63 months in prison, followed by three years of supervised release. Compton pleaded guilty in October 2012 to conspiracy to distribute and possess with intent to distribute oxycodone pills.
On Feb. 25, 2013, Brock A. Lawson, 26, of Rogersville, Tenn., was sentenced to serve 118 months in prison, followed by five years of supervised release. Lawson pleaded guilty in July 2012 to conspiracy to distribute and possess with intent to distribute marijuana.
On Apr. 25, 2013, James Light, 65, of Rogersville, Tenn., was sentenced to serve 150 months in prison, followed by four years of supervised release. Light pleaded guilty in December 2012 to conspiracy to distribute and to possess with the intent to distribute 500 grams or more of cocaine and a conspiracy to distribute and possess with intent to distribute oxycodone.
On Apr. 25, 2013, Michael L. Dykes, of Rogersville, Tenn., was sentenced to serve 37 months in prison, followed by one year of supervised release. Dykes pleaded guilty in January 2013 to conspiracy to distribute and to possess with the intent to distribute 55 kilograms or more of marijuana and a conspiracy to distribute and possess with intent to distribute oxycodone.
On Apr. 30, 2013, Jeremy R. Light, of Rogersville, Tenn., was sentenced to serve 57 months imprisonment, followed by three years of supervised release. Light pled guilty on January 3, 2013 to conspiracy to distribute and possess with intent to distribute oxycodone.
On Apr. 30, 2013, Michael B. Dykes, of Rogersville, Tenn., was sentenced to 30 months in prison, followed by three years of supervised release. Dykes pleaded guilty in January 2013 conspiracy to distribute and possess with intent to distribute oxycodone.
On Jul. 23, 2013, Jackie D. Dykes, of Rogersville, Tenn., was sentenced to serve 80 months in prison, followed by three years of supervised release. Dykes pleaded guilty in December 2012 conspiracy to distribute and to possess with the intent to distribute 55 kilograms or more of marijuana and a conspiracy to distribute and possess with intent to distribute oxycodone.
On Aug. 5, 2013, James H. McMurray, Jr., of Blountville, Tenn., was sentenced to serve 60 months in prison, followed by four years of supervised release. McMurray pleaded guilty in April 2013 to conspiracy to distribute and to possess with the intent to distribute 100 kilograms or more of marijuana and money laundering.
On Aug. 5, 2013, Michael Lee Lawson, of Rogersville, Tenn., was sentenced to serve 70 months in prison, followed by four years of supervised release. Lawson pleaded guilty in April 2013 to conspiracy to distribute and to possess with the intent to distribute 100 kilograms or more of marijuana.
On Oct. 16, 2013, Parrie Christine Hudgins, of Kingsport, Tenn., was sentenced to serve 87 months in prison, followed by five years of supervised release. Lawson pleaded guilty in April 2013 to conspiracy to distribute and to possess with the intent to distribute 1,000 kilograms or more of marijuana and a conspiracy to distribute and possess with intent to distribute oxycodone.
The indictment and subsequent conviction of Light and other co-conspirators was the result of a three year investigation conducted by the Hawkins County Tennessee Sheriff’s Department, Sullivan County Tennessee Sheriff’s Department, Greene County Tennessee Sheriff’s Department, Second Judicial Drug Task Force, Kingsport, Tennessee, Police Department, Third Judicial Drug Task Force, Tennessee Bureau of Investigation, Federal Bureau of Investigation, Social Security Administration, and Drug Enforcement Administration. Assistant U.S. Attorney Caryn L. Hebets represented the United States.
32 Indicted for Federal Drug and Gun ViolationsRead the Press Release
CHATTANOOGA, Tenn. -- A federal grand jury in Chattanooga returned nine indictments charging 32 people on Oct. 22, 2013. Indictments charge Robert Stephon North, 34, of Chattanooga, Tenn.; Juanzell Jenkins, 37, of Adairsville, Ga.; Joe Jenkins, 40, of Chattanooga, Tenn.; Jumoke Johnson, Jr., 20, of Chattanooga, Tenn.; Shannon D. Mitchell, 29, of Chattanooga, Tenn.; Gerald Toney, 33, of Chattanooga, Tenn.; Dejuan Cooper, 23, of Chattanooga, Tenn.; Guy L. Wilkerson, Jr., 20, of Chattanooga, Tenn.; Rodney Harris II, 22, of Chattanooga, Tenn.; Frank White, 30, of Chattanooga, Tenn.; Valentino Harris, 28, of Chattanooga, Tenn.; Torrey Gilmore, 38, of Chattanooga, Tenn.; Reginald D. Oakley, 39, of Chattanooga, Tenn.; Tommy Ryals, 34, of Atlanta, Ga.; Juane Joseph, 19, of Chattanooga, Tenn.; Leonita Blackmon, 32, of Chattanooga, Tenn.; LaJeromeny Brown, 35, of Chattanooga, Tenn.; Kenneth Hopkins, 49, of Chattanooga, Tenn.; Kentarius Nealy, 20, of Chattanooga, Tenn.; Idriss Barr, 29, of Chattanooga, Tenn.; Adrian Washington, 36, of Chattanooga, Tenn.; Milo E. Geiger, 36, of Chattanooga, Tenn.; Jerry Wayne Alexander, Jr., 41, of Chattanooga, Tenn.; Johnny Caldwell, Jr., 44, of Chattanooga, Tenn.; Garry Brown, 24, of Chattanooga, Tenn.; Robert Siler, 27, of Chattanooga, Tenn.; and Thaddius L. Humphrey, 32, of Chattanooga, Tenn., with conspiracy to distribute 280 grams or more of cocaine base (“crack”), and/or five kilograms or more of cocaine. Derrick L. Smith, 22, of Chattanooga, Tenn., is charged with possession of cocaine base (“crack”) with the intent to distribute it. Donte Taylor, 27, of Chattanooga, Tenn.; Rahmon Christian, 21, of Chattanooga, Tenn.; and Tramale Johnson, 25, of Chattanooga, Tenn., are charged with being convicted felons in possession of firearms. Johnson is also charged with possession of marijuana with the intent to distribute. Finally, Stephone L. Reed, 23, of Chattanooga, Tenn., is charged with car-jacking, brandishing a firearm during and in relation to a crime of violence, and being a felon in possession of a firearm.
The coordinated arrests of these individuals by federal, state and local law enforcement began on the morning of Nov. 4, 2013. The arrested individuals will be appearing in U.S. District Court this afternoon and throughout the remainder of the week.
If convicted, the individuals charged with conspiracy to distribute 280 grams or more of cocaine base (“crack”), and/or five kilograms or more of cocaine face a sentence of at least 10 years to life. Depending on their previous criminal histories, these individuals could face a sentence of 20 years to life or even a mandatory minimum sentence of life in prison. If convicted Derrick L. Smith faces up to 20 years in prison. If convicted Donte Taylor, Rahmon Christian, and Tramale Johnson face at least 0-10 years in prison, and possibly 15 years to life depending on their previous felony convictions. If convicted Stephone L. Reed faces 0-15 years in prison for carjacking, plus seven years to life for brandishing the firearm during a crime of violence. Any of these individuals who are convicted would also face a potential fine, restitution, and a period of supervised release. Sentences in federal court are served without the possibility of parole.
This indictment is the result of an investigation by the Drug Enforcement Administration, Chattanooga Police Department, Tennessee Bureau of Investigation, Federal Bureau of Investigation, Bureau of Alcohol, Tobacco, Firearms and Explosives, Red Bank Police Department, Hamilton County Sheriff’s Office, and the United States Marshals Service. Assistant U.S. Attorney Chris Poole and Special Assistant U.S. Attorneys Nicholas Regalia and Meredith Edwards will represent the United States.
Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until their guilt has been proven beyond a reasonable doubt.
Jason Anthony Carter Convicted in Connection with Meth Lab ExplosionRead the Press Release
GREENEVILLE, Tenn. – On Oct. 31, 2013, Jason Anthony Carter, 35, of Bristol, Tenn., was convicted of conspiring to manufacture methamphetamine, possession of equipment, chemicals, products, and materials used for manufacturing or attempting to manufacture methamphetamine, and creating a substantial risk of harm to human life while manufacturing or attempting to manufacture methamphetamine, following a two-day jury trial in U.S. District Court in Greeneville.
Sentencing is set for 1:30 p.m., on Mar. 3, 2014, in U.S. District Court in Greeneville. Carter faces a possible sentence of up to 40 years in federal prison and up to $1,500,000 in fines.
A federal grand jury indicted Carter, along with Amanda Kiser Steadman, 32, and James Hulon Steadman, 41, both of Bristol Tenn., on these charges in November 2012. According to evidence presented at trial, Carter and the Steadmans planned to manufacture methamphetamine at an apartment building in Bristol in August 2012. They purchased the supplies needed to manufacture methamphetamine at various businesses in Bristol before returning to the apartment to begin cooking methamphetamine utilizing the “one-pot” or “shake and bake” method. Once at the apartment, Carter assisted with the preparation of the materials to manufacture methamphetamine. Evidence further showed that while the methamphetamine was cooking, several explosions occurred, resulting in a fire in the apartment and serious injuries to Amanda Steadman.
Both Amanda Kiser Steadman and James Hulon Steadman were previously convicted and are currently awaiting sentencing.
This investigation was a joint effort of the Bristol Tennessee Police Department, Tennessee Methamphetamine Task Force, Drug Enforcement Administration, Second Judicial District Drug Task Force, and Sullivan County Sheriff’s Office. Assistant U.S. Attorney Suzanne Kerney-Quillen represents the United States.
Erwin Residents Sentenced for Conspiracy to Manufacture MethamphetamineRead the Press Release
GREENEVILLE, Tenn. – Four individuals involved in a conspiracy to manufacture methamphetamine were sentenced on Oct. 23, 2013, by the Honorable J. Ronnie Greer, U.S. District Judge. Tim Smith, 29, of Erwin, Tenn., was sentenced to serve 92 months in prison. Crystal Williams, 40, of Erwin, Tenn., was sentenced to serve 90 months in prison. Misty Potter, 36, of Erwin, Tenn., was sentenced to serve 66 months in prison. Doug Gaskins, 53, of Erwin, Tenn., was sentenced to serve 54 months in prison.
Each of these individuals pleaded guilty to a March 2013 federal indictment charging a total of 25 individuals with conspiracy to manufacture methamphetamine. Three additional separate but related conspiracies to manufacture methamphetamine cases from in and around the Erwin area were also recently prosecuted in U.S. District Court, resulting in the conviction of a total of 52 individuals. Sentencing is currently pending for approximately 17 of these individuals involved in these conspiracies.
The methamphetamine manufacturing conspiracy that these individuals admitted to being a part of involved a network of overlapping associates that relied on coordinated efforts to procure methamphetamine precursors which they then used to make methamphetamine using a "shake and bake" manufacturing method. The drugs the conspirators were responsible for making were being distributed both for profit and for use by people within the conspiracy.
