Middle District of Tennessee
Press releases recorded for this federal judicial district.
Two Indicted for Arson and Mail FraudRead the Press Release
Steven Mellides, 51, of Massapequa, New York, and John Fisher, 34, of Mt. Juliet, Tennessee, were
indicted by a federal grand jury on May 15, 2013, and were each charged with four counts relating to their
participation in the intentional burning of a newly constructed single family house in Mt. Juliet, Tenn.,
announced David Rivera, Acting U.S. Attorney for the Middle District of Tennessee.The indictment was unsealed yesterday after both defendants were arrested. The indictment charges
each defendant with conspiring to commit, and committing, mail fraud and arson.
“This case illustrates the U.S. Attorney’s Office commitment to prosecuting both violent crime and
white collar crime,” said Acting United States Attorney David Rivera. “We will continue working diligently with our local and state partners to bring to justice those who seek to enrich themselves by putting innocent people in harm’s way.”“These arrests indicate the collaborative effort by federal, state and local authorities” said Jeff Fulton,
Special Agent in Charge, ATF, Nashville Field Division. “Arson is a a crime of violence that places innocent
people’s lives and property in harm’s way.”According to the indictment, Mellides owned a residence in Mt. Juliet, Tennessee, and had multiple
conversations with Fisher and at least one other individual regarding intentionally burning the house. Those conversations culminated with Fisher intentionally setting fire to the house on December 12, 2009. After the house was destroyed by fire, Mellides told State Farm Insurance that he did not know how the fire started and did not ask anyone to set the fire, and caused multiple checks to be mailed from State Farm to pay for the damage to the house.If convicted, the defendants each face up to twenty years in prison and a $250,000 fine, as well as
forfeiture of property derived from or used in violation the offenses charged.The case was investigated by agents with the Bureau of Alcohol, Tobacco, Firearms and Explosives, the
Bomb and Arson Section of the Tennessee Department of Commerce and Insurance, and the Mt. Juliet Police Department. The United States is represented by Assistant U.S. Attorney Scarlett M. Singleton.An indictment is merely an accusation and is not evidence of guilt. Defendants are presumed innocent
unless and until proven guilty in a court of law.Two Tennessee Men Plead Guilty to Conspiring to Violate Civil Rights of African-americanresidentsRead the Press Release
WASHINGTON – Two Spring Hill, Tenn., men pleaded guilty in federal court today for their involvement in a racially-motivated conspiracy to interfere with the housing rights of African-American residents of the Spring Lake subdivision of Spring Hill, the Justice Department announced. Dakota James Calderhead, 20, and Kristian Chancellor Mathis, 19, each pleaded guilty in U.S. District Court in Nashville, Tenn., to one count of conspiracy to deprive a person of his civil rights.
According to their plea agreements, on or about December 30, 2011, Calderhead and Mathis conspired to vandalize homes in the Spring Lake subdivision. Mathis admitted to spray painting a swastika and racial slurs on the driveway of an African-American family’s residence.
Calderhead admitted that he fashioned a noose which Mathis hung from a tree outside of the residence. Calderhead also admitted to hanging a second noose from the driver’s side rearview mirror of the school bus located in front of another African-American family’s residence. Both defendants further admitted that their acts of vandalism were intimidating, and motivated, in part, by the race, color, or ethnicity of the victims.
“These innocent families were targeted and subjected to acts of harassment and intimidation for no other reason than their race,” said Deputy Assistant Attorney General Roy L. Austin Jr. of the Civil Rights Division. "The Justice Department will continue to vigorously enforce federal laws that guarantee the civil rights of all people.”
“The U.S. Attorney’s Office and our law enforcement partners remain committed to protecting the civil rights of all persons,” said David Rivera, Acting U.S. Attorney for the Middle District of Tennessee. “Conduct which seeks to deprive any person of their civil rights will always receive the full attention of this office.”
The defendants face maximum statutory penalties of 10 years in prison. U.S. District Judge Todd J. Campbell has scheduled sentencing for August 21, 2013.
This case was investigated by the Memphis Division, Columbia Resident Agency of the FBI and the Maury County Sherriff’s Department. It is being prosecuted by Senior Litigation Counsel Gerard Hogan and Trial Attorney Ryan Murguía of the Justice Department’s Civil Rights Division and Assistant U.S. Attorney Hal McDonough of the U.S. Attorney’s Office for the Middle District of Tennessee. Assistance was provided by District Attorney Mike Bottoms from the 22nd Judicial District of Tennessee.
Celina Pharmacist Sentenced in Federal CourtRead the Press Release
William Lester Donaldson, 53, of Celina, Tennessee was sentenced on May 10, 2013, by Chief United States District Judge William J. Haynes, Jr., to serve 15 months in prison, followed by 3 years of supervised release and a fine of $25,000 for possessing Hydrocodone with the intent to distribute, announced David Rivera, Acting U.S. Attorney for the Middle District of Tennessee.
Donaldson was a pharmacist in Celina, Tenn. and on five occasions, between August 13, 2010, and October 5, 2010, in various locations in the Middle Tennessee area, he advanced and sold Hydrocodone pills to individuals without a valid prescription. Donaldson’s conduct was captured by an in-store surveillance system, showing him removing previously prepared bottles from a drawer within the pharmacy and placing them in his pocket.
Donaldson was indicted on April 20, 2011, and pleaded guilty to five counts of illegally possessing and distributing Hydrocodone on November 13, 2012.
This investigation was conducted by the Celina Police Department, the 13th Judicial District Drug Task Force, the Tennessee Bureau of Investigation, the Drug Enforcement Administration, and Health and Human Services, Office of Inspector General. Assistant U.S. Attorney Lynne T. Ingram represented the government.
Behavioral Analyst Charged with Health Care FraudRead the Press Release
Jenny Lynn Hall, formerly known as Jenny Lynn Unterstein, 37, of Smithville, Tenn., was charged with health care fraud in a one-count criminal information filed today in U.S. District Court, announced David Rivera, Acting U.S. Attorney for the Middle District of Tennessee.
Hall was a licensed and board-certified behavioral analyst with a Ph.D. in applied behavioral analysis and provided services to individuals with mental, behavioral or developmental disabilities. According to the information, Hall created false documents and forged signatures in 2009 and 2010 to obtain payment for behavioral analysis services that she never provided. As a result of this fraud, TennCare, the Tennessee Medicaid program, was billed for more than 115 behavioral analysis sessions that never occurred.
“Rooting out and prosecuting health care fraud is and will continue to be a major priority of the U.S. Attorney’s Office,” said Acting United States Attorney David Rivera. “Often, healthcare fraud is accomplished at the expense of vulnerable patients who are denied the services they deserve. Health care providers who engage in fraudulent activity, especially those serving vulnerable populations, will be held accountable.”
If convicted, Hall faces a maximum penalty of 5 years in prison and a $250,000 fine, as well as forfeiture of proceeds derived from the fraud.
This investigation is being conducted by agents of the Department of Health and Human Services Office of Inspector General and the Tennessee Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney William F. Abely.An information is merely a charge and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
Five Indicted in Large-scale Synthetic Drug ConspiracyRead the Press Release
Indictment Alleges That Defendants Manufactured and Distributed “Designer” Drugs
Sold as Potpourri or Plant FoodFour defendants were arrested yesterday and another was already in custody after a federal grand jury in Nashville, Tennessee returned a 10-count indictment charging five defendants with various counts of conspiring to manufacture, distribute, and possess with intent to distribute controlled substance analogues, also known as “synthetic” or “designer” drugs, which were intended for human consumption; conspiracy to violate drug labeling and manufacturing laws; possession of firearms in furtherance of a drug trafficking crime; possession of a firearm by a convicted felon; using a place for the purpose of distributing controlled substance analogues for human consumption; conspiring to launder money; obstruction of justice; subornation of perjury; and perjury. The indictment was announced by David Rivera, Acting U.S. Attorney for the Middle District of Tennessee and Steve Anderson, Chief of the Metropolitan Nashville Police Department.
