Middle District of Tennessee
Press releases recorded for this federal judicial district.
Jury Convicts Nashville Man of Drug Trafficking & Firearms ChargesRead the Press Release
Defendant Used Armed Juveniles to Guard Stash House
Brice N. Marchbanks, 32, of Nashville, Tennessee, was found guilty yesterday by a federal jury of multiple drug trafficking and firearms offenses, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. After a week-long trial, the jury returned guilty verdicts on all counts, including drug conspiracy, maintaining a drug house, possessing firearms in furtherance of drug crimes and distributing drugs to a 14 year-old.
United States Attorney David Rivera stated, “Drugs, guns, and kids are a toxic combination. The proof showed that Marchbanks, as a 27 year-old man, was distributing drugs to 14 year old kids and using them as armed guards in a drug house. In return, Marchbanks provided them with marijuana to smoke and offered them $100 to murder another gang member. We will seek an appropriate sentence for the conduct of the defendant.”
Marchbanks’ drug operation was uncovered as part of a lengthy investigation into various Rollin’ 60 Crips gang members who were committing armed robberies of suspected drug dealers under the belief that such violent crime would not be investigated fully and that the targeted victims would not cooperate with law enforcement. Marchbanks is the final defendant to be tried in a case which began in 2009 and involved more than 30 defendants who were charged with drug crimes, firearms and other offenses as part of the investigation. All of the defendants in this case have now been convicted, including more than five gang members who held the status of “OG” (“Original Gangsta”), the highest rank available in Tennessee.
According to the proof at trial, Marchbanks was the target of such a robbery by other gang members and was in fact shot during that robbery. When questioned by police, Marchbanks falsely claimed that the robbery was not drug-related. The investigation, however, showed that Marchbanks was running a drug house in the Creekwood Drive area of Nashville
and was using armed minors to guard the house.The trial also included proof that Marchbanks wrongly suspected another Rollin’ 60 Crips gang member of having participated in that robbery, and solicited the murder of that person. A 15 year- old and a person who is still unidentified then shot the gang member whom they suspected. The wounded gang member survived and the investigation determined that he was not involved in the robbery of Marchbanks. The three people involved in the actual robbery of Marchbanks have been convicted and are also in custody.
Marchbanks faces up to life in prison when he is sentenced on January 14, 2015.
The investigation was conducted by the FBI, the ATF and the Metropolitan Nashville Police Department. Assistant United States Attorneys Sunny A.M. Koshy and Louis Crisostomo prosecuted the jury trial,
Former Klansman Pleads Guilty to Federal Hate Crime for Cross BurningRead the Press Release
Timothy Flanagan, 33, pleaded guilty today in federal court in Nashville, Tennessee, for his role in the April 30, 2012, cross burning in front of an interracial family’s home in Minor Hill, Tennessee, the Department of Justice announced. Flanagan pleaded guilty to one count of conspiring with others to threaten, intimidate and interfere with an African-American man’s enjoyment of his housing rights, and one count of interfering with those housing rights.
Flanagan—a former member of the Church of the National Knights, a Ku Klux Klan affiliate—admitted during the plea hearing that on the night of April 30,2012, he and two other individuals devised a plan to burn a cross in the yard of an African American man in Minor Hill, Tennessee. Flanagan’s co-conspirator, Timothy Stafford, constructed a wooden cross in a workshop behind his house. Using Flanagan’s credit card, Stafford and co-conspirator Ivan “Rusty” London then purchased diesel-fuel with which to soak the cross. Flanagan and the other co-conspirators then drove the cross to the victim’s residence and upon arriving at the residence, Flanagan and London exited the truck. The cross was placed in the driveway leading up to the house and was ignited. The co-conspirators burned the cross with the purpose of intimidating the African-American male who resided at that residence.
Ivan “Rusty” London IV, 21, of Lexington, Kentucky, and Timothy Stafford, 41, of Minor Hill, Tennessee, previously pleaded guilty for their roles in the conspiracy, and are currently awaiting sentencing.
“Hate-motivated crimes will not be tolerated in our country,” said Acting Assistant Attorney General Molly Moran for the Civil Rights Division. “The Justice Department will vigorously prosecute individuals who violate the rights of others because of race.”
“There can be no tolerance for such acts of intimidation when innocent persons are targeted simply because of their race,” said U.S. Attorney David Rivera for the Middle District of Tennessee. “The U.S. Attorney’s Office and our law enforcement partners will work tirelessly to protect the civil rights of all persons and bring to justice, anyone who would attempt to impede the constitutionally protected right to liberty of any person.”
Timothy Flanagan faces up to 20 years in prison and fines up to $500,000. Timothy Stafford faces up to 10 years in prison and fines of up to $250,000. Ivan London faces up to 5 years in prison and fines of up to $250,000. Sentencing for Flanagan is set for January 8, 2015.
This case was investigated by the Columbia, Tennessee, Division of the FBI and is being prosecuted by Trial Attorney Jared Fishman of the Civil Rights Division and by Assistant U.S. Attorney Hal McDonough of the Middle District of Tennessee.Former Nashville Resident Sentenced for $1.2 Million Dollar Bank Fraud and Filing False Income Tax ReturnsRead the Press Release
David A. Billington, 51, formerly of Nashville and currently residing in Murray, Kentucky, was sentenced on September 22, 2014, to serve 51 months in prison for bank fraud and filing false tax returns, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Billington was also ordered to pay restitution and the taxes that he owed, when released from prison.
“Fraudulent conduct that impacts federally insured banks will continue to be aggressively investigated by federal law enforcement agencies and prosecuted by this office” said U.S. Attorney David Rivera. “When criminals willfully fail to report their ill-gotten gains, as the law requires, they will also face additional tax charges and stiff penalties.”
Billington pleaded guilty in April 2014 to embezzling $1.2 million from his former employer, Revolution Pictures, where he worked as a contract bookkeeper. Billington admitted to Chief Judge Joseph Haynes that from 2006 to 2011, he secretly wrote a series of company checks made payable to him; altered company books and records to conceal the fraud; and thereby fraudulently obtained company funds that totaled $1.2 million.
Billington also admitted that he failed to disclose the embezzled funds in tax returns he filed for tax years 2006 through 2010, which resulted in an underpayment of almost $280,000 in income taxes.
"This sentence is the culmination of the tireless efforts of the FBI and our law enforcement partners," said A. Todd McCall, Special Agent in Charge of the Memphis Division of the Federal Bureau of Investigation. "Their hard work once again proves that those who violate trust, fiduciary duty, and the law, for personnel gain, will be brought to justice and will pay the price of their crimes."
“No matter what the source of income, all income is taxable,” said Christopher A. Henry, Special Agent in Charge of the Nashville Field Office of the IRS – Criminal Investigation. “The prosecution of individuals who intentionally conceal income and evade taxes is a vital element of the IRS' enforcement strategy. We are pleased with the successful resolution of this investigation due to the cooperative efforts of our law enforcement partners.”
The case was investigated the FBI and the IRS-Criminal Investigation. The United States was represented by Assistant U.S. Attorney Hilliard Hester.
Cookeville Resident Pleads Guilty to EmbezzelmentRead the Press Release
Woman Embezzled More Than $370,000 from Local Credit Union
Latisha Cochran, 36, of Cookeville, Tenn., pleaded guilty today in U.S. District Court, to one count of credit union embezzlement, announced David Rivera, United States Attorney for the Middle District of Tennessee.
In a hearing before U.S. District Court Chief Judge William J. Haynes, Cochran admitted issuing fraudulent loans in the names of fictitious individuals, while employed by the Middle Tennessee Federal Credit Union. Cochran admitted that she used the funds from the fraudulent loans for her own personal use, and also used fraudulent credit cards associated with the loans to make personal purchases.
Cochran also admitted taking actions to conceal her embezzlement, including opening accounts in fictitious names, using fictitious addresses, fabricating loan documentation, conducting transactions outside of normal business hours, making loan payments using embezzled funds, and shredding loan files. Cochran acknowledged to the Court that she embezzled more than $370,000, and agreed to make full restitution to the Middle Tennessee Federal Credit Union.Cochran is scheduled to be sentenced by Judge Haynes on December 12, 2014. She faces up to 30 years in prison and a fine of up to $1,000,000.
The case was investigated by the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney William F. Abely.
Fairview Man Sentenced for Production of Child PornogrphyRead the Press Release
Kevin S. Kolb, 44, of Fairview, Tenn., was sentenced yesterday by United States District Court Judge Aleta Trauger to 25 years in prison yesterday for five counts of production of child pornography, announced David Rivera, United States Attorney for the Middle District of Tennessee.
At his plea hearing on March 31, 2014, Kolb admitted that he had taken sexually explicit images of a young girl when she was between the ages of seven and ten years old, and that he had distributed the images on the internet via email and a photograph website. Investigators also found approximately 600 sexually explicit images and 12 videos of child pornography in Kolb’s possession.
Upon his release, Kolb will remain on supervised release for life and will be required to participate in sex offender treatment, among other conditions. Kolb had faced a mandatory minimum sentence of fifteen years in prison and up to 150 years for these crimes.
This matter was investigated by the Federal Bureau of Investigation and the United States was represented by Assistant U.S. Attorney S. Carran Daughtrey.
American from Philippines Sentenced for Abusive Sexual Contact of A MinorRead the Press Release
Rennie W. Wells, 74, most recently living in the Philippines, was sentenced on September 15, 2014, by United States District Judge Aleta Trauger, to 78 months in prison for abusive sexual contact with a minor, announced David Rivera, United States Attorney for the Middle District of Tennessee. The prison sentence will be followed by 15 years of supervised release. Wells had previously pleaded guilty to the offense on April 10, 2014.
Wells’ conviction and sentencing came after an investigation that began in September 2005, after Wells was observed fondling a four year old girl while attending a cookout on the Fort Campbell Army Base. Wells and his wife, who had been doing missionary work for a church in the Philippines, were home in the United States visiting friends and family.
Shortly after the cookout, Wells and his wife returned to the Philippines and continued their missionary work. Several years later, after learning of allegations of child abuse, Wells’ wife urged him to return to the United States to turn himself into authorities. In August 2013, Wells returned to the U.S. and surrendered to the Montgomery County Sheriff’s Department and admitted that he had engaged in abusive sexual contact in 2005 with the child at the Fort Campbell Army Base, as well as two other minor girls in another state. Since the cookout in September 2005, several other individuals have disclosed having been victims of sexual abuse perpetrated by Wells.This matter was investigated by the FBI and the Montgomery County Sheriff’s Department. The United States was represented by Assistant U.S. Attorney S. Carran Daughtrey.
Rutherford County Man Pleads Guilty to Social Security FraudRead the Press Release
Walter Lewis Glenn, 59, of La Vergne, Tennessee, pleaded guilty today, in U.S. District Court, to two counts of Social Security Fraud, announced David Rivera, United States Attorney for the Middle District of Tennessee.
During a plea hearing today before Senior U.S. District Court Judge Marvin E. Aspen, Glenn admitted making false statements on an application for Supplemental Security Income (“SSI”), a needs-based safety net program administered by the Social Security Administration.
Glenn pleaded guilty to allegations that, in connection with a December 2010 application for SSI benefits, he falsely stated that his spouse received no income, although his wife was receiving income from her employment. Glenn also pleaded guilty to allegations that, in connection with his SSI application, he denied that he had previously been convicted of a felony, despite having been convicted in September 2010 of a felony theft offense in which he fraudulently obtained more than $196,000 from the Social Security Administration.Glenn is scheduled to be sentenced by Judge Aspen on December 9, 2014. He faces a maximum punishment on each count of five years in prison and a $250,000 fine.
This case was investigated by the Social Security Administration Office of Inspector General, with assistance from the U.S. Department of Veterans Affairs Office of Inspector General. The United States is represented by Assistant U.S. Attorneys William F. Abely and Stephanie N. Toussaint.
Two Tennessee Men Plead Guilty to Conspiracy to Operate Illegal Cockfighting & Gambling BusinessRead the Press Release
Criminal Enterprise Collected More Than $100,000 in Proceeds
NASHVILLE, Tenn.- August 28, 2014- Thomas Hardiman, 66, of Iron City, Tenn. and Walter Wooten, 58, of Leoma, Tenn. pleaded guilty today to conspiring to operate an illegal gambling business and to assisting an animal fighting venture, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. These convictions relate to these defendants’ role with a cockfighting enterprise known as the “Shiloh Club,” which operated in Hohenwald, Tenn. until being shut down by Federal and state authorities In May 2009.
During a hearing today before U.S. District Court Judge Kevin Sharp, Hardiman and Wooten admitted conspiring with each other, and with Howard Gay and Philip Heidekker, to conduct the illegal gambling business known as the Shiloh Club. Hardiman and Wooten each acknowledged that the Shiloh Club operated regular cockfighting derbies in Hohenwald, Tenn. approximately every other Saturday from November until July, and that spectators and others gambled openly on the outcome of cockfights. Each defendant also admitted that individuals traveled from out-of-state for the purpose of entering roosters in the cockfighting derbies and gambling on the outcome of the fights. Hardiman acknowledged that the Shiloh Club collected more than $12,000 in entry fees at one particular derby, and that it collected more than $100,000 from spectators and participants over the course of its 2008-09 season.
Hardiman is scheduled to be sentenced on November 21, 2014 and Wooten is scheduled for sentencing on December 15, 2014. Each faces up to five years in prison and a fine of up to $250,000.
On April 10, 2014, Howard Gay, 56, of Hohenwald, Tenn., was convicted of three counts in connection with his role with the Shiloh Club. Specifically, Gay was found to be guilty of conspiring to operate an illegal gambling business, of operating an illegal gambling business, and of assisting an animal fighting venture. Gay is scheduled to be sentenced by Judge Sharp on September 19, 2014. He also faces up to five years in prison and a fine of up to $250,000, as well as the forfeiture of property used in the illegal activity.
Phillip Heidekker, 67 of Bon Aqua, Tenn., was also indicted by a federal grand jury on January 17, 2013 in connection with his role with the Shiloh Club. Heidekker is currently awaiting trial. An indictment is merely an accusation and is not evidence of guilt, and Heidekker is presumed innocent unless and until proven guilty in a court of law.
This case was investigated by agents with the U.S. Department of Agriculture - Office of Inspector General and the Tennessee Bureau of Investigation, with valuable assistance from the Tennessee Highway Patrol, the Federal Bureau of Investigation, the Williamson County Sherriff’s Department, and the 21st Judicial District Attorney General’s Office. The case is being prosecuted by Assistant U.S. Attorney William F. Abely.
Clarksville Man Sentenced to Life in PrisonIn Large Scale Drug Conspiracy ProsecutionRead the Press Release
NASHVILLE, Tenn. – August 28, 2014 – Chris Young a/k/a Soulja C, 26, of Clarksville, Tennessee, was sentenced to life In prison today, announced David Rivera, U.S. Attorney for the Middle District of Tennessee.
Young was convicted at a jury trial of conspiracy to distribute 500 grams or more of cocaine and 280 grams or more of crack cocaine, attempted possession of cocaine with intent to distribute within 1000 feet of a school, and possession of a firearm in furtherance of a drug trafficking crime. Young also pleaded guilty to being a felon in possession of a firearm.