The indictment and subsequent conviction of these individuals was the result of an ongoing and collaborative investigation conducted by the Unicoi County Sheriff’s Department, Washington County Sheriff’s Department, Erwin Police Department, First Judicial District Drug Task Force, Tennessee Bureau of Investigation, and Drug Enforcement Administration. Assistant U.S. Attorney J. Christian Lampe represented the United States.
U.S. Attorney Bill Killian commended the hard work and joint cooperation of the law enforcement agencies who worked the investigation. “I appreciate the efforts of all the law enforcement agencies coming together to rid this community of a large number of methamphetamine makers and users.”
Washington County Sheriff Ed Graybeal said that he appreciates everyone’s great effort in combating the methamphetamine problem that targets our area. “Law enforcement working together with the caring people of the community…we are all making a difference!” said Graybeal.
Sheriff Mike Hensley said, “This cooperative effort has dramatically reduced the overall drug problem in Unicoi County. We hope that these harsh sentences will serve as a deterrent for other individuals that are involved with manufacturing methamphetamine. Everyone involved in this investigation has done an extraordinary job to bring this to pass.”
Erwin Residents Sentenced for Conspiracy to Manufacture MethamphetamineRead the Press Release
GREENEVILLE, Tenn. – Four individuals involved in a conspiracy to manufacture methamphetamine were sentenced on Oct. 23, 2013, by the Honorable J. Ronnie Greer, U.S. District Judge. Tim Smith, 29, of Erwin, Tenn., was sentenced to serve 92 months in prison. Crystal Williams, 40, of Erwin, Tenn., was sentenced to serve 90 months in prison. Misty Potter, 36, of Erwin, Tenn., was sentenced to serve 66 months in prison. Doug Gaskins, 53, of Erwin, Tenn., was sentenced to serve 54 months in prison.
Each of these individuals pleaded guilty to a March 2013 federal indictment charging a total of 25 individuals with conspiracy to manufacture methamphetamine. Three additional separate but related conspiracies to manufacture methamphetamine cases from in and around the Erwin area were also recently prosecuted in U.S. District Court, resulting in the conviction of a total of 52 individuals. Sentencing is currently pending for approximately 17 of these individuals involved in these conspiracies.
The methamphetamine manufacturing conspiracy that these individuals admitted to being a part of involved a network of overlapping associates that relied on coordinated efforts to procure methamphetamine precursors which they then used to make methamphetamine using a "shake and bake" manufacturing method. The drugs the conspirators were responsible for making were being distributed both for profit and for use by people within the conspiracy.
The indictment and subsequent conviction of these individuals was the result of an ongoing and collaborative investigation conducted by the Unicoi County Sheriff’s Department, Washington County Sheriff’s Department, Erwin Police Department, First Judicial District Drug Task Force, Tennessee Bureau of Investigation, and Drug Enforcement Administration. Assistant U.S. Attorney J. Christian Lampe represented the United States.
U.S. Attorney Bill Killian commended the hard work and joint cooperation of the law enforcement agencies who worked the investigation. “I appreciate the efforts of all the law enforcement agencies coming together to rid this community of a large number of methamphetamine makers and users.”
Washington County Sheriff Ed Graybeal said that he appreciates everyone’s great effort in combating the methamphetamine problem that targets our area. “Law enforcement working together with the caring people of the community…we are all making a difference!” said Graybeal.
Sheriff Mike Hensley said, “This cooperative effort has dramatically reduced the overall drug problem in Unicoi County. We hope that these harsh sentences will serve as a deterrent for other individuals that are involved with manufacturing methamphetamine. Everyone involved in this investigation has done an extraordinary job to bring this to pass.”
Sneedville Resident Johnny Wayne Neeley Convicted for Oxycodone Trafficking OffensesRead the Press Release
Neeley Organized Trips to Tennessee and Florida “Pill Mills”
GREENEVILLE, Tenn. – On Sept. 30, 2013, Johnny Wayne Neeley, 39, of Sneedeville, was convicted of conspiring to distribute oxycodone and possession with intent to distribute oxycodone, following a three-day jury trial in U.S. District Court in Greeneville. Sentencing is set for 1:30 p.m., Feb. 10, 2014, in U.S. District Court in Greeneville. He faces a possible sentence of up to 40 years in federal prison and up to $2,000,000 in fines.
Neeley and 11 others were indicted on drug trafficking charges in October 2012 by a federal grand jury. According to evidence presented at trial, Neeley paid for, or “sponsored” others indicted in this conspiracy to travel on commercial airlines to pill mills in Tampa, Fla., to obtain oxycodone to distribute in the Eastern District of Tennessee. He also paid for, or “sponsored”, these individuals to travel to pill mills in the Eastern District of Tennessee to obtain oxycodone for distribution. Evidence showed that Neeley distributed controlled substances in the Eastern District of Tennessee on numerous occasions, including oxycodone, Xanax, and Suboxone.
In October 2012, Neeley and Greg Rhea, were arrested at Rhea’s residence in Morristown, where the two were barricaded inside the house in a room found to contain controlled substances, including oxycodone and oxymorphone, and three firearms.
Others charged in this indictment, who have already been convicted and are awaiting sentencing, include: Gregory Allen Rhea, 37, of Morristown; Gerald Glenn Horner, 35, of Mooresburg; Ryan Michael Guesford, of Morristown; Joey Wayne Vanover, 35, of Tazewell; Kera Leann Green, 23, of Whitesburg; Kerry Glenn Nelson, 42, of Morristown; Kimberly Ann Vanover, 37, of Tazewell; Ricky Allen “Rooster” Seal, 46, of Morristown; Tamara Michelle Moles, 44, of Mooresburg; and Ricky Tim Collins, 47, of Bean Station.
This investigation was a joint effort of the Tennessee Bureau of Investigation and Morristown Police Department. In addition, the U.S. Marshals Service, Drug Enforcement Administration Task Force officers, Third Judicial District Drug Task Force, and the Sheriff’s Offices of Claiborne, Grainger, Hancock, Hamblen, and Hawkins counties assisted with the October 2012 arrests. Assistant U.S. Attorney Suzanne Kerney-Quillen represented the United States.
U.S. Attorney William C. Killian Announces Hiring Grants for Law Enforcement and School Safety OfficersRead the Press Release
Funds Will Hire School Resource Officers and Critical Law Enforcement Positions
KNOXVILLE, Tenn. – U.S. Attorney William C. Killian, in conjunction with the U.S. Department of Justice Office of Community Oriented Policing Services (COPS), today announced funding awards for the Eastern District of Tennessee.
The grantees and amount awarded include: $112,282 to the City of Clinton; $1,000,000 to Hamilton County Sheriff’s Department; and $439,077 to the Johnson City Bureau of Police.
“In the wake of past tragedies, it's clear that we need to be willing to take all possible steps to ensure that our kids are safe when they go to school,” said Attorney General Eric Holder. “These critical investments represent the Justice Department's latest effort to strengthen key law enforcement capabilities, and to provide communities with the resources they need to protect our young people. Especially in a time of increased challenges and limited budgets, our top priority must always be the safety and well-being of our children.”
Overall the COPS Office funded awards to 263 cities and counties, aimed at creating 937 law enforcement positions. More than $125 million will be awarded nationally, including nearly $45 million to fund 356 new school resource officer positions.
“Keeping our children safe when they go to school is of critical importance and I am pleased to join the Attorney General and the COPS Office in announcing these grants which will help provide our communities with the resources needed to accomplish this vital mission,” said U.S. Attorney Killian.
“The COPS Office is pleased to assist local law enforcement agencies throughout the country address their most critical public safety issues,” said Joshua Ederheimer, Acting Director of the COPS Office. “Funding from this year’s program will allow many cities and counties to apply new sworn personnel to issues related to violent crime, property crime, and school safety.”
The COPS Hiring Program offers grants to state, local and tribal law enforcement agencies to hire or rehire community policing officers. The program provides the salary and benefits for officer and deputy hires for three years.
Grantees for the 2013 hiring program were selected based on their fiscal needs, local crime rates, and their community policing plans. There was an additional focus this year on agencies requesting assistance in developing school safety programs that would include the hiring of a school resource officer. School resource officer positions funded by the COPS Office are sworn law enforcement positions that work within a school district or facility, interacting directly with school administrators and students.
The COPS Office is a federal agency responsible for advancing community policing nationwide. Since 1995, COPS has awarded over $14 billion to advance community policing, including grants awarded to more than 13,000 state, local, and tribal law enforcement agencies to fund the hiring and redeployment of approximately 125,000 officers and provide a variety of knowledge resource products including publications, training, and technical assistance.
For the entire list of grantees and additional information about the 2013 COPS Hiring Program, visit the COPS website at www.cops.usdoj.gov.
Cleveland Doctor Indicted for Fraud and Money LaunderingRead the Press Release
CHATTANOOGA, Tenn. – On Sept. 24, 2013, a federal grand jury in Chattanooga returned a 35-count indictment against Dr. Raymond Sean Brown, 44, of McDonald, Tenn., for wire fraud, mail fraud, health care fraud and money laundering. Brown’s initial appearance and arraignment is scheduled for 2:00 p.m., Oct. 1, 2013, before U.S. Magistrate Judge Susan K. Lee, U.S. District Court, Chattanooga.
The indictment alleges that from May 2008 until December 2012, Brown fraudulently billed Medicare for Botox injections he did not give and received $7,482,968 in reimbursement from Medicare for these injections. Between 2008 and 2012, Brown allegedly purchased only 254 vials of non-FDA approved Botox, purchased no FDA approved Botox, and billed Medicare for 17,766 vials. Brown allegedly submitted claims for reimbursement electronically and received payment by checks mailed to his office. According to the indictment, the money received from Medicare for the fraudulent claims was deposited into an Athens Federal Community Bank account from which Brown made a transfer of $35,000 to a Tennessee Valley Federal Credit Union account. Brown allegedly also made payments of $58,519 and $78,851 to two different car dealerships from the Tennessee Valley Federal Credit Union account.
If convicted, Brown faces a term of up to 20 years in prison for each count of wire and mail fraud and up to 10 years in prison for each count of health care fraud and money laundering. Each count also provides for a fine of up to $250,000 and a supervised release term of up to three years. The indictment sets out forfeiture allegations which indicate that, if convicted, Brown may forfeit his interest in the $186,091 in the Tennessee Valley Federal Credit Union account and the $6,579,517 in the Athens Federal Community Bank account. He may also be subject to a money judgment of not less than $7,400,000 if convicted.
This indictment is the result of an investigation by the U.S. Food and Drug Administration- Office of Criminal Investigations and U.S. Department of Health and Human Services- Office of Inspector General. Assistant U.S. Attorney Terra L. Bay will represent the United States.
Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until their guilt has been proven beyond a reasonable doubt.