The indictment charged the following defendants:Eric Ronnell Alexander, 26, of Antioch, Tennessee;
Barry Gregory Vail, 27, of Antioch, Tennessee;
Tabatha Lynn Baird, 20, of Antioch, Tennessee;
Johnathan Landon Smith, a/k/a “London,” 29, of Spring Hill, Tennessee; and
Candice Ruth White, 36, of Nashville, Tennessee.According to the indictment, the defendants established and ran companies called Faded Botanicals, New Age Wholesale, and Toke-N-Roll, that were fronts for a large-scale conspiracy to manufacture and sell synthetic drugs to wholesale and retail customers throughout the United States. The “designer” drugs carried names like “Molly’s Plant Food,” “K4 XXX Gang,” “Bang Ban Russian Roulette,” and “El Cheapo” and were sold at local retailers in Tennessee and across the country, including gas stations, convenience stores, adult book stores, and smoke shops. The indictment alleges that Alexander and the other defendants themselves operated two smoke shops in the Nashville area called “Toke-N-Roll,” where they sold the synthetic drug products along with rolling papers, vaporizers, and bongs. The products allegedly contained controlled substance analogues, which are similar to Schedule I controlled substances in chemical composition and their effect on the body.
“Criminals who sell illegal drugs cannot evade justice by simply changing a molecule in the compounding structure of the substance,” said Acting U.S. Attorney David Rivera.” Those who would attempt to hide behind the analogue of an illegal substance and produce and sell such dangerous and adulterated substances to the public will face the consequences of federal prosecution.”
“Criminal investigations such as this save lives and protect families,” said Metro Nashville Police Chief Steve Anderson. “These products have been found to be inherently dangerous and seemingly packaged to appeal to teenagers and young adults. The truth is, the colorful packets contain chemicals that can cause very serious side effects and even death.”
The indictment alleges that the conspiracy lasted from at least July 2010 to October 5, 2012, and that the defendants manufactured synthetic drug products themselves at an unsanitary warehouse in Kentucky. According to the indictment, the defendants made the synthetic drugs products using chemicals they had purchased over the internet, cooking them on a dirty hot plate and dissolving them in alcohol before pouring them and a green leafy substance into a rusty and corroded industrial mixer meant to mix concrete; after the chemicals and leafy substance were mixed, the resulting substance was spread out in numerous aluminum foil roasting pans that were left to dry on the dirty floor of the warehouse. At that point, the indictment alleges, the green leafy substance, which was then coated with the synthetic drugs, was packed into foil packs and plastic cylinders for sale. All of the defendants are also charged with conspiracy to commit money laundering for using the illegal proceeds of the sale of these synthetic drugs to further the conspiracy and engage in monetary transactions greater than $10,000.The indictment also alleges that the defendants took multiple steps to conceal the fact that they were selling the synthetic drugs for human consumption. For example, the labels the defendants placed on the designer drug products stated that they were not for “human consumption,” and claimed instead to be “potpourri,” “herbal enhancers,” or “plant food,” although the defendants knew that these claims were not true. Similarly, the indictment alleges that employees of Toke-N-Roll were instructed not to sell the designer drugs at the same time as rolling papers, bongs, or other items meant for smoking them. Instead, the employees were told to ring up the customer’s purchase in two separate transactions.
In addition, according to the indictment, defendants Alexander, Vail, and Baird attempted to obstruct the investigation by federal investigators and a federal grand jury. Specifically, the indictment alleges that Alexander and Vail suborned and procured Baird to commit perjury, and that Baird perjured herself in the grand jury when she claimed to never have been present at the warehouse in Kentucky where defendants manufactured the synthetic drug products.
If convicted of the drug conspiracy, defendants face a maximum sentence of twenty years in prison and a $1,000,000 fine. They also face a maximum of twenty years in prison and a $500,000 fine on the money laundering charges. If convicted of the conspiracy to introduce adulterated and misbranded drugs, the defendants face a maximum sentence of five years in prison and a $250,000 fine. On the obstructed-related allegations, defendants Alexander, Vail, and Baird face a maximum sentence, if convicted, of five years in prison and a $250,000 fine for the counts charging perjury and suborning perjury, respectfully, and a maximum sentence of twenty years in prison and a $250,000 fine on the counts alleging obstruction of justice.
The indictment also contains charges related to the unlawful possession of a firearm by Alexander, who is a convicted felon, and his possession of a firearm in furtherance of the drug trafficking conspiracy. On the latter charge, Count 3 of the indictment, Alexander faces a maximum sentence of life in prison and a $250,000 fine, while the other charge carries a maximum sentence of 10 years in prison and a $250,000 fine.The indictment follows an investigation of more than two years by the Drug Enforcement Administration, the Metropolitan Nashville Police Department, and the Office of the Tennessee Attorney General. Assistant United States Attorney Alex Little is representing the government.
An indictment is merely an accusation and is not evidence of guilt. Defendants are presumed innocent unless and until proven guilty in a court of law.
Former Maury County, Tennessee Correction Officerpleads Guilty to Conspiring to Bring Contraband into the JailRead the Press Release
Former Maury County Correction Officer Derek Wayne Turner, 38, of Mt. Pleasant, Tenn., pleaded guilty yesterday in U.S. District Court to charges of conspiring to introduce contraband and controlled substances into a jail, in exchange for cash payments, announced David Rivera, Acting U.S. Attorney for the Middle District of Tennessee.Turner was indicted by a federal grand jury on October 25, 2012, along with Maury County Jail inmates Benjamin R. Bradley, 35, and James E. Pierce, 40, Bradley’s mother, Linda Chapman, 52, of Columbia, Tenn. and Melinda A. Buie, 41, of Mt. Pleasant, Tenn. and charged with conspiracy to introduce contraband and controlled substances, including tobacco and scheduled drugs, into a jail, between February - June 2011.
Turner’s sentencing hearing is scheduled for July 25, 2013, before U.S. District Judge Aleta A. Trauger. Linda Chapman pleaded guilty on April 25, 2013, and is scheduled to be sentenced on July 18, 2013. Both face a maximum penalty of 66 months in prison and a $255,000 fine.
This case was investigated by the FBI, the Tennessee Bureau of Investigation and the Maury County Sheriff’s Department. The case is being prosecuted by Assistant U.S. Attorney Darryl A. Stewart.
The charges against Bradley, Buie and Pierce are still pending. An indictment is merely a charge and is not evidence of guilt. All defendants are presumed innocent unless and until proven guilty in a court of law.Witness Who Refused to Testify Convicted of Contempt of Court and Obstruction of JusticeRead the Press Release
Abdullahi Farah a/k/a Grey Goose, age 23, of Nashville, was convicted yesterday by a federal jury of obstruction of justice and contempt of court, announced David Rivera, Acting United States Attorney for the Middle District of Tennessee.
Farah was found guilty of willfully and knowingly misbehaving in or near the presence of United States District Judge Todd J. Campbell; of willfully and knowingly disobeying and resisting a lawful order, decree, or command of Judge Campbell; and of knowingly and intentionally attempting to obstruct or interfere with and prevent the enforcement of Title 18 U.S.C. Section 1591(a), the federal statute that prohibits the sex trafficking of children and sex trafficking by force, fraud or coercion.
It was stipulated at the trial that Farah had material information regarding multiple counts of the indictment in the case of United States v. Adan, et al., including information regarding charges of sex trafficking females under the age of 18. On August 23, 2012, Judge Campbell ordered Farah to testify in a deposition for the purpose of obtaining his testimony for use at trial in the Adan case.
Pursuant to Judge Campbell’s Order, a deposition was convened on September 12, 2012, at the United States Federal Courthouse in Nashville for the purpose of taking Farah’s testimony regarding the charges in the Adan indictment. When asked if he would testify, Farah refused.
