Eastern District of Texas

MARSHALL, Texas – Two Harrison County men were sentenced to prison today for federal drug trafficking and firearms crimes in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei.

Armando Ivan De La Torre, a.k.a. “Poncho,” pleaded guilty on Oct. 6, 2020, to possession with intent to distribute methamphetamine and use and carrying of a firearm during a drug trafficking crime.  De La Torre was sentenced to 190 months in federal prison today by U.S. District Judge Rodney Gilstrap.  Judge Gilstrap also sentenced Martin Lopez to 84 months in federal prison for possession with intent to distribute methamphetamine.  

“Interagency cooperation between federal, state, and local agencies is essential in achieving our mission of dismantling drug trafficking organizations—from top to bottom—and disrupting the flow of drug-related crime and violence into our communities,” said Acting U.S. Attorney Nicholas J. Ganjei.  “Those involved in this investigation serve as an example of how that cooperation brings about shared success.”      

According to information presented in court, both men were members of an organization responsible for importing large quantities of methamphetamine from Mexico and distributing it in Marshall.  The ring operated as both direct seller of methamphetamine, as well as a source-of-supply to other drug dealers. 

On Feb. 19, 2020, De La Torre and Lopez were indicted by a federal grand jury along with seven other co-conspirators, and charged with violations of federal drug trafficking laws. 

Operation Pine Curtain is a long-term drug trafficking and money-laundering investigation that has already resulted in the arrest and prosecution of numerous co-conspirators.  Danny Brian Hernandez, Ronald Charles Parker, Daniel Ramirez, Guadalupe Salvador Diosdado, Erik Alberto Galindo, and Rachel Naomi Hernandez have pleaded guilty and have been sentenced.  Andres Michael Martinez-Juarez, Cristian Leobardo Torres-Santana, Francisco Moreno, Fernie Moreno, Amanda Jean Crisp, and Damarcus Damon Armstrong have pleaded guilty and are awaiting sentencing.  Several others have been arrested, pleaded not guilty, and are awaiting trial.

This is an Organized Crime Drug Enforcement Task Force (OCDETF) case and is being investigated by the Federal Bureau of Investigation; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Texas Department of Public Safety; the Harrison County Sheriff’s Office; and the Marshall Police Department.  This case is being prosecuted by Assistant U.S. Attorney Lucas Machicek.  OCDETF is the largest anti-crime task force in the country and its mission is to disrupt and dismantle the most significant drug trafficking and transnational criminal organizations that threaten the United States. The prosecutor-led, intelligence-driven, multi-agency task forces leverage the authorities and expertise of federal, state, and local law enforcement.

PLANO, Texas – An Irving, Texas man has been convicted of attempted coercion and enticement of a minor in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei.

Cody Ryan Turner, 37, was found guilty by a jury on March 10, 2021, following a three-day trial before U.S. District Judge Sean D. Jordan.  

“I commend our law enforcement partners for their vigilance in ensuring the safety of our children,” said Acting U.S. Attorney Nicholas J. Ganjei. “Those who target child victims are the worst among us.  Their actions will not be tolerated.  The Eastern District of Texas will continue to find such individuals and bring them to justice.”

According to information presented in court, in August 2019, Turner began messaging an individual he believed to be a young teen on a popular social media application.  After receiving no response throughout August 2019, he sent a graphic image to the child in December 2019.  Turner then messaged the child again in June 2020.  The individual who Turner believed to be a teen responded and identified herself as a child.  From June-September 2020, Turner sent a series of sexually explicit messages to this individual.

On September 8, 2020, believing that the child was at home attending school online because of COVID, Turner sent a message asking, "want company"?  Evidence introduced at trial showed that Turner drove from Irving to a location in Plano to meet the child, at which time he was arrested by a joint law enforcement team comprised of officials from the FBI and the Plano Police Department. 

Turner was indicted by a federal grand jury on September 17, 2020.  Under federal statutes, he faces a minimum of 10 years and up to life in federal prison.  The maximum statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.  A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

This case is being brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

This case was investigated by the FBI and the Plano Police Department and prosecuted by Assistant U.S. Attorney Marisa Miller and Special Assistant U.S. Attorney Bethany Pickett.

BEAUMONT, Texas – Nicholas J. Ganjei, Acting United States Attorney for the Eastern District of Texas, issued the following statement following the passing of attorney Clyde M. Siebman.

“We join others in the Eastern District of Texas and beyond in mourning the passing of Clyde Siebman.  A native of Grayson County, and a law clerk in Sherman to the late U.S. District Judge Paul Brown, Clyde had deep roots in—and a great love for—East Texas.  From founding and serving as president of the district’s bar association, to chairing the bench-bar conference for the past 25 years, Clyde devoted his life and career to the promotion of the East Texas legal community.  His impact on the district simply cannot be overstated. We extend our condolences to Clyde’s family, law partners, and many friends.”

Clyde Siebman attended Southern Methodist University for both undergraduate studies and law school.  He was Board Certified in Civil Trial Law by the Texas Board of Legal Specialization and a member of the East Texas chapter of American Board of Trial Advocates.  Clyde served as a member of the Eastern District of Texas’s Local Rules Advisory Committee, Non-Appropriated Fund Committee, and U.S. Magistrate Judge Merit Selection Committee.  He passed away on March 4, 2021.

 

 

TYLER, Texas – A Longview, Texas sex offender who was identified as part of a joint international investigation has been sentenced to federal prison for child pornography violations in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei today.

Charles Orange, 55, was convicted by a jury on Sep. 18, 2020, of possession of child pornography and was sentenced to 240 months in federal prison by U.S. District Judge Robert W. Schroeder III on March 4, 2021.  Following Orange’s release from federal prison, he will be placed on a life term of supervised release.

“There is no place for Charles Orange in lawful society,” said Acting U.S. Attorney Nicholas J. Ganjei.  “He is unapologetic, unrepentant, and unremorseful. Nothing short of incarceration will stop him from engaging in the sexual exploitation of children.  The Court’s sentence sends a clear message to Charles Orange and to other likeminded predators – the public has the right to be protected.  On behalf of the Eastern District of Texas, I wish to express my gratitude to HSI, INTERPOL, Thailand’s DSI, Australia’s AFP, and our other law enforcement partners from around the world for their tireless efforts and shared commitment to save the lives of children and bring sexual predators to justice.”

“Finding and arresting devious child predators who attempt to evade detection by law enforcement through use of the dark web and other anonymizing technologies remains a top priority for our agency,” said Ryan L. Spradlin, Special Agent in Charge of HSI Dallas. “Fortunately, the investigative actions of our dedicated special agents have prevented this deviant from victimizing children within our community while also reminding other criminals that there are no safe spaces on the internet for sexual exploitation of children.  We remain committed to our global law enforcement partnerships in fighting child sexual exploitation, and we will continue to relentlessly pursue the predators who seek to steal the innocence of our children.”

According to information presented at trial, the investigation of Charles Orange originated as a lead from INTERPOL’s Operation Blackwrist.   Agents with HSI Tyler, acting upon information provided in the INTERPOL lead, executed a search warrant on Dec. 20, 2018 at Charles Orange’s residence in Longview, Texas.  A device containing child pornography was found on a dresser next to Orange’s bed.  According to the testimony of a forensic analyst, child pornography contained on the device had been accessed and downloaded as recently as the night before the execution of the search warrant.  Analysts testified that Orange’s email address, Internet history, and Internet Protocol (IP) address connected him to the child exploitation website identified in Operation Blackwrist.  Additionally, evidence presented at trial showed that the device was used to take surreptitious photographs of young boys in stores in Longview, Texas the day before the execution of the search warrant.

In 2008, Orange was convicted of Indecency with a Child and was required to register as a sex offender.

Operation Blackwrist, named after a bracelet worn by one of the victims, was launched by INTERPOL in 2017 following the discovery of material depicting the abuse of 11 boys, all under 13 years old.  The material—first identified on the dark web—originated from a subscription-based website with nearly 63,000 users worldwide.  For years, the site had published new material weekly, with the abuser taking great care to avoid detection, often masking the children and leaving very few visual or audio clues.  Officers relied on the physical traits of the children to track their ongoing abuse and reached out to the global police community for help.

In June 2017, Thailand’s Department of Special Investigations (DSI) took on the case, working in close collaboration with INTERPOL’s Liaison Bureau in Bangkok.  Investigators around the world also joined the effort to identify the 11 boys and locate website administrators.  HSI eventually identified the website IP address and worked to establish links to the United States.

Bulgaria’s Cybercrime Department at the General Directorate Combating Organized Crime, supported by Europol, took down the website’s servers. The Department of Internal Affairs in New Zealand deconflicted intelligence and compiled information packages on website users for INTERPOL member countries.  The U.S. National Center for Missing and Exploited Children cross-checked e-mail addresses and provided additional intelligence.  The Australian Federal Police (AFP) and South Australian Police came on board when an IP address pointed to a location in Adelaide.

In November 2017, the first victims were identified, leading to simultaneous arrests in Thailand and Australia two months later.  The website’s main administrator, based in Thailand, was identified as Montri Salangam.  He was the man seen abusing the 11 boys, one of whom was his nephew.  The children had been lured to Salangam’s home with meals, internet access and football games.  A second administrator, Ruecha Tokputza, was based in Australia.  Police found thousands of images taken in both Thailand and Australia on his seized devices, some of which featured Tokputza as the main abuser.  The youngest identified victim during the South Australian court proceedings was just 15 months old.

In June 2018, Thai courts sentenced Salangam to 146 years in prison on charges of child rape, human trafficking, and possession and distribution of child sexual abuse material.  A second man, an elementary school teacher close to Tokputza, received 36 years in prison on the same charges.  On May 17, 2019, an Australian judge sentenced Tokputza to 40 years and three months in prison, the longest sentence ever imposed in Australia for child sex offenses.   The judge referred to Tokputza as “every child’s worst nightmare” and “every parent’s horror.”

INTERPOL Secretary General Jürgen Stock welcomed the successful prosecutions and applauded the massive international effort required.  “Operation Blackwrist sends a clear message to those abusing children, producing child sexual exploitation material and sharing the images online: We see you, and you will be brought to justice.  Every child abuse image is evidence of a crime and INTERPOL will always provide its full support to officers on the ground to help identify and rescue victims around the world.”

“These efforts have already resulted in numerous arrests in the United States to include individuals occupying positions of public trust.  We are proud to be a part of these international efforts,” said HSI Bangkok Regional Attaché Eric McLoughlin.

The website sparked a series of investigations around the world, leading to further arrests in Thailand, Australia, and the United States.  Police in nearly 60 countries examined referrals compiled by New Zealand.

HSI Bangkok and HSI Indianapolis partnered with INTERPOL and DSI, as well as other law enforcement agencies, to pursue any investigative leads with a potential nexus to the United States.  On January 16, 2018, HSI Bangkok assisted Thai authorities with the execution of search and arrest warrants in furtherance of this operation.  One arrest was executed, and five victims were rescued at the time of the operation. 

Following this operation, HSI Bangkok worked with the HSI Cyber Crimes Center (C3) to ensure actionable leads were provided to HSI domestic offices for further investigation.  HSI Indianapolis, HSI Buffalo, HSI Ft. Lauderdale, HSI Norfolk, HSI Tyler, and C3 provided significant support for the operation.

To date, the operation has led to the rescue of 50 children, as well as the arrest and prosecution of child sex offenders in Thailand, Australia, and the United States.

This case is part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  Led by U.S. Attorneys’ Offices and the Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.justice.gov/psc.

The investigation leading to the charges was conducted by agents from the U.S. Immigration and Customs Enforcement, Homeland Security Investigations, and the Longview Police Department with support from HSI C3.  Assistant U.S. Attorneys Nathaniel C. Kummerfeld and Marisa Miller prosecuted this case.

TEXARKANA, Texas – A correctional officer and federal inmate have been sentenced for a bribery conspiracy in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei today.

“EDTX is committed to the principle that no person, regardless of their title, status, or position, is above the law,” said Acting U.S. Attorney Nicholas J. Ganjei. “This corrupt law enforcement officer exploited his position of public trust and endangered the inmates and staff at FCI Texarkana.  This office will work tirelessly to protect the trust and confidence that East Texans have placed in their law enforcement community.”

James Thompson, a 55-year-old Titus County, Texas, man, pleaded guilty on August 5, 2020, to conspiring to commit bribery and was sentenced to 46 months in federal prison by U.S. District Judge Robert W. Schroeder III.  Judge Schroeder also ordered Thompson to forfeit $17,200.00 in U.S. currency and cash proceeds from his scheme.

Gilbert Gomez, a 54-year-old federal inmate, pleaded guilty on August 31, 2020, to conspiring to commit bribery and was sentenced to 46 months in federal prison by Judge Schroeder. Judge Schroeder also ordered Gomez to forfeit $15,000 in cash proceeds from his scheme.

According to information presented in court, beginning before August 2019 and continuing through January 2020, Thompson, a federal correctional officer, and Gomez, a federal inmate, engaged in a scheme to smuggle contraband into the Federal Correctional Institution located in Texarkana, Texas. During the scheme, Thompson received cash bribe payments and prison contraband at a post office box under the alias of “Bobby Brown.” Thompson then smuggled the contraband into FCI Texarkana when he entered the facility to go to work.  Gomez coordinated the scheme from inside the institution, where he arranged cash bribe payments and delivered the smuggled contraband to other inmates. Thompson and Gomez received more than $30,000.00 total for smuggling contraband into FCI Texarkana.

This case was investigated by the Dallas Field Office of the U.S. Department of Justice, Office of the Inspector General, the Fort Worth Division of the U.S. Postal Inspection Service, and the Bureau of Prisons, Special Investigative Services.  The case was prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.

TEXARKANA, Texas – A Bowie County sex offender has been sentenced to federal prison for possessing child pornography in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei today.

William Johnson Springer, 60, of Texarkana, Texas, pleaded guilty on Oct. 5, 2020, to possessing child pornography and was sentenced to 120 months in federal prison today by U.S. District Judge Robert W. Schroeder III. Judge Schroeder also ordered Springer to pay restitution to his victims, to register as a sex offender, and to serve a life term of supervised release following his imprisonment.

“This repeat sex offender victimized the weakest in our community by viewing and possessing child pornography,” said Acting U.S. Attorney Nicholas J. Ganjei. “My office will continue to find and prosecute those who sexually exploit our children by viewing, possessing, distributing, or producing child pornography.”

According to information presented in court, Springer possessed a cell phone, which he used to download and collect images and videos containing child pornography. His collection of more than 600 images included depictions of prepubescent minors, sadistic or masochistic abuse or violence, and sexual abuse and exploitation of infants and toddlers.

Springer was previously convicted of possession of child pornography in the U.S. District Court for the Northern District of Oklahoma and on Feb. 9, 2009, was sentenced to 67 months in federal prison and five years of supervised release as a result of that conviction.  Springer also has pending charges for failure to comply with registration requirements in the 202nd District Court in Bowie County.