Cocke County Woman Who Threatened TBI Agent Sentenced to 51 Months in Federal PrisonRead the Press Release
GREENEVILLE, Tenn. – Kathleen Laws Garrett, 51, of Newport, Tenn., was sentenced on September 19, 2013, to serve 51 months in prison, by the Honorable Leon Jordan, U.S. District Judge. Garrett pleaded guilty to a May 2013 federal indictment charging her and her son, Clayton Carroll Owenby, with threatening to retaliate against a witness.
Garrett’s son, Owenby, had been previously charged in an oxycodone distribution conspiracy, which involved nine individuals obtaining prescriptions for oxycodone from various pain clinics and physicians across the state of Tennessee and then redistributing the drug in the Eastern District of Tennessee. Owenby pleaded guilty to the drug distribution conspiracy and admitted that he obtained 5,718 total dose units (totaling 176,240 milligrams) of oxycodone from multiple physicians.
While in federal custody during the pendency of his drug case, Owenby made numerous phone calls to his mother, Garrett, wherein he threated to physically retaliate against the lead case agent and his family. Garrett also made numerous threats to physically retaliate against the lead case agent and his family as well. Garrett admitted to making these threats in response to the agent’s role in the investigation concerning her son. Owenby also pleaded guilty to threatening to retaliate against a witness and was sentenced on September 5, 2013.
“This sentence reflects that threats of physical harm against agents involved in federal investigations will not be tolerated. Such threats are totally unacceptable and will be aggressively prosecuted by this office,” said U. S. Attorney William C. Killian.
This case is the result of a joint investigation by the Cocke County Sheriff’s Office and Tennessee Bureau of Investigation. Assistant U.S. Attorney Suzanne Kerney-Quillen represented the United States.
District Attorney Lisa Shepperd Zavogiannis Sworn in as Special Assistant United States AttorneyRead the Press Release
CHATTANOOGA, Tenn. -- Lisa Shepperd Zavogiannis, District Attorney General, 31st Judicial District, was sworn in as a Special U. S. Attorney (SAUSA) for the U.S. Attorney’s Office, Eastern District of Tennessee. The ceremony was held on Monday, Sept. 16, 2013, in U.S. District Court in Chattanooga by the Honorable William B. Mitchell Carter, U.S. Magistrate Judge.
She will continue to serve as District Attorney General for the 31st Judicial District. Her role as a SAUSA for the Eastern District of Tennessee, will allow her to assist the U.S. Attorney and Assistant U.S. Attorneys in specific federal cases.
In 2006, Ms. Zavogiannis became the first woman in the state of Tennessee to be elected District Attorney in her judicial district. She maintains a strong focus on the children in her district as an active promoter of anti-drug and teen parenting programs. She serves as the President of the Children’s Advocacy Center for the Thirty-First Judicial District, and has done so since 2006. She is active with the District Attorney Generals Conference serving on several committees, including the Executive, Legislative, Public Education and Child Support Committees.
The Honorable William C. Killian, United States Attorney for the Eastern District of Tennessee stated, “We are pleased to have Ms. Zavogiannis join our staff as a Special Assistant United States Attorney. This association allows us to continue and increase our cooperative efforts with the District Attorney General in the 31st Judicial District regarding violent crimes, drugs and human trafficking, and other areas of joint concern.”
Seven East Tennessee Residents Sentenced to A Total of 603 Months in Prison for Methamphetamine Conspiracy Operating in Washington CountyRead the Press Release
GREENEVILLE, Tenn. – On Tuesday, Sept. 10, 2013, the Honorable Leon Jordan, U.S. District Judge, sentenced the last of seven defendants for their roles in a methamphetamine manufacturing conspiracy. The individuals were indicted in March 2013 for conspiring to manufacture methamphetamine (meth).
Between January 28 and February 7, 2013 law enforcement agents found meth labs or meth equipment and residue at four sites in Johnson City, including a room at the Fox Motel located on Highway 11E. The conspiracy was active when the indictment was returned on Mar. 12, 2013.
The seven individuals include: Thomas Bugg, 52, of Johnson City, who was sentenced to 92 months in prison; James Brandon Kimes, 27, of Gray, who was sentenced to 200 months in prison; Stephen Eric Burgner, 32, of Johnson City, who was sentenced to 96 months in prison; Monroe Eugene Lowe, 27, of Jonesborough, who was sentenced to 72 months in prison; Allen Casey Story, 28, of Johnson City, who was sentenced to 60 months in prison; Carla Nicole Lowe, 23, of Elizabethton, who was sentenced to 46 months in prison; and Terra Beth Bugg, 41, of Watauga, who was sentenced to 37 months in prison.
U.S. Attorney William C. Killian stated, “Tennessee continues to have one of the highest rates of meth addiction in the United States. Meth has no legitimate uses and it destroys lives, families, and communities. We will continue to devote resources to rid our communities of the scourge of meth by vigorous prosecution and meaningful prison terms.”
Law enforcement agencies participating in the investigation which led to the indictment and subsequent convictions include the Washington County Tennessee Sheriff’s Office, Drug Enforcement Administration, Johnson City Police Department, Elizabethton Police Department, Tennessee Highway Patrol, Tennessee National Guard Counter-Drug Intel, and the Kingsport Police Department. Assistant U.S. Attorney Helen Smith represented the United States.
Nasser Qayed Sentenced for Knoxville-Detroit Scheme Involving Contraband CigarettesRead the Press Release
KNOXVILLE, Tenn. B On Friday, Sept. 13, 2013, Nasser Qayed, 41, of Detroit, Mich., was sentenced by the Honorable Leon Jordan, Senior U.S. District Court Judge, to serve 21 months in federal prison for his convictions of receiving and concealing stolen goods traveling in interstate commerce. Additionally, the court ordered him to pay $121,000 in restitution.
Qayed was a former convenience store operator in Detroit, who participated in a Knoxville to Detroit contraband cigarette smuggling ring. He pleaded guilty in May 2012 to two counts of receiving and concealing stolen goods in interstate commerce.
The conviction of Qayed and others involved in this contraband cigarette smuggling ring was the result of a long-term undercover investigation by the FBI Joint Terrorism Task Force. Assistant U.S. Attorney Jeff Theodore represented the United States.
Johnson City Pharmacist Sentenced to Serve Five Years ProbationRead the Press Release
JOHNSON CITY, Tenn. – Thomas Patrick Rowan, 59, of Johnson City, was sentenced on September 11, 2013, by the Honorable J. Ronnie Greer, U.S. District Court Judge, to serve five years on federal supervised probation and a fine of $2,500. Rowan also agreed to a $75,000 forfeiture as a result of his conviction.
Rowan was charged in an information in April 2013, and pleaded guilty on April 30, 2013, to one count of obtaining oxycodone, a Schedule II controlled substance, by fraud and one count of providing false or fraudulent information in reports concerning controlled substance inventories. Rowan was a pharmacist who owned and operated pharmacies in Johnson City and Fall Branch at the time of these offenses.
“Our office takes all cases involving oxycodone and other prescribed controlled substances very seriously. Prescription controlled substance abuse is an epidemic in east Tennessee and we work aggressively to ensure that the controlled substance laws are enforced,” stated U.S. Attorney William C. Killian.
The Federal Bureau of Investigation and the Drug Enforcement Administration Diversion Division were involved in this investigation. Assistant U.S. Attorneys M. Suzanne Kerney-Quillen and Helen C.T. Smith represented the United States.
Christopher Michael Vaughan Sentenced to 420 Months for Armed RobberiesRead the Press Release
GREENEVILLE, Tenn. – Christopher Michael Vaughan, 37, of Bristol, Tenn., was sentenced to serve a total of 420 months in prison, by the Honorable J. Ronnie Greer, U.S. District Judge, on Sept. 11, 2013. Upon his release from prison, he will be subject to supervised release for five years. Vaughan was further ordered to pay restitution to the victims of his crimes.
Vaughan pleaded guilty in April 2013 to the February 2013 armed robberies of a Scotchman convenience store, a Roadrunner convenience store, and Belmont Package store, all in Bristol, Tenn. Vaughan also pleaded guilty to a February 2013 armed bank robbery of the New Peoples Bank in Bristol, Va.
Federal law mandates a seven year minimum mandatory sentence for brandishing a firearm in the commission of a violent offense, with each additional offense of possession of a firearm in the commission of a violent offense carrying a 25 year minimum mandatory sentence.
“Serious federal sentences are intended for the most violent criminals in our society. These city police departments, the FBI and AUSA Greg Bowman are to be congratulated for this successful prosecution,” said U. S. Attorney Bill Killian.
Law enforcement agencies participating in the joint investigation included the Bristol Tennessee Police Department, Bristol Virginia Police Department, and Federal Bureau of Investigation. Assistant U.S. Attorney J. Gregory Bowman represented the United States.
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.
Johnson City Man Convicted of Drug and Firearms OffensesRead the Press Release
GREENEVILLE, Tenn. – Following a two-day trial in U.S. District Court, on Sept 5, 2013, Marcus Lyonel Story, 33, of Johnson City, Tenn., was convicted of knowingly possessing a firearm in furtherance of a drug trafficking crime. Story had already pleaded guilty to possession of cocaine with intent to distribute, and possession of marijuana with intent to distribute.
Sentencing is set for 9:00 a.m., January 6, 2014. Story faces a mandatory minimum five years to life in prison. There is no parole in the federal system.
In May 2013 members of the Johnson City Police Department, First Judicial District Drug Task Force, and Drug Enforcement Administration, conducted a surveillance operation that resulted in the arrest of Story on an outstanding warrant. A subsequent search of Story’s home revealed 38.8 pounds of marijuana, 110 grams of cocaine and over $8000 in cash. The estimated street value of these drugs was $50,000. In addition, law enforcement also located six semi-automatic pistols and several hundred rounds of ammunition. Evidence presented at trial showed that Story kept the firearms to protect himself, his drug inventory, and his drug sale proceeds.
Special Assistant U.S. Attorney Nick Regalia represented the United States.
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.
Federal Jury Convicts Jeffrey Scott Braden of Meth Manufacturing Conspiracy Charge and Related OffensesRead the Press Release
Braden was the only defendant of 42 indicted to go to trial
KNOXVILLE, Tenn. - Following a three-day trial in U.S. District Court, Knoxville, a jury convicted Jeffrey Scott Braden of Lake City, Tenn., of conspiracy to manufacture 50 grams or more of methamphetamine, possession of equipment, chemicals, products and materials which may be used to manufacture methamphetamine and possession of ammunition by a previously convicted felon. Braden was one of 42 individuals indicted in the meth manufacturing conspiracy, and the indictment followed a long-term investigation designed to address the fact that Anderson County was the leading county in the state of Tennessee in meth lab seizures. Thirty-eight other individuals have pleaded guilty, two others have signed plea agreements which are on file with the court, and one defendant remains a fugitive. The initiative was named “Operation Meth-odical Destruction.”