As a result of his refusal, Farah was taken before Judge Campbell, who found that it would be futile to hold Farah in civil contempt of Court and stated that the United States could commence criminal contempt charges against Farah.
Farrah was subsequently indicted by a federal grand jury for contempt and obstruction charges. He faces a maximum sentence of life in prison when he is sentenced at a date yet to be determined.
Farah’s case and the Adan case were part of a joint investigation by the St. Paul Minnesota Police Department, Homeland Security Investigations, the FBI, the Tennessee Bureau of Investigation, and the Nashville Metropolitan Police Department. The case was prosecuted by Assistant U.S. Attorneys Van S. Vincent and Blanche Cook.
Producer of Fraudulent Identification Documents Pleads Guilty in Federal CourtRead the Press Release
Mario Bravo Romualdo, 27, of Mexico pleaded guilty today in U.S. District Court to document fraud, arising from his possession of devices designed for making false federal and state identification documents, announced David Rivera, Acting U.S. Attorney for the Middle District of Tennessee.
Romualdo was arrested on October 24, 2012 while attempting to sell fraudulent identification documents including a Social Security Card and an Employment Authorization Card. He was indicted by a federal grand jury on November 29, 2012, along with co-defendants Isaias Hernandez Ramos, Juan Tello Leynes, and Maria Marquez Ramirez, who were charged with document fraud and conspiring with Bravo Romualdo to produce, transfer, and possess false identification documents, including false Social Security Cards and false Permanent Resident Cards. Charges against the co-defendants are pending.
“The production and sale of false identification documents is a threat to our national security and to the integrity of government programs,” said Acting U.S. Attorney David Rivera. “This office will remain committed to prosecuting those who commit document fraud.”
"Document fraud is an incredibly serious crime that potentially enables terrorists and other criminals to enter the United States under false pretenses," said Homeland Security Investigations New Orleans Special Agent in Charge Raymond R. Parmer Jr. "Homeland Security Investigations will aggressively investigate and seek prosecution of individuals who threaten national security by producing fraudulent government documents.” Parmer oversees a five-state area to include Tennessee, Alabama, Arkansas, Louisiana and Mississippi.
During the plea hearing, Bravo Romualdo admitted possessing document-making devices, including 17 blank cards bearing a seal of the United States Department of Justice; 54 blank cards bearing the names and emblems of various states; and a specialized card printer and other electronic equipment designed for manufacturing false identification documents. Romualdo further admitted using these devices to produce false documents, including false Permanent Resident Cards.
Romualdo is scheduled to be sentenced by Senior Judge John T. Nixon on July 26, 2013. He faces up to 15 years in prison and a fine of up to $250,000.
This case was investigated by agents with the U.S. Department of Homeland Security, Homeland Security Investigations and by the Tennessee Department of Safety and Homeland Security Identity Crimes Unit. The case is being prosecuted by Assistant United States Attorney William F. Abely.
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.
Nashville Woman Admits Theft of $360,000 in Federal Grant Funds Intended to Aid VeteransRead the Press Release
Birdie Anderson, 54, of Nashville, Tennessee, pleaded guilty yesterday in federal court to charges that she made false statements to the Department of Veterans Affairs (VA) to obtain an $80,000 federal grant and that she had converted over $280,000 in additional VA grant funds, for her own personal use, announced Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee.
Anderson admitted that during 2007 and 2008 she made false representations when applying for a federal grant that provided money for a mortgage and for the purchase of real property that would be used to house indigent veterans. She admitted that she pocketed around $25,000 of the $80,600 in cash that the VA gave her to buy the property. Anderson subsequently failed to make the mortgage payments, which resulted in foreclosure and loss of the property as a source of veteran housing.
Anderson further admitted to receiving an additional $280,000 in VA grant funds between 2008 and 2013, by representing that she would use the money to purchase a specialty van to provide transportation for indigent veterans, and an apartment building for additional veteran housing. However, she never purchased either. The funds were electronically deposited into Anderson’s bank account, but are no longer there.
“This egregious fraud inflicted a significant double injury to tax payers in general, and to veterans specifically,” said U.S. Attorney Jerry E. Martin. “Fraud and abuse of any federal program is harmful, particularly given the current funding crisis that the United States faces. Program fraud is even more damaging when the programs affected are designed to help our needy veterans. The taxpayers’ money that Anderson fraudulently obtained in this case is gone, so it will provide no benefit to the veterans it was intended for. We will ask the court to impose a sentence that accurately reflects the harm that this defendant inflicted.”
“The VA- Office of Inspector General is dedicated to aggressively investigating thefts of funds from VA programs, including those established to assist homeless veterans,” added Quentin G. Aucoin, Special Agent in Charge of the VA- Office of Inspector General.
During the investigation, Anderson claimed that she still had the money, which was in a safe in New Hampshire. Despite that claim, Anderson has refused demands from the VA to return the money and has since formally withdrawn from participation in the grant programs for which the funds were provided.The charges carry a combined maximum of 15 years in prison, fines of up to $500,000, and forfeiture of any money or substitute property that Anderson possesses, up to the amount or value of the VA funds that she misappropriated.
United States District Judge Todd J. Cambpell has set sentencing for June 17, 2013.
The case was investigated by the VA- Office of Inspector General. The government is represented by Assistant U.S. Attorney Hilliard Hester.Jury Returns Verdicts in Lengthy Trial Against Two Ranking Gang MembersRead the Press Release
NASHVILLE, Tenn. - April 2, 2013 - Leonard Baugh a/k/a Hype, age 35, and Omega Harris a/k/a Nino a/k/a Q, also age 35, both of Nashville were convicted of multiple charges by a federal jury after a five week trial, announced Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee. The trial focused on Baugh’s use of contraband cellular telephones while serving a state prison sentence at Riverbend Maximum Security Institution in Nashville.
“We are appreciative of the diligent efforts of the jurors who served in this lengthy trial and we respect their verdicts,” said U. S. Attorney Jerry E. Martin. “This was a difficult investigation into a large and dangerous gang whose members tried to control prisons, jails and our neighborhoods. The proof showed that this gang was well armed, and regularly planned to commit violent crimes. This office and our law enforcement partners dedicated significant resources to investigating and prosecuting this case with the belief that such dangerous offenders who were lurking in our neighborhoods with multiple firearms and who were willing to use those guns to abduct others and invade their homes needed to be stopped.”
According to the proof at trial, both defendants held the rank of “OG” (Original Gangster) - the highest rank in the Rollin’ 60s Crips street gang, and committed various crimes with other Rollin’ 60s gang members. The trial proof showed that people as young as 13 years of age were joining this violent street gang.
Baugh was convicted of conspiring to commit two armed robberies against people he believed to be drug dealers, and with possession of firearms in furtherance of those conspiracies. He was responsible for the multiple guns possessed by the co-conspirators who were to carry out the planned home-invasion style robberies. Baugh was also convicted of conspiring to distribute cocaine and crack cocaine as part of a scheme to raise bond money for two female gang members who had been arrested on state prescription fraud drug charges. Baugh was serving a Tennessee state prison sentence at the time of the offenses, and the trial proof showed he routinely used a contraband cell phone while in Tennessee’s highest security prison to arrange robberies and drug offenses, which were to be committed by other Rollin’ 60s gang members.
Harris was convicted of conspiracy to distribute cocaine which was to be taken as part of one of the planned robberies, as well as conspiring to distribute prescription drugs such as Oxycontin.
The proof at trial included evidence that Harris conspired to obtain Oxycontin and other prescription drugs through the use of forged prescriptions as well as through large scale distribution of Oxycontin in various Nashville public housing projects. That proof included estimated distribution of thousands of highly addictive and dangerous Oxycontin 80 milligram pills per week. The investigation into how Harris was able to obtain these drugs in bulk continues.