Young was one of 32 defendants charged in a lengthy investigation focusing on drug trafficking in the Clarksville area. He was arrested near the Genesis Teen Learning Center in Clarksville, Tennessee as he was meeting with a co-defendant and attempting to obtain a large quantity of cocaine. A loaded firearm, $10,000 in cash, and other evidence was seized from Young. At the time, Young was on state community corrections for two other drug felony convictions, and had a previous history of unlawful possession of firearms. He was convicted after a two week trial along with two other Clarksville residents, Demetrius Duncan a/k/a Whirley and Alto Parnell a/k/a Al-Pistol a/k/a A.P. Duncan and Parnell are pending sentencing.
The investigation was conducted by the DEA, Tennessee Bureau Investigation, and Clarksville Police Department, with assistance from other state, local, and federal agencies. Assistant U.S. Attorneys Sunny A.M. Koshy and Lynne T. Ingram represented the United States.
Court Orders Circle C Construction, Llc to Pay $762,894 for Violating the False Claims ActRead the Press Release
NASHVILLE, Tenn. August 26, 2014 ? U.S. District Judge Kevin H. Sharp ordered Circle C Construction, LLC to pay $762,894.54 to the United States for False Claims Act violations connected with a construction contract at Fort Campbell military base, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Circle C is a construction contractor based in Kentucky.
The United States originally intervened in the lawsuit against Circle C in 2007. U.S. District Court Judge William J. Haynes entered summary judgment on both liability and damages for the United States in 2010. Following an appeal, the Sixth Circuit Court of Appeals in 2012 upheld Judge Haynes’ liability decision, finding that Circle C had submitted false payroll certifications to Fort Campbell that falsely claimed that Circle C was paying the required prevailing wages, under the Davis-Bacon Act, to workers on Circle C’s construction contract at Fort Campbell, when Circle C was not actually paying those wages to the workers of its electrical subcontractor, Phase Tech. The Court of Appeals reversed Judge Haynes’ original damages award in the case and remanded the case for a new trial on damages.
In March 2014, the parties tried the damages issue before Judge Sharp. On August 22, 2014, Judge Sharp announced his decision awarding $762,894.54 to the United States in the case. Specifically, Judge Sharp found that government paid Circle C $259,298.18 for the electrical portion of the affected buildings constructed by Circle C. This amount constituted the United States’ damages in this case, according to Judge Sharp, since “the government would not have paid Circle C for this work if it had known at the time that Circle C was violating the Davis-Bacon Act”.
Because violators of the False Claims Act are subject to three times the government’s actual damages, Judge Sharp trebled the $259,298.18 figure and awarded a total of $762,894.54 to the government as damages.
“This court decision signals that the United States will continue to pursue federal contractors that defraud the United States,” said U.S. Attorney David Rivera. “Judgments like this one are important, because they confirm that the government is entitled to get the benefit of its bargain on federal contracts, which includes knowing that those contractors will pay the prevailing local wages to workers on federal projects.”The investigation of this case was conducted by the Department of Labor- Office of Inspector General, and the Defense Criminal Investigative Service. The government was represented by Assistant U.S. Attorney Ellen Bowden McIntyre.
The case is docketed as United States ex rel. Brian Wall v. Circle C Construction, LLC, No. 3:07-cv-91 (M.D. Tenn.).
Nashville Businessman Charged with Bank Fraud and Aggravated Identity TheftRead the Press Release
NASHVILLE, Tenn.- August 25, 2014 - Eric Stephen Peterson, 52, of Nashville, Tennessee, was indicted by a federal grand jury on August 20, 2014, in connection with a scheme to defraud several banks by depositing checks with forged signatures into various accounts controlled by Peterson, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Peterson is the owner and operator of Peterson Insurance Company, LLC and Peterson Enterprises, LLC.
The indictment charges Peterson with 28 counts of bank fraud and two counts of aggravated identity theft.
"The U.S. Attorney’s Office takes a very serious and aggressive approach when working with our law enforcement partners to pursue those who commit financial crimes and so greatly impact the lives of those they steal from,” said U.S. Attorney David Rivera. “We will continue our efforts to insure that the lives of those responsible are equally impacted and that justice is appropriately served.”
The indictment alleges that Peterson, while managing the financial affairs of another person, obtained access to that person’s investment and bank accounts and then abused his position by forging more than 200 checks totaling more than $800,000. Peterson is alleged to have deposited those checks into seven different bank accounts which he controlled and then used the money to pay purported project principal and/or distributions to investors which he had previously solicited to make investments in certain ostensible business or investment opportunities. The indictment also alleges that Peterson forged the signature of another person who was authorized to sign the checks and that he used the money to pay his general living expenses, such as restaurant tabs, utility bills and mortgage payments.
“The Secret Service remains committed to protecting our nation’s financial security, to include aggressively investigating Ponzi schemes such as the one perpetrated by Mr. Peterson that prey on the trust of individuals, often robbing them of their life savings and financial future,” said Todd Hudson, Special Agent in Charge of the United States Secret Service - Nashville Field Office.
If convicted, Peterson faces up to 30 years in prison for the bank fraud counts, as well as an additional two years for each count of aggravated identity theft.
The case was investigated by the United States Secret Service. The United States is represented by Assistant U.S. Attorney Sandra G. Moses.
An indictment is merely an accusation and is not evidence of guilt. The defendant is presumed innocent unless and until proven guilty in a court of law.
Bloods Gang Member Sentenced to Ten Years in Prison for Role in Racketeering ConspiracyRead the Press Release
Final Defendant Sentenced in Racketeering Case
More Than 30 Defendants Collectively Sentenced to Approximately 400 Years in PrisonNASHVILLE, Tenn. – August 21, 2014 – Kenneth Gaddie, 24, a/k/a “K.G.,” of Nashville, Tennessee, has been sentenced to ten years in prison for conspiring to participate in racketeering activity related to his membership in the Bloods criminal enterprise by U.S. District Judge Aleta Trauger, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Gaddie is the final defendant to be sentenced in the case and pleaded guilty to the racketeering conspiracy on May 23, 2014.
According to court documents, from approximately 2006 until December 2011, Bloods gang members committed and conspired to commit acts of murder, attempted murder, robbery and drug trafficking. Evidence at the 2012 trial of co-defendants Keairus Wilson and Rondarius Williamson showed that the Bloods gang members met regularly to plan and agree upon the crimes to commit, including murder; maintained and circulated a collection of firearms for use in criminal activity by Bloods members; distributed cocaine, cocaine base, marijuana and hydromorphone; and used the proceeds of those drug transactions to help finance the gang’s illegal activities. Bloods gang members committed murder and other acts of violence against rival gang members and others during the course of the conspiracy.
More than 30 individuals have pleaded to, or have been found guilty in the Middle District of Tennessee of various crimes related to their involvement in the Bloods gang.
Lonnie Greenlee, 54, of Nashville, co-founder of the Galaxy Star Drug Awareness and Gang Prevention Center in Nashville and father of lead defendant Lonnie Newsome, allowed Bloods gang members to use the facility to conduct gang meetings. According to evidence presented at trial, Greenlee provided numerous Bloods gang members with fraudulent documentation of court-ordered community service hours in exchange for money. Greenlee pleaded guilty in May 2011 to one count of racketeering conspiracy and was sentenced to 24 months’ in prison on April 2, 2012.
The remaining defendants and prior sentences imposed include:Rondarius Williamson of Nashville Life +60 years in prison;
Keairus Wilson a/k/a “Key Thang,” of Nashville Life +35 years in prison;
Montez Hall a/k/a “Tez,” 22, of Nashville, 360 months in prison;
Anthony Brooks a/k/a “A.B.,” 25, of Nashville, 300 months in prison;
Lonnie Newsome a/k/a “Big Lonnie,” 26, of Nashville, 240 months in prison;
Kerry Pettus a/k/a “Lil Kerry,” 24, of Nashville, 240 months in prison;
Tim Allen a/k/a “Lil Tim,” 22, of Nashville, 216 months in prison;
Cedric Woods a/k/a “Lil Ced,” 23, of Nashville, 210 months in prison;
Jeffrey Albea a/k/a “Lil Jeff,” 20, of Nashville, 120 months in prison;
Aaron Gooch a/k/a “A-Ron,” 23, of Nashville, 120 months in prison;
Deshaune Jones a/k/a “Mexico,” 23, of Nashville, 120 months in prison;
William Walden a/k/a “Wild Bill,” 23, of Nashville, 120 months in prison;
Anthony Lampkins a/k/a “Doo Daddy,” 23, of Nashville, 96 months in prison;
Antonio Washington a/k/a “T.O.,” 23, of Nashville, 96 months in prison;
William Bartlett a/k/a “Face Mob,” 29 of Gallatin, Tenn., 88 months in prison;
Ricky Williams a/k/a “Big Rick,” 26, of Nashville, 85 months in prison;
Jermaine Tate a/k/a “Maine Maine,” 23, of Nashville, 85 months in prison;
Alonzo McLaurine a/k/a “Zo,” 22, of Nashville, 84 months in prison;
Shayne Gibson, 20, of Nashville, 84 months in prison;
Karlos Taylor a/k/a “Los,” 22, of Nashville, 80 months in prison;Alexander McDonald a/k/a “Dominique,” 22, of Nashville, 60 months in prison;
Anthony Campbell a/k/a “Dante,” 22, of Nashville, 57 months in prison;
Jermaine Coward a/k/a “Maine Maine,” 21, of Nashville, 52 months in prison;
Joedon Bradley a/k/a “Jo Jo,” 24, of Nashville, 48 months in prison;
Adrian Montgomery, 21, of Nashville, 48 months in prison;
Donald Dowell a/k/a “D-Dow,” 26, of Nashville, 47 months in prison;
Torey Cohen Boseman, 26, of Nashville, 36 months in prison;
James House a/k/a “Bam,” 39, of Nashville, 30 months in prison;
Shawn Howell, 25, of Nashville, 27 months in prison;
Rodney Britton, 24, of Nashville, 24 months in prison;
Kaylon Cunningham, 26, of Nashville, 60 months’ probation;
Corneilus Primm, 27, of Nashville, 36 months’ probation;
Brandon Prince, 24, of Nashville, 36 months’ probation.The investigation was a joint operation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Metropolitan Nashville Police Department; the U.S. Marshals Service; the LaVergne, Tennessee Police Department; and the Davidson County, Tennessee Sheriff’s Office. The case was prosecuted by Assistant United States Attorney Scarlett S. Nokes for the Middle District of Tennessee, Trial Attorney Kevin Rosenberg, of the Criminal Division?s Organized Crime and Gang Section and Cody L. Skipper, formerly a Trial Attorney assigned to the Organized Crime and Gang Section.
California Man Sentenced in Scheme to Defraud NissanRead the Press Release
NASHVILLE, Tenn. – August 19, 2014- Bruce Young, 50, of Compton, Calif., was sentenced on August 15, 2014, to 15 months in prison and ordered to pay $78,000 in restitution for his participation in a money laundering scheme that arose out of a scheme to defraud Nissan, announced David Rivera, United States Attorney for the Middle District of Tennessee.
The scheme originated from Kenneth Carter, a former Nissan employee who was employed at Nissan’s Franklin, Tennessee headquarters as an “Arbitration Specialist” from March 2007 through April 2008. As Arbitration Specialist, Carter’s duties included negotiating with attorneys who brought claims on behalf of Nissan owners, alleging that Nissan had violated “Lemon Laws” or the “Federal Warranty Act.”
Between March 2007 and April 2008, Carter, along with Bruce Young and other defendants, engaged in a scheme to defraud Nissan by filing false Lemon Law claims on behalf of individuals who owned Nissan vehicles.
The defendants provided Carter with information obtained from Nissan owners, such as the owner’s name, address, and vehicle identification number. Carter then used the information to file false and fraudulent Lemon Law claims with Nissan requesting settlement checks. Once Carter approved the false claims he would cause settlement checks to be issued. Young and others then directed the Nissan owners to deposit the checks into their bank accounts or to cash the checks and then “kick-back” a portion of the funds received from Nissan. A portion of the funds were then paid to Carter, and the remaining funds were kept by Bruce Young and others.
According to charging documents, between March 2007 and April 2008, Carter caused approximately 80 false claims to be paid by Nissan, totaling approximately $571,500.
All six persons charged in this case have pleaded guilty. Bruce Young is the fifth to be sentenced. The remaining defendant, Kenneth Carter, is scheduled to be sentenced on November 14, 2014.
The case was investigated by the IRS? Criminal Investigation and the Tennessee Bureau of Investigation. Assistant United States Attorney Kathryn Ward Booth represents the government.
Two Individuals Indicted for Conspiracy to Defraud the IRS and Filing False Tax ReturnsRead the Press Release
NASHVILLE, Tenn.- Jeffrey Cephus McCoy, 68, and Andra L. McCoy, 65, both of Brentwood, Tenn. were arrested by IRS agents this morning and charged with filing false tax returns and with conspiracy to defraud the United States in the collection of income taxes, announced David Rivera, U. S. Attorney for the Middle District of Tennessee. Both were indicted by a federal grand jury in Nashville on August 13, 2014.
According to the indictment, beginning in 2002, the McCoys conspired to defeat the lawful function of the Internal Revenue Service in its assessment, computation, and collection of income taxes. The McCoys are alleged to have filed false and fraudulent joint tax returns for tax years 2003- 2007, which included hundreds of thousands of dollars in false and fictitious withholding amounts.
The indictment also alleges that the McCoys placed assets in the names of others and submitted false and fraudulent paperwork to the IRS in order to obstruct the IRS’s assessment and collection of their taxes. During the times alleged in the indictment, Jeff McCoy earned compensation for his services as a radiologist from various healthcare providers with whom he contracted.
If convicted, each defendant faces up to five years in prison and a fine of $250,000 on the conspiracy charge, and three years in prison and a fine of up to $250,000 on each of five counts of filing a false tax return.
This investigation was conducted by the Internal Revenue Service – Criminal Investigation. Assistant U.S. Attorney Kathryn W. Booth represents the government.
An indictment is merely an accusation and is not evidence of guilt. The defendants are presumed innocent unless and until proven guilty in a court of law.
Former Hanover CEO Sentenced in $18 Million Ponzi SchemeRead the Press Release
Trio Bilked More Than 125 Investors
NASHVILLE, Tenn. – August 15, 2014 - Terry Kretz, 61, of Gallatin, Tenn. and the former CEO of Hanover Corporation, was sentenced today by U.S. District Judge Todd J. Campbell to 168 months in prison, followed by three years of supervised release, for orchestrating an $18 million Ponzi scheme, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Judge Campbell also ordered Kretz to pay $14,784,983.75 in restititution.
Kretz was indicted on November 4, 2009 and pleaded guilty on January 31, 2014, to securities fraud, mail fraud, money laundering, and conspiracy to commit securities fraud, wire fraud and mail fraud.