Sentencing is set for 2:00 p.m., Feb. 20, 2014, in U.S. District Court in Knoxville, Tenn., before The Honorable Judge Thomas A. Varlan, Chief U.S. District Judge. Braden faces a sentence of life in prison without the possibility of parole because he has several prior felony drug convictions.
The evidence presented at trial included Braden’s confessions to repeatedly manufacturing methamphetamine, testimony about seized chemicals and meth lab components in which Braden was a “cook,” testimony of co-conspirators, and proof of his prior criminal history as a convicted felon.
After the verdict was returned, U.S. Attorney William Killian said, “There was a large-scale meth manufacturing problem in Anderson County, and federal, state and local law enforcement agencies teamed up to combat it. It has been addressed. This conviction and the life sentence which Braden faces serves as a lesson to anyone in this district that serious punishment awaits those who repeatedly manufacture methamphetamine.”
Law enforcement agencies participating in the joint investigation which led to the indictment and the subsequent conviction of Braden included the Drug Enforcement Administration, Anderson County Sheriff’s Department and Tennessee Bureau of Investigation. Assistant U.S. Attorney David P. Lewen, Jr., represented the United States at trial.
Distributing Methamphetamine and Selling Firearms Illegally Sends Unicoi Market Operator to Federal Prison for 46 MonthsRead the Press Release
GREENEVILLE, Tenn.- Billy Joe Rice, 55, of Unicoi County, was sentenced on September 5, 2013, to serve 46 months in federal prison by the Honorable Leon Jordan, U.S. District Judge. Rice pleaded guilty in August 2012 to a federal indictment charging him with distribution of methamphetamine and dealing firearms without a license. Upon his release from prison, Rice will serve three years of supervised release.
A three year investigation revealed that Rice was buying and selling firearms, some of which were stolen, from a market he operated in Unicoi, Tenn. He did not have a federal firearms license. Investigators learned that Rice was also acquiring materials for the manufacture of methamphetamine and distributing methamphetamine.
Law enforcement agencies participating in this investigation which lead to the indictment and subsequent conviction of Rice included the Unicoi County Sheriff’s Department, Erwin Police Department and Bureau of Alcohol, Tobacco, Firearms and Explosives. Assistant U.S. Attorney Robert Reeves represented the United States.
U.S. Attorney Bill Killian praised the law enforcement agencies involved for eliminating an outlet for stolen firearms, and reducing the possibilities that the firearms will fall into the hands of felons and other drug dealers.
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 crimes face tough sentences. PSN gives each federal district the flexibility it needs to focus on individual challenges that a specific community faces.
Cocke County Drug Dealer Who Threatened TBI Agent Sentenced to 135 Months in Federal PrisonRead the Press Release
GREENEVILLE, Tenn. – Clayton Carroll Owenby, 45, of Newport, Tenn., was sentenced on September 5, 2013, to serve 135 months in prison, by the Honorable Leon Jordan, U.S. District Judge. Owenby pleaded guilty to a March 2013 federal indictment charging him and nine others with conspiracy to distribute oxycodone. Additionally, Owenby pleaded guilty to a separate federal indictment, filed in May 2013, charging him with threatening to retaliate against a witness.
The conspiracy for which Owenby was convicted of being a part, involved conspirators obtaining prescriptions for oxycodone from various pain clinics and physicians across the state of Tennessee and then redistributing the drug in the Eastern District of Tennessee. Owenby admitted that he obtained 5,718 total dose units (totaling 176,240 milligrams) of oxycodone from multiple physicians.
While in federal custody during the pendency of his drug case, Owenby made numerous phone calls to his mother, Kathleen Garrett, wherein he threated to physically retaliate against the lead case agent and his family. Owenby admitted to making these threats in response to the agent’s role in the investigation. Garrett also pleaded guilty to threatening to retaliate against a witness and is scheduled to be sentenced on September 19, 2013.
“This sentence reflects, not only the defendant’s serious original crime, but the totally unacceptable threats of physical harm to the federal agent and his family,” said U. S. Attorney William C. Killian.
This case is the result of a joint investigation by the Cocke County Sheriff’s Office and Tennessee Bureau of Investigation. Assistant U.S. Attorney Suzanne Kerney-Quillen is representing the United States.
Former TVA Vice President Pleads Guilty to Unlawful Financial Investments in Iran and Filing False Income Tax ReturnsRead the Press Release
KNOXVILLE, Tenn. – On September 4, 2013, former TVA Vice President Masoud Bajestani, 58, formerly of Chattanooga, Tenn. pleaded guilty to conspiracy to violate the International Emergency Economic Powers Act (IEEPA) and Iranian Transactions Regulations, and two counts of filing false income tax returns. Bajestani also agreed to the forfeiture of $600,000 in U.S. currency, representing the funds used to promote the specified unlawful activity.
Sentencing is set for 1:15 p.m., on January 15, 2014, in U.S. District Court in Knoxville, Tennessee, before the Honorable Leon Jordan, U.S. District Judge. Bajestani faces a maximum penalty of five years in prison for conspiracy to violate the IEEPA, and three years for each count of filing a false tax return. He also faces a maximum fine of $250,000 on each count.
In February 2013, a federal grand jury returned an 11-count superseding indictment against Bajestani, charging him with conspiracy, violations of the IEEPA and the Iranian Transactions Regulations, making a false statement to a federal agency, international money laundering, and filing false income tax returns.
Between February 2008 and May 2010, Bajestani agreed and conspired with an Iran-based coconspirator to engage in financial investments in Iran, in violation of the Iranian Transactions Regulations. These regulations impose economic sanctions against Iran, making it unlawful to make financial investments in Iran without authorization from the U.S. Office of Foreign Assets Control. Bajestani transferred $600,000 to Iran for investment purposes. He and his coconspirator used an informal value transfer system known as a “hawala” to transfer the funds to Iran. Bajestani also falsely reported on his income tax returns that he did not have an interest in a foreign bank account.
This investigation was conducted by Homeland Security Investigations, IRS-Criminal Investigations Division, Tennessee Valley Authority-Office of Inspector General, and Federal Bureau of Investigation. Assistant U.S. Attorney Jeffrey Theodore represented the United States.
Larry Shane Morgan Sentenced to Serve 447 Months for Armed RobberiesRead the Press Release
GREENEVILLE, Tenn. – On Aug. 29, 2013, Larry Shane Morgan, 37, of Greeneville, Tenn., was sentenced to serve 447 months in prison by the Honorable Leon Jordan, U.S. District Judge. Following an October 2012 jury trial, Morgan was convicted of the June 2012 robbery by force of the Stop and Go Market in Chuckey, Tenn.; the July 2012 armed robbery of the Greeneville Federal Bank on the Andrew Johnson Highway; and being a convicted felon in possession of ammunition.
Morgan was sentenced to an additional 24 months for violation of supervised release on a prior federal conviction, for a total effective sentence of 471 months in prison. Upon his release from prison he will be subject to supervised release for five years. Morgan was further ordered to pay restitution to the victims of his crimes.
Federal law mandates a five year minimum mandatory sentence for possession of a firearm in the commission of a violent offense, with each additional offense of possession of a firearm in the commission of a violent offense carrying a 25 year minimum mandatory sentence.
Law enforcement agencies participating in the joint investigation include the Greeneville Police Department, Greene County Sheriff=s Department, Federal Bureau of Investigation, Bureau of Alcohol, Tobacco, Firearms and Explosives, Johnson City Police Department, Tennessee Bureau of Investigation Crime Lab, and Sullivan County Sheriff=s Department dive team. Assistant U.S. Attorney J. Gregory Bowman represented the United States.
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.
Geoff Billips Sentenced to Serve 104 Months in Prison for Armed RobberyRead the Press Release
GREENEVILLE, Tenn. – Geoff Billips, 36, of Bluff City, Tenn., was sentenced on Aug. 28, 2013, to serve 104 months in prison, by the Honorable J. Ronnie Greer, U.S. District Judge. Upon his release from prison, Billips will be subject to probation under the supervision of the U.S. Probation Office for five years.
Billips pleaded guilty in April 2013 to the armed robbery of the Check Into Cash business on Volunteer Parkway in Bristol, Tenn., and to brandishing a firearm in furtherance of the robbery. Because he brandished a firearm in furtherance of the robbery, he faced a minimum 84 month sentence up to life in prison for the firearm charge alone.
Law enforcement agencies participating in the joint investigation which led to the indictment and subsequent conviction of Billips include the Bristol Police Department, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and Federal Bureau of Investigation (FBI). Assistant U.S. Attorney J. Gregory Bowman represented the United States.
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.
Funds Obtained in $4,078,713.00 Forfeiture Case Shared with Local and State Law Enforcement from Tennessee, North Carolina and CaliforniaRead the Press Release
KNOXVILLE, Tenn. – On Aug. 29, 2013, a press conference was held at the U.S. Attorney’s Office in Knoxville, Tenn., to present 19 local and state law enforcement agencies with their share of funds forfeited in the case of U.S. v. Francisco Javier Cruz-Ramirez, et. al.
Agencies receiving forfeiture sharing funds in this case include:
Blount County Tennessee Sheriff's Office $ 69,813.93
City of Jacksonville North Carolina Police Department $157,081.34
City of Wilmington North Carolina Police Department $418,883.57
Cumberland County North Carolina Sheriff's Office $244,348.75
Duplin County North Carolina Sheriff's Office $209,441.79
Fayetteville North Carolina Police Department $244,348.75
Tennessee Fifth Judicial District Drug Task Force $ 34,906.97
Knox County Tennessee Sheriff's Office $ 69,813.93
Knoxville Tennessee Police Department $139,627.85
La Verne California Police Department $ 34,906.97
Lenoir City Tennessee Police Department $ 69,813.93
Metro Knoxville Airport Authority Police $ 69,813.93
Monterey Tennessee Police Department $ 34,906.97
North Carolina Department of Public Safety $349,069.64
Oak Ridge Tennessee Police Department $ 69,813.93
Sampson County North Carolina Sheriff Department $279,255.72
Tennessee Bureau Of Investigation $ 69,813.93
Tennessee Department Of Safety $ 69,813.93
Town of Leland North Carolina Police Department $157,081.34
This case involved an investigation of a Mexican drug trafficking organization. Evidence gained through a wiretap investigation led to agents being able to identify and stop a semi-truck being driven by Armando Guzman Villegas and Javier Cruz-Ramirez as it traveled west through the Eastern District of Tennessee on Interstate 40. The subsequent search of the contents of the truck revealed several pallets of shrink wrapped bottled water. One of the shrink wrapped pallets contained approximately $4.1 million in cash, contained in approximately 200 duct taped bundles, with approximately $20,000 in cash in each bundle.
Cruz-Ramirez pleaded guilty to aiding and abetting interstate transportation in aid of racketeering enterprises. He was sentenced to serve 60 months in prison, followed by three years of supervised release.
Villegas pleaded guilty to conspiracy to distribute five kilograms or more of cocaine and to aiding and abetting interstate transportation in aid of racketeering enterprises. He was sentenced to serve 60 months in prison, followed by five years of supervised release.