Harris was also convicted of being a felon in possession of a firearm, relating to the possession of a folding Kel-Tech Sub 2000 firearm. The proof at trial included tracing that firearm through the hands of over a dozen gang members and associates, including proof that Harris provided that firearm to other gang members for use in other crimes. Harris was acquitted of conspiring to commit various drug-related robberies and the firearms charges related to those conspiracies.
Sentencing for both defendants has been scheduled for June 20, 2013 before Senior U.S. District Judge John Nixon. The United States intends to seek lengthy prison sentences against each of these defendants, reflecting each defendants’ roles in these crimes, their previous criminal histories, and other appropriate sentencing factors.
The investigation, which is still ongoing, included the arrests of over 30 Rollin’ 60s gang members and associates, including five holding the highest rank of “OG.” Many of the defendants previously pleaded guilty, and others - who are presumed innocent - will be tried later on a variety of charges including drug trafficking, conspiracy to commit armed robberies, firearms offenses, and obstruction of justice.
The case was investigated by the FBI, with assistance from other federal and local agencies. This trial was prosecuted by Assistant U.S. Attorneys Sunny A.M. Koshy and Special Assistant U.S. Attorney Mario M. Pinto.Pulaski Man Sentenced to 70 Months for Drug ConspiracyRead the Press Release
Frank Dwayne Randolph a/k/a Tubbs, 48, of Pulaski, Tennessee, was sentenced yesterday to 70 months in prison for his role in a drug trafficking conspiracy, announced Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee.
U.S. District Judge Aleta A.Trauger also sentenced Randolph to serve three years of supervised release and ordered him to forfeit $750,000.00, which was determined to be criminal proceeds of the drug conspiracy. In imposing the sentence, Judge Trauger noted that Randolph had been involved in one of the largest drug conspiracies in the Giles County, Tennessee area and continued to show no remorse for his crimes.Randolph was convicted, following a month-long trial in November 2012, of drug conspiracy, money laundering conspiracy, being an accessory after the fact to a drug conspiracy and perjury.
According to the evidence at trial, Randolph’s half-brother, Travis Gentry, who was also convicted at trial, obtained large quantities of cocaine and marijuana from various suppliers. Gentry then cooked a large portion of the cocaine into crack cocaine to increase his profits and then distributed the drugs in rural areas including Pulaski, Tenn. and Athens, Alabama. Multiple firearms, including several loaded assault rifles, were recovered from Randolph's residence in Pulaski, Tenn. during the execution of search warrants.Approximately $2,100.00 in marked buy money, from a prior cocaine purchase from Gentry, was also recovered from a bank safe deposit box held by Randolph. A review of financial records showed over $100,000.00 in deposits into Randolph's accounts which were not accounted for by his payroll or declared business tax receipts from his business, Quality Window Tinting, in Pulaski, Tenn. Prosecutors argued at trial, and the Court determined at sentencing, that this money constituted proceeds from the drug conspiracy.
Travis Gentry is scheduled to be sentenced on April 26, 2013.
The investigation was conducted by the Drug Enforcement Administration, the Tennessee Bureau of Investigation, the Giles County Sheriff's Department, the Pulaski Police Department and the Bureau of Alcohol, Tobacco, Firearms & Explosives. Assistant U.S. Attorneys Sunny A.M. Koshy and Alex Little represented the United States at trial and sentencing.Rutherford County Sheriff’s Deputy Arrested Forcocaine TraffickingRead the Press Release
Complaint Alleges Armed Deputy Arranged Purchase Of Seven Kilograms of Cocaine
Luis Reynaldo Parra Flores, 35, of Murfreesboro, Tennessee, a deputy with the Rutherford County Sheriff’s Department, was charged in a federal complaint in Nashville yesterday, with conspiring to distribute more than five kilograms of cocaine, announced Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee.
According to the affidavit in support of the complaint, on March 13, 2013, agents with the Drug Enforcement Administration (DEA) intercepted a courier who arrived at the Nashville International Airport with seven kilograms of cocaine in his luggage. Federal agents and Metro Nashville drug detectives conducted an undercover operation to identify the individuals who planned to receive the cocaine. The affidavit alleges that Flores met with the cooperator and attempted to take delivery of the cocaine. After he did so, federal agents placed him under arrest and found that he was carrying a firearm and a badge identifying him as a Rutherford County Sheriff’s Deputy.
“The actions of a few corrupt law enforcement officers harms the reputation of the many dedicated men and women who wear the badge with honor,” said U.S. Attorney Jerry E. Martin. “We will always pursue those few who choose to dishonor their badge and will bring them to justice.”
“Flores failed the citizens of Rutherford County and the dedicated employees of the Rutherford County Sheriff’s Office and violated their trust,” said Rutherford County Sheriff Robert Arnold. “We have a black eye and a bruised jaw. I am ashamed of his actions and I apologize to the citizens of Rutherford County. He has tarnished his badge and ruined the trust the citizens placed in him. His employment was immediately terminated and his badge has been destroyed and will never be worn again.”
If convicted, Flores faces a sentence of ten years to life in prison and a $10 million fine.
The case was investigated by the DEA, the 20th Judicial District Drug Task Force and the Metropolitan Nashville Police Department. Assistant United States Attorney Alex Little is representing the government.
A criminal complaint is merely an accusation and is not evidence of guilt. Defendants are presumed innocent unless and until proven guilty in a court of law.
National Foundation of America Founder Convicted of Defrauding Clients of $30 Million in AssetsRead the Press Release
Company Misrepresented as Charitable Organization to Investors
Richard Olive, 47, of Vero Beach, Florida, formerly a resident of Franklin, Tennessee, was convicted by a federal jury on March 7, 2013, of mail fraud, wire fraud and money laundering, related to his operation of National Foundation of America (“NFOA”), announced Jerry E. Martin, U. S. Attorney for the Middle District of Tennessee.
From January 2006 through May 2007 Olive represented to potential investors that NFOA, which was headquartered in Franklin, Tenn., was a charitable organization that had been recognized and approved by the IRS as a 501(c)(3) organization. During the scheme, Olive solicited assets from elderly individuals, including annuities and real estate, valued at more than $30 million, and promised that, in return, NFOA would issue an “installment bargain contract” that would purportedly give investors a guaranteed payout within a specific time period as well as a generous tax deduction.
“Fraudulent investment scams like these are devastating to investors, especially people who invest their life’s savings with individuals they trust, only to find that their trust has been misplaced,” said U. S. Attorney Jerry E. Martin . “In this case, a lot of people invested money they couldn't afford to lose, particularly in hard economic times. The U.S. Attorney’s Office will diligently and appropriately prosecute those who perpetrate such schemes and prey on unsuspecting and trusting investors.”
Olive promised clients that in exchange for an NFOA “installment bargain contract,” investors would receive a fixed payment for a specified number of years. Evidence presented by prosecutors at trial demonstrated that NFOA never had sufficient assets to meet these obligations. The majority of assets that Olive solicited were annuities, which incurred high penalties on their surrender. When Olive received these annuities, he surrendered them, incurring the penalties, so that he could access the cash.
Additional evidence presented at trial showed that Olive used the cash to fund his lavish lifestyle, including paying for $153,000 of expenses on credit cards, funding a family trip to New Orleans on a chartered jet, settling a lawsuit against him for $250,000, and using cash to purchase several properties, including a $690,000 condo in Las Vegas. Although Olive held NFOA out to be a “charitable organization,” evidence presented at trial showed that he donated to charity less than ½ of 1% of the $23.6 million received by NFOA.Prosecutors also presented evidence showing that Olive made a series of misrepresentations about NFOA assets during the scheme. For example, in February 2006, just days after NFOA had been incorporated, Olive sent financial statements to a financial advisor that falsely represented that NFOA had been in operation in 2003 and 2004 and that it held significant assets. In May 2006 Olive represented to another financial advisor that the company had $35 million in assets, although the charitable tax returns that he filed with the State of Tennessee indicated that from its inception to June 2006, NFOA had received only $2.8 million in revenue.
