Eastern District of Texas
Press releases recorded for this federal judicial district.
Smith County Lawyer Guilty of Employment Tax ViolationsRead the Press Release
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.
Two More Individuals Plead Guilty in Connection with Health Care Kickback ConspiracyRead the Press Release
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.
Member of White Supremacist Prison Gang Guilty of Violent Crime in Aid of RacketeeringRead the Press Release
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.
Member of White Supremacist Prison Gang Guilty of Violent Crime in Aid of RacketeeringRead the Press Release
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.
Human Trafficking Has No Home in the Eastern District of TexasRead the Press Release
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.
Grayson County Man Sentenced for Trafficking MethamphetamineRead the Press Release
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.
Vidor Woman Sentenced to 15 Years in Federal Prison Following Opioid Overdose DeathsRead the Press Release
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.
U.S. Attorney's Office Recovers Nearly $70 Million in 2020Read the Press Release
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.
Jefferson County Man Sentenced to Federal Prison for Violent CarjackingRead the Press Release
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.
North Texas Woman Sentenced to Federal Prison for Bankruptcy Fraud SchemeRead the Press Release
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.
Gregg County Man Sentenced to Federal Prison for Trafficking Anabolic SteroidsRead the Press Release
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.
Wylie, Texas Man Sentenced After Admitting to Distributing Child Pornography and Communicating with Suspected MinorsRead the Press Release
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.
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U.S. Attorney Cox Announces Departure from Eastern District of Texas PostRead the Press Release
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.
Bowie County Man Charged with $5 Million COVID-Relief FraudRead the Press Release
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.
U.S. Attorney Releases Corporate Enforcement Memo for Eastern District of TexasRead the Press Release
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.
Man Charged with $5 Million COVID-Relief FraudRead the Press Release
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.
U.S. Attorneys in Texas Warn of Charges Against Potential Violent ProtestersRead the Press Release
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.U.S. Attorney Warns Demonstrators that Any Violence at Texas State Capitol will be Vigorously ProsecutedRead the Press Release
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.
Texas man and woman behind My Buddy Loans charged with filing hundreds of fraudulent applications for COVID reliefRead the Press Release
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.
Texas Company Agrees to Reimburse Medicare for Improper Billing Related to NeurostimulatorsRead the Press Release
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.
Nemo Found, Pleads GuiltyRead the Press Release
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.
Convicted Felon Admits to Shooting Drug Customer Twice over Unpaid Drug DebtRead the Press Release
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.
Federal Inmate Agrees to Extend Stay After Smuggling Drugs into FCI TexarkanaRead the Press Release
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.
White Supremacist Sentenced for Role in Murder of Fellow Federal Prison InmateRead the Press Release
BEAUMONT, Texas – A 40-year-old federal inmate has been sentenced for his role in the murder of a fellow prisoner in the Eastern District of Texas announced U.S. Attorney Stephen J. Cox today.
Michael Jason Shelton, of Henagar, Alabama, pleaded guilty on July 13, 2020, to accessory after the fact-murder, and was sentenced to 180 months in federal prison today by U.S. District Judge Marcia Crone.
On June 13, 2018, Rickey Fackrell, 36, of Vernal, Utah, and Christopher Cramer, 38, of Ogden, Utah, were both sentenced to death after being convicted by a jury of first degree murder following a six-week federal trial before Judge Crone.
According to information presented in court, beginning in March 2014, Cramer and Fackrell, inmates of the U.S. Penitentiary in Beaumont, Texas, murdered fellow inmate, Leo Johns. On June 9, 2014, Cramer and Fackrell stabbed Leo Johns to death at the federal prison. Shelton pleaded guilty to being an accessory to the murder. All three inmates were members of the white supremacy group, Soldiers of the Aryan Culture.
This case was investigated by the Federal Bureau of Investigation and the Bureau of Prisons-SIS. This case was prosecuted by Assistant U.S. Attorneys John B. Ross and Rachel Grove.