The court also ordered the forfeiture of $4,078,713.00 in cash.
In addition to the agencies receiving sharing checks, the Drug Enforcement Administration played a significant role in the investigation which led to the subsequent conviction and sentencing of these individuals. Assistant U.S. Attorney David Lewen represented the United States. Assistant U.S. Attorney Frank Dale assisted with the forfeiture.
The Department of Justice Asset Forfeiture Program is a nationwide law enforcement initiative that removes the tools of crime from criminal organizations, deprives wrongdoers of the proceeds of their crimes, recovers property that may be used to compensate victims, and deters crime. The most important objective of the Program is law enforcement. Equitable sharing further enhances this law enforcement objective by fostering cooperation among federal, state, and local law enforcement agencies. Any state or local law enforcement agency that directly participates in an investigation or prosecution that results in a federal forfeiture may request an equitable share of the net proceeds of the forfeiture.
Calvin Carter Sentenced to 106 Months in Federal Prison for Cocaine and Firearms ChargesRead the Press Release
GREENEVILLE, Tenn. – On Aug. 20, 2013, Calvin Carter, 31, of Atlanta, Ga., was sentenced to serve 106 months in prison, by the Honorable J. Ronnie Greer, U.S. District Judge. Upon his release from prison, Carter will be subject to supervised release under the supervision of the U.S. Probation Office for six years.
Carter pleaded guilty in August 2012 to possession of crack cocaine with intent to distribute, and to possession of a firearm in furtherance of the trafficking of cocaine. Because he possessed a firearm in furtherance of drug trafficking, he faced a minimum 60 month sentence, up to life, in prison for the firearm charge alone.
The investigation which led to the indictment and subsequent conviction of Carter was initiated by members of the Johnson City Police Department. During a traffic stop, Carter was found to be in possession of over 27 grams of crack cocaine. In addition, officers located a loaded Smith & Wesson .44 magnum revolver. Agents with the Drug Enforcement Administration also assisted in the case.
Special Assistant U.S. Attorney Nicholas J. Regalia represented the United States.
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.
Knoxville Resident Charles Bush Sentenced to Serve 151 Months in Prison for Child PornographyRead the Press Release
KNOXVILLE, Tenn. – Charles Wesley Bush, 33, of Knoxville, Tenn., was sentenced on Aug. 20, 2013, by the Honorable Thomas A. Varlan, Chief U.S. District Court Judge, to serve 151 months in federal prison.
Bush was indicted in October 2012 and pleaded guilty in March 2013 to a four-count indictment charging him with distribution and possession of child pornography. Bush came to the attention of federal authorities through his use of the internet to distribute child pornography. A forensic examination of his computer found him to be in possession of 232 images and 299 video files of child pornography.
This case was investigated by the Federal Bureau of Investigation. Assistant U.S. Attorneys Frank M. Dale, Jr. and Melissa Kirby represented the United States.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Patrick Shane O’Ferrall Sentenced to 120 Months for Possessing Child PornographyRead the Press Release
GREENEVILLE, Tenn. – Patrick Shane O’Ferrall of Piney Flats, Tenn., was sentenced to a statutory maximum sentence of 120 months in prison, by the Honorable Leon Jordan, U.S. District Judge. Upon his release from prison, O’Ferrall will be subject to supervised release under the supervision of the U.S. Probation Office for the remainder of his life. O’Ferrall was also ordered to pay restitution to a victim, whose image was among the child pornography depictions.
The investigation of O’Ferrall began when, following his arrest for domestic assault, his spouse discovered pornographic images of young children on CDs among his belongings. Thereafter, officers seized computers, CDs and DVDs from O’Ferrall’s residence. A forensic examination of the seized computer and discs revealed over 3,500 images containing child pornography and DVDs containing videos of young children engaged in sexual acts.
Law enforcement agencies participating in the joint investigation which led to indictment and subsequent conviction of O’Ferrall included the Sullivan County Sheriff’s Department and Federal Bureau of Investigation. Assistant U.S. Attorney J. Gregory Bowman represented the United States.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Former Jonesborough Police Officer Sentenced to Serve Eighteen Months in Prison for Steroid TraffickingRead the Press Release
GREENEVILLE, Tenn. – Freddie Matthew Sergent, 31, of Telford, Tenn., was sentenced on August 12, 2013, by the Honorable J. Ronnie Greer, U.S. District Court Judge, to serve 18 months in federal prison to be followed by three years of supervised release.
Sergent pleaded guilty in January 2013 to unlawfully distributing anabolic steroids from approximately 2009 to April 2012. Anabolic steroids are synthetically produced variants of the naturally occurring male hormone testosterone and are regulated under the Controlled Substances Act (CSA) as a Schedule III controlled substance. As a Schedule III controlled substance, they may not be possessed lawfully in the United States without a prescription.
Sergent obtained raw steroid powders and other materials through the U.S. mails from sources in China. He processed and packaged the steroids into vials containing approximately 300 milliliters of a solution containing an anabolic steroid, to include the Schedule III anabolic steroid boldenone undecylenate, often referred to by the trade name “Equipoise.” Sergent sold the steroids to customers in eastern Tennessee as well as customers across the United States.
During the execution of a federal search warrant at Sergent’s residence in April 2012, agents recovered steroid powders, materials used to process and package steroids, syringes, computers used to order and sell steroids over the Internet, and three firearms. He admitted that he had been ordering steroid powder from China, processing and packaging the steroids, and selling the steroids to customers throughout the United States, the steroids being sent through the U.S. mail. Sergent said he had sold approximately $80,000 worth of steroids at $40 per vial.
For almost the entire time Sergent was unlawfully trafficking in steroids, he was employed as a police officer with the Jonesborough, Tennessee Police Department. He resigned from the Jonesborough Police Department in January 2012.
Agencies involved in this investigation included the Drug Enforcement Administration, U.S. Postal Inspection Service, and Homeland Security Investigations. Assistant U.S. Attorney Neil Smith represented the United States.
Morristown Dentist Indicted for TennCare FraudRead the Press Release
GREENEVILLE, Tenn. – On Jul. 9, 2013, a federal grand jury in Greeneville returned an indictment against Gary Dean Stump, D.M.D., 57, of Bean Station, Tenn., charging him with health care fraud for submitting false claims to TennCare’s program for dental services to children, TennDent.
Stump appeared in court on Jul. 15, 2013 before U.S. Magistrate Judge Dennis H. Inman and pleaded not guilty. He was released pending trial, which has been set for Sept. 16, 2013, in U.S. District Court, in Greeneville, Tennessee, before the Honorable R. Leon Jordan, U.S. District Court Judge.
According to the indictment on file with the U.S. District Court, Stump, a dentist practicing in Morristown, Tenn., submitted false claims to TennCare’s TennDent program between August 2011 and August 2012. TennCare is the State of Tennessee’s Medicaid health care benefit program for the indigent. TennCare contracts with Delta Dental to manage TennCare’s dental benefits for TennCare recipients under the age of 21 through a program called TennDent. Under TennDent, children can receive comprehensive dental services as medically necessary from participating dentists. The dentists then submit claims to Delta Dental for reimbursement for the services provided.
The indictment alleges that Stump submitted false claims to TennDent for nitrous oxide analgesia, making false notations on patient treatment records that the analgesia had been provided when it had not. Stump is also alleged to have submitted false claims for reimbursement for other dental services and procedures not provided, including crowns, root canals, and dentures. Stump received approximately $11,000 in reimbursement to which he was not entitled.
If convicted, Stump faces a term of 20 years in prison on each of the 18 counts as well as fines of up to $250,000 on each count and three years of supervised release.
This indictment is the result of an investigation by the Tennessee Bureau of Investigation’s Medicaid Fraud Control Unit. Assistant U.S. Attorney Neil Smith will represent the United States.
Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until their guilt has been proven beyond a reasonable doubt.
Morristown Dentist Indicted for TennCare FraudRead the Press Release
GREENEVILLE, Tenn. – On Jul. 9, 2013, a federal grand jury in Greeneville returned an indictment against Gary Dean Stump, D.M.D., 57, of Bean Station, Tenn., charging him with health care fraud for submitting false claims to TennCare’s program for dental services to children, TennDent.
Stump appeared in court on Jul. 15, 2013 before U.S. Magistrate Judge Dennis H. Inman and pleaded not guilty. He was released pending trial, which has been set for Sept. 16, 2013, in U.S. District Court, in Greeneville, Tennessee, before the Honorable R. Leon Jordan, U.S. District Court Judge.
According to the indictment on file with the U.S. District Court, Stump, a dentist practicing in Morristown, Tenn., submitted false claims to TennCare’s TennDent program between August 2011 and August 2012. TennCare is the State of Tennessee’s Medicaid health care benefit program for the indigent. TennCare contracts with Delta Dental to manage TennCare’s dental benefits for TennCare recipients under the age of 21 through a program called TennDent. Under TennDent, children can receive comprehensive dental services as medically necessary from participating dentists. The dentists then submit claims to Delta Dental for reimbursement for the services provided.
The indictment alleges that Stump submitted false claims to TennDent for nitrous oxide analgesia, making false notations on patient treatment records that the analgesia had been provided when it had not. Stump is also alleged to have submitted false claims for reimbursement for other dental services and procedures not provided, including crowns, root canals, and dentures. Stump received approximately $11,000 in reimbursement to which he was not entitled.
If convicted, Stump faces a term of 20 years in prison on each of the 18 counts as well as fines of up to $250,000 on each count and three years of supervised release.
This indictment is the result of an investigation by the Tennessee Bureau of Investigation’s Medicaid Fraud Control Unit. Assistant U.S. Attorney Neil Smith will represent the United States.
Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until their guilt has been proven beyond a reasonable doubt.
Husband and Wife Sentenced for Participating in Conspiracy to Manufacture MethmaphetamineRead the Press Release
GREENEVILLE, Tenn. -- Richie Barnett, 47 and Ruth Barnett, 44, of Erwin, Tenn., were sentenced on August 5, 2013, by the Honorable J. Ronnie Greer, U.S. District Judge, for their roles in a methamphetamine manufacturing conspiracy. Richie Barnett was sentenced to serve 135 months in prison and Ruth Barnett was sentenced to serve 120 months in prison. Both Barnetts pleaded guilty to a November 2012 federal indictment charging them with conspiracy to manufacture methamphetamine.
The Barnetts conspired to manufacture methamphetamine using a “shake-and-bake” process. Richie Barnett was the primary methamphetamine cook. He admitted to cooking methamphetamine over 40 times. Both individuals obtained equipment and precursors used in the manufacture process. Each Barnett received a sentencing enhancement for an infant child being placed at risk of harm as the result of being present at their residence while a portion of a methamphetamine manufacturing process was taking place.