Other evidence presented at trial showed that throughout the scheme, Olive repeatedly and falsely represented to investors that NFOA had been recognized as a charitable organization by the IRS under Section 501(c)(3) of the Internal Revenue Code. Olive’s former attorney testified that Olive continued to make this false representation, even after being advised on at least two occasions to stop.
The jury also heard testimony that at least five states had issued cease-and-desist orders during the scheme, based in part on their findings that Olive was misrepresenting NFOA’s 501(c)(3) status, and ordered him to stop selling NFOA’s product in those states. NFOA was seized and ultimately liquidated by the Tennessee Department of Commerce and Insurance in May 2007.
Olive faces up to 20 years in prison on each of the mail and wire fraud counts, and up to 10 years in prison on the unlawful monetary transaction counts. A sentencing date has not yet been set.
The case was investigated by the FBI and the IRS– Criminal Investigation . Assistant United States Attorneys Kathryn B. Ward and Darryl A. Stewart represented the government.Two Hungarian Nationals Sentenced in Tennessee for Roles in International Fraud Scheme Involving Online Marketplace WebsitesRead the Press Release
WASHINGTON – Hungarian nationals Beatrix Boka and Aleksandar Kunkin were sentenced today to serve 36 months and 46 months in prison, respectively, for their roles in moving approximately $550,000 in illicit proceeds derived from an international online marketplace fraud scheme, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Jerry E. Martin for the Middle District of Tennessee.
Boka, 34, and Kunkin, 40, were sentenced by U.S. District Judge Aleta A. Trauger in the Middle District of Tennessee. In addition to their prison terms, Boka and Kunkin were each sentenced to serve two years of supervised release and ordered to pay $464,581 in restitution.
Boka and Kunkin each pleaded guilty in November 2012 to one count of conspiracy to commit bank and wire fraud.
According to testimony at Boka and Kunkin’s plea hearings, members of the conspiracy fraudulently listed vehicles for sale at online marketplaces such as eBay. When victims expressed interest in purchasing the vehicles, co-conspirators sent emails that directed the victims to wire payments to certain bank accounts, and victims never received the vehicles for which they paid. From May to June 2012, Boka and Kunkin visited Bank of America branches in North Carolina and South Carolina and opened bank accounts under false identities, which were supported by fraudulent identity documents including counterfeit Hungarian passports. In total, 36 victims sent approximately $550,102 to accounts opened by Boka and Kunkin. Boka and Kunkin subsequently sent the bulk of the money to co-conspirators located abroad.
The case is being prosecuted by Assistant U.S. Attorney Byron M. Jones of the Middle District of Tennessee and Trial Attorney Mysti Degani of the Criminal Division’s Computer Crime and Intellectual Property Section. The case is being investigated by the FBI, the Tennessee Bureau of Investigation, the Metropolitan Nashville Police Department and the Cobb County, Ga., Sheriff’s Department.
Felon Indicted for Possession of 16 FirearmsRead the Press Release
Indictment Alleges That Defendant Also Attempted To Obstruct Justice
Russell Brothers, Jr., 75, of Burns, Tennessee, was indicted by a federal grand jury in Nashville today, in a five-count indictment charging him with being a felon in unlawful possession of 16 firearms and two separate attempts to obstruct justice, announced Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee.
According to the indictment, in April 2012, Brothers illegally possessed a number of firearms, including rifles, shotguns, and handguns. Because Brothers has prior felony convictions for drug trafficking and money laundering, this possession was unlawful. In addition, the indictment alleges that Brothers obstructed justice in two ways: (1) Brothers provided another individual with a false version of events related to his illegal conduct in order to influence the testimony of that person in the pending federal criminal investigation and (2) Brothers attempted to conceal one of the guns with the intent to impair its availability for use in the federal criminal investigation.
If convicted for the unlawful possession of firearms, Brothers faces a maximum sentence of 10 years in prison and a $250,000 fine for each count. If convicted of obstructing justice, Brothers faces a maximum sentence of 20 years in prison and a $250,000 fine for each count.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Metropolitan Nashville Police Department, the Drug Enforcement Administration, and the Federal Aviation Administration. Assistant United States Attorney Alex Little is representing the government.An indictment is merely an accusation and is not evidence of guilt. Defendants are presumed innocent unless and until proven guilty in a court of law.
Tennessee Prisoner Indicted for Anthrax HoaxRead the Press Release
Indictment Alleges That Defendant Mailed Threatening Letters With White Powder
to State and Local OfficialsBranden Frady, 32, of Johnson City, Tennessee, was indicted by a federal grand jury in Nashville yesterday, in a 10-count indictment charging him with sending threats through the U.S. Postal Service and conveying false information indicating the use or attempted use of Anthrax, announced Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee.
According to the indictment, between September 10, 2012, and September 18, 2012, while Frady was a prisoner at Riverbend Maximum Security Institute in Nashville, he prepared and sent six threatening letters to Tennessee Governor Bill Haslam, Tennessee Secretary of State Tre Hargett, the U.S. Post Office, and an Assistant District Attorney General for the 20th Judicial District of Tennessee in Nashville. Four of the letters contained white powder that the defendant claimed was Anthrax. The letters also made explicit death threats against the officials.
“Threats involving the use of weapons of mass destruction cause significant disruption in the workplace and to government operations,” said U.S. Attorney Jerry E. Martin. “Such threats often exhaust public safety resources and cause needless harm to the public. For those who choose to engage in such conduct, the U.S. Attorney’s Office and our law enforcement partners will act swiftly to neutralize the threat, identify those responsible and bring them to justice.”
One example alleged in the indictment is that Frady sent a letter from prison to the Office of the District Attorney General in Nashville, that arrived on September 11, 2012, and contained a white powder substance. In the letter, Frady wrote, “here is some Anthrax,” “you got to die,” and “I will kill you.” In response to this letter, local law enforcement officers and firefighters responded to the scene, evacuated the offices of the Nashville District Attorney General, and closed nearby buildings.
It is also alleged in the indictment that letters Frady sent to the Office of Governor Bill Haslam, Secretary of State Tre Hargett, and the U.S. Post Office contained similar threats. For example, after sending a letter to the Governor that contained threats but without white powder, Frady sent a second letter to the Governor stating, “This time I am sending you some Anthrax,” and “you will die.” This letter did contain a white powder. The indictment also alleges that, in a second letter to the Office of the District Attorney General, Frady wrote: “I’m back,” “Here is some Anthrax for real,” and claimed that “there is a bomb being placed in the D.A. Office[,] the Governor Office and the Post Office in Nashville so you will blow up.”
If convicted, Frady faces a maximum sentence of five years in prison and a $250,000 fine for each count.
The case was investigated by the FBI, the Tennessee Highway Patrol, the Tennessee Department of Correction and the Metropolitan Nashville Police Department. Assistant United States Attorney Alex Little is representing the government.
An indictment is merely an accusation and is not evidence of guilt. Defendants are presumed innocent unless and until proven guilty in a court of law.
Former Tennessee Driver License Service Center Employee Sentenced to 27 Months in Prison for BriberyRead the Press Release
Larry Murphy,54, of Antioch, Tenn. and Anny Castillo, 30, of Madison, Tenn., were sentenced on February 15, 2013, on federal bribery charges stemming from the fraudulent issuance of Tennessee driver licenses, announced Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee.
Murphy, who had been employed by the Tennessee Department of Safety and Homeland Security as a licensing clerk, was sentenced to 27 months in prison and ordered to forfeit almost $70,000 in bribes he received for issuing driver’s licenses to unauthorized applicants.
Castillo was sentenced to 90 days in prison and nine months of house arrest for paying bribes to Murphy to obtain licenses for applicants who did not pass the required tests. Castillo was also ordered to forfeit $42,500 which she received to broker the transactions. Both defendants requested more lenient sentences, but U.S. District Judge Kevin Sharp noted that the sentences imposed were called for due to the serious nature of the offense.