“Those who prey on the investing public can rest assured that the U.S. Attorney’s Office will mount an exhaustive and thorough prosecution to ensure that justice is served,” said U.S. Attorney David Rivera. “After convictions are obtained, we will be equally aggressive during the penalty phase and seek appropriate punishment on behalf of those who suffer financial distress as a result of the fraud.”
According to court documents, Kretz carried out the scheme along with two other defendants, both of whom have also pleaded guilty: Daryl Bornstein, 55, a Hanover salesman from Kingston Springs, Tenn. and Robert Haley, 55, Hanover’s chief financial officer and a Lebanon, Tenn. resident.
The fraudulent scheme was carried out from January 2004 through August 2006. During that period, Kretz offered clients the opportunity to invest in Hanover through promissory notes bearing high interest rates. Through representations in the promissory notes, as well as his own discussions with investors, Kretz told clients that their money would be used for specific purposes, such as investing in stock options and startup companies. In fact, as Kretz knew, more than half the money invested in Hanover went to repay earlier investors, to pay Hanover’s salaries and overhead, or to benefit him or other defendants personally. Such personal benefits included the purchase of a $600,000 residential building lot in the name of Kretz personally, contributing more than $176,000 to a church, and paying for golf memberships.
Kretz and Bornstein also issued Hanover promissory notes to reimburse individuals who had previously lost money investing in ventures recommended by Bornstein before he joined Hanover. In some cases, these old investors contributed new money to Hanover, while in other cases, they invested nothing. In both cases, money from new investors in Hanover was used to make payments on promissory notes issued to cover non-Hanover losses without the Hanover investors’ knowledge.
Bornstein and Haley are scheduled to be sentenced on August 25, 2014.
The case was investigated by the FBI, the IRS-Criminal Investigation, the Tennessee Bureau of Investigation, and the Tennessee Department of Commerce and Insurance. The case is being prosecuted by Assistant U.S. Attorney Scarlett S. Nokes of the Middle District of Tennessee and Trial Attorney Justin Goodyear of the Criminal Division’s Fraud Section.
Owner of Security Training Companies Sentenced to More Than 7 Years in Prison for FraudRead the Press Release
NASHVILLE, Tenn. - August 13, 2014- Ricky Lee Coleman, Jr., 41, of Antioch, Tennessee was sentenced on August 11, 2014, to 92 months in prison in connection with a scheme that defrauded more than 2,500 individuals, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Coleman’s sentence also includes 3 years of supervised release following his prison sentence and he was ordered to pay more than $900,000 in restitution to his victims.
On May 7, 2014, Coleman pleaded guilty to charges of mail fraud, wire fraud, and credit card fraud in connection with his ownership and operation of International Executive Services LLC, Advancement Solutions LLC, and RLC Enterprises, companies based in Hermitage and Antioch, Tennessee, that defrauded thousands of military veterans and others seeking job training and job placement services.
Coleman previously admitted directing his employees to make false representations to customers and potential customers, including that they would be placed into a training class, that they would be paid during training, and that they would be guaranteed employment after training. Coleman also admitted instructing his employees to make misrepresentations to customers who had paid for training in order to delay their attempts to seek refunds and to postpone their complaints, including by sending letters falsely informing customers that they were enrolled in certain training academies. Coleman spent the majority of funds paid by customers on personal expenses or on efforts to recruit new customers.The case was investigated by the United States Secret Service, the Tennessee Bureau of Investigation, the United States Postal Inspection Service and the Metro Nashville Police Department. The case was prosecuted by Assistant U.S. Attorney William F. Abely.
Former Wayne County School System Employee Charged with Federal Program Fraud Totaling $135,000Read the Press Release
Nashville, Tenn. – August 13, 2014 – Kayla Luna, 47, of Waynesboro, Tennessee, was charged by a criminal information filed yesterday, with federal program fraud, announced David Rivera, U.S. Attorney for the Middle District of Tennessee.
According to the information, between July 2008 and continuing until January 2013, Luna, who was an agent of the Wayne County School System, embezzled, stole, and obtained by fraud, goods that belonged to the Wayne County School System. Specifically, Luna is charged with converting goods and gift cards purchased at Wal-Mart stores, totaling approximately $135,000, to the use of someone other than the school system.
U.S. Attorney David Rivera stated, “This case is yet another example of cooperation between federal and state law enforcement agencies to pursue fraud allegations and prosecute an individual responsible for helping herself to funding that was intended for Wayne County schools and students.”
“This case illustrates how state and federal law enforcement agencies can utilize their resources to bring to justice the most egregious criminal activity, including corrupt practices undertaken by those in a position of public trust” said A. Todd McCall, Special Agent in Charge of the Federal Bureau of Investigation’s Memphis Division.
"This case exemplifies the hard work exhibited by the Internal Revenue Service- Criminal Investigation and our law enforcement partners as we leveraged our cooperative resources to dismantle public corruption in Wayne County", said Christopher A. Henry, Special Agent in Charge for IRS- Criminal Investigation's Nashville Field Office. "The victims in this case are the young minds that one day will be the future leaders of this great country and their needs and educational opportunities will not be dashed by corrupt public officials. IRS Special Agents will vigorously pursue all aspects of criminal financial fraud."
If convicted, Luna faces a maximum penalty of 10 years in prison, a $250,000 fine, as well as forfeiture of $135,000.
This investigation was conducted by the Federal Bureau of Investigation, the Internal Revenue Service – Criminal Investigation, the Tennessee Bureau of Investigation, and the State of Tennessee-Office of the Comptroller of the Treasury. Assistant United States Attorney Scarlett S. Nokes is representing the United States.
Charges brought by an information are merely accusations and are not evidence of guilt. The defendant is presumed innocent unless and until proven guilty.Repeat Sex Offender Pleads Guilty to Distribution of Child PornographyRead the Press Release
NASHVILLE, Tenn. – August 11, 2014 – Christopher Troy Sullivan, 40, of Joelton, Tennessee, pleaded guilty yesterday in U.S. District Court in Nashville to distribution of child pornography, announced David Rivera, United States Attorney for the Middle District of Tennessee.
Sullivan is a registered sex offender, having been previously convicted in 2004 of aggravated sexual exploitation of a minor in Davidson County, Tenn. He now faces a minimum mandatory sentence of 15 years in prison
According to court documents, from approximately December 2010 through May 2012, Sullivan possessed and distributed child pornography. Sullivan admitted that he created a fake profile on the social media website “Facebook” to initiate and maintain an online relationship with a teenage girl over the course of several months. During the relationship, Sullivan obtained hundreds of nude and sexually explicit images of the girl. He then distributed those images to others and created additional false online profiles, pretending to be the girl, in order to induce other teenage girls to also send him nude images.
Law enforcement officers from the Metropolitan Nashville Police Department seized several items of electronic equipment from Sullivan’s home in Joelton, Tenn. Analysis of the equipment revealed that Sullivan had obtained over 1,400 images of child pornography, which were located in hidden electronic file folders.
Sullivan is scheduled for sentencing before U.S. District Judge Aleta A. Trauger on October 27, 2014, at 2:30 p.m.
This matter was investigated by the Metropolitan Nashville Police Department, the Cheatham County Sheriff’s Department, the Davidson County Probation and Parole Office and the Minnesota Bureau of Criminal Apprehension. The case is being prosecuted by Assistant United States Attorneys Lynne T. Ingram and Louis A. Crisostomo.Nashville Tax Return Preparer Sentenced to Three Years in Prison for Role in Million Dollar Tax Refund SchemeRead the Press Release
NASHVILLE, Tenn., - August 12, 2014 - Carolina Serrano, 42, of Nashville, Tenn., was sentenced on August 8, 2014, by Chief Judge Williams J. Haynes to serve three years in prison for her participation in a tax refund fraud conspiracy that resulted in the payment of more than $1 million dollars in fraudulent federal tax refunds, announced U.S. Attorney David Rivera. Judge Haynes also ordered Serrano to pay $1 million dollars in restitution, and in lieu of cash, ordered that she forfeit any property she owned that was collectively worth up to $1 million dollars.
At a plea hearing in November 2013, Serrano admitted that she had conspired with two co-defendants and others to defraud the United States; to aid in the theft of government money; to engage in mail fraud; and to prepare false tax returns. Serrano confessed that between 2011 and October 2013, she prepared fraudulent federal tax returns for other participants in the scheme using aliases, false employment and earnings, non-existent dependents and other false information, to generate tax refunds which were not owed.
Serrano also admitted that she referred accomplices to certain individuals whom she knew would cash the refund checks, despite the fact that the person presenting the check was not the payee. Serrano agreed that she had thereby helped others obtain more than $1 million in fraudulent tax refunds.
“This was not a case in which someone simply cheated on their taxes by lying about their true earnings or deductions, which is also a serious crime,” said United States Attorney David Rivera. “This case involved an orchestrated wholesale scheme to blatantly steal taxpayer money in the form of tax refunds, of which the participants were entitled to nothing. When, as here, the evidence demonstrates a defendant’s guilt beyond a reasonable doubt, this office will seek a sentence that accurately reflects the financial harm inflicted by such a defendant on the honest American taxpayer.”
Also charged in the case were Elizabeth Navas and Gregoria Perez-Ortiz, both of Nashville and both of whom have previously pleaded guilty. Navas will be sentenced on August 15, 2014, and Perez-Ortiz will be sentenced on August 18, 2014.The case was jointly investigated by the IRS-Criminal Investigation, Homeland Security Investigations and the Postal Inspection Service. The government was represented by Assistant U.S. Attorney Hilliard Hester.
Franklin, Tennessee-based Community Health Systems, Inc. to Pay $98.15 Million to Resolve False Claims Act AllegationsRead the Press Release
Alleged Medically Unnecessary In-Patient Admissions & Violations of the Stark Law Results in Largest Ever FCA Settlement in Middle Tennessee
NASHVILLE, Tenn., July 30, 2014 ? Community Health Systems, Inc. (CHS), the nation’s largest operator of acute care hospitals, has agreed to pay $98.15 million to resolve allegations that the company knowingly billed government health care programs for inpatient services that should have been billed as outpatient or observation services, announced David Rivera, U.S. Attorney for the Middle District of Tennessee and Stuart F. Delery, Assistant Attorney General for the Department of Justice?s Civil Division. The settlement also resolves allegations that one of the company’s affiliated hospitals improperly billed the Medicare program for certain inpatient procedures and for services rendered to patients referred in violation of the Physician Self-Referral Law (commonly known as the Stark Law). CHS is based in Franklin, Tennessee, and has 206 affiliated hospitals in 29 states.
"This is the largest False Claims Act settlement in this district and it reaffirms this office's commitment to investigate and pursue health care fraud that compromises the integrity of our health care system," said David Rivera, the United States Attorney for the Middle District of Tennessee. “This office is committed to ensuring that all companies billing government healthcare programs are responsible corporate citizens and that hospital providers do not engage in schemes to increase medically unnecessary in-patient admissions of government healthcare program beneficiaries in order to increase profits.”
Charging the government for higher cost inpatient services when patients need only lower cost outpatient services wastes the country’s health care resources,” said Stuart F. Delery, Assistant Attorney General for the Department of Justice?s Civil Division. In addition, providing physicians with improper financial incentives to refer patients compromises medical judgment and risks depriving patients of the most appropriate health care available. This Department will continue to enforce the laws to prevent this type of abuse of the nation’s health care resources and to ensure patients receive the most appropriate care.”
The United States alleged that from 2005 through 2010, CHS engaged in a deliberate corporate-driven scheme to increase inpatient admissions of Medicare, Medicaid, and the Department of Defense’s TRICARE program beneficiaries, over the age of 65, who originally presented to the emergency departments at 119 CHS hospitals. The United States further alleged that the inpatient admission of these beneficiaries was not medically necessary, and that the care needed by, and provided to, these beneficiaries should have been provided in a less costly outpatient or observation setting. CHS agreed to pay $89.15 million to resolve these allegations. The settlement does not include hospitals that CHS acquired from Health Management Associates (HMA) in January 2014.
In addition, the United States alleged that from 2005 through 2010, one of CHS’s affiliated hospitals, Laredo Medical Center, Laredo, Texas (LMC), presented false claims to the Medicare program for certain cardiac and hemodialysis procedures performed on a higher cost inpatient basis that should have been performed on a lower cost outpatient basis. The United States also alleged that from 2007 through 2012, LMC improperly billed Medicare for services referred to LMC by a physician who was offered a medical directorship at LMC, in violation of the Stark Law. That law prohibits a hospital from submitting claims for patient referrals made by a physician with whom the hospital has an improper financial relationship, and is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient. CHS agreed to pay $9 million to resolve the allegations involving LMC.
As part of today’s agreement, CHS entered into a Corporate Integrity Agreement (CIA) with the United States Department of Health and Human Services, Office of Inspector General, requiring the company to engage in significant compliance efforts over the next five years. Included in the CIA is the requirement that CHS retain independent review organizations to review the accuracy of the company’s claims for inpatient services furnished to federal health care program beneficiaries.
The settlement resolves lawsuits filed by several whistleblowers under the qui tam provisions of the False Claims Act, which permit private parties to file suit on behalf of the government and obtain a portion of the government’s recovery. Those relators include Kathleen Bryant, former Director of Health Information Management at CHS’s Heritage Medical Center in Shelbyville, Tennessee; Bryan Carnithan, former Emergency Medical Services Coordinator at CHS’ Heartland Hospital in Marion, Illinois; Amy Cook-Reska, former coder for CHS’ Laredo Medical Center in Laredo, Texas; Sheree Cook, former nurse at CHS’s Heritage Medical Center in Shelbyville, Tennessee; James Doghramji, former internal medicine and emergency room physician at CHS’s Chestnut Hill Hospital in Philadelphia, Pennsylvania; Thomas Mason, former emergency room physician at Lake Norman Regional Medical Center in Mooresville, North Carolina; Scott Plantz, former emergency room physician at CHS’s Longview Regional Medical Center in Longview, Texas; and Nancy Reuille, former nurse and Supervisor of Case Management at CHS’s Lutheran Hospital in Fort Wayne, Indiana. The relators’ share of the settlement has not yet been determined.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $20.2 billion through False Claims Act cases, with more than $14 billion of that amount recovered in cases involving fraud against federal health care programs.
This settlement was the result of a coordinated investigation led by the United States Attorney’s Office for the Middle District of Tennessee, the Department of Justice, Civil Division, Commercial Litigation Branch and the United States Attorney’s Office for the Southern District of Texas and also involved the efforts of the United States Attorney’s offices of the Northern and Southern Districts of Illinois, Northern District of Indiana, and Western District of North Carolina as well as the Department of Health and Human Services, Office of Inspector General; the Department of Health and Human Services, Office of Audit Services; the Department of Defense, Defense Health Agency, Program Integrity Office; and the Federal Bureau of Investigation. Locally, Assistant United States Attorney John-David H. Thomas of the Middle District of Tennessee represents the government.