This case is being brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

This case was investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.

Two members of the Aryan Circle (AC) pleaded guilty this week to their roles in a violent assault of a man in October 2016.

Michael Martin, aka Aryan Prodigy, aka AP, 38, of Austin, Texas, and Bobby Dayle Boney, 50, of Sulphur Springs, Texas, each pleaded guilty to assault resulting in serious bodily injury in aid of racketeering. Martin and Boney committed the assault as part of their membership in the AC, a gang that operates in Texas and other states throughout the country.

This case is part of a larger investigation into the AC, Operation Noble Virtue, that has targeted AC leadership and resulted in prosecutions and convictions in six different jurisdictions to date. According to information presented in court and contained in court filings, the AC is a violent, white supremacist organization that originated in the Texas Department of Corrections and operates in federal prisons across the country, as well as outside prisons in states including Texas, Arkansas, Louisiana, and Missouri. The AC enforces its rules and promotes discipline among its members, prospects, and associates through murder, attempted murder, assault, and threats. Members, and oftentimes associates, are required to follow the orders of higher-ranking members without question.

Martin and Boney both joined the AC in the early 2000s and have gang tattoos indicating their affiliation. Both served in leadership roles within the gang. For a period of time, Martin served as an upper board member, which meant that he was one of the five highest-ranking leaders in the gang. Also, for a period of time, Boney held the leadership rank of vice president, which meant that he gave orders to other AC members and disciplined members who were not following the gang’s directives, among other things.

Prior to October 2016, AC members learned that another member wanted to switch his gang affiliation, or “patch over,” from the AC to a different gang. Martin ordered AC members to attack the former member in order to “X” him, or remove him from the gang, because it violated the AC’s rules to join another organization. AC members, including Martin and Boney, held a “church,” or meeting, at an AC member’s home in the Tyler, Texas, area where they planned the logistics of the assault.

On Oct. 2, 2016, Martin, Boney, and other AC members met at a park near Tyler to carry out the assault. On Martin’s order, Boney and another AC member violently beat the victim, including kicking the victim in the head while he was on the ground. This attack resulted in the victim seeking medical care.

Martin and Boney will be sentenced at a date to be determined.

Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division and Acting U.S. Attorney Nicholas J. Ganjei for the Eastern District of Texas made the announcement.

This case is part of a larger investigation into the Aryan Circle by an Organized Crime Drug Enforcement Task Force (OCDETF) consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; Drug Enforcement Administration; Federal Bureau of Prisons; Texas Department of Public Safety; Houston Police Department-Gang Division; Montgomery County (TX) Precinct One Constable’s Office; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; Texas Department of Criminal Justice; New Jersey Department of Corrections-Special Investigations Division; Indiana State Police; Fort Smith (AR) Police Department; Arkansas Department of Corrections; Arnold (MO) Police Department; Jefferson County (MO) Sheriff’s Department; St. Louis Metropolitan Police Department; St. Louis County (MO) Police Department; Indiana Department of Corrections; Carrollton (TX) Police Department; Montgomery County (TX) Sheriff’s Office; Travis County (TX) Sheriff’s Office; Tarrant County (TX) Sheriff’s Office; Evangeline Parish (LA) Sheriff’s Office; Smith County (TX) Sheriff’s Office; McCurtain County (OK) Sheriff’s Office; Montgomery County (TX) District Attorney’s Office; Liberty County (TX) District Attorney’s Office; Harris County (TX) District Attorney’s Office; Mercer County (NJ) District Attorney’s Office; Evangeline Parish (LA) District Attorney’s Office; and the Sebastian County (AR) District Attorney’s Office.

Trial Attorney Bethany Lipman of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Christopher Rapp of the Eastern District of Texas are prosecuting the case.

BEAUMONT, Texas – In connection with the Social Security Administration’s March 4th National “Slam the Scam” Day, the United States Attorney’s Office for the Eastern District of Texas reminds the public to be vigilant of Social Security scam calls. 

“For the past year, we have seen a steady increase in Social Security-related scam calls,” said Acting U.S. Attorney Nicholas J. Ganjei.  “The financial exploitation of older Americans will not be tolerated.  We are partnering with the Social Security Administration Office of the Inspector General to spread the word about these scams.  We encourage anyone who receives such calls to hang up.”

“We are working with the Department of Justice and law enforcement agencies across the United States to combat Social Security imposter scams—but our best weapon in this fight will always be awareness,” said Inspector General Gail S. Ennis. “I want to thank the many agencies and organizations that have joined us in our effort this year to alert Americans to hang up on suspicious calls, and talk to their family and friends about phone scams.”

Last year, the (SSA-OIG) received over 700,000 reports of Social Security-related telephone scams—with a total of nearly $45 million lost. Victims reported an average loss of $5,800. The scams involve an imposter calling from what appears to be a local or government phone number.  Scammers often use robocalls, but they may also have a live person call.  They may also follow up with emails or texts to try to convince you they are a government official, and they are investigating you.  These scammers will state that the individual’s Social Security Number has been compromised or has already been suspended for fraudulent activity.  The caller may even threaten to suspend the account or have the person arrested if they do not take immediate action. 

The U.S. Attorney’s Office and SSA-OIG offer the following information about how to spot these scams:

 

• SSA may call you in some situations, but will NEVER call you and:

 

• Tell you that your Social Security Number has been suspended or offer to increase your benefits or resolve an identity theft issue for a fee.

 

• Threaten you with arrest or legal action if you do not immediately pay a debt, fine, or fee.

 

• Request immediate payment or even accept payment via gift cards, pre-paid debit cards, cash, wire transfers, or internet currency, such as Bitcoin.

 

• Demand secrecy from you in handling a Social Security-related problem, or tell you to make up a story to tell your friends, family, or store and bank employees.

 

• If you owe money to Social Security, the agency will generally mail you a letter with payment options and appeal rights.

 

• SSA will not send you an email with an attachment containing your personal information.

 

• SSA will only send you emails or text messages when you have subscribed with SSA to receive updates, or as part of SSA’s enhanced security when accessing your personal my Social Security account.

 

If you receive such a call, hang up immediately.  Do not give anyone your personal information such as your Social Security Number, bank account, or credit card numbers.  If you receive a voice mail, do not return the call.  Report any scams to OIG.SSA.GOV.

TYLER, Texas – A Tyler, Texas woman was sentenced to prison today for a federal drug trafficking crime in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei.

Alexa Leigh Brown, 51, pleaded guilty on Sep. 8, 2020, to possession with intent to distribute methamphetamine and was sentenced to 71 months in federal prison today by U.S. District Judge Jeremy D. Kernodle.   

“The illegal drug trade brings with it violence, property crime, and severe health risks,” said Acting U.S. Attorney Nicholas J. Ganjei.  “We are committed to aggressively investigating and prosecuting those who would harm our communities.”           

According to information presented in court, beginning in April 2019, Brown sold more than 165 grams of methamphetamine to a confidential informant over five separate occasions.  On August 26, 2019, Brown was arrested following the execution of a search warrant at her residence in Tyler, which resulted in the seizure of additional quantities of methamphetamine and firearms.  Brown and eight other co-conspirators were indicted by a federal grand jury on Jan. 15, 2020, and charged with violations of federal drug trafficking and firearms laws. 

This case was investigated by the Drug Enforcement Administration; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Texas Department of Public Safety; the Smith County Sheriff’s Office; and the Tyler Police Department and prosecuted by Assistant U.S. Attorney Lucas Machicek.

TEXARKANA, Texas – Three East Texans have been sentenced to prison for an international drug trafficking operation in the Eastern District of Texas pursuant to Operation Dirty Bird, announced Acting U.S. Attorney Nicholas J. Ganjei today.

“Mexican drug cartels are not welcome in East Texas,” said Acting U.S. Attorney Nicholas J. Ganjei. “My office—in partnership with the phenomenal men and women of the Texas law enforcement community—will work tirelessly to dismantle any drug trafficking operations based in East Texas, or even those that happen to be passing through.”

Rodolfo Javier Falcon, a 36-year-old Camp County, Texas, man, was sentenced to thirty years in prison by U.S. District Judge Robert W. Schroeder III. Falcon pleaded guilty on August 20, 2020, to conspiring to distribute controlled substances before U.S. Magistrate Judge Caroline M. Craven.  Falcon agreed to forfeit $5 million in drug proceeds.

Eleazar Martinez Reyes, a 41-year-old Camp County, Texas, man, was sentenced to 87 months in prison by Judge Schroeder.  Reyes pleaded guilty on August 4, 2020, to conspiring to distribute controlled substances and to illegal re-entry following removal before Judge Craven. Reyes agreed to forfeit $150,000 in drug proceeds.

Gerardo Carbrera Ramirez, a 28-year-old Franklin County, Texas, man, was sentenced to 151 months in prison by Judge Schroeder.  Ramirez pleaded guilty on June 11, 2020, to conspiring to distribute controlled substances before Judge Craven. Ramirez agreed to forfeit $7500 in drug proceeds.

According to information presented in court, Falcon, Reyes, Ramirez, Jose Armando Rosales-Bernal, Julio Villarreal, Armando Moreno Jr., Claudia Claribel Gardea, Jose Geraldo Ornelas-Pineda, David Martinez, and others conspired to distribute more than 150 kilograms of cocaine, along with methamphetamine and heroin, from the Jalisco Nueva Generacion drug cartel in Mexico.  The group distributed drugs in Dallas, East Texas, Florida, North Carolina, Arkansas, Illinois, and Michigan.  On one occasion, Falcon, Gardea, and Ornelas-Pineda—and two young children—were stopped in Tennessee carrying nine kilograms of cocaine from Rosales-Bernal to North Carolina.  The organization was also responsible for shipping drug proceeds, in the form of bulk cash, back to Mexico. Law enforcement intercepted one bulk cash shipment of approximately $350,000.  Rosales-Bernal and Falcon both occupied leadership roles in the drug trafficking organization. During the conspiracy, Rosales-Bernal, Falcon, Martinez, and others possessed and carried firearms to safeguard their drugs and cash.  Rosales-Bernal and others spent their drug proceeds on lavish lifestyle items, including a Dodge Charger Hellcat, flashy watches, exotic weapons, a jewel encrusted rooster necklace, and numerous pairs of luxury shoes and boots.

Operation Dirty Bird is a long-term drug trafficking and money laundering investigation that has led to the seizure of more than $500,000 in U.S. Currency, almost 40 kilograms of cocaine, more than a quarter kilogram of methamphetamine, nine firearms, several vehicles, two houses in Dallas, and an array of fine jewelry.

Rosales-Bernal, Villarreal, Moreno, Falcon, Ramirez, Gardea, Ornelas-Pineda, Dalia Janet Campos Rosales, Reyes, and Martinez were previously charged and arrested as a result of this investigation. Ornelas-Pineda, Moreno, and Villarreal have pleaded guilty and have been sentenced. Rosales-Bernal, Gardea, and Campos Rosales have pleaded guilty and are awaiting sentencing. Martinez has pleaded not guilty and is awaiting trial. This case is pending in the Texarkana Division of the Eastern District of Texas.  If convicted, Martinez face a minimum of 15 years and as much as life in federal prison.

This case is being investigated by the Mount Pleasant office of the Texas Department of Public Safety, Criminal Investigation Division and the Dallas office of Homeland Security Investigations.  In addition, the following agencies have played critical roles in this investigation: the Mesquite, Texas, Police Department SWAT team; the Texas National Guard; the Texas Department of Public Safety, Highway Patrol Division and Aircraft Division; the George West, Texas, Police Department; the 23rd Judicial Drug Task Force in Dickson, Tennessee; and the Mount Pleasant, Texas, Police Department. The case is being prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.

BEAUMONT, Texas – Two Texas men pleaded guilty this week to violent gang-related activities in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei and Nicholas L. McQuaid, Acting Assistant Attorney General of the Justice Department’s Criminal Division.

Michael Martin, aka Aryan Prodigy, aka AP, 38, of Austin, Texas, and Bobby Dayle Boney, 50, of Sulphur Springs, Texas, each pleaded guilty to assault resulting in serious bodily injury in aid of racketeering.  Martin entered his plea before U.S. Magistrate Judge Zack Hawthorn and Boney pleaded before U.S. Magistrate Judge Keith Giblin.  Martin and Boney committed the assault as part of their membership in the Aryan Circle (AC), a gang that operates in Texas and other states throughout the country.

“Fighting the scourge of organized criminal gangs is a team effort,” said Acting U.S. Attorney Nicholas Ganjei.  “It will take the full resources and resolve of federal, state, and local law enforcement to push back against these violent criminal organizations.”

According to information presented in court and contained in court filings, Martin and Boney both joined the AC in the early 2000s and have gang tattoos indicating their affiliation. Both served in leadership roles within the gang.  Martin had previously served as an upper board member of the gang, which meant that he was one of the five highest-ranking leaders in the AC. Also, for a period of time, Boney held the leadership rank of vice president, which meant that he gave orders to other AC members and disciplined members who were not following the gang’s directives, among other things.

The AC is a violent, white supremacist organization that operates inside federal prisons across the country and outside prisons in states including Texas, Arkansas, Louisiana, and Missouri.  The AC enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, assault, and threats against those who violate the rules or pose a threat to the organization.  Members, and oftentimes associates, are required to follow the orders of higher-ranking members without question.

Prior to Oct. 2, 2016, AC members learned that another AC member wanted to switch his gang affiliation, or “patch over,” from the AC to a different gang.  AC members were ordered to attack the former member in order to “X” him, or attack and remove him from the gang, because it violated the AC’s rules to join another organization.  A meeting was held at an AC member’s home in the Tyler, Texas area where AC members planned the logistics of the assault.

On Oct. 2, 2016, Martin, Boney, and other AC members met at a park near Tyler, Texas, where they had planned to attack the former member, who was also present. Multiple AC members violently beat the victim, including kicking the victim in the head while he was on the ground.  This attack resulted in the victim seeking medical care for serious injuries.