“Government employees owe a duty of trust to the citizens of Middle Tennessee that they serve,” said United States Attorney Jerry Martin. “Public employees who corruptly breach that trust should expect to go to prison, even if, like Mr. Murphy, they have not previously been in serious trouble with the law.Raymond R. Parmer, Jr., Special Agent in Charge of Homeland Security Investigations (HSI), New Orleans, who oversees the region that includes Tennessee, added, “Fraudulent documents threaten the security of all citizens by making it easier for criminals to commit a range of offenses from identity theft to potential terrorism. HSI and its law enforcement partners continually work together to identify and prosecute criminals who violate the public trust.”
This case was jointly investigated by Homeland Security Investigations, the FBI and the Tennessee Department of Safety and Homeland Security. The United States was represented by Assistant U.S. Attorney Hilliard Hester.
Tennessee Safety and Homeland Security Commissioner Bill Gibbons stated, “There are homeland security concerns with identity crimes as it relates to driver licenses. Our department initiated this investigation as soon as we learned of possible criminal activity by Mr. Murphy, an employee in one of the state’s driver services centers. With the help of our federal partners, justice was served and the sentence was appropriate for the crime.”Miami Man Sentenced in Federal Court for Medical Identity Theft SchemeRead the Press Release
Rural Gainesboro, Tennessee Barn Used as Medical Provider Address
Yennier Capote Gonzalez, 33, of Miami, Florida, was sentenced on February 15, 2013, by Chief U.S. District Judge William J. Haynes, Jr., to serve 67 months in federal prison, and ordered to pay restitution in the amount of $19,296 for his role in a medical identity theft scheme, announced Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee.
Gonzalez was convicted by a federal jury in Nashville, Tennessee on November 2, 2012, of five counts of health care fraud, two counts of aggravated identity theft and one count of money laundering, after he falsely billed $232,000 to Medicare Advantage Program insurance companies.
“Health care fraud and identity theft are top priorities of the U.S. Attorney’s Office,” said U.S. Attorney, Jerry E. Martin. “We continue to expand our focus and dedicate new resources to investigating and prosecuting this type of white collar criminal activity and will stay the course to insure that those who operate fraudulent schemes such as this are held accountable.”
“Medical identity theft is one of the fastest growing areas of health care fraud,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services- Office of Inspector General in Atlanta. “In this case, the defendant was arrested less than 48 hours after our office received the complaint. The sentence handed down today should serve as a deterrent to anyone who tries to defraud the Medicare program.”
This investigation began in August 2010 after the U.S. Department of Health and Human Services- Office of Inspector General was notified that an individual in Miami, Fla. had attempted to wire $17,000 from a new Tennessee account that had recently received a $38,000 Medicare deposit. Gonzalez had opened the account for his recently incorporated business, Gainesboro Ultimate Med Service, in rural Gainesboro, Tennessee. A visit to the property revealed the only structure at the business location was an old barn and an uncompleted house at another tract of land that was used as the address for the fraudulently billed patients.
The investigation also revealed that Gainesboro Ultimate Med Service had stolen the identity of a Knoxville, Tennessee physician and used it to obtain a Medicare provider number at the barn address. Gainesboro Ultimate Med Service then submitted claims using the names of several Medicare beneficiaries who lived in South Florida. The patients, who were also victims of identity theft, were billed for services purportedly rendered at Gainesboro Ultimate Med Service, even though they had never been to Tennessee.
Gonzalez was arrested on August 25, 2010, at a bank in Miami, Fla., during another wire transfer attempt.
This case was investigated by agents of the U.S. Department of health & Human Services-Office of Inspector General. The government is represented by Assistant U.S. Attorneys Darryl Stewart and William Abely.
Two Florida Individuals Indicited for Aggravated Identity Theft in Connection with the Filing of False Tax ReturnsRead the Press Release
Samara Y. Henderson, 25, and Marlow S. Favors, 34, both of Tampa, Florida, were indicted by a federal grand jury in Nashville today in a 9-count indictment charging conspiracy, mail fraud and aggravated identity theft, announced Jerry E. Martin, United States Attorney for the Middle District of Tennessee.
According to the indictment, from approximately March 2011 through January 2012, Henderson and Favors were charged in a conspiracy that devised a scheme to obtain the names and social security numbers of individuals and used the personal identification to file false tax returns in the names of those individuals without their knowledge or permission. The indictment alleges that the tax returns filed in the scheme claimed false and fraudulent refunds which were loaded onto debit cards and mailed to addresses in Tennessee and Florida. Some of the tax returns filed in the scheme listed addresses on Rachel’s Lane in Hermitage, Tennessee, while other tax returns used addresses in Tampa, Florida, or Odessa, Florida, among other places, as the individual’s address.The indictment also alleges that Henderson and Favors then used the debit cards to pay for personal expenses, such as vehicles and accessories, vehicle repairs, plastic surgery procedures, ATM withdrawals and other personal expenditures.
As part of the indictment, the United States Attorney's Office is seeking a monetary judgment against Henderson and Favors of approximately $1 million, which represents the proceeds of the scheme.
If convicted, Favors and Henderson face the following maximum penalties: for conspiracy, five years in prison and a $250,000 fine for each count; mail fraud, 20 years in prison and a $250,000 fine for each count; for aggravated identity theft, two years in prison, in addition to any other terms of imprisonment imposed on the other counts, and a $250,000 fine for each count.
The case was investigated by the Internal Revenue Service - Criminal Investigation. Assistant United States Attorney Kathryn B. Ward is representing the United States.An indictment is merely an accusation and is not evidence of guilt. Defendants are presumed innocent unless and until proven guilty in a court of law.
Three Individuals Indicted for Prescription Drug Diversion ConspiracyRead the Press Release
Over $58 Million in Pharmaceuticals Diverted
Charles Jeffrey Edwards, 51, and Brenda Elise Edwards, 42, both of Houston, Texas, and Jerrod Nichols Smith, 43, of Sugar Land, Texas, were indicted by a federal grand jury on January 17, 2013, on charges that they conspired to obtain prescription pharmaceuticals from “street collectors” in New York and Miami, and to sell those prescription drugs to independent pharmacies as though the drugs had been obtained from legitimate wholesale distribution companies, announced Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee.
All three defendants were indicted on charges of conspiracy and mail fraud related to the scheme. Additionally, Charles and Brenda Edwards were indicted on money laundering charges and Charles Edwards and Jerrod Smith were indicted for obstruction of justice. The indictment alleges that the scheme resulted in gross proceeds of over $58 million and that the defendants gained over $14 million in profits.
“The diversion of pharmaceuticals and the resulting risks of adulteration poses a grave threat to the public,” said U.S. Attorney Martin. “The U.S. Attorney’s Office and our regulatory and enforcement partners will aggressively pursue those who would seek to profit from such illegal activity and display such a total disregard for the safety of our citizens.”
According to the indictment, between December 2006 and August 2009, Charles Edwards and Jerrod Smith owned and operated Cumberland Distribution, Inc., (“Cumberland”) a wholesale prescription drug distribution business licensed in Tennessee. Brenda Edwards was an employee of Cumberland. Cumberland maintained a corporate office in Houston, Texas, and drug distribution warehouses in Nashville, Tennessee that were used to receive, sort, organize, package and ship pharmaceuticals to pharmacies throughout the United States.
The defendants allegedly purchased pharmaceuticals from a network of street collectors who obtained the drugs on the streets of New York and Miami from individuals who had legitimate prescriptions. The defendants then diverted the pharmaceuticals by repackaging and distributing them to independent pharmacies, making it appear as though the diverted pharmaceuticals had been obtained from a licensed wholesale distributor.As a part of this conspiracy, the defendants directed warehouse employees to cleanse the packaging of the pharmaceuticals to conceal the true origin of the drugs and to create false pedigrees and false entries in Cumberland’s books and records that made it appear as though the drugs had been legitimately obtained. Also, the defendants created a layer of distribution between the diverted pharmaceuticals and Cumberland by incorporating or causing others to incorporate various, separate businesses throughout the conspiracy and by causing the pharmaceuticals to be shipped to Cumberland through intermediaries. One such intermediary company was Tristate Management, in Texarkana, Arkansas. Charles and Brenda Edwards also directed wire transfers to pay for the pharmaceuticals obtained from the street collectors and to make payments to themselves.