The indictment and subsequent convictions of the Barnetts were the results of an ongoing and collaborative investigation conducted by the Unicoi County Sheriff’s Department, Erwin Police Department, Washington County Sheriff’s Department, First Judicial District Drug Task Force, Tennessee Bureau of Investigation, and Drug Enforcement Administration. Assistant U.S. Attorney J. Christian Lampe represented the United States.
U.S. Attorney Bill Killian commended the hard work and joint cooperation of the law enforcement agencies who worked on the investigation. “I appreciate the diligent efforts by all agencies involved to bring this and related conspiracies to an end. They are to be commended for their dedication to combatting the many harmful effects that methamphetamine has on our communities.”
Mexican Citizen Convicted of Illegally Re-Entering the United StatesRead the Press Release
KNOXVILLE, Tenn. – On July 9, 2013, a federal jury in U.S. District Court for the Eastern District of Tennessee, at Knoxville, found Rigoberto Francisco-Reyes, a national and citizen of Mexico, guilty of being previously deported and re-entering the United States without permission. After the jury’s verdict was announced, Francisco-Reyes was remanded into federal custody by the Honorable Thomas Varlan, U.S. District Judge. Sentencing has been set for 2:00 p.m., Dec. 4, 2013.
Evidence at trial showed that Francisco-Reyes had been previously deported from the United States five times, and that he had several prior felony convictions for immigration offenses.
This case was investigated by the Bureau of Immigration and Customs Enforcement (ICE) in collaboration with the White Pine Police Department. Assistant U.S. Attorney Melissa M. Kirby represented the United States.
“This case is a prime example of ICE identifying and detaining a violent criminal and egregious immigration law violator who poses the greatest threat to public safety,” said Scott L. Sutterfield, acting field office director of ERO New Orleans. Sutterfield oversees ERO activities in Tennessee, Louisiana, Alabama, Arkansas and Mississippi.
Johnson City Physicians to Pay $4.25 Million to Resolve Civil False Claims Allegations Re Unapproved Foreign DrugsRead the Press Release
GREENEVILLE, Tenn.– William R. Kincaid, M.D., Millard R. Lamb, M.D., and Charles O. Famoyin, M.D., former partners in East Tennessee Hematology-Oncology Associates, P.C., d/b/a McLeod Cancer and Blood Center (McLeod Cancer) in Johnson City, Tenn., have agreed to pay via separate settlement agreements $4.25 million, plus interest, to resolve allegations that they violated the False Claims Act by knowingly submitting or causing the submission to the Medicare and TennCare/Medicaid programs of false claims for misbranded, unapproved chemotherapy drugs that were administered through the McLeod Cancer clinic.
Dr. Kincaid, the managing partner of McLeod Cancer, pleaded guilty in December 2012 to receiving misbranded drugs with intent to defraud or mislead in violation of the Food, Drug and Cosmetics Act and was sentenced on June 10, 2013, to serve 24 months in federal prison. Dr. Kincaid will also be excluded from federal health care programs for a period of 10 years. Drs. Lamb and Famoyin were minority owners and were not criminally charged. Dr. Kincaid’s portion of the civil settlement is $2.55 million; Drs. Lamb and Famoyin are each responsible for payments of $850,000.
During 2007 to early 2008 and from August 2009 to February 2012, McLeod Cancer purchased a substantial amount of chemotherapy and other drugs, specifically versions of Abraxane®, Alimta®, Avastin®, Eloxatin®, Gemzar®, Herceptin®, Rituxan®, Taxotere®, and Zometa®, from a foreign drug distributor in Canada that obtained these drugs from foreign sources. The drugs, sometimes with labeling in foreign languages or without dosage information, were not manufactured in establishments that were registered with the U.S. Food and Drug Administration (FDA). The FDA, which has responsibility for enforcing the Food, Drug and Cosmetics Act to ensure the health and safety of the American public, requires that any manufacturer or distributor of drugs in the United States be registered with and approved by the FDA. Drugs with labeling in a language other than English or from foreign sources not registered with the FDA are considered “misbranded.”
McLeod Cancer purchased the foreign drugs for amounts substantially below what drugs from legitimate U.S. drug manufacturers and distributors would have cost. Drs. Kincaid, Lamb and Famoyin administered these drugs to their patients and submitted claims for the drugs to the Medicare, TennCare, and other government health benefit programs. Since these programs do not cover such drugs, the government has alleged all of these claims violated the Federal and State False Claims Acts.
“Medical practices that administer prescription drugs from non-FDA approved foreign sources are putting patients at risk of exposure to counterfeit, contaminated, ineffective and potentially dangerous medications. This case is an example of the efforts the government will continue to make to minimize the chance of patients receiving such unsafe medication as well as to ensure that Medicare and other health benefit programs do not pay for unapproved drugs,” said U.S. Attorney Bill Killian. Attorney General Robert Cooper added: “These settlements are a product of cooperation by state and federal agencies working together to ensure that Tennesseans are protected from possibly unsafe or ineffective misbranded drugs.”
Mr. Killian noted that these settlements, as well as the earlier conviction of Dr. Kincaid, resulted from a comprehensive parallel civil and criminal investigation conducted by the FDA Office of Criminal Investigation (FDA-OCI), the Federal Bureau of Investigation (FBI), the Tennessee Bureau of Investigation (TBI), the U.S. Attorney’s Office and the Tennessee Attorney General’s Office. He commended the efforts of all who played a role in the complex investigation, including FDA-OCI Special Agent Bob West, FBI Special Agent Letitia Jones, TBI Special Agent Denise Morrissey Woodby, FBI Forensic Accountant LeAnn Lanz, Assistant U.S. Attorneys Neil Smith and Betsy Tonkin, Special Assistant U.S. Attorney Ben Cunningham, and Assistant Tennessee Attorney General Eli Swiney.
Sevierville Developer Receives Five Year Sentence for Wire and Bank Fraud Conspiracy and Money Laundering in $6 Million Mortgage Fraud SchemeRead the Press Release
KNOXVILLE, Tenn. – Jeffrey Whaley, 49, of Sevierville, Tenn., was sentenced on July 1, 2013, by the Honorable Thomas W. Phillips, U.S. District Court Judge, to serve five years in prison for his May 2012 federal convictions for wire fraud, bank fraud, money laundering, all arising from a mortgage fraud scheme. Whaley’s sentencing today followed his co-defendant and Sevierville title attorney Jerry Kerley’s four-year sentence imposed on June 6, 2013.
Whaley and Kerley were convicted of conspiring to defraud Citizens Bank, located in New Tazewell, Tenn., and SunTrust Mortgage, Inc., located in Richmond, Va., through a mortgage fraud scheme. The conspiracy involved a "straw borrower" mortgage fraud scheme in which straw borrowers were induced to obtain mortgage loans in their names based on promises that they would not have to make a down payment or mortgage payments for the property, would receive cash at closing, and would share in the profit following a resale of the property. As part of the conspiracy, materially false representations were made to Citizens Bank and SunTrust Mortgage, which, among other things, included false representations related to the straw borrowers’ source of funds for down payments and amounts recorded as "cash from borrower" on HUD-1 Settlement Statements and loan applications, for the purpose of inducing Citizens Bank and SunTrust Mortgage to disburse the mortgage loan proceeds it had wired to and entrusted with Kerley's title company Guaranty Land Title.
Kerley and Whaley concealed eight real estate transactions from Citizens Bank and SunTrust Mortgage that the borrower did not provide at closing the money identified as the "cash from borrower" on the HUD-1 Settlement Statement. In those eight transactions, Citizens Bank and SunTrust Mortgage, in total, wired more than $6 million in loan proceeds to Guaranty Land Title Company for disbursement. Kerley, a Tennessee licensed attorney, was the owner of Guaranty Land Title Company where the fraudulent loans were closed. Whaley conducted business through a company known as GBO Enterprises which received substantial sums of money from the loan proceeds. Kerley and Whaley committed money laundering offenses through financial transactions that involved proceeds from the mortgage fraud scheme.
“As we know from the all too recent financial crisis, fraud on mortgage lenders has the potential to disrupt our nation’s economic stability. The five- and four-year prison sentences for Whaley and Kerley demonstrate that mortgage fraud will be vigorously prosecuted by the U.S. Department of Justice,” said U.S. Attorney Bill Killian.
This investigation was conducted jointly by the Internal Revenue Service, Criminal Investigation, Federal Bureau of Investigation, and United States Secret Service. Assistant U.S. Attorneys Trey Hamilton and Zac Bolitho represented the United States.
Greeneville Physician and Wife Indicted for Misbranded Drugs and Health Care FraudRead the Press Release
Clinic obtained unapproved foreign drugs for three years
GREENEVILLE, Tenn. – A federal grand jury in Greeneville returned an indictment on June 11, 2013, against Dr. Anindya Kumar Sen, 64, his wife, Patricia Posey Sen, 65, and their business, East Tennessee Cancer & Blood Center, P.C. (ETCBC), all of Greeneville, Tenn., for introduction of misbranded drugs with intent to defraud and mislead, importing drugs contrary to law, conspiracy to commit those offenses, and conspiracy to commit health care fraud.
Dr. and Mrs. Sen appeared in court on June 27, 2013, before U.S. Magistrate Judge Dennis H. Inman and pleaded not guilty. They were released pending trial, which has been set for September 4, 2013 in U.S. District Court, in Greeneville.
According to the indictment on file with the U.S. District Court, Sen was the owner and managing physician of ETCBC, a cancer clinic with locations in Greeneville and Johnson City; Posey was practice manager for the clinic. Beginning in April 2009, they began obtaining foreign drugs not approved for use by the Food & Drug Administration (FDA) in the United States. The drugs were “misbranded,” as defined in the Food, Drug and Cosmetic Act, because, among other things, the drugs had not been manufactured at facilities registered with the FDA and the drugs’ packaging contained foreign languages. The Sens purchased over $3 million in unapproved drugs which were administered to patients at ETCBC. Claims were then submitted to Medicare, TennCare, and other health care programs falsely representing that FDA-approved drugs had been administered.
If convicted, the Sens face terms of up to 20 years in prison on the health care charge and each of the unlawful importation charges, along with fines of up to $250,000 per count and up to three years of supervised release.
This indictment is the result of an investigation by the Food & Drug Administration Office of Criminal Investigation, Federal Bureau of Investigation, and Tennessee Bureau of Investigation. Assistant U.S. Attorney Neil Smith and Special Assistant U.S. Attorney Ben Cunningham will represent the United States.
Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until their guilt has been proven beyond a reasonable doubt.
James Wade Campbell Sentenced to Serve 240 Months in Prison for Manufacturing MethamphetamineRead the Press Release
GREENEVILLE, Tenn. – James Wade Campbell, 32, of Elizabethton, Tenn., was sentenced on June 26, 2013, by the Honorable J. Ronnie Greer, U.S. District Court Judge, to serve 240 months in federal prison. Following the prison sentence he will be subject to eight years of supervised release, under the supervision of the U.S. Probation Office. There is no parole in the federal system.