This case is part of a larger investigation into the AC, Operation Noble Virtue, which has targeted AC leadership and resulted in prosecutions and convictions in six different jurisdictions to date.  This is an Organized Crime Drug Enforcement Task Force (OCDETF) case and is being investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; Drug Enforcement Administration; Federal Bureau of Prisons; Texas Department of Public Safety; Houston Police Department-Gang Division; Montgomery County (TX) Precinct One Constable’s Office; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; Texas Department of Criminal Justice; New Jersey Department of Corrections-Special Investigations Division; Indiana State Police; Fort Smith (AR) Police Department; Arkansas Department of Corrections; Arnold (MO) Police Department; Jefferson County (MO) Sheriff’s Department; St. Louis Metropolitan Police Department; St. Louis County (MO) Police Department; Indiana Department of Corrections; Carrollton (TX) Police Department; Montgomery County (TX) Sheriff’s Office; Travis County (TX) Sheriff’s Office; Tarrant County (TX) Sheriff’s Office; Evangeline Parish (LA) Sheriff’s Office; Smith County (TX) Sheriff’s Office; McCurtain County (OK) Sheriff’s Office; Montgomery County (TX) District Attorney’s Office; Liberty County (TX) District Attorney’s Office; Harris County (TX) District Attorney’s Office; Mercer County (NJ) District Attorney’s Office; Evangeline Parish (LA) District Attorney’s Office; and the Sebastian County (AR) District Attorney’s Office.  OCDETF is the largest anti-crime task force in the country and its mission is to disrupt and dismantle the most significant drug trafficking and transnational criminal organizations that threaten the United States. The prosecutor-led, intelligence-driven, multi-agency task forces leverage the authorities and expertise of federal, state, and local law enforcement.

The matter is being prosecuted by Assistant United States Attorney Christopher Rapp of the Eastern District of Texas and Trial Attorney Bethany Lipman of the Criminal Division’s Organized Crime and Gang Section.

MARSHALL, Texas – A Marshall, Texas woman has been sentenced to federal prison today for drug trafficking crimes in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei.

Rachel Naomi Hernandez, 32, pleaded guilty on September 23, 2020, to possession with intent to distribute methamphetamine and was sentenced to 135 months in federal prison today by U.S. District Judge Rodney Gilstrap.

“Drug trafficking organizations prey on vulnerable addicts for profit in an illegal marketplace that encourages violence and lawlessness,” said Acting U.S. Nicholas J. Ganjei.  “We are dedicated to dismantling these organizations and disrupting every link in their chain of supply.”      

According to information presented in court, on May 20, 2018, police stopped Hernandez for a traffic violation, during which she admitted to possessing a firearm.  The officer confirmed through dispatch that Hernandez was a convicted felon, and arrested her for being felon in possession of a firearm.  A subsequent search of Hernandez’s vehicle led to the discovery and seizure of 270 grams of methamphetamine, a pistol, various pills, vials containing suspected PCP, digital scales, and $4,762 in U.S. Currency.  Hernandez was indicted by a federal grand jury on December 18, 2019, and charged with violations of federal drug trafficking and firearms laws. 

This is an Organized Crime Drug Enforcement Task Force (OCDETF) case and was investigated by the Federal Bureau of Investigation; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Texas Department of Public Safety; the Harrison County Sheriff’s Office; and the Marshall Police Department.  OCDETF is the largest anti-crime task force in the country and its mission is to disrupt and dismantle the most significant drug trafficking and transnational criminal organizations that threaten the United States. The prosecutor-led, intelligence-driven, multi-agency task forces leverage the authorities and expertise of federal, state, and local law enforcement.  This case was prosecuted by Assistant U.S. Attorney Lucas Machicek.

SHERMAN, Texas – A federal grand jury in the Eastern District of Texas has returned an indictment charging eight individuals with various federal violations related to a complex international drug trafficking conspiracy, announced Acting U.S. Attorney Nicholas J. Ganjei today.

Debbie Mercer, 58, and Kayleigh Moffett, 33, both of Oklahoma City; Federico Machado, 53, of Florida; Carlos Villaurrutia, 40, of McAllen, Texas; and four others were named in an indictment charging them with conspiracy to manufacture and distribute cocaine, conspiracy to commit money laundering, conspiracy to commit wire fraud, conspiracy to commit export violations, and conspiracy to commit federal registration violations involving aircraft.  The indictment details approximately $350 million in alleged criminal activity since 2016.  The seven-count superseding indictment was returned by a federal grand jury earlier this week and unsealed today.  The defendants have already been arrested and will be arraigned in federal court next week.

“The threat posed by transnational crime cannot be overstated,” said Acting U.S. Attorney Nicholas J. Ganjei.  “The use of United States-registered aircraft by these criminal organizations and their networks of associates poses a clear and present danger to the security of our nation.  The American public can expect EDTX to be relentless in its fight against the sometimes invisible, but always dangerous, threat of transnational organized crime.”

“The indictments resulting from this highly complex investigation showcases HSI’s unique and far-reaching authorities, serving as an example of what the global law enforcement community can accomplish when we work together,” said Ryan L. Spradlin, Special Agent in Charge, HSI Dallas.  “We were able to deliver a significant blow to the transnational criminal organizations around the world by exposing a money laundering and drug trafficking scheme perpetuated by sophisticated drug cartels.”

“As this case demonstrates, we will aggressively investigate the illegal exportation of aircraft contrary to U.S. national security interests,” said Trey McClish, Special Agent in Charge of the U.S. Department of Commerce, Bureau of Industry and Security – Office of Export Enforcement’s Dallas Field Office.  “Alongside our Federal and State partners, OEE will leverage its unique criminal and administrative enforcement powers to detect and disrupt serious criminal schemes that violate U.S. export control law.”

“The indictment in this case demonstrate that individuals who choose to circumvent Federal regulations pertaining to aircraft registration and ownership will be pursued to the fullest extent of the law,” said Todd Damiani, Special Agent-In-Charge, Southern Region, U.S. Department of Transportation Office of Inspector General (DOT-OIG). “The collaborative nature of this investigation is representative of the ongoing investigative work DOT-OIG performs to ensure aviation safety and maintain national security interests in order to prevent the nefarious acts these defendants are being charged with from occurring.”

According to unsealed court documents, the defendants allegedly purchased and illegally registered aircraft under foreign corporations and other individuals for export to other countries.  The indictment specifically alleges that Mercer and Moffett, through their company Aircraft Guarantee Corporation (AGC), registered thousands of aircraft in Onalaska, Texas, an east Texas town without an airport.

According to the indictment, several of the illegally registered and exported aircraft were used by transnational criminal organizations in Colombia, Venezuela, Ecuador, Belize, Honduras, Guatemala, and Mexico to smuggle large quantities of cocaine destined for the United States.  The indictment further alleges that illicit proceeds from the subsequent drug sales were then transported as bulk cash from the United States to Mexico and used to buy more aircraft and cocaine. According to the indictment, aircraft purchases were typically completed by wiring funds from casa de cambios and/or banks in Mexico to shell corporations operating in the United States as aircraft sellers/brokers. 

The indictment describes that foreign governments seized United States-registered aircraft containing multi-ton shipments of cocaine.  According to the indictment, the aircraft were held in trust by AGC for the benefit of foreign corporations or individuals. The indictment identifies Federico Machado, through his company South Aviation, and Carlos Villaurrutia, who used his companies TEXTON, TWA International, and Ford Electric, as aircraft sellers/brokers operating in the United States.

The indictment separately charges Mercer, Moffett, and Machado with engaging in a fraud scheme related to the acquisition of aircraft. According to the indictment, Machado recruited investors to invest in aircraft purchase deposits for sales transactions that never took place. Investors allegedly placed their funds in an escrow account held by Wright Brothers Title Company, which was owned and managed by Mercer and Moffett.  Machado then allegedly used these funds for purposes other than the purchase of aircraft. 

If convicted, the defendants face a minimum of 10 years and up to life in federal prison for the drug conspiracy charges and up to 20 years for the money laundering, export and wire fraud violations. 

This is an Organized Crime Drug Enforcement Task Force (OCDETF) case and is being investigated by Homeland Security Investigations (Dallas, Brownsville and Laredo offices); Department of Commerce, Bureau of Industry and Security (Dallas and Houston offices);  Department of Transportation Office of Inspector General (DOT-OIG); Polk County Constable Precinct 1; Southeast Texas Export Investigations Group; Internal Revenue Service; and Federal Aviation Administration (FAA).  This case is being prosecuted by Assistant U.S. Attorneys Ernest Gonzalez, Colleen Bloss and Robert Wells.  OCDETF is the largest anti-crime task force in the country and its mission is to disrupt and dismantle the most significant drug trafficking and transnational criminal organizations that threaten the United States. The prosecutor-led, intelligence-driven, multi-agency task forces leverage the authorities and expertise of federal, state, and local law enforcement.

It is important to note that a complaint, arrest, or indictment should not be considered as evidence of guilt and that all persons charged with a crime are presumed innocent until proven guilty beyond a reasonable doubt.

BEAUMONT, Texas – The United States Attorney’s Office for the Eastern District of Texas is pleased to announce a new speaker series and welcomes as its first guest The Honorable Jason K. Pulliam, United States District Judge for the Western District of Texas. 

When Judge Pulliam took his oath of office on August 9, 2019, he became the first African American judge appointed to the district court in the Western District of Texas.  Judge Pulliam has previously served as Judge Advocate with the United States Marine Corps, a judge in Bexar County, and a Justice on the Texas Fourth Court of Appeals before his federal appointment.  He was invited to address the employees of the U.S. Attorney’s Office about his path to judgeship and to share his perspective from the bench.

“The Eastern District of Texas strives to have an outsized, positive impact in our community, and to recognize the contributions of thought leaders across the state,” said Acting United States Attorney Nicholas J. Ganjei. “We are thrilled that Judge Pulliam could speak with us today, particularly as we honor the contributions of African Americans to our country during this year’s Black History Month.”

The annual celebration of Black History Month was made law in 1986 when Congress passed Public Law 99-244, designating February as National Black History Month.  It is commemorated by the Association for the Study of African American Life and History, which establishes a national theme for each year.  The theme for 2021 is “The Black Family: Representation, Identity, and Diversity,” and acknowledges the rich tapestry of the African American family.

TYLER, Texas – A Tyler, Texas man has pleaded guilty to a federal firearms violation in the Eastern District of Texas, announced Acting United States Attorney Nicholas J. Ganjei today.

Eric Cadell Gipson, 56, pleaded guilty to being a felon in possession of a firearm today before United States Magistrate Judge K. Nicole Mitchell.

According to information presented in court, on June 2, 2020, Gipson, a convicted felon, arranged for the purchase of 9mm pistol.  Six days later, on June 8, 2020, Gipson took possession of the firearm.  Gipson, having been previously convicted of murder, robbery and theft, was prohibited by law from owning or possessing firearms or ammunition.

“Prohibiting the possession of firearms by convicted felons is a critical component of keeping our communities safe, said Acting United States Attorney Nicholas J. Ganjei.  “The Eastern District of Texas remains committed to keeping guns out of the hands of the most dangerous members of society.”

A federal grand jury returned an indictment charging Gipson with federal violations on Oct. 29, 2020.  Under federal statutes, Gipson faces up to 10 years in federal prison.  The maximum statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.  A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case was prosecuted as part of the Project Safe Neighborhoods Initiative.  Project Safe Neighborhoods is aimed at reducing gun and gang violence, deterring illegal possession of guns, ammunition and body armor, and improving the safety of residents in the Eastern District of Texas. Participants in the initiative include community members and organizations as well as federal, state and local law enforcement agencies.

This case was investigated by the Federal Bureau of Investigation, Smith County Sheriff’s Office and Homeland Security Investigations and is being prosecuted by Assistant United States Attorney Alan Jackson.

SHERMAN, Texas – A former bank president has been sentenced to federal prison for violations in the Eastern District of Texas, announced Acting United States Attorney Nicholas J. Ganjei today.

Anita Gail Moody, 57, of Cooper, Texas pleaded guilty on June 5, 2020, to conspiracy to commit bank fraud and arson and was sentenced to 96 months in federal prison today by U.S. District Judge Amos L. Mazzant, III.  Moody has additionally agreed to pay restitution in the amount of $11,136,241.82. 

According to information presented in court, on May 11, 2019, while Moody was President of Enloe State Bank in Cooper, Texas, the bank suffered a fire that investigators later determined to be arson.  The fire was contained to the bank’s boardroom, however the entire bank suffered smoke damage.  Investigation revealed that several files had been purposefully stacked on the boardroom table, all of which were burned in the fire.  Notably, the bank was scheduled for a review by the Texas Department of Banking the very next day.  Further investigation revealed Moody had created false nominee loans in the names of several people, including actual bank customers.  Moody eventually admitted to setting the fire in the boardroom to conceal her criminal activity concerning the false loans.  She also admitted to using the fraudulently obtained money to fund her boyfriend’s business, other businesses of friends, and her own lifestyle.  The fraudulent activity, which began in 2012, resulted in a loss to the bank of approximately 11 million dollars. 

“Criminal conduct that affects the financial health of a small, local lender can send a negative ripple effect throughout the entire community,” said Acting United States Attorney Nicholas J. Ganjei.  “The Eastern District of Texas will vigorously prosecute cases, such as the one here, that undermine public confidence in our local banks.  We are also deeply appreciative of the excellent investigative work of the FDIC Office of the Inspector General, and the Bureau of Alcohol, Tobacco, Firearms and Explosives in bringing this matter to a close.” 

Jeannie Swaim, who served as vice president of Enloe State Bank, and who was also involved in fraudulent conduct, was previously sentenced to 24 months’ imprisonment, and agreed to pay restitution in the amount of $410,675.18.

This case was investigated by the FDIC-OIG and the Bureau of Alcohol, Tobacco, Firearms, and Explosives and prosecuted by Assistant United States Attorneys Maureen Smith and Wes Wynne.

BEAUMONT, Texas – A 51-year-old Vidor, Texas, woman has been sentenced to federal prison for maintaining a drug-involved premises in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei today.

Michelle Lea Harrington pleaded guilty on Sep. 10, 2020.  Today, she was sentenced to 60 months in federal prison by U.S. District Judge Marcia A. Crone.

“Individuals who contribute to the unlawful trafficking of prescription opiates will be punished,” said Acting U.S. Attorney Nicholas J. Ganjei.  “This conviction of a landlord who permitted the distribution of opioid pills in her residence is a clear message that our community will not tolerate those perpetuating the opioid crisis in southeast Texas.”

According to information presented in court, Harrington rented out a residence in Vidor, Texas to three individuals, including Catherine Ardis.  Harrington lived there as well and knew that Ardis distributed hydromorphone pills, also known as Dilaudid, from the residence.  At least three persons died as a result of opiates purchased at the home.  Medical examination determined that the victims died from poly-drug toxicity resulting from the use of hydromorphone pills.

Catherine Ardis was previously sentenced to 15 years.

This case was investigated by the U.S. Drug Enforcement Administration, Vidor Police Department, Jefferson County Sheriff’s Office, Beaumont Police Department, Port Arthur Police Department, and was prosecuted by Assistant U.S. Attorney Michael A. Anderson.

BEAUMONT, Texas – The United States Attorney’s Office for the Eastern District of Texas reminds the public that fraudsters soon follow disaster. 

As Texas suffers from historic freezing and resulting property damage from ice and burst pipes, it is likely that individuals will seek to fraudulently profit from the attendant stress.