The indictment also alleges that on July 15, 2009, Charles Edwards and Jerrod Smith submitted to a federal grand jury, 21false pedigree documents that each stated that Tristate Management had acquired the pharmaceuticals listed on the pedigrees from a licensed wholesaler, Ocean Pharmed in Irmo, SC. The pedigree documents were false because the pharmaceuticals had not been acquired from Ocean Pharmed, but had been acquired through a network of street collectors on the streets of South Florida, or New York City and surrounding areas.
"The FDA Office of Criminal Investigations, along with our law enforcement and regulatory partners work diligently to preserve the integrity of the pharmaceutical supply chain and will vigorously pursue those that threaten the safety of the American public," said David W. Bourne, Special Agent in Charge, U.S. Food and Drug Administration, Office of Criminal Investigations- Miami Field Office.
The wholesale distribution of prescription drugs in the United States is subject to regulation. Regulating the wholesale market ensures that drugs dispensed to patients are authentic and not counterfeit, properly labeled, and have been handled and maintained according to industry standards and Food and Drug Administration (FDA) requirements. Regulations also require that the prescription drugs be in the possession of state-licensed entities, and have a verifiable chain of custody, also known as a pedigree.Congress enacted the Prescription Drug Marketing Act in 1987 to combat a practice known as prescription drug diversion. In essence, diverted pharmaceuticals are those that have been removed from the regulated distribution channels but then reintroduced into the wholesale marketplace through various means, including the falsification of the accompanying pedigrees. Once a pharmaceutical is diverted outside of the regulated distribution channels, it becomes difficult, if not impossible, for the regulators or the end-users to know whether the pharmaceutical was altered, stored in improper conditions, or its potency adversely affected.
In a practice known as street diversion, diverters repurchase medications that have already been dispensed, remove the patient labels, and reintroduce them into the wholesale market. The aim of prescription drug diversion is to acquire drugs at steep discount and reintroduce them into the wholesale market in a manner that obscures the fact that the drugs were ever diverted. When done effectively, neither the pharmacist nor the consumer know that the diverted drugs are handled, packaged, and labeled by parties not authorized or qualified to do so.
In addition, federal law generally requires wholesale distributors to provide pedigrees with each wholesale distribution of a prescription drug, and prohibits any alteration or modification of the same. The pedigree lists all previous sales of that drug back to the last authorized distributor of record. Requiring such disclosure discourages the introduction of drugs that come from illegitimate sources like unlicensed wholesalers, closed-door pharmacies, street diverters, and drug counterfeiters. Separate and apart from the federal requirement, many states also require that wholesalers provide pedigrees with each wholesale distribution.
If convicted, the defendants face up to 20 years in prison on each count of mail fraud, 10 years on each count of money laundering, five years on the count of conspiracy, and five years on the count of obstruction of justice. They face fines of $250,000 on each count.This investigation was conducted by the FDA- Office of Criminal Investigations. Assistant U.S. Attorneys Kathryn B. Ward and Sandra G. Moses represent the government.
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 Mid-State Men Indicted for Operating an Illegal Cockfighting EnterpriseRead the Press Release
Howard Gay, 55, of Hohenwald, Tenn., Thomas Hardiman, 64, of Iron City, Tenn., Walter Wooten, 57, of Leoma, Tenn., and Phillip Heidekker, 66 of Bon Aqua, Tenn., were indicted by a federal grand jury on January 17, 2013, and were each charged with three counts relating to their participation in a cockfighting enterprise known as the “Shiloh Club” in Hohenwald, Tenn., announced Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee.
An indictment is merely an accusation and is not evidence of guilt. Defendants are presumed innocent unless and until proven guilty in a court of law.
The indictment charges each defendant with operating an illegal gambling business, conspiring to operate an illegal gambling business and aiding and abetting an animal fighting venture.
“Cockfighting is a shockingly vicious and cruel pursuit that is illegal in Tennessee and almost always involves illegal gambling,” said U.S. Attorney Jerry Martin. “Leaders of organizations that exist to profit on illegal gambling and other illegal enterprises should expect to face federal prosecution whenever federal statutes are violated.”
According to the indictment, the Shiloh Club had been in operation for more than a generation and had hosted cockfighting derbies every other Saturday between November 2008 and May 2009. The defendants operated and worked for the Shiloh Club and hosted and participated in cockfighting derbies that involved fights between roosters brought from Tennessee and other states.
The defendants facilitated widespread gambling on the outcome of the cockfights in the form of entry fees as well as side bets among spectators. Through the collection of admission fees and entry fees, as well as from the sale of concessions and cockfighting paraphernalia, the defendants made a significant profit. During one cockfighting derby alone, more than $12,300 in entry fees were paid to the Shiloh Club.
In May 2009 federal and state law enforcement executed a federal search warrant at the Shiloh Club and more than 200 individuals were subsequently prosecuted on state charges for being spectators at the cockfight and for gambling and other charges.
If convicted, the defendants each face up to five years in prison and a $250,000 fine, as well as forfeiture of property derived from or used in violation the offenses charged.
The 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 United States is represented by Assistant U.S. Attorney William F. Abely.Former Consultant for Clarksville Department of Electricity Found Guilty of Honest Services Mail and Wire FraudRead the Press Release
Two Co-defendants Previously Pleaded Guilty
Tommy L. Walton II, 39, of Huntersville, North Carolina, was found guilty late yesterday by a federal jury on nine counts of honest services mail fraud and seven counts of honest services wire fraud after a week-long trial, announced Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee. The jury also recommended a monetary judgment against Walton in the amount of $95,211.38.
U.S. Attorney Jerry Martin stated, “Corrupt practices by public officials and those who corruptly pay public officials undermine the confidence that citizens must have in their governmental institutions. The costs of corruption are borne by taxpayers, ratepayers, honest vendors and honest public employees. The Department of Justice is committed to prosecuting individuals who fraudulently game the system and line their own pockets at the expense of the public and of all those who labor honestly and follow the rules.”
According to testimony at trial, on November 3, 2008, Walton was hired as a consultant for the Clarksville, Tennessee Department of Electricity by Rick R. Ingram, Sr., then president of the Clarksville Department of Electricity. Between that date and June 29, 2009, Walton and his consulting firm, IntelliNet Consulting LLC, invoiced and received from the Clarksville Department of Electricity a total of $156,139,39. The payment of each invoice was approved by Ingram and during that same time, Walton paid $51,500 directly to Ingram or to one of Ingram’s creditors.
The payments made by Walton to Ingram were not disclosed to members of the Clarksville Electric Power Board or to other employees at the Clarksville Department of Electricity. The United States alleged that these payments by Walton were bribes and kickbacks and that the concealment of these payments from the Clarksville Department of Electricity deprived the Clarksville Department of Electricity and its customers of the honest services of Ingram.
On May 25, 2012, Rick Ingram pleaded guilty to two counts of honest services mail fraud and two counts of honest services wire fraud related to this same scheme and to a separate scheme involving Walton’s father, Tommy L. Walton, Sr. Rick Ingram testified at the trial that he would not have approved the payment of all invoices submitted to the Clarksville Department of Electricity by Walton and IntelliNet Consulting had Walton and IntelliNet Consulting not continued making payments to Ingram and to Ingram’s creditor.
Tommy L. Walton, Sr. pleaded guilty to eight counts of honest services mail fraud and to five counts of honest services wire fraud on January 14, 2013.Sentencing hearings will be scheduled for each of these defendants. Each defendant faces up to twenty years in prison, fines of up to $250,000, and orders requiring payment of restitution to the Clarksville Department of Electricity.