The lawsuits are captioned United States ex rel. Bryant v. Community Health Systems, Inc., et al., Case No. 10-2695 (S.D. Tex.); United States ex rel. Carnithan v. Community Health Systems, Inc., et al., Case No. 11-cv-312 (S.D. Ill.); United States ex rel. Cook-Reska v. Community Health Systems, Inc., et al., Case No. 4:09-cv01565 (S.D. Tex.); United States ex rel. James Doghramji; Sheree Cook; and Rachel Bryant v. Community Health Systems Inc., et al., Case No. 3-11-cv-00442 (M.D. Tenn.); United States ex rel. Mason v. Community Health Systems, Inc., et al., Case No. 3:12-cv-817 (W.D.N.C.); United States ex rel. Plantz v. Community Health Systems, Inc., et al., Case No. 10C-0959 (N.D. Ill.); and United States ex rel. Reuille v. Community Health Systems Professional Services Corporation, et al., Case No. 1:09-cv-007RL (N.D. Ind.). The claims resolved by this agreement are allegations only, and there has been no determination of liability.Columbia, Tennessee Man Sentenced for Stealing Equipment Worth More Than $770,000 from General Motors Spring Hill PlantRead the Press Release
Failing to Report Income from Sale of Stolen Equipment Nets Additional Charge
NASHVILLE, Tenn., - Anthony Praino, 51, of Columbia, Tennessee, was sentenced on July 28, 2014, to 30 months in prison for interstate shipment of hundreds of pieces of stolen auto manufacturing equipment, and failing to disclose to the IRS, the income he earned from selling the equipment, announced David Rivera, U.S. Attorney for the Middle District of Tennessee.
Praino pleaded guilty before U.S. District Judge Todd Campbell in December 2013 and admitted that, while employed as a fork lift operator at the General Motors plant in Spring Hill, Tenn., he stole the equipment and sold it during 2011 and 2012.
Investigators with General Motors discovered that a significant amount of expensive equipment was missing and subsequently identified some of the equipment advertised for sale on eBay. The equipment was clandestinely purchased by the investigators and when it was delivered to them, the return address for the sender was determined to be Praino’s residence. General Motors referred the matter to the Maury County Sheriff’s Office and given the value and volume of the stolen equipment, the FBI and the IRS were also notified.
Agents began monitoring Praino’s activities and observed him depositing a large parcel for delivery by a local commercial shipping company. Agents determined that the shipment contained more stolen, high-dollar equipment that was being shipped to Thailand. A search warrant was obtained for Praino’s home in Columbia, Tenn., where agents discovered additional stolen General Motors equipment valued at more than $500,000.
Additional testimony at the guilty plea established that Praino had received more than $145,000 from the sale of the stolen equipment, which he failed to disclose when filing his 2011 tax return. As a result, he failed to pay about $48,000 in additional income tax, which constitutes a separate federal crime.
This case was investigated by the FBI, the IRS- Criminal Investigation and the Maury County Sheriff's Office. The government was represented by Assistant U.S. Attorney Hilliard Hester.
Four Guilty in Conspiracy to Defraud Lowe'sRead the Press Release
NASHVILLE, Tenn.- July 22, 2014- Four Kentucky residents pleaded guilty yesterday to conspiring to defraud Lowe’s Companies, Inc., announced David Rivera, United States Attorney for the Middle District of Tennessee. Joe Fuqua, 38, Michael Gregory, 39, and Charles Ragar, 49, all of Franklin, KY, and Robert Trammel, 40, of Bowling Green, KY, each pleaded guilty to conspiring to commit wire fraud in hearings before Judge Todd J. Campbell of the U.S. District Court for the Middle District of Tennessee.
At their hearings, each of the four defendants admitted taking part in a conspiracy to establish Lowe’s credit accounts, bounce checks to the accounts, and thereafter purchase merchandise from Lowe’s retail stores using the fraudulent accounts. Each defendant also admitted to selling a portion of the merchandise obtained fraudulently from Lowe’s to a co-conspirator in exchange for a percentage of the actual retail value of the merchandise. Altogether, members of the conspiracy made fraudulent purchases exceeding $191,000 at 14 Lowe’s stores across Tennessee and Kentucky.
On April 16, 2014, a federal grand jury sitting in the Middle District of Tennessee indicted Fuqua, Gregory, Ragar, Trammel, along with four others, in connection with the scheme to defraud Lowe’s. They will be sentenced by Judge Campbell on October 17, 2014. Each defendant faces a maximum sentence of 20 years in prison.
Joseph Marty Jones, 46, of Franklin, KY, Ronnie Shubin, 30, of Springfield, TN, and Kevin Pierce, 28, of Castalian Springs, TN, were also indicted on one count of conspiracy to commit wire fraud, while John Brown, 24, of Russellville, KY was indicted on one count of conspiracy to commit wire fraud and one count of wire fraud. These defendants are awaiting trial.
An indictment is merely an accusation and is not evidence of guilt. Those defendants who have not pleaded guilty are presumed innocent unless and until proven guilty in a court of law.
The case was investigated by the Federal Bureau of Investigation and the Springfield, Tennessee Police Department. The United States is represented by Assistant U.S. Attorney William F. Abely.
Former Tennessee Department of Transportation Contract Employee Sentenced to Two Years in PrisonRead the Press Release
NASHVILLE, Tenn. – July 21, 2014 - Michael W. Young, 55, formerly of Nashville, Tenn. and currently residing in Clermont, Florida, was sentenced on July 15, 2014, to serve two years in prison for stealing $974,000 of federal funds designated for state roadway projects and for laundering funds derived from that crime, announced U.S. Attorney David Rivera. Young was also ordered to pay $221,690 in restitution to the State of Tennessee, which is the balance of the stolen funds that were not recovered.
“Criminal breaches of public trust and theft of taxpayers’ money intended for the benefit of residents of the Middle District of Tennessee occupy a high priority with this office,” said U.S. Attorney David Rivera. “Our law enforcement partners will continue to investigate such crimes and bring violators to justice.”
Young was employed from 2004 until 2012 as a contract agent for Tennessee and was responsible for purchasing property rights-of-way for road expansions for the Tennessee Department of Transportation (TDOT), with funding provided by the United States. Young admitted to Chief Judge Joseph Haynes that after the property owner agreed to sell the rights-of-way, TDOT issued checks to him to complete the purchase but instead, he used the funds for his own personal and business expenses. Young admitted that he diverted these TDOT funds from 2004 until 2012, when an audit disclosed the thefts and the total diverted funds had reached $974,000. Young concealed and covered the shortages of cash needed for property purchases with new funds later provided by TDOT that were intended for subsequent transactions, in the fashion of a typical “Ponzi” scheme.
Young was initially charged in criminal information filed on December 2, 2013.
“Some people think that stealing from the government is a victimless crime - it’s not,” said Christopher A. Henry, Special Agent- in- Charge of the IRS-Criminal Investigation. “The victims in this case are every taxpayer of the State of Tennessee. I hope this sentence sends a clear message to those who would consider conducting or participating in this type of fraudulent activity. It will not go undetected and they will be held accountable.”
TDOT Commissioner John Schroer commended the efforts leading to the conviction adding, "State agencies must be diligent in identifying schemes to defraud the public. This conviction is the result of coordinated efforts by department staff and federal authorities."
This case was jointly investigated by the U.S. Department of Transportation- Office of Inspector General, the FBI, the IRS-Criminal Investigations and the Tennessee Department of Transportation. The case was prosecuted by Assistant U.S. Attorney Hilliard Hester.
Former Employee of Touchstone Medical Imaging, LLC Pleads Guilty to Embezzling More Than $1.2 MillionRead the Press Release
Defendant Purchased Expensive Automobiles, Furs and Other Luxury Items
NASHVILLE, Tenn. - July 15, 2014- Michelle Nixon, 48, of Chicago, Illinois, formerly of Nashville, pleaded guilty today to a scheme to defraud her former employer of more than $1.2 million, announced David Rivera, U. S. Attorney for the Middle District of Tennessee. Nixon pleaded guilty to two counts of wire fraud in a hearing before U.S. District Court Judge Aleta A. Trauger.
During the plea hearing, Nixon admitted that, from June 2009 until August 2013, she embezzled more than $1.2 million from Touchstone Medical Imaging LLC, a provider of medical imaging services based in Brentwood, Tennessee, where she served as the Regional Controller. Nixon admitted generating fraudulent checks totaling more than $1,178,000 that were made payable to a company that she owned, despite lacking any permission or authority to do so and despite the fact that her company provided no goods or services to Touchstone. Nixon also admitted generating additional fraudulent checks that were made payable to herself and to taking steps to conceal her fraud, including making false entries in the corporate ledger. Nixon used funds derived from the fraudulent checks to purchase automobiles, jewelry, luxury items, and other goods.
On February 14, 2014, agents with the Federal Bureau of Investigation seized various items from Nixon’s residence in Nashville that had been purchased with proceeds from the fraud. Among the items seized were a Mercedes Benz sedan, a Range Rover sport utility vehicle, jewelry, fur coats, and various luxury items sold by Tiffany & Co., Louis Vuitton, Gucci, Prada, Cartier, Jimmy Choo, Versace, and others.
Nixon is presently scheduled to be sentenced by Judge Trauger on October 16, 2014. She faces up to 20 years in prison for each count of wire fraud, and has also agreed to pay restitution to Touchstone in the amount of $1,283,269.51 and to forfeit the proceeds of her crime to the United States.
The case was investigated by the FBI and is being prosecuted by Assistant U.S. Attorney William F. Abely.
22 Indicted in Multi-State Heroin Distribution ConspiracyRead the Press Release
A federal grand jury in Nashville, Tenn. returned a 23-count indictment on June 25, 2014, charging 22 individuals with various offenses relating to a conspiracy to distribute large amounts of heroin and fentanyl in the Middle Tennessee area, Northern Alabama and St. Louis, Missouri, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Much of the heroin had been adulterated or replaced with fentanyl and caused or contributed to the death of at least two persons in Alabama and was responsible for multiple non-fatal overdoses.
Joining Rivera at a morning news conference were Chief Steve Anderson of the Metropolitan Nashville Police Department, Jack Webb, Assistant Special Agent- in- Charge of the ATF, Nashville Field Division and Michael Stanfill, Asst. Special Agent- in- Charge of the Drug Enforcement Administration for Tennessee.
Local, state and federal agents, yesterday, began arresting those named in the indictment and as of this morning, 21 suspects were in custody.
“The resurgence of heroin as the drug of choice is wreaking havoc in our communities across the nation and causing untold overdoses and deaths,” said U.S. Attorney David Rivera. “I commend our law enforcement partners for their untiring efforts in bringing this case and interrupting the flow of such dangerous substances to our neighborhoods. The U.S. Attorney’s Office will vigorously prosecute this case and seek appropriate sentences for the conduct of those charged.”
According to the indictment, the year-long investigation identified Jamal Cooper of Antioch, Tenn. as one of the leaders and supervisors of the heroin distribution conspiracy and who was responsible for obtaining large quantities of heroin from multiple sources, including Lonald Ector of San Bernardino, Calif. and Robert Gonzales of Fontana, Calif. Various residences and properties in Nashville and Antioch, Tennessee, Florence, Alabama, and Sheffield, Alabama were used by the defendants to store heroin and cash generated from the sale and distribution of heroin, and from which to distribute heroin and fentanyl to the Middle Tennessee area, Northern Alabama and St. Louis Missouri.
The indictment alleges that members of the conspiracy used cutting agents, to dilute the heroin to increase their profits and distributed fentanyl, which they purported to be heroin, which caused or contributed to two deaths in Alabama and numerous non-fatal overdoses in Alabama and Nashville.
According to the facts set forth in the indictment, the defendants remained undeterred after learning of the deaths and overdoses and continued to distribute the heroin and fentanyl.
The indictment also alleges that four of the defendants conspired to use firearms against individuals whom they believed were attempting to rob other members of the conspiracy of money and drugs and one person was in fact shot in Nashville on April 4, 2014.
“These heroin-related overdoses and deaths are absolutely unacceptable,” Metro Police Chief Steve Anderson said. “Arrests like those announced today show that violent criminal activity associated with the illegal drug trade will not be tolerated by law enforcement and our partners in prosecutors’ offices at the state and federal level.”
“This focused investigation will have a lasting impact on reducing firearms related violence and taking drugs off the streets of the Nashville Metro area,” said ATF Special Agent–in–Charge Jeff Fulton. “Additionally, these arrests demonstrate ATF and our partners’ continued dedication to identify, target, and investigate violent criminals who lessen the quality of life in our neighborhoods.”“The prescription pill epidemic in the U.S. continues to produce a rapidly expanding base of new heroin users with no regard to race, gender, age, or economic background,” said Michael Stanfill, Assistant Special Agent-in-Charge of the DEA in Tennessee. “Our federal, state, and local partners will aggressively pursue those drug trafficking organizations that are attempting to capitalize on this new demand for heroin. This investigation is another example of law enforcement agencies working together and utilizing their combined resources to decimate a violent drug organization and improve the quality of life for people in Tennessee and Alabama.”
The indictment charges the following individuals with conspiring to distribute and possession with intent to distribute heroin and/or fentanyl:Jamal Cooper, aka Jamal Jordan, aka J, aka Mal, 37, of Antioch, Tennessee;
Lonald Ector, aka J.R., 46, of San Bernardino, California;
Robert Gonzales, 29, of Fontana, California;
D’Ron Robinson, aka St. Louis, 25, of Jackson, Tennessee;
Karon Key Jordan, 34, of Gallatin, Tennessee;
Jasmond Foster, aka Jazz, 26, of Sheffield, Alabama;
William Earl Foster, Jr., aka Buck, 25, of Florence, Alabama;
Donquez Groves, aka Lewis Palmer, aka Little Donnie, 31, of Nashville, Tennessee;
Wilton Bailey, aka Willy Will, 38, of Nashville, Tennessee;
Clifford Woods, aka Wimpy, 55, of Gallatin, Tennessee;
Tommy E. Smith, 37, of Nashville, Tennessee;
Sheteeka Bryant, 34, of Nashville, Tennessee;
Eric Williams, aka E, 38, of Nashville, Tennessee;
Robert Foxx, aka D-Tay, aka Johnny, 28, of Nashville, Tennessee;
Darnell Finnels, aka Ski, aka Skeezy, 24, of Nashville, Tennessee;
Shawna Caroline Foster, 36, of Florence, Alabama;
Jerry Ray Cochran, aka J Ray, 40, of Florence, Alabama;
William Kimbrough III, aka Trey, 37, of Tuscumbia, Alabama;
Wallace Earl Coffey, aka Nephew, aka Beck, 27, of Sheffield, Alabama;
Wallace Beckwith, aka Duke, 47, of Florence, Alabama; and
Thomas Barnett, aka Ham, aka Hambone, 27, of Florence, Alabama.The indictment also charges the following:
Knowingly conspiring to possess and discharge a firearm in furtherance of a drug trafficking crime:
Robert Noel, aka Kamp Trey, 22, of Nashville, Tennessee; Jamal Cooper, Eric Williams and Darnell Finnels.
Knowingly possessing a firearm in furtherance of a drug trafficking crime: Jamal Cooper.Knowingly possessing and discharging a firearm in furtherance of a drug trafficking crime: Darnell Finnels.
Knowingly possessing and intentionally distributing fentanyl; Jamal Cooper.