“Fraudsters often appear from nowhere to take advantage of natural disasters, which is what occurred in the early days of the pandemic.  Now, we are concerned that weary homeowners will fall prey to unsolicited calls regarding insurance claims, home warranties, or bogus government grants” says Acting U.S. Attorney Nicholas J. Ganjei.  “If you did not solicit the call, hang up.” 

Millions of people fall victim to scams every year.  If you think you have become a victim, contact your local law enforcement authority.  You can also submit a report to https://ReportFraud.ftc.gov.

For more tips on how to identify a scam, visit www.consumer.ftc.gov/features/scam-alerts.

 

BEAUMONT, Texas – Two Houston women have been sentenced for federal drug trafficking violations in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei today.

Cristal Lagunas, 26, and Iris Venture, 22, were indicted by a federal grand jury and charged with conspiracy to possess with intent to distribute cocaine and methamphetamine on March 18, 2020.  They pleaded guilty in September 2020.  Today, both defendants were sentenced to 135 months in federal prison by U.S. District Judge Marcia A. Crone.

“This case exemplifies how multiple federal law enforcement agencies can work together to take down those involved in the illegal drug trade,” said Acting U.S. Attorney Nicholas J. Ganjei.  “We will continue to bring all resources to the fight against unlawful narcotics and firearms trafficking.”

According to information presented in court, on March 10, 2020, Lagunas and Ventura met an undercover federal agent at a credit union in Beaumont, Texas, to exchange a kilogram of methamphetamine and $600 cash for three fully automatic AK-47 rifles.

This case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the U.S. Drug Enforcement Administration and prosecuted by Assistant U.S. Attorney Michelle S. Englade.

TYLER, Texas – Two Texas men have been sentenced to federal prison for criminal violations in the Eastern District of Texas, announced Acting United States Attorney Nicholas J. Ganjei today.

Mario Eleuterio Garcia-Sevilla, 44, of Grand Saline, Texas, and Juan Valazquez Delgadillo, 50, of Garland, Texas, pleaded guilty in September 2020, to conspiracy to produce and transfer false identification documents.  Today, United States District Judge Jeremy D. Kernodle sentenced Garcia to 37 months in federal prison, and sentenced Delgadillo to a prison term of 30 months.

“Identification document fraud is a direct threat to the security of the United States and its citizens,” said Assistant United States Attorney Nicholas Ganjei.  “Disruption of criminal enterprises that aim to compromise document security is, and should be, a primary focus of federal law enforcement.” 

According to information presented in court, beginning in January 2019, Garcia and Delgadillo conspired to produce and transfer fictitious United States identification documents to others in the Eastern District of Texas.  The false documents included United States Social Security cards and Permanent Residence cards. Garcia obtained the documents from Delgadillo and then transferred them to individuals throughout the East Texas area.  Garcia and Delgadillo were indicted by a federal grand jury on Feb. 27, 2020.

This case was investigated by the Federal Bureau of Investigation, Smith County Sheriff’s Office, and Texas Department of Public Safety.  This case was prosecuted by Assistant United States Attorney Alan R. Jackson.

SHERMAN, Texas – A Sherman, Texas man has been indicted on charges involving the sexual exploitation of children in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei today.

Brian Christopher Welch, 43, was arrested on Feb. 3, 2021, pursuant to a federal criminal complaint charging him with production and distribution of child pornography.  Welch was indicted by a federal grand jury this week and formally charged with child pornography violations.

“This case shows that there is no one type of individual who preys on children.  Child sexual predators come from all backgrounds, genders, races, and ethnicities – and they are often active members of their community,” said Acting U.S. Attorney Nicholas J. Ganjei.  “Parents are urged to use caution in allowing any outsider, including friends and people in positions of trust, to have unsupervised access to their children.  The Eastern District is proud of its robust partnership with federal and state law enforcement agencies, and is committed to utilizing all available resources, both nationally and internationally, to locate those individuals who use internet-based technologies to exploit children.”

According to court documents, between December 2016 and August 2020, Welch is alleged to have used digital devices to record a minor engaged in sexually explicit conduct.  Additionally, Welch is charged with distributing child pornography to another person, and with transportation of child pornography, on Jan. 29, 2021.

If convicted, Welch faces a minimum of 15 years and up to 30 years in federal prison.

This case is being brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

This case is being investigated by Homeland Security Investigations and the Grayson County Sheriff’s Office and prosecuted by Assistant U.S. Attorney Marisa J. Miller.

It is important to note that a complaint, arrest, or indictment should not be considered as evidence of guilt and that all persons charged with a crime are presumed innocent until proven guilty beyond a reasonable doubt.

TEXARKANA, Texas – A Liberty County, Texas, man and woman have been indicted for filing hundreds of fraudulent Economic Injury Disaster Loan (EIDL) applications with the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei today.

Clifton Pape, 45, and Sally Jung, 58, both of Cleveland, Texas, allegedly operated a COVID relief fraud scheme known as “My Buddy Loans,” that garnered them more than $700,000 in fraud proceeds and resulted in at least $1.3 million in loss to the United States. Pape and Jung are charged by way of a federal indictment that charges violations of 18 U.S.C. §§ 1349 and 2326, conspiracy to commit telemarketing wire fraud victimizing ten or more persons over the age of fifty-five; 18 U.S.C. § 1343, wire fraud; and 18 U.S.C. §§ 1028A and 2, aggravated identity theft and aiding and abetting.

“We believe this investigation—to date—involves the single largest number of individual fraudulent EIDL applications associated with the CARES Act,” said Acting U.S. Attorney Nicholas Ganjei. “We are asking those with information about the My Buddy Loan fraud scheme, including those who believe they may be victims, to call the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or file a complaint using the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.”

“This telemarketing scheme exploited those seeking assistance during the COVID pandemic, including many who were over the age of 55,” said SBA OIG’s Central Region Special Agent in Charge Sharon Johnson. “We are asking members of the press and the community to encourage those victimized by this fraud scheme—including hundreds of residents in Texas and across the country—to file a complaint with the NCDF.”

“This case demonstrates the investigative capabilities of the United State Secret Service and should service as a strong deterrent to anyone considering taking part in a similar scam,” said William Mack, Resident Special Agent in Charge of the Secret Service Tyler Texas Resident Office.  “This investigation highlights our outstanding partnership with the SBA OIG’s Central Region and we will continue to work with our law enforcement partners to disrupt criminal groups who target and victimize our communities.  We thank members of the public and the banking community who have been vigilant, and we encourage them to continue reporting any suspicious activity involving COVID relief.”

 

According to court documents filed in U.S. District Court in Texarkana, Pape and Jung operated the telemarketing scheme under the name My Buddy Loans. In exchange for a fee, My Buddy Loans took personal identifying information from victims and promised to file an application for an agricultural grant, which they said was available to those who owned a few acres of land. Instead, Pape and Jung actually filed fraudulent EIDL applications with the SBA that contained the victims’ personal identification information.

 

Pape and Jung used Square’s credit and debit card processing service to charge third parties the fee. Pape and Jung completed at least 700 successful charges, obtaining at least $700,000 in fees. Pape and Jung then transferred the proceeds of the fraud scheme into a bank account they controlled. On one occasion, Pape used the fraud proceeds to pay a traffic ticket. On another occasion, Pape and Jung used more than $3600 from the fraud scheme to pay for a stay at a resort in San Antonio, Texas. A picture from that stay shows Pape and Jung celebrating over sparkling wine. Pursuant to a seizure warrant, agents seized the $505,535.04 in fraud proceeds remaining in the account.

The CARES Act is a federal law enacted in March 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.  One source of relief provided by the CARES Act was the authorization or EIDL advances and low-interest loans to small businesses to meet financial obligations and operating expenses that could have been met had the disaster not occurred. Under the EIDL program applicants were eligible for a forgivable advance of up to $10,000 if the applicant had ten or more employees.

A federal indictment is merely an accusation. A defendant is presumed innocent unless and until proven guilty.

Under federal statutes, Pape and Jung face up to 168 years in federal prison and a $6,000,000 fine at sentencing. The statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.

This case is being investigated by the U.S. Secret Service and the SBA Office of Inspector General. The case is being prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.

BEAUMONT, Texas – A 30-year-old Beaumont, Texas engineer pleaded guilty today for filing fraudulent bank loan applications seeking more than $10 million dollars in forgivable loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. 

Acting U.S. Attorney Nicholas J. Ganjei for the Eastern District of Texas, Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division, Senior Executive Michael J. Mullaney for Law Enforcement Operations, Federal Housing Finance Agency – Office of Inspector General (FHFA-OIG), Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation – OIG (FDIC-OIG), Inspector General Hannibal “Mike” Ware of the SBA-OIG, and Inspector in Charge Delany De Leon-Colón of the U.S. Postal Inspection Service’s (USPIS) Criminal Investigations Group made the announcement.   

Shashank Rai pleaded guilty to one count of making false statements to a bank. He was charged on May 13, 2020, with violations of wire fraud, bank fraud, false statements to a financial institution, and false statements to the SBA.

“The Payroll Protection Program was designed to help struggling businesses and hardworking Americans, not individuals who concoct imaginary businesses and employees,” said Acting U.S. Attorney Nicholas J. Ganjei.  “We will continue to work diligently with our law enforcement partners to investigate and prosecute those who exploit this critical, taxpayer-funded program.”

As part of his guilty plea, Rai admitted that he sought millions of dollars in forgivable loans guaranteed by the SBA from two different banks by claiming to have 250 employees earning wages when, in fact, no employees worked for his purported business. Rai made two fraudulent claims to two different lenders for seek loans guaranteed by the SBA for COVID-19 relief through the Paycheck Protection Program (PPP). In the application submitted to the first lender, Rai sought $10 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of $4 million.  In the second application, Rai sought approximately $3 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of approximately $1.2 million.

According to court documents, the Texas Workforce Commission provided information to investigators of having no records of employee wages having been paid in 2020 by Rai or his purported business, Rai Family LLC. In addition, the Texas Comptroller’s Office of Public Accounts reported to investigators that Rai Family LLC reported no revenues for the fourth quarter of 2019 or the first quarter of 2020.

According to court documents, materials recovered from the trash outside of Rai’s residence included handwritten notes that appear to reflect an investment strategy for the $3 million, which is the amount of money that Rai allegedly sought from the second lender.

The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding, and in December 2020, Congress authorized another $284 billion in additional funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. PPP loan proceeds must be used by businesses for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.

This case was investigated by the FHFA-OIG, FDIC-OIG, SBA-OIG, and USPIS. Assistant Chief L. Rush Atkinson and Trial Attorney Lou Manzo of the Criminal Division’s Fraud Section, and Assistant U.S. Attorneys Nathaniel Kummerfeld and Frank Coan for the Eastern District of Texas are prosecuting the case.

The Fraud Section leads the department’s prosecution of fraud schemes that exploit the PPP. In the months since the PPP began, Fraud Section attorneys have prosecuted more than 100 defendants in more than 70 criminal cases. The Fraud Section has also seized more than $60 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds. More information can be found at:  https://www.justice.gov/criminal-fraud/ppp-fraud.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

TEXARKANA, Texas – A Texarkana, Texas, doctor has pleaded guilty today to a federal fraud violation, announced Eastern District of Texas Acting U.S. Attorney Nicholas J. Ganjei.

Dr. Rafael Otero, 68, pleaded guilty to an information charging him with defrauding the U.S. Department of Housing and Urban Development (HUD) before U.S. Magistrate Judge Caroline M. Craven. In his plea agreement, Dr. Otero agreed to pay restitution to HUD.

“Dr. Otero, and his son Antonio Otero, exploited a HUD-insured mortgage program designed to provide affordable housing for those suffering from diseases like Alzheimer’s,” said Acting U.S. Attorney Nicholas Ganjei. “While they left the HUD-insured mortgage unpaid, the Oteros took hundreds of thousands of dollars. Because of their actions, the American taxpayers ultimately suffered a loss of over $3.6 million.”

According to information presented in court, Dr. Otero was the majority owner of the Magnolia Alzheimer’s Assisted Living facility in Texarkana, Texas, and his son, Antonio Otero, was the facility’s administrator. In order to secure millions of dollars in necessary funding, the Oteros obtained a loan that was insured by HUD. The HUD-insured loan provided a favorable interest rate and did not require the owners of Magnolia to take personal responsibility for the loan in the event of a default. Instead, HUD would suffer the financial loss in the event that Magnolia defaulted on the loan. As a condition of this federal benefit, Magnolia agreed to be bound by a regulatory agreement with HUD that prohibited the owners from receiving money from Magnolia, unless the loan was being paid and Magnolia had surplus cash.

But instead of paying the HUD-insured loan, and in violation of the regulatory agreement they signed with HUD, the Oteros took hundreds of thousands of dollars from Magnolia. Dr. Otero received more than $150,000 from Magnolia in unauthorized compensation and other payments. Antonio Otero took even more money from Magnolia, using it to pay for $3,952 of camera equipment, a $3,247 watch, $2,520 in landscaping for his personal residence, a $27,408 personal mortgage payment, a $12,750 down payment on a personal vehicle, and $1,540 tickets to the Dallas Cowboys. Additionally, he took money from Magnolia and gave it to other individuals, including $13,000 for cosmetic surgery. When Dr. Otero learned that his son had been stealing money from Magnolia, Dr. Otero did not report him to authorities or remove him from his position. After Dr. Otero learned of his son’s theft, Antonio Otero stole an additional $62,000 from Magnolia.

Under federal statutes, Dr. Otero faces up to one year in federal prison at sentencing.  The statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.  A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

Antonio Otero pleaded guilty to equity skimming on October 28, 2019, and was sentenced on June 2, 2020, to 46 months in prison by U.S. District Judge Robert W. Schroeder III. Judge Schroeder also ordered Antonio Otero to pay $2 million in restitution to HUD.

This case was investigated by the United States Department of Housing and Urban Development, Office of Inspector General. The case was prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.

A Texas engineer pleaded guilty today for filing fraudulent bank loan applications seeking more than $10 million dollars in forgivable loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. 

Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division, Acting U.S. Attorney Nicholas J. Ganjei for the Eastern District of Texas, Inspector General Laura S. Wertheimer of the Federal Housing Finance Agency (FHFA) – Office of Inspector General (OIG), Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation (FDIC) – OIG, Inspector General Hannibal “Mike” Ware of the SBA-OIG and Inspector in Charge Delany De Leon-Colón of the U.S. Postal Inspection Service’s (USPIS) Criminal Investigations Group made the announcement.    

Shashank Rai, 30, of Beaumont, pleaded guilty to one count of making false statements to a bank. He was charged on May 13, 2020, with violations of wire fraud, bank fraud, false statements to a financial institution, and false statements to the SBA.