This case was investigated by agents of the Tennessee Valley Authority- Office of Inspector General. The case was prosecuted by Assistant United States Attorneys Byron Jones and John Webb.
Clarksville Man Pleads Guilty to Filing False Tax ReturnsRead the Press Release
James Robert Sanford, 53, of Clarksville, Tenn., pleaded guilty on January 14, 2013, to filing a false claim for a federal income tax refund, and to aiding and abetting in the filing of a false claim for a federal income tax refund, announced Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee.
On November 30, 2011, Sanford was indicted by a federal grand jury in Nashville and charged with six counts of filing false tax returns. According to the indictment, Sanford prepared and filed 2006 and 2007 federal income tax returns for himself and his spouse, knowing that the returns were false, fictitious, and fraudulent. These returns claimed refunds of $5,774.00 and $4,276.00, respectively.
The indictment also alleged that Sanford prepared and filed false income tax returns for other individuals for calendar year 2006. These returns claimed refunds ranging from $3,490.00 to $7,128.00 and Sanford knew these returns were fraudulent as well.
Sanford will be sentenced before Chief Judge William J. Haynes, Jr. on April 8, 2013, and faces a maximum penalty of five years in prison and a $250,000 fine on each count.
This investigation was conducted by IRS-Criminal Investigation. Assistant U.S. Attorney Darryl Stewart represented the government.Wayne Medical Center to Pay $883,000to Settle False Claims Act AllegationsRead the Press Release
Wayne Medical Center, located in Waynesboro, Tenn., has agreed to pay the United States $883,451.40 to settle False Claims Act allegations, announced Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee.
Wayne Medical Center submitted a voluntary self-disclosure to the U.S. Attorney’s Office and to the Office of Inspector General for the Department of Health and Human Services. The self-disclosure, discovered by the hospital’s compliance program, prompted an investigation into the hospital’s billing for ambulance transport as part of its emergency medical services.
Based upon an audit of billings conducted by Wayne Medical Center, the United States alleged that Wayne Medical Center submitted certain claims and received payment for: (1) ambulance services that were not medically necessary or for which medical necessity was not documented; (2) ambulance services for which a Physician Certification Statement was not obtained; (3) ambulance services that were assigned an incorrect transport level; (4) ambulance services for which the requisite signatures were not obtained; and (5) ambulance services that were billed with incorrect mileage units. The time period covered by the settlement agreement spans January 1, 2004, through December 31, 2009.
“Today’s announced settlement is another example of the benefit to providers of self-reporting billing issues directly to the United States Attorney’s Office,” said U.S. Attorney Jerry E. Martin. “Wayne Medical Center avoided the costs associated with a protracted investigation and the risks of potential fines under the False Claims Act. By doing the right thing and coming forward, they were treated fairly and were able to quickly and efficiently put this matter behind them.”
"This case is an excellent example of collaboration between the health care community and the law enforcement community coming together to serve the American taxpayer," said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta. "When this hospital realized it had received inappropriate Medicare payments, it brought the matter to the attention of the U.S. Attorney's Office and refunded the money to the Medicare Trust Fund. We certainly hope that other health care providers will do the same when they realize they have been overpaid."
The United States encourages all health care providers to self-disclose any known violations that have resulted in the submission of improper claims to federal health care programs.
This case was investigated by the Department of Health and Human Services - Office of Inspector General and the U.S. Attorney’s Office for the Middle District of Tennessee. Assistant U.S. Attorney Mark H. Wildasin represented the United States.Former CPA Sentenced for Filing False Tax ReturnsRead the Press Release
Macon J. Dew, 64, of Mr. Juliet, Tennessee, was sentenced on January 11, 2013, by Chief U.S. District Judge William J. Haynes, Jr., to serve 12 months and 1 day in federal prison, and ordered to pay restitution in the amount of $205,535.00 to the IRS for his role in the preparation of false tax returns, announced Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee. Dew was also prohibited from preparing or filing any future tax returns.
On July 18, 2012, Dew pleaded guilty to two counts of aiding and assisting in the preparation of false tax returns. Dew admitted that he was a Certified Public Accountant until 2008 and he had operated a tax return preparation business in Mt. Juliet and Old Hickory, Tenn. He acknowledged that between 2001 and 2004, he prepared at least 33 false income tax returns for others. The false items included fictitious W-2 forms, false Schedule C businesses, and fraudulent education credits. Dew admitted that the tax loss from the filing of these false returns was at least $40,000.
Additionally, Dew admitted that for the 2006 tax year, he prepared returns and relevant schedules for two individuals who formed a corporation known as CP Construction, LLC. The returns falsely reported a loss of $751,300.00 each. These claimed losses resulted in a tax loss to the government of $165,535.
“This office will vigorously prosecute those who defraud the United States government by filing false income tax returns,” said U.S. Attorney Martin. “It is especially offensive when individuals with licenses and special knowledge use their skills to prepare false returns and false documents to support them. We will continue to pursue the public money that was paid for false tax refunds to restore it to the U.S. Treasury.”
This investigation was conducted by IRS- Criminal Investigation. Assistant U.S. Attorney Jimmie Lynn Ramsaur represented the government.Indictment Alleges More Than $2 Million EmbezzledRead the Press Release
FORMER HENDERSONVILLE TITLE COMPANY OWNER INDICTED
FOR WIRE AND BANK FRAUDNASHVILLE, Tenn.– Garry Christopher Forsythe, 40, of Hendersonville, Tennessee, was indicted on January 3, 2013, by a federal grand jury and charged with six counts of wire fraud and three counts of bank fraud, arising from his alleged embezzlement of funds from the Forsythe Title escrow accounts, announced Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee. Forsythe is the former owner and operator of Forsythe Title and Escrow Services, Inc., a real estate closing company and title insurance agent located in Hendersonville, Tennessee.
“This case represents another example of the U.S. Attorney’s Office and the Department of Justice’s ongoing commitment to prosecuting white-collar crime,” said United States Attorney Jerry E. Martin. “Citizens and businesses in the Middle District of Tennessee can be assured that this office, along with our many valued law enforcement partners, stand committed to rooting out and prosecuting such fraud.”
According to the indictment, between December 2000 and January 2008, Forsythe received money from buyers of real properties and from mortgage lenders financing the purchase of the properties for the purpose of closing real estate transactions. Forsythe Title acted as the settlement agent and the money received by Forsythe Title was supposed to be deposited into an escrow account and used to pay only the expenses of closing the particular real estate transaction. However, Forsythe transferred, or caused the funds from the Forsythe Title escrow accounts to be transferred to the Forsythe Title operating account. These funds exceeded the fee income that Forsythe Title legitimately earned from the real estate transactions and were used to cover the operating expenses of Forsythe Title and to pay compensation to Christopher Forsythe.
The indictment further alleges that Forsythe knew that the total funds in the escrow account were insufficient to cover the total amount of the checks that Forsythe Title was obligated to issue for the real estate transactions that the title company had agreed to close and that the escrow shortages would be concealed by future deposits which would cover previous transactions.
Finally, the indictment alleged that Forsythe failed to disclose to employees of Forsythe Title and to the parties involved in the transactions, that there was a shortage of funds in the Forsythe Title escrow account, and that checks issued to pay the expenses of closing the real estate transactions would be returned by the bank because the escrow account contained insufficient funds to cover all of the checks issued. According to the indictment, Forsythe’s scheme caused losses of approximately $2,249,294.80.
If convicted, Forsythe faces up to 30 years in prison and a $1million fine.
The case was investigated by agents with the IRS-Criminal Investigation and the FBI. The United States is represented by Assistant U.S. Attorney John K. Webb.
An indictment is merely an accusation and is not evidence of guilt. Defendants are presumed innocent unless and until proven guilty in a court of law.