Knowingly possessing and intentionally distributing heroin: Jamal Cooper-3 additional counts; Eric Williams-6 additional counts; Robert Foxx- 6 additional counts; and Donquez Groves-1 additional count.Conspiring to distribute fentanyl resulting in the death of another person: Jamal Cooper, William Earl Foster, Shawna Caroline Foster and Jerry Ray Cochran.
If convicted, all defendants face a mandatory minimum sentence of 10 years to life in prison. Those charged with conspiracy to distribute fentanyl resulting in the death of another person face a mandatory minimum sentence of 20 years to life in prison.This case was investigated by the Metropolitan Nashville Police Department’s Specialized Investigations Division; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; the 20th Judicial District Drug Task Force; the Lauderdale County, Alabama Drug Task Force; the Colbert County, Alabama Drug Task Force and the Florence, Alabama Police Department. The case is being prosecuted by Assistant U.S. Attorney Matthias Onderak.
An indictment is merely an accusation and is not evidence of guilt. All defendants are presumed innocent unless and until proven guilty in a court of law.Four Sentenced in Scheme to Defraud NissanRead the Press Release
Wendell Young, 34, of Inglewood, Calif., Adrian Franklin, 40, of Chandler, Arizona, Francisco DeLaRosa, 42, of West Covina, Calif. and Tracey Young, 46, of Los Angeles, have been sentenced by United States District Court Judge William Haynes for their participation in a money laundering scheme to defraud Nissan, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. All defendants pleaded guilty earlier this year.
Yesterday, Tracey Young was sentenced to 12 months and one day in prison, to be followed by six months in a half-way house and ordered to pay $191,250 in restitution to Nissan. DeLaRosa was sentenced to five months in a half-way house, during which time he will be required to serve two days each week in a local correctional facility, to be followed by five months of house arrest and ordered to pay $31,500 in restitution to Nissan.
On May 30, 2014, Wendell Young was sentenced to 20 months in prison and ordered to pay $191,250 in restitution to Nissan. On June 6, 2014, Adrian Franklin was ordered to serve three years of supervised release, including 10 months in a halfway house, during which time he will be required to serve weekends in a local correctional facility. Franklin was also ordered to pay $191,250 in restitution to Nissan.
Two additional defendants, Bruce Young and Kenneth Carter, are scheduled to be sentenced by Judge Haynes in August 2014.The scheme originated from Kenneth Carter, a former Nissan employee who was employed at Nissan’s Franklin, Tennessee headquarters as an “Arbitration Specialist” from March 2007 through April 2008. As Arbitration Specialist, Carter’s duties included negotiating with attorneys who brought claims on behalf of Nissan owners, alleging that Nissan had violated “Lemon Laws” or the “Federal Warranty Act.”
Between March 2007 and April 2008, Carter, along with Wendell Young, Adrian Franklin, Tracey Young, Francisco DeLaRosa, and others, engaged in a scheme to defraud Nissan by filing false Lemon Law claims on behalf of individuals who owned Nissan vehicles.
The defendants provided Carter with information obtained from Nissan owners, such as the owner’s name, address, and vehicle identification number. Carter then used the information to file false and fraudulent Lemon Law claims with Nissan requesting settlement checks. Once Carter approved the false claims he would cause settlement checks to be issued. Defendants Wendell Young, Adrian Franklin, Tracey Young, and Francisco DeLaRosa then directed the Nissan owners to deposit the checks into their bank accounts or to cash the checks and then “kick-back” a portion of the funds received from Nissan. A portion of the funds were then paid to Carter, and the remaining funds were kept by Wendell Young, Adrian Franklin, and Tracey Young.
According to charging documents, between March 2007 and April 2008, Carter caused approximately 80 false claims to be paid by Nissan, totaling approximately $571,500.
The case was investigated by the IRS? Criminal Investigation and the Tennessee Bureau of Investigation. Assistant United States Attorney Kathryn Ward Booth represents the government.First Call Ambulance Service, LLC. Settles False Claims Act AllegationsRead the Press Release
First Call Ambulance Service, LLC., will pay $500,000 to settle allegations that it violated the False Claims Act (“FCA”), announced David Rivera, United States Attorney for the Middle District of Tennessee. The settlement resolves allegations by the United States and Tennessee that First Call up coded billings for ambulance transports provided to patients covered by federal healthcare programs and TennCare, Tennessee’s joint state/federal Medicaid program.
Specifically, the United States and Tennessee alleged that First Call submitted false claims for payment covering advanced life support (“ALS”) services for its ambulance runs. For many transports billed as ALS, First Call’s provision of ALS services was medically unnecessary, or First Call did not actually provide ALS services. Instead, only basic life support (“BLS”) services were necessary, and in some cases were the only services provided. BLS services are billed to federal health insurance programs at a lower rate than ALS services.
“Enforcement of the False Claims Act remains a top priority of the Department of Justice and this office,” said U.S. Attorney Rivera. “The U.S. Attorney’s Office, working with our law enforcement partners, will continue to devote the resources necessary to vigorously protect taxpayers’ interests and aggressively pursue fraud, waste, and abuse.”
In addition to the monetary payment, First Call has entered into a corporate integrity agreement with the U.S. Department of Health and Human Services. This agreement will require First Call to take certain compliance measures to reduce the likelihood of future violations of the FCA and other health care regulations.
The federal and state investigations corroborated conduct originally alleged in a qui tam complaint filed pursuant to the FCA. The United States and Tennessee declined to intervene with regard to other allegations in the qui tam complaint. The relator who filed the qui tam will receive a share of the settlement proceeds.
This matter was investigated by the United States Postal Service- Office of Inspector General, the Tennessee Bureau of Investigation, the Tennessee Attorney General’s Office, and the United States Attorney’s Office for the Middle District of Tennessee. The United States was represented by Assistant U.S. Attorney Christopher C. Sabis.Georgia Man Arraigned on Fraud and Money Laundering ChargesRead the Press Release
R.C. Patel a/k/a Rajesh C. Patel, 55, of Duluth, Georgia, was arraigned today in U.S. District Court in Nashville, on investment fraud and related money laundering charges, announced David Rivera, United States Attorney for the Middle District of Tennessee. Patel pleaded not guilty to these charges.
“Investment fraud schemes cause irreparable harm across a broad spectrum – to the individual investors who lose their savings to such schemes, to small businesses trying to raise capital legitimately, and to the integrity of our economy as a whole,” said U.S. Attorney Rivera. “This office will continue to prioritize and vigorously prosecute these types of cases.”
“The Federal Bureau of Investigation stands ready with its federal, state and local partners to protect the community from those who seek financial gain through the use of fraudulent and deceptive practices,” said FBI Special Agent in Charge Todd McCall. “Those who engage in such illegal tactics can rely on being the subject of a vigorous and thorough investigation, no matter where they are located. Anyone with information regarding fraudulent conduct is encouraged to immediately contact their local FBI office.”
On May 14, 2014, a federal grand jury, sitting in the Middle District of Tennessee, indicted Patel on five counts of wire fraud, one count of mail fraud, and four counts of money laundering. According to the indictment, Patel schemed to defraud a Brentwood, Tenn. investor of more than $1,500,000 in connection with two investments in hotel properties.
In one investment involving the purchase of a hotel building, Patel is alleged to have misrepresented to the investor that he had successfully bid on and acquired the mortgage when, in fact, he had not even placed a bid on the property. Instead, Patel used the $500,000 provided by the investor for his personal and unrelated purposes. The indictment also alleges that Patel induced the same investor to invest an additional $750,000 in a partnership formed by Patel to purchase a beachfront hotel in Myrtle Beach, South Carolina. In exchange for his investment, Patel promised the investor a 25% ownership interest in the hotel partnership. However, after collecting the investor’s funds, Patel revised the partnership’s operating agreement to remove any reference to the investor and his ownership interest.
The indictment further alleges that Patel used the $750,000 provided by the investor to reduce an unrelated personal loan in his own name, and shifted the remaining proceeds to an account under his control through a series of transfers and deposits.
If convicted, Patel faces up to 20 years in prison on each fraud count and up to ten years in prison on each money- laundering count, in addition to potential fines and forfeiture of any money or property derived from the fraud.
The case was investigated by the FBI. The United States is represented by Assistant U.S. Attorney William F. Abely.
An indictment is merely an accusation and is not evidence of guilt. This defendant is presumed innocent unless and until proven guilty in a court of law.
Overton County Man Pleads Guilty to Making Fake Driver Licenses to Facilitate Meth ProductionRead the Press Release
Richard Earl Graybeal, 41, of Cookeville, Tenn., pleaded guilty on May 20, 2014, in U.S. District Court, to producing false identification documents, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Graybeal admitted that he had unlawfully manufactured Tennessee driver licenses and identification documents to facilitate the purchase of cold medications, which are commonly used in the production of methamphetamine.
“The illicit production of Meth is a continuing problem in Middle Tennessee and we recognize the value of using all available resources to combat it, said U.S. Attorney David Rivera. “That includes bringing federal criminal charges, when appropriate, including offenses that aid in the purchase of precursors necessary to produce it. The U.S. Attorney’s Office and our law enforcement partners will continue to direct the necessary resources to our communities where the manufacture of meth is epidemic.”
Testimony at the plea hearing established that Graybeal was placed on state probation in 2009 for promoting the manufacture of methamphetamine. Graybeal’s probation officer, Overton County law enforcement officers and the Tennessee Highway Patrol received information that Graybeal was making identification documents in false names to use in purchasing cold medicines containing pseudoephedrine, a key ingredient necessary for manufacturing methamphetamine and which requires identification to purchase. Officers conducted a search of Graybeal’s residence on August 17, 2012, and discovered more than 70 fake Tennessee driver licenses and state identification cards. Also found, was computer equipment and materials used in manufacturing the false documents and paraphernalia used in the manufacture of methamphetamine. Several of the false licenses bore different names, but contained a photo of the same person. Other documents bore Graybeal’s photo, but contained aliases.
Subsequent investigation by the U.S. Secret Service confirmed that Graybeal had used one or more of these false licenses and identities to make purchases of cold medicine.
“The Secret Service believes in a partnership approach to law enforcement, especially when the resources of its participants can be combined to effectively and efficiently make a significant impact on crime in the communities where we live,” said Todd Hudson, the Special Agent in Charge of the Nashville Secret Service office. “In this case, the Secret Service partnered with the Tennessee Highway Patrol and the Overton County Sheriff’s Office to suppress the use of false identification documents intended for use in drug-related activities. It is evident that identity theft and other criminal activities are inter-connected with the potential to adversely affect our communities. The Secret Service is committed to combating identity theft and will continue to work with our state and local partners to reduce this type of criminal activity.”
Graybeal’s state probation was subsequently revoked and he is currently serving a state prison sentence for the previous methamphetamine charge. He will be sentenced in U.S. District court on August 21, 2014 and faces a maximum of 20 years in prison and a $250,000 fine.This case was investigated by the Overton County Sheriff’s Office, the Tennessee Highway Patrol and the U.S. Secret Service. The case was prosecuted by Assistant U.S. Attorney Hilliard Hester.
Bethpage Woman Pleads Guilty to Filing False Tax ReturnRead the Press Release
Failed to Report Over $600,000 in Embezzled Funds
B Traci Lynne Howes, 40, of Bethpage, Tennessee, pleaded guilty today to filing a false tax return which failed to report funds she embezzled from her employer, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Howes faces up to three years in prison and a fine of up to $250,000.
At the plea hearing, Howes admitted that while she was employed as the office manager at Drywall Systems, Inc., in Gallatin, Tenn., from January 2008 through July 2011, she embezzled approximately $605,796 from her employer, including wiring approximately $477,622 to her personal and business bank accounts and making unauthorized charges on the company’s credit cards. In addition, during the last quarter of 2010 and the first two quarters of 2011, Howes failed to file quarterly federal tax returns and did not pay to the IRS the taxes that had been withheld from employees’ paychecks.
For tax years 2008-2011, Howes failed to report the embezzled income on her personal tax returns, which caused a tax loss of approximately $139,525, not including penalties and interest. Additionally, during the last quarter of 2010 and the first and second quarters of 2011, Howes withheld employee trust fund taxes of approximately $117,592 from employee paychecks, but failed to pay that amount to the IRS. She also failed to pay the employer’s portion of payroll taxes in the amount of $88,631.
In the plea agreement, Howes agreed to the entry of a restitution order of at least $605,769 to Drywall Systems and $139,525 to the IRS.
A sentencing hearing is scheduled for September 5, 2014, before United States District Court Judge Kevin H. Sharp. This investigation was conducted by the IRS- Criminal Investigation. Assistant U.S. Attorney Kathryn W. Booth represents the government.
Guatamalan National Sentenced for $600,000 Tax Refund FraudRead the Press Release
Juan Castro-Castro, 37, formerly a resident of Shelbyville, Kentucky, was sentenced on May 13, 2014, to serve 37 months in prison for engaging in a fraudulent tax refund conspiracy, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Castro-Castro is an undocumented alien and citizen of Guatemala and acknowledged in court that he will likely be deported upon completion of his prison sentence.
Castro-Castro pleaded guilty to conspiring with others to bring fraudulently acquired tax refund checks to Nashville, and with stealing about $649,000 in tax refunds, between January 2012 and August 2013.
“Castro-Castro and others are using these tax fraud schemes to steal millions of dollars from honest United States taxpayers,” said U.S. Attorney David Rivera. “Our federal law enforcement agencies are actively and aggressively on the hunt for such violations. They are working together to identify and disrupt these schemes, arrest the participants, and bring thieves of public money like Mr. Castro-Castro to federal court where they will be held accountable.”Testimony at sentencing established that Castro-Castro and others had used false names to submit more than 100 fraudulent federal tax returns in Kentucky. These false returns claimed that tax refunds were owed, and most listed one of four Kentucky addresses to which, multiple refund checks were mailed by the IRS as a result of the scheme. These addresses included empty apartments on which Castro-Castro was the lease holder and paid rent, as well as his own residence.
Castro-Castro received these refund checks and brought them to Nashville several times each week to be cashed by an accomplice. Federal investigators discovered the scheme and identified the location where the checks were being cashed as Cash City on Nolensville Rd. Castro-Castro was arrested by federal agents in May 2013 and has been held in custody since that time. During the past year, 21 other individuals involved in the scheme have been charged in other indictments, 16 of which have pleaded guilty.
“The defendants who perpetrated this scheme systematically defrauded the government and the taxpaying public,” said Christopher A. Henry, Special Agent in Charge, IRS-Criminal Investigation. “At the IRS, protecting taxpayer money is a matter we take very seriously. IRS Criminal Investigation will continue to vigorously pursue those who unjustly enrich themselves by preparing false claims for refunds.”
“Tax fraud is an outrage to honest citizens everywhere who fulfill their obligation to society by paying their fair share,” said Special Agent in Charge of HSI New Orleans Raymond R. Parmer Jr. “Criminals who attempt to cheat the system and steal from law-abiding Americans will continue to be a major priority for HSI investigators.” Parmer oversees a five-state area of operations to include Tennessee, Alabama, Arkansas, Louisiana and Mississippi.