As part of his guilty plea, Rai admitted that he sought millions of dollars in forgivable loans guaranteed by the SBA from two different banks by claiming to have 250 employees earning wages when, in fact, no employees worked for his purported business. Rai made two fraudulent claims to two different lenders for loans guaranteed by the SBA for COVID-19 relief through the Paycheck Protection Program (PPP). In the application submitted to the first lender, Rai sought $10 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of $4 million.  In the second application, Rai sought approximately $3 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of approximately $1.2 million.

According to court documents, the Texas Workforce Commission provided information to investigators of having no records of employee wages having been paid in 2020 by Rai or his purported business, Rai Family LLC. In addition, the Texas Comptroller’s Office of Public Accounts reported to investigators that Rai Family LLC reported no revenues for the fourth quarter of 2019 or the first quarter of 2020.

According to court documents, materials recovered from the trash outside of Rai’s residence included handwritten notes that appear to reflect an investment strategy for the $3 million, which is the amount of money that Rai allegedly sought from the second lender.

The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding, and in December 2020, Congress authorized another $284 billion in additional funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. PPP loan proceeds must be used by businesses for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.

This case was investigated by the FHFA-OIG, FDIC-OIG, SBA-OIG, and USPIS. Assistant Chief L. Rush Atkinson and Trial Attorney Lou Manzo of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Frank Coan and Nathaniel Kummerfeld for the Eastern District of Texas are prosecuting the case.

The Fraud Section leads the department’s prosecution of fraud schemes that exploit the PPP. In the months since the PPP began, Fraud Section attorneys have prosecuted more than 100 defendants in more than 70 criminal cases. The Fraud Section has also seized more than $60 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds. More information can be found at:  https://www.justice.gov/criminal-fraud/ppp-fraud.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

BEAUMONT, Texas – A Woodville, Texas, man has pleaded guilty to federal firearms and drug trafficking violations in the Eastern District of Texas, announced Acting United States Attorney Nicholas J. Ganjei today.

Christopher Dashawn Montoya, 26, pleaded guilty to possession with intent to distribute methamphetamine and possession of a firearm in furtherance of a drug trafficking crime today before U.S. District Judge Michael Truncale.

“The United States Attorney’s Office for the Eastern District of Texas remains committed to eliminating methamphetamine trafficking in our communities,” said Acting United States Attorney Nicholas Ganjei.  “Our resolve is even greater in cases, such as here, where a drug dealer possesses firearms to aid his drug trafficking efforts.”             

According to information presented in court, on December 1, 2019, Montoya was arrested at a Polk County residence on multiple outstanding warrants.  A search of the residence resulted in the seizure of approximately one kilogram of methamphetamine, marijuana, a large amount of cash, a digital scale, and a firearm.  A search of Montoya’s vehicle parked at the residence revealed a backpack containing another two firearms, and more illegal narcotics.

A federal grand jury returned an indictment charging Montoya with firearms and drug trafficking violations on July 1, 2020.  As a result of his guilty pleas, under federal statutes, Montoya faces up to life in federal prison.  The maximum statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.  A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

This case is being prosecuted as part of the Project Safe Neighborhoods Initiative.  Project Safe Neighborhoods is aimed at reducing gun and gang violence, deterring illegal possession of guns, ammunition and body armor, and improving the safety of residents in the Eastern District of Texas.  Participants in the initiative include community members and organizations as well as federal, state and local law enforcement agencies.

This case is being investigated by the Polk County Sheriff’s Office; the Woodville Police Department; the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); and the Drug Enforcement Administration (DEA) and prosecuted by Special Assistant United States Attorney Tommy L. Coleman. 

TYLER, Texas –  A 53-year-old Rusk, Texas man has been sentenced to prison for a federal firearms violation in the Eastern District of Texas, announced Acting United States Attorney Nicholas J. Ganjei.

Larry Van Butcher, a.k.a. “Red,” pleaded guilty on Oct. 29, 2020, to being a prohibited person in possession of a firearm and was sentenced to 21 months in federal prison by United States District Judge Jeremy D. Kernodle today.  

“Domestic violence offenses represent a significant public safety concern in our communities, and, in the most tragic circumstances, result in a pattern of abuse and escalating violence,” said Acting United States Attorney Nicholas Ganjei.  “Restricting domestic violence offenders from possessing the tools to perpetrate similar or more severe crimes is a priority for the Department of Justice.”            

According to information presented in court, on Nov. 5, 2019, Butcher was interviewed by law enforcement about illegal drug and firearms activities occurring at his residence.  After confessing to using methamphetamine and marijuana as well as possessing numerous firearms, Butcher admitted that he had been previously convicted in Cherokee County, Texas, for the misdemeanor offense of Assault Family Violence, which is a crime of domestic violence resulting in a federal prohibition on possessing firearms.  Butcher advised that he knew he was prohibited from possessing firearms and could not purchase firearms for himself.  Law enforcement officers then traveled to Butcher’s residence and seized 20 firearms, including two that had been reported stolen.  Butcher was indicted by a federal grand jury on June 18, 2020, and charged with federal firearms violations. 

This case is a part of Project Guardian, the Department of Justice’s signature initiative to reduce gun violence and enforce federal firearms laws.  Initiated by the Attorney General in the fall of 2019, Project Guardian draws upon the Department’s past successful programs to reduce un violence; enhances coordination of federal, state, local, and tribal authorities in investigating and prosecuting gun crimes; improves information-sharing by the Bureau of Alcohol, Tobacco, Firearms and Explosives when a prohibited individual attempts to purchase a firearm and is denied by the National Instant Criminal Background Check System (NICS), to include taking appropriate actions when a prospective purchaser is denied by the NICS for mental health reasons; and ensures that federal resources are directed at the criminals posing the greatest threat to our communities.  The United States Attorney’s Office has prosecuted this case with support from the following Project Guardian partners: the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; the Texas Department of Public Safety; the Smith County Sheriff’s Office; and the Tyler Police Department.  This case was investigated by and is prosecuted by Assistant United States Attorney Lucas Machicek. 

TYLER, Texas – A Tyler, Texas attorney pleaded guilty today to federal employment tax violations announced Eastern District of Texas Acting United States Attorney Nicholas J. Ganjei.

John Bennett White IV, 60, pleaded guilty to an information charging him failure to pay employment taxes today before U.S. Magistrate Judge K. Nicole Mitchell.

“Mr. White withheld taxes from his employees’ paychecks but repeatedly failed to turn those funds over to the IRS,” said Acting United States Attorney Nicholas Ganjei.  “White instead chose to pocket his employees’ tax payments to fund his lifestyle.  This sort of conduct harms every taxpayer, not only because of the lost public revenue, but also because of the expense of recovering the lost funds from individuals such as White.” 

According to court documents and statements made in court, White was an attorney and firm manager for a Tyler law firm, J. Bennett White, P.C., where White had significant control over the finances of the firm and had a duty to account for and pay over the employment taxes on behalf of the firm’s employees to the IRS.

Between the second quarter of 2007 and the fourth quarter of 2015, White made sporadic and partial efforts to pay his firm’s employment tax liabilities.  For multiple quarters during the same period White caused employment taxes to be withheld from the law firm’s employees’ wages, but willfully failed to fully pay those trust fund taxes of to the IRS.  White filed Forms 941 reporting the law firm’s employment taxes for each of these quarters.  White paid the full amount owed the IRS for 24 of those 38 quarters.  White made partial payments on 10 occasions and no payment for seven quarters.  In total, White caused a tax loss of over $300,000. Instead of paying employment taxes, White paid other creditors and his own personal expenses.

Under federal statutes, White faces up to five years in federal prison at sentencing.  The statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.  A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

This case is being investigated by IRS Criminal Investigation and prosecuted by Assistant U.S. Attorney Ryan Locker.

TEXARKANA, Texas – Two more individuals have pleaded guilty to conspiring to pay and receive kickbacks in violation of the Anti-Kickback Statute, announced Acting United States Attorney Nicholas J. Ganjei.

Kimberly Willette, 59, of Friendswood, Texas, and Edwin Chad Isbell, 48, of McKinney, Texas, pleaded guilty to conspiracy to commit illegal remunerations on Jan. 25, 2021 before U.S. Magistrate Judge Caroline Craven.

Nicolas Arroyo of Newport Coast, California, previously pleaded guilty for his involvement in the conspiracy.

“Kickback schemes are anti-competitive, lead to overutilization and higher program costs, and prioritize profits over patient care,” said Acting United States Attorney Nicholas J. Ganjei.  “The payment and receipt of kickbacks related to federal health care programs will not be tolerated in the Eastern District of Texas.” 

According to information presented in court, the defendants conspired with others to pay and receive kickbacks in exchange for the referral of, and arranging for, health care business, specifically pharmacogenetic (PGx) tests.  Pharmacogenetic testing, also known as pharmacogenomic testing, is a type of genetic testing that identifies genetic variations that effect how an individual patient metabolizes certain drugs.  The illegal arrangement concerned the referral of PGx tests to clinical laboratories in Fountain Valley, California, Irvine, California, and San Diego, California.  More than $28 million in illegal kickback payments were exchanged by the defendants and others during the conspiracy.

In December 2019, Arroyo and eleven other individuals from three states were charged for their roles in the kickback conspiracy.  A federal grand jury in the Eastern District of Texas returned an indictment against Philip Lamb of Scottsdale, Arizona; Nicolas Arroyo of Newport Coast, California; Vincent Marchetti, Jr., of Coronado, California; William Flowers of Houston, Texas; Steven Donofrio of Temecula, California; James J. Walker, Jr. a/k/a Jimmy Walker of Frisco, Texas; Timothy Armstrong of Frisco, Texas; Virginia Blake Herrin of Frisco, Texas; Patrick Ridgeway of Jackson, Mississippi; Chismere Mallard of McAllen, Texas; Ray W. Ng of Dallas, Texas; and Ashley Kretzschmar of Aledo, Texas; for conspiring to commit illegal remunerations in violation of the Anti-Kickback Statute.

The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remunerations in exchange for the referral of or arranging for items or services payable under federal health care programs.  Under federal statutes, violations of the Anti-Kickback statute are punishable by up to five years in federal prison.

This case was investigated by the U.S. Department of Health and Human Services, Office of Inspector General, the FBI Dallas – Frisco Resident Agency, and the U.S. Department of Homeland Security, Homeland Security Investigations.  It was prosecuted by Assistant U.S. Attorneys Nathaniel C. Kummerfeld and L. Frank Coan, Jr.

A Texas man pleaded guilty today to violent gang-related activities in the Eastern District of Texas.

According to information presented in court and contained in court filings, Glynnwood Derrick, 46, of Texarkana, joined the Aryan Circle (AC) while in state prison in Texas in 2000, and received his “patch,” or gang tattoo, in 2004 while serving a sentence in federal prison. Derrick held various ranks within the organization over the years, including the ranks of Captain and Major. Derrick attended “church,” or gang meetings, on numerous occasions at the homes of other AC members.

The AC is a violent, white supremacist organization that operates inside federal prisons across the country and outside prisons in states including Texas, Arkansas, Louisiana, and Missouri. The AC enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, assault, and threats against those who violate the rules or pose a threat to the organization. Members, and oftentimes associates, are required to follow the orders of higher-ranking members without question.

Prior to Oct. 2, 2016, AC members learned that an AC member wanted to switch his gang affiliation, or “patch over,” from the AC to a different gang. AC members were ordered to attack the former member in order to “X” him, or attack and remove him from the gang, because it violated the AC’s rules to join another organization. A meeting was held at an AC member’s home in the Tyler, Texas area where AC members planned the logistics of the assault.

On Oct. 2, 2016, Derrick and other AC members met at a park near Tyler, Texas, where they had planned to attack the former member, who was also present. Multiple AC members violently beat the victim, including kicking the victim in the head while he was on the ground.  This attack resulted in the victim seeking medical care.

Derrick will be sentenced at a date to be determined.

Nicholas L. McQuaid, Acting Assistant Attorney General of the Justice Department’s Criminal Division, and Nicholas J. Ganjei, Acting U.S. Attorney for the Eastern District of Texas, made the announcement.

This case is part of a larger investigation into the Aryan Circle by an Organized Crime Drug Enforcement Task Force (OCDETF) consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; Drug Enforcement Administration; Federal Bureau of Prisons; Texas Department of Public Safety; Houston Police Department-Gang Division; Montgomery County (TX) Precinct One Constable’s Office; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; Texas Department of Criminal Justice; New Jersey Department of Corrections-Special Investigations Division; Indiana State Police; Fort Smith (AR) Police Department; Arkansas Department of Corrections; Arnold (MO) Police Department; Jefferson County (MO) Sheriff’s Department; St. Louis Metropolitan Police Department; St. Louis County (MO) Police Department; Indiana Department of Corrections; Carrollton (TX) Police Department; Waller (TX) Police Department; Montgomery County (TX) Sheriff’s Office; Travis County (TX) Sheriff’s Office; Tarrant County (TX) Sheriff’s Office; Evangeline Parish (LA) Sheriff’s Office; Smith County (TX) Sheriff’s Office; McCurtain County (OK) Sheriff’s Office; Montgomery County (TX) District Attorney’s Office; Liberty County (TX) District Attorney’s Office; Harris County (TX) District Attorney’s Office; Mercer County (NJ) District Attorney’s Office; Evangeline Parish (LA) District Attorney’s Office; and the Sebastian County (AR) District Attorney’s Office. It is being prosecuted by Trial Attorney Bethany Lipman of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Christopher Rapp of the Eastern District of Texas.

BEAUMONT, Texas – A Texas man has pleaded guilty to violent gang-related activities in the Eastern District of Texas, announced Acting United States Attorney Nicholas J. Ganjei and Nicholas L. McQuaid, Acting Assistant Attorney General of the Justice Department’s Criminal Division.

Glynnwood Derrick, 46, pleaded guilty to assault resulting in serious bodily injury in aid of racketeering today before U.S. Magistrate Judge Zack Hawthorn.

“Gang violence has no place in our community,” said Acting United States Attorney Nicholas Ganjei.   “The men and women of the Department of Justice, and our law enforcement partners, will do whatever it takes to safeguard our citizens from the predations of organized criminal gangs.”

According to information presented in court and contained in court filings, Derrick joined the Aryan Circle (AC) while in state prison in Texas in 2000, and received his “patch,” or gang tattoo, in 2004 while serving a sentence in federal prison. Derrick held various ranks within the organization over the years, including the ranks of Captain and Major. Derrick attended “church,” or gang meetings, on numerous occasions at the homes of other AC members.

The AC is a violent, white supremacist organization that operates inside federal prisons across the country and outside prisons in states including Texas, Arkansas, Louisiana, and Missouri.  The AC enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, assault, and threats against those who violate the rules or pose a threat to the organization.  Members, and oftentimes associates, are required to follow the orders of higher-ranking members without question.