Campbell and Amber Layne Markland, 33, also of Elizabethton, Tenn., were indicted in September 2012 and both later pleaded guilty conspiring to manufacture five to 50 grams of methamphetamine. The charges initiated from the investigation of a fire and injuries sustained by Campbell caused by a methamphetamine laboratory at an Elizabethton apartment in September 2011. In February 2012, both Campbell and Markland were arrested on state charges when a second methamphetamine laboratory and components were discovered at a different apartment in Elizabethton where they were manufacturing methamphetamine.
In May 2013, Markland was sentenced by Judge Greer to serve 130 months in federal prison, followed by four years of supervised release. Campbell received an enhanced sentence in this case due to his classification as a career offender because of his lengthy criminal history, which included at least two prior felony convictions of either a crime of violence or a controlled substance offense.
U.S. Attorney Bill Killian commended the investigative efforts of the law enforcement agencies who handled this investigation. “Manufacturing methamphetamine is inherently dangerous and places our communities at risk due to fires and explosions that can result from “shake and bake” labs. The punishment that these individuals receive sends a strong message that this office will continue to aggressively prosecute people who manufacture methamphetamine and, by doing so, create a substantial risk of harm to the lives of people in the community.”
Agencies involved in this investigation included the Elizabethton Police Department, Tennessee Methamphetamine and Prescription Drug Task Force, and Drug Enforcement Administration. Assistant U.S. Attorney Suzanne Kerney-Quillen represented the United States.
John Threadgill Sentenced to Serve 51 Months in Prison for Tax EvasionRead the Press Release
KNOXVILLE, Tenn. – John Oliver Threadgill, 70, of Knoxville, Tennessee, was sentenced on June 24, 2013, by the Honorable Thomas W. Phillips, U.S. District Court Judge, to serve 51 months in federal prison. In addition, he was ordered to pay restitution to the Internal Revenue Service in the amount of $3,569,200.90.
Threadgill was indicted on June 21, 2011, and charged with one count of income tax evasion. He was convicted on November 11, 2012, following a five-day jury trial.
According to the indictment, Threadgill failed to pay more than $1.4 million in tax to the Internal Revenue Service (IRS) for numerous tax years from 1985 through 2004. The indictment further alleged that Threadgill, an attorney, used his law firm bank account and payroll account to pay for personal expenditures, opened bank accounts in the names of nominee trusts, and titled his personal residences in the names of nominee trusts.
During the trial, the United States presented evidence of Threadgill’s earnings, along with proof that he spent more than $909,000 in personal expenditures, including $69,000 for a wedding, $245,000 for family educational expenses, $60,000 for country club expenses, $52,000 for personal travel, and $213,000 for personal real estate, with funds that could have been used to pay his taxes. The United States also offered proof that Threadgill had evaded the payment of his taxes through disguising the personal nature of his assets and by placing real estate in the names of nominee trusts.
“Every person should know that, regardless of your stature, you will be prosecuted for violating the criminal income tax laws. This sentence should serve as a deterrent to other potential tax defrauders,” said U. S. Attorney Bill Killian.
This investigation was conducted by the Internal Revenue Service Criminal Investigation. Assistant United States Attorney Frank M. Dale, Jr. represented the United States.
Knoxville Resident Sentenced to 20 Years for Using Bomb During Bank RobberyRead the Press Release
KNOXVILLE, Tenn. – Gordon Harold Williams, 49, of Knoxville, Tenn., was sentenced on June 19, 2013, to serve 20 years in prison, by the Honorable Thomas Varlan, U.S. District Court Chief Judge. Upon his release from prison, Williams will serve five years of supervised release. He was also ordered to pay restitution in the amount of $1546.00.
Williams pleaded guilty in July 2012 to the robbery of a BB&T Bank in Knoxville, Tenn., in which Williams threatened bank tellers with a homemade bomb in a backpack.
According to a plea agreement on file with the U.S. District Court Clerk in support of the guilty plea, Williams confessed to having an explosive device in a backpack during the robbery. The device contained bottles of liquid accelerant, gun powder, bird shot and metal screws, which was designed to be detonated with additional liquid accelerant and a lighter. Williams obtained $1546.00 from two bank tellers during the robbery.
Further investigation shortly after the robbery by Federal Bureau of Investigation Safe Streets Task Force (FBI SSTF) and Knox County Sheriff’s Office (KCSO) Major Crimes Unit led to an improvised explosive device located at a Fountain City address. Knoxville Police Department Bomb Squad and Knoxville Fire Department HAZMAT both responded to the scene and recovered the explosive device. The device was sent to the FBI laboratory in Quantico, Va.
“These federal and local agencies collectively and effectively caused this individual to receive a serious sentence for a violent crime with multiple victims and the potential to cause great harm. We thank them for their efforts that keep us safe. With no parole in the federal system, Williams will serve this time, as he should. Others should note the consequences of these actions,” said U. S. Attorney Bill Killian
This matter was a joint investigation of the FBI SSTF and the KCSO Major Crimes Unit. Assistant U.S. Attorney David Lewen, Jr. represented the United States.
Thirteen in Custody on Federal Cocaine Charges in Tennessee and AlabamaRead the Press Release
CHATTANOOGA, Tenn. — A total of 13 people from Eastern Tennessee, and Huntsville, Ala., have been arrested by agents of the Drug Enforcement Agency (DEA). All are believed to be part of in a large cocaine trafficking organization out of Fayetteville, Tenn., in Lincoln County.
Calvin Fontaine Hadley, 36, of Fayetteville, Tenn., was arrested in May 2013. On June 17, 2013, 10 additional individuals were arrested in Fayetteville, Tenn. They appeared before U.S. Magistrate Judge Susan K. Lee on June 18, 2013, for initial appearances and arraignments. Those individuals include: Deonzsanique Bryson, 23, Darryl Brown, 51, Tanica Berry, 31, Dominique Brooks, 25, Tony Brown, 22, Ophelia Harper, 61, Jermaine Hicks, 27, Willie Hockett, 25, Jeffery Mires, 36, and Doris Stewart, 57, all from Fayetteville, Tenn.
Two more individuals, Ortegus McCrary, 36, and Terrance Nance, 57, of Huntsville, Ala., were arrested in Huntsville and appeared before a U.S. Magistrate Judge in the Northern District of Alabama, on June 17, 2013. Detention hearings have been set for both on June 20, 2013, in U.S. District Court, Northern District of Alabama.
Others are pending arrest on federal charges. Their names and other pertinent information will be released upon their initial appearance before the U.S. Magistrate Judge.
A jury trial for all of these individuals is scheduled for August 27, 2013, in the U.S. District Court, Eastern District of Tennessee, before Honorable Harry S. Mattice, U.S. District Court Judge.
All were charged by a federal grand jury sitting in Chattanooga, Tenn., with conspiring to distribute, and possess with intent to distribute more than five kilograms of cocaine and more than 280 grams of cocaine base (crack). If convicted of this offense, each faces a minimum of 10 years and maximum of life in prison. Some face additional counts relating to money laundering and cocaine distribution.
This case has been investigated by the DEA, Tennessee Bureau of Investigations, and Lincoln County Sheriff’s Department. Agents and officers from the Bureau of Alcohol, Tobacco, Firearms and Explosives, Department of Homeland Security, Investigations Division, 17th Judicial District Drug Task Force, Fayetteville Police Department and Sheriff’s Departments for Franklin, Giles, and Marshal County, Tenn., and Madison County, Ga., have assisted with the investigation and arrests. Assistant U.S. Attorney Terra Bay is representing the United States in court.
Members of the public are reminded that these are only charges and that every person is presumed innocent until their guilt has been proven beyond a reasonable doubt.
Mexican and Honduran Citizens Indicted on Federal Charges of Transporting Illegal Foreign NationalsRead the Press Release
Violations Discovered During Traffic Stop by Tennessee State Trooper
KNOXVILLE, Tenn. – Mario Garcia-Duarte, 22, of Mexico, and Guadalupe Orellana-Morel, 20, of Honduras, were indicted on June 18, 2013, by a federal grand jury in Knoxville, Tenn., on charges relating to the transportation of foreign nationals who were in the United States illegally. Both Garcia-Duarte and Orellana-Morel remain in custody and will appear in U.S. District Court later this week.
Garcia-Duarte was the driver of a vehicle that was stopped on June 11, 2013, in Knox County, by Tennessee Highway Patrol (THP) Trooper Adam Bowman, a member of the THP’s East Bureau Interdiction Plus Team. Orellana-Morel was a passenger in the vehicle.
At the time of the traffic stop, Garcia-Duarte presented a Mexican driver’s license to Trooper Bowman. Further investigation at the scene revealed 14 additional passengers in the vehicle with no luggage or personal items. After a background check on the vehicle, Federal Homeland Security Investigations agents were called to the scene, where they assumed primary responsibility of the investigation.
Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until their guilt has been proven beyond a reasonable doubt.
Federal Jury Convicts Father and Two Sons of Conspiracy to Distribute Oxycodone and Money LaunderingRead the Press Release
Jackie Mize Organized Doctor-Shopping Trips to Florida from Claiborne County
KNOXVILLE, Tenn. - Following a five-day trial in U.S. District Court, Knoxville, Tenn., a jury convicted Jackie, Kelvin and James Mize of Harrogate, Tenn., of conspiring to distribute oxycodone and launder the proceeds of the drug distribution.
Sentencing is set for Jackie Mize at 2:00 p.m., on Nov. 13, 2013. Kelvin and James Mize are set for Nov. 14, 2013, at 11:00 a.m. and 2:00 p.m., respectively, in U.S. District Court in Knoxville. All three face a sentence of up to 20 years in prison. The jury also ordered the forfeiture of a parcel of real estate in Harrogate, Tenn., and ordered them to pay a $3,000,000 money judgment to the United States.
Evidence presented at trial demonstrated that Jackie Mize, his two sons, Kelvin and James Mize, and other relatives and friends regularly traveled in groups to Ft. Lauderdale and St. Petersburg, Fla., to obtain prescriptions for oxycodone and other controlled substances. Jackie Mize was the organizer of the trips and paid all of the expenses of his coconspirators. The individuals involved would go to various pain clinics, obtain multiple prescriptions for these controlled substances and have them filled at pharmacies in Florida. Jackie Mize retained half of all of the pills in exchange for sponsoring the doctor-shopping trips. The conspiracy lasted for a year and a half, during which the members of this conspiracy obtained tens of thousands of pills which were sold in and around Claiborne County, Tenn The $3,000,000 money judgment ordered by the jury represents the street value of the pills sold by this organization. Mize and his sons sold pills from a “farm house” owned by Mize in Harrogate on a regular basis, which was ordered forfeited by the jury.
William C. Killian, U.S. Attorney for the Eastern District of Tennessee said, “Federal law enforcement agencies will continue to work closely with our local partners to address drug trafficking problems. We were pleased to assist local authorities in Claiborne County to take down a significant oxycodone trafficking ring.”