The case was investigated by the Internal Revenue Service- Criminal Investigation, Homeland Security Investigations and the U.S. Postal Inspection Service. The case was prosecuted by Assistant U.S. Attorney Hilliard Hester.
An indictment is merely an accusation. With respect to the remaining defendants, all are presumed innocent until proven guilty.
Former Army Assistant Inspector General Pleads Guilty to Fraud Scheme Targeting Identities of U.S. Army OfficersRead the Press Release
James Robert Jones, 43, of Woodlawn, Tennessee pleaded guilty today in connection with a scheme to obtain fraudulent bank loans using the stolen identities of active duty U.S. Army officers, announced David Rivera, United States Attorney for the Middle District of Tennessee. At a hearing today before U.S. District Court Judge Aleta A. Trauger, Jones entered a plea of guilty to one count of bank fraud, one count of making a false statement to a bank, one count of making a false statement to federal agents, and one count of obstructing justice.
At his plea hearing, Jones, a former Assistant Inspector General with the U.S. Army Office of Inspector General at Fort Campbell, admitted abusing his position to obtain personal identifying information, including Social Security numbers and dates of birth, of active duty U.S. Army officers, including officers who were deployed to Afghanistan. Jones acknowledged that he used this personal identifying information to apply for loans in the officers’ names, that he obtained loans from two federally-insured financial institutions, and that he used the money from the loans for his own personal benefit. Jones further admitted that he attempted to conceal his scheme by asking a colleague to delete records found on his U.S. Army-issued laptop computer, and by seeking to cast blame for his crimes on a deceased U.S. Army officer, despite the fact that the deceased officer had no involvement in the scheme.Jones faces up to 30 years in prison for the counts of bank fraud and making a false statement to a bank, up to 20 years in prison for obstructing justice, and up to 5 years in prison for making false statements to investigators. Jones will be sentenced by Judge Trauger on August 11, 2014.
The case was investigated by the United States Secret Service and the U.S. Army Criminal Investigations Command at Fort Campbell. The United States is represented by Assistant U.S. Attorney William F. Abely.
Nashville Man Sentenced to 135 Months for Marijuana ConspiracyRead the Press Release
Joshua Lee Alan Eichel, 32, of Nashville, Tenn., was sentenced on May 8, 2014, to 135 months in prison by U.S. District Court Judge Kevin H. Sharp, for conspiring to possess and distribute 1,000 kilograms of marijuana, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. The prison term will be followed by five years of supervised release.
Eichel was indicted by a federal grand jury in April 2013 and pleaded guilty in December 2013.
As described in Eichel’s plea agreement, in a statement Eichel gave to agents following his arrest in March 2013, he claimed to have been the largest hydroponic marijuana dealer in Nashville. Eichel told agents he was the leader of a conspiracy whose members purchased large amounts of marijuana from a variety of sources in California and Oregon. Eichel also explained to agents how he and his co-conspirators would then ship the marijuana to the Nashville area in order to resell it.
Agents had previously identified and intercepted a number of packages shipped by members of the conspiracy prior to executing a search warrant at Eichel’s residence, located at 121 Grant Park Dr. in Franklin, Tenn. on March 13, 2013. During the execution of the search warrant, Agents found and seized packaging materials, shipping materials, and approximately $21,000 cash.
Prior to this conviction, Eichel had been convicted in the Middle District of Tennessee, in 2003, of distributing cocaine and conspiring to possess marijuana with intent to distribute.
This matter was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Drug Enforcement Administration, the Federal Bureau of Investigation, and the United States Postal Inspection Service, as well as the 18th and 21st Judicial District Drug Task Forces, the Franklin Police Department, and the Tennessee Alcoholic Beverage Commission. The United States was represented by Assistant U.S. Attorney Brent A. Hannafan.
Two Plead Guilty in Prescription Drug Diversion SchemeRead the Press Release
Charles Jeffrey Edwards, 52, of Houston, Texas, and Brenda Elise Edwards, 43, of Houston, Texas, pleaded guilty yesterday, in U.S. District Court, to participating in a prescription drug diversion scheme, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Brenda Edwards pleaded guilty to one count of conspiracy, for which she faces up to five years in prison and a fine of $250,000. Charles Edwards pleaded guilty to one count of mail fraud and one count of money laundering. Mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine and money laundering carries a maximum penalty of 10 years in prison and a $250,000 fine. Both defendants will be sentenced on November 24, 2014.
At the plea hearing yesterday before U.S. District Court Judge Aleta A. Trauger, both defendants admitted that, from approximately December 2006 through August 2009, Charles Edwards co-owned Cumberland Distribution, Inc., a business engaged in the wholesale distribution of prescription drugs to pharmacies throughout the United States and which maintained its headquarters in Houston, Texas. Cumberland Distribution maintained warehouses in Nashville, Tenn., located at 5425 Harding Place and at 1419 Donelson Pike and was licensed by the State of Tennessee as a wholesale distributor of prescription drugs. Brenda Elise Edwards was an employee of Cumberland Distribution.
Both defendants admitted that Cumberland Distribution purchased a portion of the prescription drugs it resold to pharmacies from individuals and entities that were not licensed to engage in the wholesale distribution of prescription drugs and were not otherwise authorized to distribute prescription drugs. The prescription drugs were acquired through various networks of “diverters” who obtained prescription drugs from other unlawful sources. As a result, Cumberland Distribution could not lawfully resell the drugs. The defendants used the Nashville warehouses to receive deliveries of prescription drugs, where they were sorted and repackaged and shipped to pharmacies that had made purchases from Cumberland. Generally, the diverted drugs included drugs used to combat HIV/ AIDS medication, antipsychotic, anti-depression, as well as acid reflux, blood pressure medication, and diabetes medication.
Charles Edwards further admitted that as part of the scheme, he created a layer of distribution between the diverted pharmaceuticals and Cumberland Distribution by incorporating or causing others to incorporate various separate businesses, and caused the pharmaceuticals to be shipped to Cumberland Distribution through intermediaries, further concealing the true origin of the drugs.
For example, Charles Edwards admitted that in January 2008, he and Jerrod Nichols Smith directed another individual to open a business in Texarkana, Arkansas, called Tristate Management Group. The purpose of Tristate Management was to make it appear as though the pharmaceuticals that Cumberland Distribution was selling had been purchased from a licensed wholesale distributor, when in fact the pharmaceuticals were purchased from unlicensed or unauthorized sources. When shipments were received at Tristate Management, the individual would place new shipping labels on the packages and send them to the Cumberland Distribution warehouse in Nashville, or he would inventory the packages before sending the contents of the shipment on to Cumberland Distribution.
Pharmacies throughout the United States purchased diverted prescription drugs from Cumberland Distribution under the premise that the prescription drugs being purchased had been in the custody of licensed wholesale distributors or other authorized distributors since being sold by the original manufacturer. Cumberland Distribution used Federal Express to ship diverted prescription drugs and inaccurate pedigree documents to the pharmacies.
Brenda Edwards further admitted that as part of the conspiracy she caused wire transfers to be made from Cumberland Distribution’s bank account into bank accounts in various names that were under her and Charles Edwards’ control, for her own use or for the use of members of her family.
On May 14, 2009, the U.S. Food and Drug Administration executed a federal search warrant at Cumberland Distribution’s Nashville warehouse. Brenda Edwards admitted that on the day the search warrant was executed, in order to place the funds out of the reach of federal agents, she caused a wire transfer in the amount of $138,709.76 from a bank account she and Charles Edwards controlled, to a bank account in Mexico that was in the name of her mother.
According to the indictment, the scheme resulted in gross proceeds of over $58 million and the defendants gained over $14 million in profits.
The indictment also charged another individual, Jerrod Nichols Smith, with conspiracy, mail fraud, and making a false statement in a matter within the jurisdiction of the United States. A trial of Jerrod Nichols Smith is scheduled for October 7, 2014, before U.S. District Court Judge Aleta A. Trauger.
An indictment is merely an accusation of guilt. Jerrod Nichols Smith is presumed innocent unless and until proven guilty in a court of law.
This case was investigated by the United States Food and Drug Administration. Assistant United States Attorneys Kathryn Ward Booth and Sandra G. Moses represent the government.
Owner of Security Training Companies Pleads Guilty to Fraud ChargesRead the Press Release
Ricky Lee Coleman, Jr., 40, of Antioch, Tenn., pleaded guilty today to charges of mail fraud, wire fraud, and credit card fraud, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Coleman owned and operated International Executive Services LLC, Advancement Solutions LLC, and RLC Enterprises, all companies based in Hermitage and Antioch, Tennessee that defrauded thousands of military veterans and others seeking job training and job placement services.
At a plea hearing before U.S. District Court Judge Aleta A. Trauger, Coleman admitted that between January 2006 and March 2009, approximately 2,600 customers paid Coleman’s companies more than $900,000 in return for promises that they would be provided training in the areas of counter-terrorism, counter-assault, personal security or special operations. Coleman directed his employees to make false representations to customers and potential customers, including promises that those who paid a registration fee would be placed into a training class and would bear no additional costs beyond the registration fee. Customers were also promised that they would be paid during training and that they would be guaranteed employment after training.
Coleman also admitted that fewer than 20 of the thousands of customers who paid fees to his companies were ever assigned to attend training classes; many were asked to pay additional fees; and none were paid during training. Coleman also instructed his employees to make misrepresentations to customers who had paid for training in order to delay their attempts to seek refunds and to postpone their complaints, including sending letters falsely informing customers that they were enrolled in certain training academies, including fictitious academies that did not exist. In addition, Coleman fraudulently induced customers to pay for equipment that was supposedly required for the promised training classes.
Coleman also admitted that he spent the majority of funds paid by customers on personal expenses or on efforts to recruit new customers.
Coleman will be sentenced by Judge Trauger on August 11, 2014. He faces up to 20 years in prison for each of four counts of wire fraud, 20 years in prison for the count of mail fraud, and 15 years in prison for the count of credit card fraud. Coleman has also agreed to pay more than $900,000 restitution to victims of his offenses.
The case was investigated by the United States Secret Service, the Tennessee Bureau of Investigation, the United States Postal Inspection Service and the Metro-Nashville Police Department. The case is being prosecuted by Assistant U.S. Attorney William F. Abely.
Columbia Man Sentenced to 15 Years for Distribution of Sexually Explicit Images of ChildrenRead the Press Release
Scott E. Rouse, 37, of Columbia, Tennessee was sentenced on April 25, 2014, to 15 years in prison by U.S, District Judge Kevin Sharp, for distribution of child pornography, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. The prison term will be followed by 10 years of supervised release, during which time Rouse will be required to remain on the sex offender registry and participate in sex offender treatment, among other conditions.
According to the plea agreement, in March and April of 2012, Rouse was found to be using his email to send and receive images and video of pre-teen girls being exploited sexually, including some that involved penetration.
A computer forensic examiner subsequently discovered over 400 images and 38 videos of children engaged in sexually explicit conduct in Rouse’s email and on his electronic devices. The examiner further discovered that Rouse had been engaged in this kind of behavior since on or before January 1, 2010.
Prior to this conviction, Rouse had been convicted in 2004 of aggravated sexual exploitation of a minor in Hickman County, Tennessee; and in March 2008, Rouse was convicted of sexual exploitation of a minor and violation of the sexual offender registry in Maury County, Tennessee.
This matter was investigated by the Federal Bureau of Investigation, the Tennessee Bureau of Investigation, and the United States Attorney’s Offices for the Middle District of Tennessee. The United States was represented by Assistant U.S. Attorney Carrie Daughtrey.
Nashville Woman Sentenced to Prison for Stealing VA Funds Intended for Needy VeteransRead the Press Release
Squandered More Than $364,000 Intended to Assist Homeless Veterans
Birdie Anderson, 56, of Nashville, Tenn., was sentenced on April 18, 2014, by U.S. District Judge Todd Campbell to serve 2 years in prison for making false statements to the Department of Veterans Affairs (VA), and stealing public money, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Anderson pleaded guilty in April 2013 to stealing the money obtained in three VA grants, totaling more than $364,000 during 2006 and 2007, which was intended to assist indigent and homeless veterans.
“This is a truly egregious violation,” said U.S. Attorney David Rivera. “There is no group as worthy of government assistance as those who have served their country in the military, and have since fallen on hard times. This defendant’s greed and deception deprived that group of assistance they needed, and as a result they will not receive the benefit of the money she stole and squandered. Hopefully others like defendant who may be tempted to take advantage of government programs that are intended to help others, will take heed of this case.”
According to testimony at the hearing, in April 2007 Anderson obtained the first VA grant of $80,000 for the purchase of a dwelling. The grant agreement specified that she would not be required to repay the grant on condition that she would maintain the property as a residence for homeless veterans for a period of seven years. She represented that the property was worth $124,000 and that she had the rest of the money on hand in cash for the purchase. In truth she did not have the balance of the purchase price in cash, but instead obtained a mortgage loan of $75,000 to purchase the property. She then used only about $55,000 of the $80,000 cash grant provided by VA to close on the property, and simply kept the rest. She made only one payment on the mortgage, and defaulted on the loan. Though the property was used to house veterans for a period of time, it has been repossessed and is no longer available to veterans as a residence.In December 2007 Anderson obtained a second grant of $25,000, which she represented she would combine with matching funds to purchase a $40,000 specialty van for use in transporting veterans to medical appointments and job interviews. Anderson submitted a sales contract and a vehicle identification number for the van she represented she was going to purchase, in support of her grant application. She received and kept the cash VA deposited into her bank account, but simply never purchased the van.
In March 2009 Anderson applied for and obtained a third VA grant of more than $250,000 for the purchase of a large apartment building worth $398,000. Anderson again represented that she would maintain this building as a residential dwelling for homeless veterans, and that the City of Nashville had agreed to provide the matching funds for the purchase. In support of this representation, Anderson submitted a letter which purported to have been sent by the director of the Nashville Commission on Homelessness, and which represented that Nashville had committed the balance of funds needed for this purchase. The letter was later determined to be a forgery. Anderson received the VA grant funds but never closed on the property, since she did not in fact have any matching funds. When VA officials inquired of Anderson regarding the fact that no purchase had occurred, she falsely represented that she was undergoing cancer treatments.
The matter was referred to the VA Office of Inspector General for investigation. Agents executed a search warrant on Anderson’s Nashville residence in February 2012. No money was located, but agents discovered hundreds of receipts demonstrating gambling activity at regional casinos and horse tracks. A review of her bank records likewise revealed numerous checks written to and debit card use at such establishments, during 2007 through 2009. Anderson told agents that the $250,000 cash from the third grant was in a safe located in New Hampshire. Further investigation, however, disclosed no such safe or cash being maintained on Anderson’s behalf and none of the grant money was ever recovered.
Monty Stokes, Special Agent in Charge, VA Office of Inspector General, said, “The VA Grant and Per Diem Program’s goal is to promote the development of supportive housing and services to assist homeless veterans achieve residential stability, increased skills and obtain greater independence. Because of the successful investigative and prosecutive efforts of the VA OIG and the U.S. Attorney’s office, Birdie Anderson’s greed and deception will not go unchecked. She will have the next two years to contemplate if it was really worth it.”