Prior to Oct. 2, 2016, AC members learned that an AC member wanted to switch his gang affiliation, or “patch over,” from the AC to a different gang.  AC members were ordered to attack the former member in order to “X” him, or attack and remove him from the gang, because it violated the AC’s rules to join another organization.  A meeting was held at an AC member’s home in the Tyler, Texas area where AC members planned the logistics of the assault.

On Oct. 2, 2016, Derrick and other AC members met at a park near Tyler, Texas, where they had planned to attack the former member, who was also present. Multiple AC members violently beat the victim, including kicking the victim in the head while he was on the ground.  This attack resulted in the victim seeking medical care for serious injuries.

This case is part of a larger investigation into the Aryan Circle by an Organized Crime Drug Enforcement Task Force (OCDETF) consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; Drug Enforcement Administration; Federal Bureau of Prisons; Texas Department of Public Safety; Houston Police Department-Gang Division; Montgomery County (TX) Precinct One Constable’s Office; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; Texas Department of Criminal Justice; New Jersey Department of Corrections-Special Investigations Division; Indiana State Police; Fort Smith (AR) Police Department; Arkansas Department of Corrections; Arnold (MO) Police Department; Jefferson County (MO) Sheriff’s Department; St. Louis Metropolitan Police Department; St. Louis County (MO) Police Department; Indiana Department of Corrections; Carrollton (TX) Police Department; Waller (TX) Police Department; Montgomery County (TX) Sheriff’s Office; Travis County (TX) Sheriff’s Office; Tarrant County (TX) Sheriff’s Office; Evangeline Parish (LA) Sheriff’s Office; Smith County (TX) Sheriff’s Office; McCurtain County (OK) Sheriff’s Office; Montgomery County (TX) District Attorney’s Office; Liberty County (TX) District Attorney’s Office; Harris County (TX) District Attorney’s Office; Mercer County (NJ) District Attorney’s Office; Evangeline Parish (LA) District Attorney’s Office; and the Sebastian County (AR) District Attorney’s Office. The matter is being prosecuted by Assistant United States Attorney Christopher Rapp of the Eastern District of Texas and Trial Attorney Bethany Lipman of the Criminal Division’s Organized Crime and Gang Section.

BEAUMONT, Texas – January is Human Trafficking Awareness month.  Each year, law enforcement and service providers reaffirm their commitment to eradicating human trafficking in all forms.  Acting United States Attorney Nicholas J. Ganjei is issuing a number of messages to educate the public about human trafficking and, importantly, to dispel many myths and misconceptions about trafficking. 

           “Human trafficking is modern-day slavery,” said Acting United States Attorney Ganjei.  “We proudly partner with federal, state, and local law enforcement, as well as the remarkable men and women who work with victims, to bring traffickers to justice.  Those who exploit other human beings for personal gain have no safe harbor in the Eastern District of Texas.”

           Often associated only with sex trafficking, “human trafficking” also includes labor trafficking and indentured servitude.  Moreover, trafficking offenses occur in every city and region.  It is also a common misconception that individuals are kidnapped or forced into trafficking by strangers.  Most victims of human trafficking actually know their trafficker and are enticed by promises of good jobs, easy money, a comfortable life, new opportunities, or even the affection of their trafficker.  Traffickers do not fit one particular profile.  They can be men or women and are from all races, ethnicities, and socio-economic backgrounds.

           Acting United States Attorney Ganjei urges the public to assist.  “Because these crimes are often unreported, the public plays a valuable role in helping law enforcement to combat human trafficking.  Each day, people unwittingly come into contact with victims of trafficking.  From ride share drivers, to beauty service providers, to grocery or convenience store workers, we see these hidden victims.”  Acting U.S. Attorney Ganjei added, “It us up to all of us to end this terrible practice.  If you see something, say something.  Please contact law enforcement or the National Human Trafficking Hotline if you suspect human trafficking.”

           If you are currently the victim of sex trafficking, labor trafficking, or indentured servitude, or if you suspect someone else is being victimized, please contact the National Human Trafficking Hotline at 888-373-7888 (voice), “BeFree” or 233733 (text), or https://polarisproject.org.

SHERMAN, Texas – A Sherman, Texas, man has been sentenced to federal prison for drug trafficking violations in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei today.

Anthony Wade Buford, 35, pleaded guilty on June 9, 2020, to conspiracy to distribute and possession with intent to distribute methamphetamine and was sentenced to 235 months in federal prison today by U.S. District Judge Amos L. Mazzant, III.

According to information presented in court, in the summer of 2019, Grayson County law enforcement agencies began investigating reports that a drug trafficking group operating in the area was receiving narcotics from a supplier in McKinney, Texas.  On August 22, 2019, a deputy with the Grayson County Sheriff’s Office initiated a traffic stop on a vehicle occupied by Buford and a search of the vehicle revealed 242.74 grams of pure methamphetamine and 13.1 grams of suspected black tar heroin. Officers were able to identify co-defendants Jeremy Wayne Helton, a resident of McKinney, as Buford’s source of supply. On August 28, 2019, task force investigators executed a search warrant at Helton’s residence, where they located co-defendant Kennen Depetris and seized 1.568 kilograms of pure methamphetamine, $12,000 cash; four handguns; 3.8 ounces of GHB, digital scales and assorted baggies for drug packaging, fake driver’s licenses; and a quantity of suspected heroin.

Investigators later identified co-defendant Benjamin Christopher Reyes, of Dallas, Texas, as Helton and Depetris’s source of supply. They immediately conducted a “buy-bust” operation on Reyes at Helton’s residence, where they seized an additional two kilograms of pure methamphetamine from him.  Further investigation led to the identification of the following additional members of the conspiracy, all of whom were indicted along with Reyes, Helton, Depetris and Buford, including:

• Mishay Gabriele McManigell of Sherman, Texas, who has pleaded guilty and was sentenced to 121 months in federal prison for her role in the conspiracy.
• Coty Allen Pipkin, of Sherman, Texas, who has pleaded guilty and was sentenced to 120 months in federal prison for his role in the conspiracy.
• Melysa Rae Sudderth, of Pottsboro, Texas, who has pleaded guilty and was sentenced to 70 months in federal prison for her role in the conspiracy.
• Stephen Keith Martin, of Sherman, Texas, who has pleaded guilty and was previously sentenced to 188 months in federal prison for his role in the conspiracy.
• Bridget Marie Dobrovolsky, of Durant, Oklahoma, who has pleaded guilty and was sentenced to 120 months in federal prison for her role in the conspiracy.

 

Two defendants, Reyes and Marlon Glenn Warren, II, of Denison, Texas have pleaded guilty and are awaiting sentencing. Helton previously pleaded guilty and received 210 months in federal prison for his role in the conspiracy. Depetris is currently awaiting trial.

This case was investigated by the Sherman, Denison, and Bells, Texas Police Departments; the Grayson County Sheriff’s Office; the Drug Enforcement Administration’s (DEA); and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and is being prosecuted by Assistant United States Attorney Matthew T. Johnson.

BEAUMONT, Texas – A 62-year-old Vidor, Texas woman has been sentenced to federal prison for drug trafficking violations in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei today.

Catherine Ardis pleaded guilty on Sep. 10, 2020, to conspiracy to possess with intent to distribute a controlled substance, namely hydromorphone, and was sentenced to 180 months in federal prison by U.S. District Judge Marcia A. Crone on Jan. 22, 2021.

            According to information presented in court, federal agents began an investigation of Ardis and others in June of 2019 after three persons died as a result of opiates purchased from Ardis at her residence on FM 105 North in Vidor, Texas.  Medical examination of the deceased persons determined that the victims died from poly-drug toxicity resulting from the use of hydromorphone pills, also referred to as Dilaudid.  As part of the factual basis for the plea, Ardis admitted to selling the hydromorphone pills that resulted in the death of the three victims.

            “Prescription opiates require a doctor’s consultation and care for a reason,” said Acting U.S. Attorney Nicholas J. Ganjei.  “Those that put the public at risk for a quick buck will be punished to the fullest extent of the law.”

            “This case is a tragic reminder that the abuse of opioids and other prescription pills is just as deadly as illicit narcotics, and those who traffic in diverted pharmaceuticals are held equally responsible under the law,” stated DEA Special Agent in Charge, Steven S. Whipple.  “We hope that this case serves as a warning to those who illegally distribute pharmaceuticals or those who may abuse them.”

            This case was investigated by the U.S. Drug Enforcement Administration, Vidor Police Department, Jefferson County Sheriff’s Office, Beaumont Police Department, Port Arthur Police Department, and prosecuted by Assistant U.S. Attorney Michael A. Anderson.

BEAUMONT, Texas – Acting U.S. Attorney Nicholas J. Ganjei announced today that the United States Attorney’s Office for the Eastern District of Texas (EDTX) collected $68,064,639.91 in criminal, civil, and asset forfeiture actions in 2020. 

              In criminal cases, EDTX collected $6,587,484.79 of restitution for crime victims, and recovered an additional $52,557,961.91 through civil enforcement actions for the American taxpayer.  Working with partner agencies and divisions, the Eastern District also collected $8,919,191.00 through asset forfeiture.  Forfeited assets deposited into the Department of Justice’s Asset Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.

              “I am proud of the Eastern District’s aggressive approach to collecting debts for victims of crime and for the government,” said Acting U.S. Attorney Nicholas J. Ganjei. “Despite the challenges presented by the COVID pandemic, the Eastern District focused on working to ensure that crime victims receive what they are owed and that defendants pay for their crimes.”

              The U.S. Attorneys’ Offices, along with the Department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the federal government and criminal debts owed to federal crime victims.  The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss.  Restitution is paid to the victim; criminal fines and felony assessments are paid to the department’s Crime Victims Fund, which then distributes the funds collected to federal and state victim compensation and assistance programs.

              The Justice Department, as a whole, collected more than $15.9 billion in civil and criminal actions in 2020.  This amount is more than five times the approximately $3.2 billion appropriated budget for all 94 U.S. Attorneys’ offices and the main litigating divisions of the Justice Department.  The total includes all monies collected through Justice Department-led enforcement actions and negotiated civil settlements.  It also includes more than $13.5 billion in payments made directly to the Justice Department and more than $2.4 billion in indirect payments made to other federal agencies, states, and other designated recipients.

BEAUMONT, Texas – A 34-year-old Beaumont, Texas man has been sentenced to federal prison for carjacking and firearms violations in the Eastern District of Texas announced Acting U.S. Attorney Nicholas J. Ganjei today.             

              Thaddiaus Joseph Thomas pleaded guilty on August 12, 2020 to discharging a firearm in furtherance of a crime of violence and carjacking and was sentenced to 198 months in federal prison today by U.S. District Judge Marcia A. Crone.

              “Everyone deserves to live in a safe community, free from the threat of violent crime,” said Acting U.S. Attorney Ganjei.  “The U.S. Attorney’s Office for the Eastern District of Texas, along with our federal and local law enforcement partners, will do whatever it takes to stem the tide of violent gun crime on our streets.”

               According to information presented in court, on Dec. 21, 2019, Thomas and Tremaurice Arthur Randall traveled to the Excellent Carwash located at 5010 Haden Road in Beaumont, Texas, wearing masks, where they approached a man who was sitting in the driver’s seat of his 2003 Dodge Ram pickup truck. Thomas pointed a pistol at the man and Randall ordered him to “give it up” before the two pulled the man out of his truck and threw him to the ground. Thomas then pistol whipped the man in the head and fired one shot toward his feet.  Randall and Thomas then entered the pickup truck and fled.  Thomas and Randall were indicted by a federal grand jury on March 4, 2020 and charged with conspiracy to commit carjacking, carjacking, possession of a firearm during a crime of violence, and possession of a firearm by a prohibited person.

              Randall, 24, of Beaumont, pleaded guilty on August 4, 2020 to brandishing a firearm in furtherance of a crime of violence and carjacking and was sentenced on Dec. 2, 2020 to 114 months in federal prison. 

              This case is a part of Project Guardian, the Department of Justice’s signature initiative to reduce gun violence and enforce federal firearms laws.  Initiated by the Attorney General in the fall of 2019, Project Guardian draws upon the Department’s past successful programs to reduce gun violence; enhances coordination of federal, state, local, and tribal authorities in investigating and prosecuting gun crimes; improves information-sharing by the Bureau of Alcohol, Tobacco, Firearms and Explosives when a prohibited individual attempts to purchase a firearm and is denied by the National Instant Criminal Background Check System (NICS), to include taking appropriate actions when a prospective purchaser is denied by the NICS for mental health reasons; and ensures that federal resources are directed at the criminals posing the greatest threat to our communities. 

              This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Beaumont Police Department and prosecuted by Assistant U.S. Attorney John B. Ross.

SHERMAN, Texas – A 47-year-old Arlington, Texas woman has been sentenced to federal prison for a bankruptcy fraud scheme in the Eastern District of Texas announced Acting U.S. Attorney Nicholas J. Ganjei today.           

           Cotriena Machelle Embers pleaded guilty on August 10, 2020 to bankruptcy fraud, wire fraud and aggravated identity theft and was sentenced to 42 months in federal prison today by U.S. District Judge Amos Mazzant.   The judge left open the possibility of ordering restitution to the identity theft victim in the case.

         According to evidence presented in court, beginning in August 2017, Embers engaged in a scheme to defraud an apartment complex where she resided by falsely filing a bankruptcy petition using the name and social security number of a third party, without that person’s knowledge or authorization.  The bankruptcy court ultimately discovered this fraudulent representation and ordered Embers to appear and explain her actions.  The United States Trustee’s Office, which is charged with overseeing the integrity of bankruptcy cases in the federal courts, offered evidence in the bankruptcy case about what Embers had done and referred the matter to the U.S. Attorney’s Office and the FBI for investigation.  After investigation by the FBI, a federal grand jury indicted Embers in 2019, charging her with bankruptcy fraud, wire fraud, and aggravated identity theft. 

            “It is crucial that proceedings in bankruptcy cases in federal court are carried out with integrity.  The United States Attorney’s Office is determined to prosecute individuals who undermine these cases by making false statements to the bankruptcy judge and parties” said Acting U.S. Attorney Nicholas Ganjei.  “We appreciate the work of the U.S. Trustee in investigating and referring these cases for prosecution to the U.S. Attorney and the FBI, and appreciate the valuable work done by the FBI in this investigation.”

            This case was investigated by the U.S. Trustee’s Office and the Federal Bureau of Investigation and prosecuted by the United States Attorney’s Office for the Eastern District of Texas.

MARSHALL, Texas – A 53-year-old Longview, Texas man has been sentenced to federal prison for drug trafficking violations in the Eastern District of Texas announced Acting U.S. Attorney Nicholas J. Ganjei today.           

          Tony Goss pleaded guilty on Sep. 30, 2020 to possession with the intent to distribute anabolic steroids and was sentenced to 19 months in federal prison today by U.S. District Judge Rodney Gilstrap.  