Law enforcement agencies participating in the joint investigation which led to the indictment and subsequent conviction of the Mizes included the Drug Enforcement Administration, Internal Revenue Service-Criminal Investigations, and Eighth Judicial Drug Task Force. Assistant U.S. Attorneys David C. Jennings and Zachary C. Bolitho represented the United States at trial.
Joseph Banner Sentenced to 170 Months in Prison for Participating in A Conspiracy to Manufacture MethamphetamineRead the Press Release
GREENEVILLE, Tenn - Joseph Banner, 34, of Erwin, Tenn., was sentenced to serve 170 months in prison, by the Honorable Leon Jordan, U.S. District Judge. Banner pleaded guilty to a federal indictment which was filed in September 2012, charging Banner and 20 others with Conspiracy to Manufacture Methamphetamine. All have been convicted and sentenced to serve time in federal prison. Additional separate but related conspiracy to manufacture methamphetamine cases are currently being prosecuted in federal court.
The methamphetamine manufacturing conspiracy that Banner admitted to being a part of involved a network of overlapping associates that relied on coordinated efforts to procure methamphetamine precursors, which they then used to make methamphetamine using a "shake and bake" manufacturing method. Banner was a prolific methamphetamine cook and the remnants of numerous cooks were recovered by law enforcement from the property surrounding his residence. The drugs the conspirators were responsible for making were being distributed both for profit and for use by people within the conspiracy.
The indictment and subsequent conviction of Banner was the result of an ongoing and collaborative investigation conducted by the Unicoi County Sheriff’s Department, Washington County Sheriff’s Department, Erwin Police Department, First Judicial District Drug Task Force, Tennessee Bureau of Investigation, and Drug Enforcement Administration. Assistant U.S. Attorney J. Christian Lampe represented the United States.
U.S. Attorney Bill Killian commended the hard work and cooperation of the law enforcement agencies who worked the investigation. “It took a joint effort by all agencies involved to cause this result. I want to commend all those agencies and individuals who are working together to combat the home grown methamphetamine manufacturing rings that plague our communities."
Detroit Drug Dealer Sentenced to 240 Months in Prison for Transporting Oxycodone to the Tri-Cities.Read the Press Release
GREENEVILLE, Tenn. - Qwindel Jerome Page, 28, of Detroit, Mich., was sentenced on June 12, 2013, by the Honorable J, Ronnie Greer, U.S. District Court Judge, to serve 240 months in federal prison. Page was convicted of conspiracy to distribute oxycodone, conspiracy to commit money laundering and possession of oxycodone with the intent to distribute.
Beginning in 2007, agents with the Second Judicial Drug Task Force, Sullivan County Sheriff’s Department, Bureau of Alcohol Tobacco, Firearms, and Explosives, and Internal Revenue Service-Criminal Investigations Division, investigated and gathered evidence of drug traffickers bringing oxycodone from Detroit, Mich. to the Tri-Cities area. Evidence presented at trial showed that Page acquired oxycodone in Michigan and recruited individuals in Detroit to act as couriers to transport the illegal drugs to East Tennessee where the drugs would be resold. Page directed a group of individuals in Johnson City, Kingsport and Bristol who assisted him in selling oxycodone and wire transferring the proceeds back to Detroit. He also used buses, rental cars and commercial airlines to transport the drugs to Tennessee and money back to Detroit.
In November 2012, following a three day trial, Page was found guilty on all counts of a superseding indictment that charged him with conspiracy to distribute oxycodone, conspiracy to commit money laundering and possession of oxycodone with the intent to distribute. Special Assistant U.S. Attorney Nick Regalia represented the United States.
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.
Johnson City Physician Sentenced to Serve Two Years in Prison for Unapproved Foreign DrugsRead the Press Release
GREENEVILLE, Tenn. – William Ralph Kincaid, 68, of Johnson City, Tenn., was sentenced on June 10, 2013, by the Honorable J. Ronnie Greer, U.S. District Court Judge, to serve 24 months in federal prison.
Kincaid pleaded guilty in December 2012, to receiving misbranded drugs with intent to defraud or mislead in violation of the Food, Drug and Cosmetics Act. Kincaid faced a term of up to three years in prison and fines of up to $250,000.
As set out in his plea agreement, Kincaid was a physician and managing partner for East Tennessee Hematology-Oncology Associates, P.C., doing business as McLeod Cancer and Blood Center, Johnson City, Tennessee (McLeod Cancer), a professional corporation providing care and treatment for patients with cancer and blood diseases. McLeod Cancer purchased large amounts of prescription drugs, to include chemotherapy drugs, which were administered through the clinic; McLeod Cancer then sought reimbursement through the Medicare and Medicaid/TennCare programs as well as other health benefits programs.
Beginning in 2007, McLeod Cancer began obtaining drugs from a Canadian business, Quality Specialty Products (QSP). The drugs had been obtained from foreign sources and had not been approved by the U.S. Food and Drug Administration (FDA) for distribution or use in the United States. The FDA has responsibility for enforcing the Food, Drug and Cosmetics Act to ensure the health and safety of the American public. The safety and efficacy of drugs is protected by requiring that any manufacturer or distributor of drugs in the United States be registered with and approved by the FDA. Drugs with labeling in a language other than English or from foreign sources not registered with the FDA are considered “misbranded.” Further, the FDA regulates the distribution of drugs to ensure they are handled properly so as not to lose their efficacy (such as becoming too hot or cold).
After nurses at McLeod Cancer raised concerns in late 2007 and early 2008 about chemotherapy drugs with foreign labeling, the clinic stopped ordering drugs from QSP. However, in August 2009, Kincaid and Michael Combs, McLeod Cancer’s business manager, met with a QSP representative and began ordering misbranded unapproved drugs. Dr, Kincaid directed Combs to have the drugs shipped to a storage business in Johnson City which Dr. Kincaid owned in part. The drugs, after having been received at the storage business, were transported to Combs' office at McLeod Cancer and then placed by a pharmacy technician into the clinic's drug storage and control system where the misbranded drugs were mingled with FDA-approved drugs from legitimate sources. FDA-approved drugs obtained from legitimate U.S. drug manufacturers and distributors were still shipped directly to McLeod Cancer and not to the storage business.
McLeod Cancer obtained misbranded unapproved drugs, to include the drugs ABRAXANE®, ALIMTA®, AVASTIN®, ELOXATIN®, GEMZAR®, HERCEPTIN®, RITUXAN®/MABTHERA®, TAXOTERE®, and ZOMETA®, from approximately September 2007 to early 2008 and from August 2009 to February 2012, purchasing over $2 million in misbranded unapproved drugs, providing those drugs to their patients, and billing Medicare, TennCare, and other government health benefits programs approximately $2.3 million for the unapproved drugs.
In imposing sentence, Judge Greer stated “it was about greed” and the “motivation was to make more money.” Judge Greer acknowledged that while it was impossible to know which patients had received the unapproved drugs, the “emotional harm” to patients from not knowing whether they had received unapproved drugs contributed to the seriousness of the offense.
Kincaid, through his attorney, advised Judge Greer that he had entered into an agreement with the United States and the State of Tennessee to pay $2.55 million in settlement of civil claims under the False Claims Act for false and fraudulent claims for reimbursement submitted to the Medicare and TennCare programs for unapproved drugs. Kincaid also made an initial payment of $500,000 pursuant to the settlement agreement.
Judge Greer allowed Kincaid to remain on bond pending designation of an institution for service of sentence by the U.S. Bureau of Prisons.
“This conviction sends a message to all medical providers and practitioners that federal criminal penalties await those who distribute misbranded and potentially unsafe drugs, especially those used in cancer treatment. The FDA's regulatory system is designed to protect patients from substances such as these." said U.S. Attorney William C. Killian.
“The FDA's Office of Criminal Investigations is committed to protecting the public health by aggressively pursuing unscrupulous medical practitioners who jeopardize their patients' safety with unapproved medications," said John Roth, Director of FDA’s Office of Criminal Investigations. “The FDA applauds the hard work of the U.S. Attorney's Office, the Federal Bureau of Investigation, and the Tennessee Bureau of Investigation in bringing about this successful result."
Agencies involved in this investigation included Food & Drug Administration Office of Criminal Investigation, Federal Bureau of Investigation, and Tennessee Bureau of Investigation. Assistant U.S. Attorney Neil Smith represented the United States.
Sevierville Attorney Receives Four Year Sentence for Wire and Bank Fraud Conspiracy and Money Laundering in $6 Million Mortgage Fraud SchemeRead the Press Release
KNOXVILLE, Tenn. - Jerry Kerley, 60, of Kodak, Tenn. was sentenced on June 6, 2013, by the Honorable Thomas W. Phillips, U.S. District Court Judge, to serve four years in prison for his May 2012 federal convictions for wire fraud, bank fraud, money laundering, all arising from a mortgage fraud scheme.
The indictment charged Kerley and Jeffrey Whaley with conspiring to defraud Citizens Bank, located in New Tazewell, Tenn., and SunTrust Mortgage, Inc., located in Richmond, Va., through a mortgage fraud scheme. The indictment alleged that the conspiracy involved a "straw borrower" mortgage fraud scheme in which straw borrowers were induced to obtain mortgage loans in their names based on promises that they would not have to make a down payment or mortgage payments for the property, would receive cash at closing, and would share in the profit following a resale of the property. The indictment further alleged that it was part of the conspiracy that materially false representations were made to Citizens Bank and SunTrust Mortgage, which, among other things, included false representations related to the straw borrowers’ source of funds for down payments and amounts recorded as "cash from borrower" on HUD-1 Settlement Statements and loan applications, for the purpose of inducing Citizens Bank and SunTrust Mortgage to disburse the mortgage loan proceeds it had wired to and entrusted with Kerley's title company Guaranty Land Title.
The indictment specifically alleged eight real estate transactions in which Kerley and Whaley concealed from Citizens Bank and SunTrust Mortgage that the borrower did not provide at closing the money identified as the "cash from borrower" on the HUD-1 Settlement Statement. According to the indictment, in those eight transactions, Citizens Bank and SunTrust Mortgage, in total, wired more than $6 million in loan proceeds to Guaranty Land Title Company for disbursement. The indictment alleged that Kerley, a Tennessee licensed attorney, was the owner of Guaranty Land Title Company where the fraudulent loans were closed. The indictment also alleged that Whaley conducted business through a company known as GBO Enterprises which received substantial sums of money from the loan proceeds. The indictment also alleged that Kerley and Whaley committed money laundering offenses through financial transactions that involved proceeds from the mortgage fraud scheme. Whaley is scheduled to be sentenced in U.S. District Court on July 1, 2013.
This investigation was conducted jointly by the Internal Revenue Service, Criminal Investigation, Federal Bureau of Investigation, and the United States Secret Service. Assistant U.S. Attorneys Trey Hamilton and Zac Bolitho represented the United States.