The case was investigated by the Nashville VA Office of Inspector General, and was prosecuted by Assistant U.S. Attorney Hilliard Hester.
Tennessee Substance Abuse Treatment Facility Agrees to Resolve False Claims Act Allegations for $9.25 MillionRead the Press Release
New Life Lodge in Burns, Tennessee at Center of Allegations
U.S. Attorney David Rivera announced today that CRC Health Corporation (CRC) has agreed to pay $9.25 million to the United States and the State of Tennessee to settle allegations that CRC knowingly submitted false claims by providing substandard treatment to adult and adolescent Medicaid patients suffering from alcohol and drug addiction at its facility in Burns, Tennessee. CRC, based in Cupertino, California, is a nationwide provider of substance abuse and mental health treatment services.
“Substance abuse of varying levels is rampant here and across the country,” said U.S. Attorney David Rivera of the Middle District of Tennessee. “Fortunately, when needed, Medicaid or TennCare covers substance abuse treatment and certain mental health assistance. “When those services are required, that treatment must be provided with the highest possible quality of care to those patients. Anything less is unacceptable.”
CRC owns and operates a residential substance abuse treatment facility in Burns, Tennessee, called New Life Lodge. The United States alleged that, between 2006 and 2012, New Life Lodge billed the Tennessee Medicaid program for substance abuse therapy services that were not actually provided or were provided by therapists who were not properly licensed by the State of Tennessee. The United States also alleged that New Life Lodge failed to make a licensed psychiatrist available to patients at the facility, as required by the state’s regulations, failed to maintain patient-staffing ratios required by the Tennessee Department of Mental Health regulations, and billed for Medicaid patients in excess of the state-licensed bed capacity at the facility. In addition, the United States alleged that New Life Lodge caused Medicaid to be double-billed for prescription substance abuse medications given to residents at the facility. New Life Lodge is not currently treating Medicaid patients at its facility.
“Medicaid patients who enter residential treatment programs for alcohol and drug addiction deserve to have treatment provided by appropriately qualified personnel according to the appropriate standard of care,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “We will not tolerate health care providers who prioritize profit margins over the needs of their patients.”
“The FBI is committed to investigating allegations of wrong doing and false claims related to federally- funded health care programs,” said A. Todd McCall, Special Agent in Charge of the Memphis Division of the Federal Bureau of Investigation. “The resolution of this matter is the result of the hard work by the individual investigators and the coordinated effort of all the agencies involved.”
“Providers of health care services must not place profits above patients,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services- Office of Inspector General in Atlanta. “This was a vulnerable population of individuals who were seeking treatment for their substance abuse problems. We will pursue these cases in order to ensure proper treatment is afforded to those seeking treatment.”
Director Mark Gwyn of the Tennessee Bureau of Investigation said, “This resolution is indicative of a great collaborative effort to combat egregious and fraudulent activity against health care, which ultimately impacts everyone in Tennessee.”
The allegations covered by the settlement were originally raised in a lawsuit filed by Angie Cederoth, who was previously employed in New Life Lodge’s billing department, under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties to sue on behalf of the United States for the submission of false claims and to receive a share of any recovery. Ms. Cederoth will receive a payment of $1,526,260.01 as her share of the settlement proceeds.
The investigation of this matter reflects a coordinated effort among the, the U.S. Attorney’s Office for the Middle District of Tennessee; the Commercial Litigation Branch of the Justice Department’s Civil Division; the Tennessee Attorney General’s Office; the FBI; the Tennessee Bureau of Investigation; and the Department of Health and Human Services’- Office of Inspector General.
The lawsuit is captioned U.S. ex rel. Cederoth v. CRC Health Corporation, Inc.3-11-CV-00897 (M.D. Tenn.).
The claims asserted against the defendants are allegations only, and there has been no determination of liability.
Former CFO of Nashville Restraunts Pleads Guilty to $1 Million Money Laundering Scheme Against American ExpressRead the Press Release
Guilty Plea Came During Fourth Day of Jury Trial
Michael G. Tangredi, 23, of Nashville, pleaded guilty yesterday to money laundering, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Tangredi’s plea came after evidence and testimony during the fourth day of a jury trial in U.S. District Court. District Judge Aleta Trauger accepted the guilty plea and then discharged the jury hearing the case.
A superseding indictment in June 2013 charged Tangredi with wire fraud and mail fraud and aiding and abetting others in the execution of a wire fraud and mail fraud scheme against American Express. The superseding indictment also charged Tangredi with engaging in financial transactions using portions of the $1 million that American Express had paid them during the scheme, which occurred between May-September 2008.
“This guilty plea required the dogged determination and detailed analysis by the U.S. Secret Service to unravel a complex case and its convoluted money trail,” said U.S. Attorney David Rivera. “The defendant now stands convicted and faces a significant sentence.”
The testimony at trial was that Tangredi’s father owned three Italian restaurants in Nashville which he operated with Tangredi’s assistance as chief financial officer. Bank records introduced in evidence reflected that the restaurants had experienced significant financial stress in the months just prior to the fraud. The credit card scheme generated large sums of cash. Trial testimony also established that the fraudulently acquired funds were used to purchase a Maserati, a Bentley; and a restaurant in Hawaii.
Fairview Man Pleads Guilty to Produciton of Child PornographyRead the Press Release
Kevin S. Kolb, 47, of Fairview, Tenn., pleaded guilty today in U.S. District Court in Nashville to five counts of production of child pornography, announced David Rivera, United States Attorney for the Middle District of Tennessee.
According to testimony at the plea hearing, Kolb took sexually explicit images of a young girl, while in his care, when she was between the age of seven and ten years old. Kolb distributed these images via the internet and investigators also found approximately 600 sexually explicit images and 12 videos of child pornography in Kolb’s possession.
Kolb faces a mandatory minimum sentence of fifteen years in prison and up to 150 years for these crimes. Sentencing is scheduled for June 23, 2014, before U.S. District Court Judge Aleta Trauger.
This matter was investigated by the Federal Bureau of Investigation and the United States is represented by Assistant U.S. Attorney S. Carran Daughtrey.
Former Air National Guard Recruiting Assistant Pleads Guilty to Conspiracy to Defraud Department of DefenseRead the Press Release
Max P. Andolsek, 52, of Tullahoma, Tenn., pleaded guilty yesterday in U.S. District Court to conspiracy to defraud the Department of Defense, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Andolsek, a former recruiting assistant for the Air National Guard, and two other individuals, were indicted on July 17, 2013. He faces up to five years in prison and a fine of $250,000.
“Our nation’s men and women who are considering serving their country through enlistment in the military deserve to be dealt with candidly and with honesty,” said U.S. Attorney David Rivera. “Recruiters are the first faces of the military seen by many considering service. Those who attempt to profit financially by fraudulently manipulating our nation’s recruitment programs undermine their effectiveness, particularly when we are experiencing lean financial times for our nation’s defense. All attempts to defraud our nation’s military will be vigorously pursued by this office and our law enforcement partners.”
“Recruitment into the United States Military should be about service to one’s country and not service to one’s wallet,” said A. Todd McCall, Special Agent in Charge of the Memphis Division of the Federal Bureau of Investigation. “This plea is the result of the efforts of the FBI and our law enforcement partners to investigate and bring to justice any who would commit blatant and outrageous fraud against the United States.”
According to evidence presented at the plea hearing, between December 2006 and July 2009, Andolsek conspired with Aaron L. Osborne, a full-time Air National Guard recruiter, to make materially false statements or representations to the Department of Defense in order to embezzle money from the Air National Guard Recruiting Assistance Program (“G-RAP”).
Andolsek admitted to the Court that he had contracted with Document and Packaging Brokers, Inc. (“Docupak”), a U.S. Department of Defense contractor, to administer the G-RAP Program, which was designed to allow airmen, officers, and retirees of the Air National Guard to voluntarily serve as recruiting assistants. To participate in the G-RAP Program these individuals were required to complete an online application. Recruiting assistants were selected by Docupak from the pool of applicants and then received online training, including instruction as to eligibility to serve, financial issues, Air Force core values, and ethics.The G-RAP Program was also designed to encourage recruiting assistants to reach out in their communities to find qualified individuals, who were not already working with a full time recruiter, to become Air National Guard Airmen. Once a recruiting assistant identified a qualified potential airman, they would enter the information into the G-RAP website. If the person actually enlisted in the Air National Guard, a $1,000 pre-loaded VISA card would be mailed to the recruiting assistant.
Under the program regulations, full time and temporary Air National Guard recruiters were not eligible to participate in the G-RAP initiative and to be eligible to receive payment, recruiting assistants had to be the first contact with a potential airman.
G-RAP program regulations also prohibited payments being split with a full time or temporary recruiter.At his plea hearing, Andolsek admitted that Osborne, a full-time recruiter, was the first to receive the contact information of various potential airmen and then supplied that information to Andolsek. Andolsek would then enter the information on the Docupak website and receive a $1,000 payment loaded onto a VISA card each time. Whenever Andolsek made a subsequent entry that one of the potential airmen had started boot camp, he received an additional $1,000 payment loaded to the VISA card. Most of the times that Andolsek received a $1,000 payment, he paid $300 of the proceeds to Osborne.
Andolsek will be sentenced on October 10, 2014. Provisions outlined in the plea agreement require that Andolsek make restitution in the amount of at least $14,000.
Aaron Osborne and co-defendant Arvalon Michelle Harleston, both from Clarksville, Tenn. are scheduled for trial on September 23, 2014, before United States District Court Judge Kevin H. Sharp.
An indictment is merely an accusation and is not evidence of guilt. All defendants are presumed innocent unless and until proven guilty in a court of law.
The case was investigated by the Federal Bureau of Investigation and the Tennessee Bureau of Investigation. Assistant United States Attorney Kathryn Ward Booth represents the government.
Former Dell Employee Pleads Guilty to Fraud SchemeRead the Press Release
Marci 21, 2014Herbie Morrow, 39, of Richmond Heights, Missouri, formerly of Nashville, pleaded guilty today to federal fraud and conspiracy charges, announced David Rivera, United States Attorney for the Middle District of Tennessee. Morrow was charged on March 7, 2014, with two counts of accessing a protected computer in furtherance of fraud and one count of conspiring to access a protected computer in furtherance of fraud.
At the plea hearing, Morrow, a former employee of Dell, admitted to conspiring with another former Dell employee to defraud Dell by using corporate computers to create fraudulent discounts. Morrow also acknowledged conspiring to access Dell account websites in order to use the fraudulent discounts to purchase more than $293,000 worth of Dell merchandise, including laptop computers and computer accessories, at substantially reduced prices or for free. Morrow admitted that a co-conspirator sold the fraudulently obtained merchandise via a company known as Tech Geek Sales, and split the resulting profits with Morrow.
U.S. District Court Chief Judge William J. Haynes, Jr. scheduled the sentencing hearing for June 9, 2014. Morrow faces a maximum sentence of 5 years in prison and a maximum fine of up to $250,000 on each count. In addition, Morrow will forfeit the proceeds of the fraud and pay restitution to Dell.
Marcus Culver, 31, of Nashville, also a former Dell employee, was also charged in this case and is currently awaiting trial. The information charging Culver is merely an accusation and is not evidence of guilt. All defendants are presumed innocent unless and until proven guilty in a court of law.This case was investigated by the United States Secret Service and is being prosecuted by Assistant U.S. Attorney William F. Abely.
Former Nissan Employee and Two Others Plead Guilty in Scheme to Defraud NissanRead the Press Release
Kenneth Carter, 45, of Corona, Calif., Wendell Young, 34, of Inglewood, Calif., and Bruce Young, 50, of Compton, Calif., pleaded guilty on March 7, 2014, to participating in a scheme to defraud Nissan North America, announced United States Attorney David Rivera. They will be sentenced by Judge William J. Haynes, Jr. on May 30, 2014.
Kenneth Carter pleaded guilty to all counts in the indictment, including conspiracy to commit mail fraud, three counts of mail fraud, and conspiracy to commit money laundering. Carter faces up to 20 years in prison and a fine of $500,000 on the conspiracy to commit money laundering count, up to 20 years in prison and a fine of $250,000 on each of the mail fraud counts, and up to five years in prison and a fine of $250,000 on the conspiracy to commit mail fraud count.
Wendall Young and Bruce Young entered into plea agreements with the government whereby each pleaded guilty to one count of conspiracy to commit money laundering.
According to the indictment, from March 2007 through April 2008 Kenneth Carter was employed at Nissan’s Franklin, Tennessee headquarters as an “Arbitration Specialist.” In that role, his duties were to negotiate with attorneys who brought claims on behalf of Nissan owners, alleging that Nissan had violated “Lemon Laws” or the Federal Warranty Act.
The indictment alleged that the defendants engaged in a scheme to defraud Nissan. Bruce Young and Wendell Young, among others, would approach individuals who owned Nissan vehicles to obtain information such as the owner’s name, address, and vehicle identification numbers. Carter then used this information to file false and fraudulent claims at Nissan, requesting settlement checks. Once the checks were issued, Bruce Young, Wendell Young, and others directed the Nissan owners to deposit the checks into their bank accounts or to cash the checks.
Bruce Young and Wendell Young then told the Nissan owners to pay them a portion of the funds the owners received from Nissan. A portion of those funds were then paid to Carter and Bruce Young and Wendell Young kept a portion of those proceeds for themselves. During the course of the scheme, Carter filed approximately 80 false claims, totaling approximately $571,500.
A total of six defendants were charged in the indictment and these guilty pleas represent the final 3 defendants. The three other defendants previously entered guilty pleas, including Adrian Franklin, 40, of Chandler, Arizona, who pleaded guilty to one count of conspiracy to commit money laundering on November 18, 2013, and Francisco DeLaRosa, 40, of West Covina, Calif., and Tracey Young, 45, of Los Angeles, Calif., each pleaded guilty to one count of conspiracy to commit money laundering on February 21, 2014.
The case was investigated by the IRSB Criminal Investigation and the Tennessee Bureau of Investigation. Assistant United States Attorney Kathryn Ward Booth represents the government.
Nashville Man Indicted on Charges of Bank Larceny, Money Laundering and Aggravated Identity TheftRead the Press Release
Over $181,000 in Donations Stolen From Area Churches
B Kenneth James Stopkotte, 48, of Nashville, Tennessee, was indicted yesterday by a federal grand jury and charged with bank larceny, money laundering, access device fraud and aggravated identity theft, announced David Rivera, U.S. Attorney for the Middle District of Tennessee, and Todd Hudson, Special Agent in Charge, U.S. Secret Service.
According to the indictment, between August 27, 2012, and February 28, 2013, Stopkotte stole approximately $181,608.52 in donation checks from the mailboxes of numerous churches in the Nashville area. Stopkotte deposited the checks in accounts which he controlled at SunTrust Bank, First Tennessee Bank, Regions Bank, the Bank of Nashville and the Navy Federal Credit Union. Additionally, Stopkotte transferred approximately $70.000 of the stolen funds from these various bank accounts to an account that he controlled at USAA Federal Savings Bank. Stopkotte then laundered approximately $48,000 of the money by nine wire transfers in varying amounts into an account titled Black Marlin Industries located at the Federal Bank of the Middle East in Nicosia, Cyprus.