         According to evidence presented in court, On August 22, 2019, state and federal law enforcement agents executed a search warrant at an office located at 107 Community Blvd, in Longview.  Goss admitted that he possessed approximately 5,493 pills or tablets containing anabolic steroids, approximately 4,192 grams of anabolic steroid powder and, approximately 2,960 milliliters of liquid anabolic steroids at the location with the intent to distribute them for commercial profit.  Goss further admitted that he distributed anabolic steroids through mass-marketing by means of an interactive computer service.

         Goss also agreed to the forfeiture of seven firearms, a 2016 Ford F – 350 pickup, and $459,285.25 which he obtained by selling anabolic steroids online. 

            This case was investigated by the Drug Enforcement Administration Tyler Field Office, and the U.S. Postal Inspection Service – Ft. Worth Office and prosecuted by Assistant U.S. Attorney Jim Noble.

PLANO, Texas – A 35-year-old Wylie, Texas man has been sentenced for child exploitation violations in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.

Zachary Sean Layne pleaded guilty on Jan. 6, 2020, to distributing child pornography and was sentenced to 210 months in federal prison by U.S. District Judge Sean D. Jordan on Jan. 15, 2021.

According to information presented in court, in the spring of 2019, federal agents served a search warrant at Layne’s home in Wylie, Texas, following a report from a social media company about suspected child pornography being shared from a user at Layne’s residence.  Layne admitted that he used the social media applications and that he regularly chatted with other individuals on the platform.  He stated that he had been trading child pornography, via the social media application and cloud storage accounts, for more than a year.  In addition to trading child pornography, Layne admitted to chatting with individuals he believed to be minors.  He stated that he “catfished” some of the minors with the hopes that they would send him pornographic material.  Layne further admitted that he engaged in sexually graphic conversations with many purported minors, including about meeting up for sex.  There is no evidence that Layne followed through with plans to meet with minors to engage in sexual activity.

“Those who dare to prey on children will be prosecuted to the fullest extent of the law,” said U.S. Attorney Cox.  “Other would-be exploiters are on notice that EDTX and its law enforcement partners have zero tolerance for such despicable crimes.”

“Predators who exploit the innocence of children must not have any presence within our communities,” said Christopher Miller, Deputy Special Agent in Charge HSI Dallas. “We will work endlessly to ensure we remove these deviant criminals from our streets, using the full magnitude of our investigative resources to end the illegal business of sexual exploitation of minors.”

As part of his guilty plea, Layne admitted that he knowingly distributed child pornography, using cellular devices and the social media platform.  Layne also agreed that he had shared the files in order to receive valuable consideration, namely, other and new child pornography.  Moreover, Layne admitted that be distributed and possessed more than 600 images and videos of child pornography, and that the files depicted prepubescent minors and sadistic or masochistic abuse. 

This case was investigated by Homeland Security Investigations Safety with assistance of the Wylie Police Department, Dallas Police Department, and the U.S. Department of Justice—Office of the Inspector General, Investigations Division.  The case was prosecuted by Assistant U.S. Attorney Marisa Miller.

 

###

BEAUMONT, Texas – United States Attorney Stephen J. Cox announced that he will step down from his post as U.S. Attorney for the Eastern District of Texas (EDTX) effective 11:59 p.m. today, January 19.

“The opportunity to serve as the U.S. Attorney for the Eastern District of Texas has been a distinct honor and privilege for which I will be forever grateful,” said Cox. “The opportunity to serve the people of the Great State of Texas, and to work alongside the fine men and women of our office, has been nothing short of humbling.”

During Cox’s tenure at EDTX, the District focused increased attention on complex fraud and white-collar enforcement, with a particular emphasis on healthcare, financial, and antitrust crimes; adopted new corporate enforcement policies that are important for transparency, good government, and fairness; launched a new transnational elder fraud initiative designed to target international crime rings targeting senior citizens; formed new partnerships and strike forces with law enforcement partners to leverage expertise and increase referrals; initiated a new violent crime enforcement blitz designed to thwart a rise in gun crimes in Port Arthur and the Golden Triangle; formed new public-private partnerships to facilitate increased information sharing; and developed a new leadership structure to implement specialized fields of practice and increase collaboration and co-counsel opportunities across the District.

Cox began his service at the Department of Justice in early 2017, when he served as Deputy Associate Attorney General in the Office of the Associate Attorney General (OASG), overseeing five large litigating components, three grant-making components, and a number of other offices relating to civil justice.  Cox spearheaded numerous policy reforms relating to corporate enforcement and regulatory reform, while overseeing several Department matters concerning financial fraud and healthcare fraud.  He also served as vice chair of the Deputy Attorney General’s working group on corporate enforcement and accountability, and as executive director of the Department’s regulatory reform task force.

In May 2020, after more than three years in OASG including as Chief of Staff, former Attorney General William Barr appointed Cox as U.S. Attorney for EDTX effective June 1st, and on September 28th was appointed by the Court as U.S. Attorney, having received the unanimous approval of the active and senior District Judges.

Cox focused a significant amount of attention developing new ways to leverage the talented personnel in the Office.  Since his arrival, EDTX made some sizeable changes to the structure of the office, moving personnel between divisions, adding new hires, and creating new roles to better accomplish our mission. In the Criminal Division, for example, Cox identified specialized fields of practice and named Deputy Chiefs to oversee these new sections across the District. The new structure now leverages the expertise of these Deputy Chiefs in some of our most specialized cases and creates a horizontal structure that allows for unprecedented collaboration amongst all our offices. 

Under Cox’s leadership, EDTX also increased its capacity and strengths in white collar enforcement through the new personnel structure, more targeted recruiting and staffing, new and improved partnerships with law enforcement, and new corporate enforcement policies.  For example, EDTX recruited two new White Collar AUSAs, partnered with the Criminal Division to embed three Healthcare Strike Force prosecutors within EDTX, and recruited new SAUSAs with white-collar experience.  EDTX signed an MOU with the Special Inspector General for Pandemic Recovery so that we could heighten the focus on COVID-related fraud; joined the Gulf Coast Strike Force to increase healthcare fraud capacity; and joined the Procurement Collusion Strike Force to bolster efforts to protect competition in the procurement marketplace.

Cox launched a new transnational elder fraud initiative and placed a senior white collar prosecutor from the leadership team in charge.  The initiative’s purpose is to reimagine the fight against elder fraud and use the same tactics and tools that EDTX uses to root out transnational drug cartels to decimate the criminal transnational syndicates preying on our seniors.  EDTX established three separate Financial Investigation Groups to partner with law enforcement in conducting an expansive review of Suspicious Activity Reports, which have identified financial transactions that might be related to elder fraud.  EDTX established an open, working dialogue with some of the world’s biggest banks to share information and foster better referrals.  EDTX participated in the Department of Justice’s Money Mule Initiative with great results.  Money mules are the lifeblood of these international fraud rings, and EDTX identified and disrupted at least 13 money mules through interviews, warning letters, and criminal charges.  EDTX is also working with Texas retailers and grocers on what to look for when they suspect a large gift card purchase is being used to facilitate money laundering.  Finally, EDTX grew its partnerships with the Consumer Protection Branch, the Criminal Division, and the Federal Trade Commission, yielding increased elder fraud referrals.

Borrowing a page from his work at Main Justice, Cox recently announced that EDTX has formally adopted the most recent corporate enforcement policies that the Department has introduced in the past four years, removing any doubt as to whether they applied in EDTX.  The policies address a wide spectrum of white-collar enforcement issues relating to corporate resolutions, prosecutorial discretion, third-party payments, voluntary disclosure, cooperation, guidance documents, piling-on credit, agency coordination, compliance programs and corporate monitors, and ability to pay. Cox spearheaded several of these policies while at OASG and assisted with others in his capacity as vice-chair of the Deputy Attorney General’s working group on corporate enforcement and accountability.

Cox supervised investigations into and secured charges or convictions in numerous significant cases, including, the bomber of a Beaumont church; Jefferson County residents allegedly engaged in the unlawful nationwide distribution of butanediol, commonly referred to as a “date rape drug;” a church pastor charged with production of child pornography; the seizure of phony tech support websites used to defraud Amazon customers; a Collin County man facing COVID-relief fraud charges related to the Paycheck Protection Program; Liberty County residents alleged to have operated a CARES Act fraud scheme involving Economic Injury Disaster Loans; individuals allegedly engaged in a multi-million dollar transnational money laundering operation involving elder fraud; the sentencing of an Al-Qaeda trained jihadist to 300 months for a plot to recruit terrorists to kill Americans on behalf of ISIS; Aryan Circle gang members and associates indicted on charges of racketeering conspiracy, which includes acts involving murder, and violent crimes in aid of racketeering, including assault resulting in serious bodily injury and kidnapping; a Collin County man convicted for cyber fraud and money laundering that victimized senior citizens, school districts, and charities; the conviction of a Jefferson County physician for health care fraud and kickback violations related to compounded scar creams; and the sentencing of a Dark Web cannibal to 40 years for child exploitation violations.

Under Cox’s leadership, the civil litigation practice in EDTX has achieved significant and numerous successes in all aspects of civil practice, including its efforts to enforce the Controlled Substances Act (CSA), False Claims Act (FCA), civil forfeiture, and well as in its defensive practice, defending federal employees and agencies sued in federal court. The United States sought and obtained a temporary restraining order (TRO) under the CSA barring defendants Jake’s Fireworks and Right Price Chemicals from continuing business operations on the grounds that Jake’s Fireworks was a drug-involved premises.  EDTX also played a primary role in negotiating a $48 million settlement in United States ex rel. Magee v. Texas Heart Hospital of the Southwest et al, 4:16-cv-00717 (E.D. Tex.) to resolve claims that Texas Heart Hospital of the Southwest and its wholly owned subsidiary violated the Physician Self-Referral Law and the Anti-Kickback Statute.  EDTX also continued its commitment to using the FCA to hold individuals, not just corporations, accountable for fraud on the United States, settling with Bibi Tasleyma Sattar, D.O. and her medical practice for $210,000 for violations of the Anti-Kickback Statute, as well as a similar $368,325.00 settlement with Joseph Rizzo, M.D. and a $281,524.07 settlement with Jason Bourque, also for Anti-Kickback violations.  EDTX also commenced civil forfeiture proceedings against Fahad Shah, who submitted fraudulent applications for over $3 million in forgivable loans pursuant to the Small Business Authority’s Paycheck Protection Program, but diverted the funds for his own personal use.

Upon Cox’s departure, Nicholas Ganjei, a career federal prosecutor and EDTX’s First Assistant U.S. Attorney, will serve as Acting U.S. Attorney. Ganjei will become the first Persian-American in the 174-year history of the District to serve as EDTX’s U.S. Attorney (acting or otherwise).

“I expect the transition to be seamless,” said Cox. “Nick and I worked hand-in-glove on setting these office priorities and putting our signature initiatives into motion.  Although I am passing the torch, I’m excited to see where Nick and the leadership team take the office next.”

Cox will return to the private sector and will announce his next role in the coming months, but in the meantime, Cox plans to spend time with the family ticking through some bucket-list items that include sightseeing, camping, and touring the country. 

Cox’s biography can be found here.

TEXARKANA, Texas – A 32-year-old Maud, Texas man has been charged with allegedly filing bank loan applications fraudulently seeking more than $5 million dollars in forgivable loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, announced Eastern District of Texas U.S. Attorney Stephen J. Cox today. 

           Samuel Yates was charged with two counts of wire fraud returned by a federal grand jury in Texarkana, Texas, on Jan. 14, 2021.  Yates allegedly sought millions of dollars in forgivable loans guaranteed by the SBA from two different banks by claiming to have over 400 employees earning wages when, in fact, no employees worked for his purported business.

           According to court documents unsealed today in U.S. District Court in Texarkana, Yates allegedly made two fraudulent applications to two different lenders for loans guaranteed by the SBA for COVID-19 relief through the PPP.  In the application submitted to the first lender, Yates allegedly sought $5 million in PPP loan proceeds by fraudulently claiming to have over 400 employees with an average monthly payroll of more than $2 million.  In the second application, Yates claimed to employ over 100 individuals and was able to obtain a loan over $500,000. With each application, Yates submitted a list of purported employees that he obtained from a publicly available random name generator on the internet. He also submitted forged tax documents with each application.

           The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.  One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP.  In April 2020, Congress authorized over $300 billion in additional PPP funding.

           The PPP allows qualifying small-businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent.  PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities.  The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within eight weeks of receipt and use at least 75 percent of the forgiven amount for payroll. 

           A federal criminal indictment is merely an accusation. A defendant is presumed innocent unless and until proven guilty.

           This case was investigated by the SBA Office of Inspector General, and U.S. Postal Inspection Service.  Trial Attorney Louis Manzo of the Criminal Division’s Fraud Section and Criminal Chief Frank Coan and Assistant U.S. Attorney Jonathan R. Hornok for the Eastern District of Texas are prosecuting the case.

BEAUMONT, Texas – The Eastern District of Texas has taken another significant step in promoting justice, fairness, and transparency in the areas of corporate and white-collar enforcement.

“For the past four years, the Department of Justice has introduced and formalized policies relating to corporate and white-collar enforcement actions. These policies are good for government, good for fairness, good for transparency, good for the public, and consistent with the Department’s pursuit of justice,” said U.S. Attorney Stephen J. Cox. “Today, the Eastern District of Texas makes clear that it has adopted these policies and fully commits the District to applying them in its civil and criminal white-collar and corporate investigations.”

In a new policy memorandum announced today, the Eastern District of Texas has formally adopted the Department’s recent enforcement policies concerning corporate resolutions, prosecutorial discretion, third-party payments, voluntary disclosure, cooperation, guidance documents, piling-on credit, agency coordination, compliance programs and corporate monitors, and ability to pay.  This EDTX Corporate Enforcement Memo is designed to balance the District’s aggressive enforcement of corporate and white-collar fraud against equally important considerations such as transparency, good government, and fairness. U.S. Attorney Cox added, “the Eastern District of Texas is continually innovating as part of our goal to be on the cutting edge of corporate and white-collar enforcement. Specifically adopting these Department’s policies solidifies the District’s leadership in these areas.” 

The EDTX Corporate Enforcement Memo removes any doubt regarding whether the Department’s policies apply to investigations by the United States Attorney’s Office in the Eastern District of Texas.  The policy applies to all current and future civil and criminal investigations and will be effective immediately.  The Eastern District of Texas policy is available here.

A Texas man has been charged in the Eastern District of Texas with allegedly filing bank loan applications fraudulently seeking more than $5 million dollars in forgivable loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. 

David P. Burns, Acting Assistant Attorney General for the Justice Department’s Criminal Division; Stephen J. Cox, U.S. Attorney of the Eastern District of Texas; Dale Forrester, Special Agent in Charge of the Treasury Inspector General for Tax Administration’s Cybercrime Investigations Division; Donald Abram, Special Agent in Charge of the SBA Office of Inspector General’s (OIG) Central Region; and Ryan L. Spradlin, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) Dallas made the announcement.