Also, according to the indictment, during the period of December 15, 2011, through January 19, 2012, Stopkotte used a credit card that had been issued to another person to charge approximately $13,631.45 in payments and other things of value, while using a means of identification of another person during the credit card transactions.
If convicted, Stopkotte faces a maximum penalty of 10 years in prison and a $250,000 fine on each of the bank larceny offenses, 20 years in prison and a $500,000 fine on each of the money laundering offenses, and 15 years in prison and a $250,000 fine on the access device charge. Additionally, Stopkotte faces a mandatory minimum sentence of two years on the aggravated identity theft charge which must be served consecutively to the prison term received for the access device offense.
This investigation was conducted by the U.S. Secret Service, the Murfreesboro, Tenn. Police Department, the Franklin, Tenn. Police Department, the Brentwood Tenn. Police Department and the Madeira, Ohio Police Department. Assistant U.S. Attorney Sandra G. Moses is representing the United States.
Charges brought by an indictment are merely accusations and are not evidence of guilt. The defendant has the right to a trial, at which, the government must bear the burden of proof beyond a reasonable doubt.
Former Franklin Homebuilder Pleads Guilty to Theft from Employee Benefit PlanRead the Press Release
Custom Homebuilder Used Employee 401(k) Contributions for Personal Use
Nicholas Psillas, 58, of Houston, Texas, formerly of Franklin, Tenn., pleaded guilty today in U.S. District Court to theft from an employee benefit plan, announced David Rivera United States Attorney for the Middle District of Tennessee.
Psillas was indicted in April 2012 and faces up to five years’ in prison, a fine of $250,000, and a term of 3 years of supervised release. He will be sentenced on June 13, 2014.
According to the plea agreement, Psillas was the president and owner of Corinthian Custom Homes (“CCH”), located in Franklin, Tenn. In January 2005 Psillas established a 401(k) plan for CCH employees, of which he was the trustee. Eligible employee participants contributed funds to the plan, which were deducted from their bi-weekly compensation. CCH was responsible for making mandatory “safe harbor” contributions, required by the plan. CCH was also required to remit employee contributions and safe harbor contributions to a financial institution, which was responsible for managing the funds through employee-directed investments.
From approximately March 2006 through October 2007, instead of remitting the contributions as required, Psillas converted to his own use approximately $62,529 in employee contributions and $22,366 in safe harbor contributions. Psillas allowed funds to be withheld from participating employees’ paychecks and then to be deposited into and comingled with the company’s general operating account, which he used for his personal use and the use of CCH.
Psillas’s failure to make the required remittance for the employee and safe harbor contributions resulted in lost earnings of over $12,000.
This case was investigated by the U.S. Department of Labor. Assistant United States Attorney Kathryn Ward Booth represents the government.
Former High School Football Player Sentenced for Making Racially Motivated Threats to African-American CoachRead the Press Release
Jonathan Caine, 20, of Nashville, Tenn., was sentenced today in U.S. District Court in Nashville to 36 months’ probation for a federal hate crime of making racially motivated threats to an African-American football coach at a local high school, announced David Rivera, U.S. Attorney for the Middle District of Tennessee.
Caine, formerly a student and football player at the Nashville area high school where the victim works as a coach, was charged with a misdemeanor federal hate crime in November 2013 and pleaded guilty to interfering with a federally protected right.
“Threatening someone because of their race is a cowardly and despicable act,” said U.S. Attorney David Rivera.” “The U.S. Attorney’s Office and the Department of Justice are committed to ensuring that the rights of all persons are protected and to holding those accountable who would abridge those rights based simply on a person’s race.”
In August 2012 Caine made repeated anonymous threats to the victim and to other school officials by leaving phone messages which were laced with racial slurs and derogatory and violent threats based solely on the victim’s race and employment. A subsequent investigation by the FBI identified Caine as the caller.
In addition to the period of probation, the plea agreement requires, among other things, that Caine be placed on home confinement for 2 months; complete a comprehensive substance abuse and treatment program; and complete 520 hours of community service directed at needy minority communities.This case was investigated by the FBI and is being prosecuted by Assistant U.S. Attorney Blanche Cook of the Middle District of Tennessee and Trial Attorney Nicholas Murphy of the Civil Rights Division.
California Residents Plead Guilty in Scheme to Defraud NissanRead the Press Release
Francisco DeLaRosa, 40, of West Covina, Calif., and Tracey Young, 45, of Los Angeles, pleaded guilty today before U.S. Chief District Judge William J. Haynes, Jr. to conspiring to launder money derived from a scheme to defraud Nissan North America, announced David Rivera, U.S. Attorney for the Middle District of Tennessee.
Young and DeLaRosa each admitted in their plea agreement that from March 2007 through April 2008, they conspired to launder the proceeds that resulted from the scheme to defraud Nissan. Young and DeLaRosa admitted that they, and others, would approach individuals who owned Nissan vehicles to obtain information such as the owner’s name, address, and vehicle identification number. They then passed this information to Kenneth Carter a co-defendant and Nissan employee, who used the information to file false and fraudulent claims at Nissan requesting settlement checks.
After the checks were issued by Nissan to settle the fictitious claims, Young and DeLaRosa, and others, directed the Nissan owners to deposit the checks into their bank accounts or to cash the checks and return funds from the settlement checks to Young and DeLaRosa, who then transferred the funds either directly or indirectly to Kenneth Carter, who was involved in the scheme. Young admitted she often kept a portion of the proceeds.
According to the indictment, approximately 80 false claims were filed as part of the scheme, totaling approximately $571,500.
DeLaRosa agreed to pay restitution of at least $31,500 for his portion of the scheme, and Young agreed to pay restitution in the amount of at least $191,250 for her portion of the scheme.Sentencing is scheduled for June 13, 2014. Each defendant faces up to 20 years in prison and a fine of $500,000.
On November 18, 2013, another co-defendant in the case, Adrian Franklin, 40, of Chandler, Arizona, pleaded guilty to one count of conspiracy to commit money laundering. Franklin is scheduled to be sentenced on March 28, 2014.
The indictment that also named three other defendants whose cases are still pending: Kenneth Carter, 44, of Corona, Calif; Bruce Young, 49, of Compton, Calif; and Wendell Young, 34, of Inglewood, Calif. The indictment charged conspiracy, mail fraud, and conspiracy to commit money laundering, and alleged that Nissan lost approximately $571,500 as a result of the scheme.
An indictment is merely an accusation and all persons are presumed innocent unless and until proven guilty in a court of law.
The case was investigated by the IRSB Criminal Investigation and the Tennessee Bureau of Investigation. Assistant United States Attorney Kathryn Ward Booth represents the government.
Nashville Gang Member Sentenced to Life in Prison for Drug Trafficking and Firearms Offenses Near Elementary SchoolRead the Press Release
Four Life Sentences Imposed by the Court
Christopher Ray Moody, 30, of Nashville, Tenn., was sentenced today in U.S. District Court, to life in prison, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Moody was convicted by a jury on November 25, 2013, of all eight charges against him involving drug trafficking and firearms offenses. Moody’s crimes were committed from 2008 – 2011 and many were committed in and near specially protected areas around schools and public housing.
U.S. Attorney David Rivera stated, “This defendant had multiple previous convictions for drug trafficking, firearms, and violent crime. He continued committing crimes even while on bond or on probation for state offenses. He had no intention of turning away from a lifestyle of crime, as evidenced by the video recording introduced at trial in which he said he was taking penitentiary chances every day, and was never going to stop. The four life sentences imposed against him stops him cold, and helps protect this community and the children at the elementary school near his drug house. This is another example of using federal laws to remove armed recidivist gang members from our streets."
According to the proof at trial, Moody was a 98 Mafia Crip street gang member and repeatedly cooked multiple ounces of crack cocaine for distribution at a residence near Jones Paideia Elementary School, in Nashville. Moody kept firearms at this location, including a compact semi-automatic style firearm which he had previously obtained in a drug transaction.
Moody was arrested on unrelated state charges in April 2009. While he was incarcerated on these charges, investigators determined that Moody had instructed his girlfriend to hold his drugs and a gun for him so that he could start drug trafficking again when he completed his state sentence. Moody was released from custody in May 2010 and the evidence showed he went back to drug trafficking at the same residence.
A federal search warrant was issued in February 2011 and resulted in the Moody’s arrest, as well as the seizure of evidence showing that he cooked crack cocaine. Shotgun shells were also found at the home and the trial proof showed that Moody possessed a shotgun at that location during drug deals. Moody was also a previously convicted felon, and was found to be illegally in possession of firearms and ammunition.
The investigation was conducted by the FBI and the Bureau of Alcohol, Tobacco, Firearms, and Explosives. Assistant U.S. Attorneys Sunny A.M. Koshy and Lynne T. Ingram represented the United States.
Romanian Man Pleads Guilty to Role in International Fraud Scheme Involving Online Market Place WebsitesRead the Press Release
Alexandru Stanciu, 34, of Bucharest, Romania pleaded guilty today to one count of conspiracy to commit bank and wire fraud for his role in moving approximately $320,000 in illicit proceeds derived from an international online marketplace fraud scheme, announced David Rivera, U.S. Attorney for the Middle District of Tennessee.
According to testimony at the plea hearing, members of the conspiracy fraudulently listed vehicles for sale at online marketplaces such as Autotrader and eBay. When potential buyers expressed interest in purchasing the vehicles, co-conspirators sent e-mails that directed the buyers to wire payments to certain bank accounts. In total, 17 individuals sent approximately $321,389 to accounts opened by Stanciu. None of the victims ever received the vehicles for which they paid.
“International online marketplace fraud schemes pose a serious threat to consumers and to Internet commerce,” said U.S. Attorney David Rivera. “Foreign-based criminals believe they can flee safely back to their home countries and avoid the consequences of the crimes they commit here. They are mistaken. Federal, state, local, and foreign law enforcement officials increasingly are working together to investigate, arrest and prosecute the people responsible for these schemes. The safe havens for these criminals are shrinking thanks to these coordinated efforts. Prosecutions like this one reinforce that message.”
According to testimony, beginning at least as early as December 2011 and continuing to as late as July 2013, Stanciu opened bank accounts under false identities, which were supported by fraudulent identity documents including counterfeit passports. Stanciu opened 10 such accounts, under nine different names. Stanciu subsequently sent the bulk of the money to other co-conspirators located abroad
Stanciu was apprehended in July 2013 at Miami International Airport, from which he was scheduled to travel to Bucharest, Romania by way of London. At the time of his arrest Stanciu had $1,850 U.S. Dollars and 4,600 Euros in cash in his possession.
Stanciu is scheduled to be sentenced on June 2, 2014. He faces a maximum of thirty years in prison and a $1,000,000 fine.
The case was investigated by the Federal Bureau of Investigation and the Tennessee Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Byron M. Jones with the Middle District of Tennessee and Trial Attorney Mysti Degani with the Criminal Division’s Computer Crime and Intellectual Property Section.
Three Tennessee Men Plead Guilty in $18 Million Ponzi SchemeRead the Press Release
WASHINGTON – Top officers and a salesman for an investment company based in Nashville, Tenn., have pleaded guilty for their roles in an $18 million Ponzi scheme.
U.S. Attorney David Rivera of the Middle District of Tennessee, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Special Agent in Charge Todd McCall of the FBI’s Memphis Division and Special Agent in Charge Christopher Henry of the IRS-Criminal Investigation in Nashville made the announcement today after the pleas were accepted by U.S. District Judge Todd J. Campbell in the Middle District of Tennessee.
Terry Kretz, 61, of Gallatin, Tenn., the chief executive officer for Hanover Corporation, and Daryl Bornstein, 54, of College Grove, Tenn., a Hanover salesman, pleaded guilty today to securities fraud, money laundering, and conspiracy to commit securities fraud, wire fraud and mail fraud. On Jan. 29, 2014, Hanover’s chief financial officer, Robert Haley, 54, pleaded guilty to the same charges. Kretz and Haley also pleaded guilty to mail fraud.
“Ponzi schemes typically leave unsuspecting investors in financial ruin and many have lost their life’s savings,” said U.S. Attorney Rivera. “The U.S. Attorney’s Office and our law enforcement partners will continue to place a great emphasis on educating the public about investment fraud and will vigorously pursue those who prey upon unsuspecting investors.”
“The three men who pleaded guilty schemed, lied, and stole at the expense of innocent investors,” said Acting Assistant Attorney General Raman. “They ran a classic Ponzi scheme until the bottom fell out, and their clients – people looking to provide stability for their families or save for their retirements – suffered serious financial harm. We will stay vigilant to ensure that fraudsters like Kretz, Bornstein and Haley are held accountable.”
“It is a priority of the FBI to target fraudsters who use criminal investment and Ponzi schemes to scam innocent working families and retirees out of their hard earned money,” said FBI SAC McCall. “These pleas demonstrate the effectiveness of state and federal law enforcement working together to protect the public from financial fraudsters and bring those responsible to justice.”
“Promoters of Ponzi schemes prey upon trusting investors and then steal their hard earned money,” said IRS-CI SAC Henry. “Investors should be wary of programs promising unbelievable returns and investments should be looked at carefully. Remember the old cliché, ‘If it seems too good to be true, it probably is’.”
The three men were indicted by a federal grand jury on July 27, 2011. Sentencing is scheduled for April 2, 2014.According to court documents, the defendants carried out the fraudulent scheme from October 2004 through August 2006. During that period, Kretz and Bornstein offered clients the opportunity to invest in Hanover through promissory notes bearing high interest rates. Through representations in the promissory notes, as well as their own discussions with investors, Kretz and Bornstein told clients that their money would be used for specific purposes, such as investing in stock options and startup companies. In fact, as all three defendants knew, more than half the money invested in Hanover went to repay earlier investors, to pay Hanover’s salaries and overhead, or to benefit the defendants personally. Such personal benefits included the purchase of a $600,000 residential building lot in the name of Kretz personally, contributing more than $176,000 to a church, and paying for golf memberships.
Kretz and Bornstein also issued Hanover promissory notes to reimburse individuals who had previously lost money investing in ventures recommended by Bornstein before he joined Hanover. In some cases, these old investors contributed new money to Hanover, while in other cases, they invested nothing. In both cases, money from new investors in Hanover was used to make payments on promissory notes issued to cover non-Hanover losses without the Hanover investors’ knowledge.
Haley, in his role as chief financial officer, perpetuated the fraud by sending note holders checks that purported to be for “interest” — but were in fact simply transfers of money recently taken in from new investors. Haley also prepared a false balance sheet that overstated Hanover’s financial health and that he knew would be shown to note holders.
The case was investigated by the FBI, IRS-CI, the Tennessee Bureau of Investigation, and the Tennessee Department of Commerce and Insurance. The case is being prosecuted by Assistant United States Attorney Scarlett S. Nokes of the Middle District of Tennessee and Trial Attorney Justin Goodyear of the Criminal Division’s Fraud Section.
Today’s convictions are part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorney’s Offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.