Samuel Yates, 32, of Maud, was charged in an indictment with two counts of wire fraud.  The indictment alleges that Yates sought millions of dollars in forgivable loans guaranteed by the SBA from two different banks by claiming to have over 400 employees earning wages when, in fact, no employees worked for his purported business.

According to court documents unsealed today in U.S. District Court in Texarkana, Yates allegedly made two fraudulent applications to two different lenders for loans guaranteed by the SBA for COVID-19 relief through the PPP.  In the application submitted to the first lender, Yates allegedly sought $5 million in PPP loan proceeds by fraudulently claiming to have over 400 employees with an average monthly payroll of more than $2 million. In the second application, Yates claimed to employ over 100 individuals and was able to obtain a loan over $500,000. With each application, Yates submitted a list of purported employees that he obtained from a publicly available random name generator on the internet. He also submitted forged tax documents with each application.

The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.  One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP.  In April 2020, Congress authorized over $300 billion in additional PPP funding.

The PPP allows qualifying small-businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent.  PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities.  The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within eight weeks of receipt and use at least 75 percent of the forgiven amount for payroll. 

A federal criminal indictment is merely an accusation. A defendant is presumed innocent unless and until proven guilty.

Trial Attorney Louis Manzo of the Criminal Division’s Fraud Section and Criminal Chief Frank Coan and Assistant U.S. Attorney Jonathan R. Hornok for the Eastern District of Texas are prosecuting the case.

The Justice Department acknowledges and thanks the SBA Office of Inspector General, and U.S. Postal Inspection Service for their efforts investigating this mater.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

The U.S. Attorneys representing the four districts in Texas have announced their intent to prosecute any crimes committed at the state capitol or otherwise in violation of federal law ahead of upcoming presidential inauguration.
 

 “Last week’s attack on the U.S. Capitol in D.C. was reprehensible. We will not tolerate that type of behavior from protesters in Austin or anywhere in Texas,” said Acting U.S. Attorney Prerak Shah. “The Department of Justice will always support free speech, but we will never condone violence and destruction.”

Acting U.S. Attorney Shah joins his counterparts – U.S. Attorneys Ryan K. Patrick, Gregg N. Sofer, and Stephen J. Cox, of the Southern, Western, and  Eastern Districts of Texas, respectively – to warn those planning to cross state lines to commit crimes in Texas or at the state capitol.  

As the chief law enforcement officers in each of the federal districts, the U.S. Attorneys will be working with federal, state and local law enforcement throughout the state to aggressively identify acts that violate federal law. The plan is to ensure that anyone who is arrested for committing looting, violence or any other crime related to protests or similar events on or about inauguration day will be processed and held in federal custody pending further criminal proceedings.

The U.S. Attorney’s Office in the District of Columbia (DC) is prosecuting those that have been or will be identified as allegedly committing crimes during the riots at the U.S. Capitol last week. The Texas U.S. Attorneys are working with Department of Justice officials and law enforcement on those prosecutions.

BEAUMONT, Texas - The U.S. Attorneys representing the four districts in Texas have announced their intent to prosecute any crimes committed at the state capitol or otherwise in violation of federal law ahead of upcoming presidential inauguration.

“The First Amendment is a cherished right and bedrock principle of our great nation,” said United States Attorney Stephen J. Cox.  “Those who intend to commit crimes at the Texas State Capitol, rather than peacefully demonstrate, can expect to be met with a swift response by law enforcement and prosecution by our office.”

U.S. Attorney Cox joins his counterparts – U.S. Attorneys Gregg N. Sofer and Ryan K. Patrick and Acting U.S. Attorney Prerak Shah of the Western, Southern and Northern Districts of Texas, respectively – to warn those planning to cross state lines to commit crimes in Texas or at the state capitol.  

As the chief law enforcement officers in each of the federal districts, the U.S. Attorneys will be working with federal, state and local law enforcement throughout the state to aggressively identify crimes that violate federal law. The plan is to ensure that anyone who is arrested for committing looting, violence or any other crime related to protests or similar events on or about inauguration day will be processed and held in federal custody pending further criminal proceedings.

The U.S. Attorney’s Office (USAO) in the District of Columbia (DC) is prosecuting those that have been or will be identified as allegedly committing crimes during the riots last week. The Texas U.S. Attorneys will also be working with Department of Justice (DOJ) officials and necessary law enforcement in those prosecutions. Any questions regarding those matters should be directed to DOJ Office of Public Affairs or to the USAO in D.C.

TEXARKANA, Texas – A Liberty County, Texas, man and woman have been charged with filing hundreds of fraudulent Economic Injury Disaster Loan (EIDL) applications with the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.

           Clifton Pape, 45, and Sally Jung, 58, both of Cleveland, Texas, allegedly operated a COVID relief fraud scheme known as My Buddy Loans, that garnered them more than $775,000 in fraud proceeds and resulted in at least $1.3 million in loss to the United States. Pape and Jung are charged by way of a federal criminal complaint that charges a violation of 18 U.S.C. § 1031, major fraud against the United States.

           “At a time when small businesses—the engines of our economy in East Texas—most needed the help that the Small Business Administration was rushing to provide, these individuals took advantage of members of the public, depleting the available resources for small businesses and lining their own pockets with fraudulent gain,” said U.S. Attorney Stephen J. Cox of the Eastern District of Texas. “We encourage members of the public and the banking community to stay vigilant, watching for fraud as another round of COVID relief begins. It is a priority of the Department of Justice to deter and prosecute this type of fraud.”

           “Those responsible for committing fraud against SBA for personal gain will be identified and brought to justice,” said SBA OIG’s Central Region Special Agent in Charge Sharon Johnson. “SBA’s Economic Injury Disaster Loan program provides advance grants and loans to eligible small businesses to mitigate the negative impacts of the pandemic. I want to thank the Department of Justice and our law enforcement partners for their dedication to justice.”

           “These charges represent the consequences of exploiting the COVID-19 pandemic by defrauding the EIDL program and thus taking money intended for legitimate businesses in need,” said William Mack, U.S. Secret Service Resident Agent in Charge of the Tyler Resident Office. “The success of this investigation was the direct result of investigative actions taken by the Secret Service and its law enforcement partners.  The Secret Service will continue to hold those accountable who seek to exploit CARES Act programs and seek justice for all those who seek to exploit U.S. citizens for their own illicit gain.”

           According to court documents filed today in U.S. District Court in Texarkana, Pape and Jung operated under the name My Buddy Loans. In exchange for $1082.50, My Buddy Loans took personal identifying information from third parties and promised to file a federal application for a $10,000 agricultural grant. Instead, Pape and Jung actually filed EIDL applications with the SBA that contained false information. For example, in June and July 2020, Pape and Jung filed 222 EIDL applications, all of which purported to be for businesses with exactly ten employees—the minimum number of employees required to obtain the maximum EIDL advance of $10,000. From those 222 applications, the SBA issued 130 EIDL advances in the amount of $10,000—$1.3 million total.

           Pape and Jung used Square’s credit and debit card processing service to charge third parties the fee of $1082.50. Pape and Jung completed 716 successful charges, obtaining at least $775,000 in fees from third parties. Pape and Jung then transferred the proceeds of the fraud scheme into a bank account they controlled. On one occasion, Pape used the fraud proceeds to pay a traffic ticket. On another occasion, Pape and Jung used more than $3600 from the fraud scheme to pay for a stay at La Cantera Resort in San Antonio, Texas. A picture from that stay shows Pape and Jung celebrating over sparkling wine and other beverages. Pursuant to a seizure warrant, agents seized the $505,535.04 in fraud proceeds remaining in the account.

           The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.  One source of relief provided by the CARES Act was the authorization or EIDL Advances and low-interest loans to small businesses to meet financial obligations and operating expenses that could have been met had the disaster not occurred. Under the EIDL Advance program loan applicants were eligible for an advance of up to $10,000 if the applicant had ten or more employees, which was forgivable. The advance amount was based on the number of employees reported by a business. An applicant could receive $1000 per employee up to $10,000. The SBA required an EIDL Advance applicant to provide specific information at the time the application was made, including the number of employees, revenue, and cost of goods. An EIDL applicant could apply through a third-party processor. Third-party processors were permitted to charge a reasonable fee for their services.

           Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

           A federal criminal complaint is merely an accusation. A defendant is presumed innocent unless and until proven guilty.

           Under federal statutes, Pape and Jung face up to 10 years in federal prison and a $5,000,000 fine at sentencing. The statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.

           This case is being investigated by the U.S. Secret Service and the SBA Office of Inspector General. The case is being prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.

LONGVIEW, TEXAS – The United States Attorney for the Eastern District of Texas, Stephen J. Cox announced that Spinal Decompression Clinic of Texas (“SDCT”) has agreed to pay $330,898.00 to resolve liability under the False Claims Act for the alleged improper billing of electro-acupuncture device neurostimulators.

           From August 21, 2018 through June 26, 2019, SDCT billed Medicare for the implantation of 41 neurostimulators – a surgical procedure which usually requires an operating room and is reimbursed by federal healthcare programs. SDCT received reimbursement from Medicare in the amount of $177,051.15 for these procedures.  SDCT, however, did not perform these surgeries, and instead applied P-Stim devices in an office setting, without surgery or anesthesia. P-Stim is an electric acupuncture device that, pursuant to manufacturer’s instructions, is affixed behind a patient’s ear using an adhesive. Needles are inserted into the patient’s ear and affixed using another adhesive. Once activated, the device then provides intermittent stimulation by electrical pulses. It is a single use, battery-powered device designed to be worn for approximately four days until its battery runs out, at which time the device is thrown away.

           Medicare does not reimburse for acupuncture or for acupuncture devices such as P-Stim, nor does Medicare reimburse for P-Stim as a neurostimulator or as implantation of neurostimulator electrodes.

“Falsely submitting claims for non-covered services robs from the Medicare program and thereby deprives those in need from vital resources,” said United States Attorney Stephen J. Cox.  “Recovery of improperly paid reimbursements is critical to the long-term sustainability of the Medicare program, and we will do everything we can to ensure that any false claim is quickly recovered.”

           “When services provided are excluded from Medicare reimbursement, some providers may be tempted to falsely claim payment for covered treatments.  Such schemes, however, can result in hefty fines and prosecution,” said Miranda L. Bennett, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services.  “In coordination with our law enforcement partners, we will investigate and hold accountable entities that engage in these practices.” 

           The settled civil claims are allegations only. There has been no determination of civil liability. This case was investigated by the U.S. Department of Health and Human Services of the Inspector General. Assistant U.S. Attorney Aimee M. Cooper handled the matter.      

TYLER, Texas – A 36-year-old Tyler, Texas man has pleaded guilty to federal drug trafficking in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.

            Nasir Saleh-Saad Jabr, a.k.a. “Nemo,” appeared before U.S. Magistrate Judge K. Nicole Mitchell today to enter a plea of guilty to possession with intent to distribute methamphetamine.               

Jabr was arrested on Dec. 3, 2019, following an armed standoff with law enforcement in the parking lot of the Econo Lodge located at 2631 WNW Loop 323 in Tyler.  At the time of his arrest, Jabr was found to be in possession of 111.2 grams of methamphetamine and three firearms.  According to information presented in court, Jabr admitted he was responsible for possessing and distributing more than 50, but less than 150 grams of methamphetamine.  Jabr and three others were indicted by a federal grand jury on July 15, 2020, and charged with violations of federal drug trafficking laws.  Co-defendants Ralph Paul Pressley, III, 37, a.k.a. “Lil’ Paul,” and Tammy Lynn Dilbeck, 39, of Troup, Texas, have also recently plead guilty to violations of federal drug trafficking laws.

Under federal statutes, Jabr faces up to life in federal prison at sentencing.  The statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.  A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

            This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; the Texas Department of Public Safety; the Smith County Sheriff’s Office; and the Tyler Police Department and is being prosecuted by Assistant U.S. Attorney Lucas Machicek.

BEAUMONT, Texas – A 34-year-old Beaumont, Texas man has pleaded guilty to federal drug trafficking and firearms violations in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.

              Rustin Chase McKinsey, also known as “Dollar Bill,” pleaded guilty to discharging a firearm in furtherance of a drug trafficking crime and being a felon in possession of a firearm.  McKinsey entered his guilty plea before U.S. Magistrate Judge Zack Hawthorn on Jan. 6, 2021.

              According to information presented in court, on Sep. 4, 2020, law enforcement officers responded to a residence on Taylor Street in Beaumont, Texas in reference to a shooting. Upon arrival at the residence, officers discovered the victim laying on the front porch with a towel wrapped around a gunshot wound to his leg.  The victim’s roommate told officers he was awoken by an argument between the victim and McKinsey, and he observed McKinsey fire two shots at the victim before fleeing the scene.  The victim stated he owed money to McKinsey for methamphetamine that McKinsey sold him. 

              On Oct. 9, 2020, law enforcement officers responded again to the same residence on Taylor Street in Beaumont, Texas in reference to another shooting. Upon arrival, officers discovered the same victim suffering from a gunshot wound to his back. A single spent .22 caliber shell casing was discovered at the scene. The victim stated that McKinsey shot him again over the same drug debt that was owed. 

              McKinsey was arrested and admitted to officers that he had shot the victim on both occasions over a drug debt.  McKinsey is a convicted felon having previously been convicted of possession of a controlled substance in Jefferson County, Texas, on Dec. 18, 2017.  As a convicted felon, McKinsey is prohibited by federal law of owning or possessing a firearm or ammunition. 

              Under federal statutes, McKinsey faces up to life in federal prison at sentencing. The statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.

              This case is being investigated by the Beaumont Police Department and the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Matthew Quinn.

TEXARKANA, Texas – A 47-year-old federal inmate pleaded guilty to a federal violation in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.

              Jason Josh Parmeley pleaded guilty to aiding and abetting attempt to obtain contraband in prison today before U.S. Magistrate Judge Caroline M. Craven. In his plea agreement, Parmeley agreed to be sentenced to 60 to 80 months of imprisonment following his current term of incarceration, which will elapse in 2028.

              According to information presented in court, Parmeley, while an inmate at FCI Texarkana, joined others in smuggling Buprenorphine into the institution. Parmeley facilitated communication between the participants, intending the drugs to be distributed to inmates at the institution. Parmeley was also participating in a scheme and conspiracy to commit wire fraud while he was incarcerated.

              Under federal statutes, Parmeley faces up to 20 years in federal prison at sentencing. The statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.

              This case is being investigated by the Dallas Field Office of the U.S. Department of Justice, Office of the Inspector General, the Fort Worth Division of the U.S. Postal Inspection Service, and the Bureau of Prisons, Special Investigation Service. The case is being prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.