U.S. Attorney’s Office Announces Violent Crime Enforcement Blitz in Jefferson CountyRead the Press Release
BEAUMONT, Texas – U.S. Attorney Stephen J. Cox announced today his office is aggressively targeting gun crime violators in Jefferson County, Texas.
The United States Attorney’s Office for the Eastern District of Texas has announced that it will take an aggressive and collaborative approach to prosecuting violent crime in Jefferson County. This announcement comes after a steady increase in gun crime throughout Jefferson County, including armed robberies, carjackings, felons in possession of firearms, and individuals possessing firearms during crimes of violence. To accomplish its goal of eradicating gun violence in Jefferson County, EDTX has recently designated one of its senior prosecutors to coordinate the efforts of local and federal law enforcement. This senior attorney will also personally handle the resulting cases.
This initiative has already produced results for the people of Southeast Texas. Today, 23-year-old Derrick Gloude of Beaumont appeared before United States Magistrate Judge Keith Giblin on charges of Hobbs Act robbery and brandishing a firearm during a crime of violence. Gloude is accused of robbing seven different stores in Beaumont at gunpoint with a purple-colored gun, doing so from November 9 through November 16, 2020. He was ordered detained in federal custody pending trial. Earlier this month, 24-year-old Tremaurice Arthur Randall of Beaumont, was sentenced to 114 months in federal prison for carjacking and brandishing a firearm during a crime of violence.
“An aggressive approach to violent crime is, and remains, a priority for both the Department of Justice and the Eastern District of Texas,” said U.S. Attorney Stephen Cox. “If you are a felon in possession of a firearm, or if you use a firearm to commit a violent offense, our office will use all available resources to bring you to justice.”
This initiative 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.
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U.S. Attorney Stephen J. Cox Warns that the New Vaccine Will Bring New Opportunities for FraudRead the Press Release
BEAUMONT, Texas - With millions of people waiting for their turn to get the new COVID vaccine, it is expected that scammers will use that opportunity to prey on those willing to pay for it.
“Since the beginning of the pandemic, we’ve seen fraudsters taking advantage of public programs and supply shortages – we expect the new vaccine to provide similar platforms for deceit, and we will be ready to prosecute those responsible for vaccine-related fraud to the fullest extent of the law,” said U.S. Attorney Stephen J. Cox.
States will determine how their own vaccination plans will be rolled out but there is not expected to be any out-of-pocket charges during the public health emergency. Nevertheless, the FTC and FBI similarly warn that fraudsters may try to convince people to pay for early access to the vaccine, or to pay for the vaccine itself.
Always be suspicious of unsolicited phone calls, emails, or home visits that ask for payment information in order to receive a vaccine. No one from a vaccine distribution site will ask for your credit card or banking information. If you want to verify whether COVID-19 related solicitations or treatments are legitimate, call your health provider.
Millions of people fall victim to scams every year. If you think you have become a victim, contact the National Center for Disaster Fraud Hotline at 1-866-720-5721 or online at www.justice.gov/coronavirus. You can also submit a report to https://ReportFraud.ftc.gov.
Harrison County Drug Dealer Sentenced to 14 Years in Federal Prison for Methamphetamine TraffickingRead the Press Release
MARSHALL, Texas – A 32-year-old Marshall, Texas man was sentenced to federal prison for drug trafficking crimes in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.
Ronald Charles Parker, a.k.a. “Big Ron,” pleaded guilty on Sep. 14, 2019, to possession with intent to distribute methamphetamine and was sentenced to 168 months in federal prison on Dec. 16, 2020 by U.S. District Judge Rodney Gilstrap.
According to information presented in court, Parker was a member of a drug trafficking organization responsible for selling large quantities of methamphetamine in Marshall, Texas. During the course of the investigation Parker conducted seven separate drug transactions with a confidential informant, selling a total of 1.24 kilograms of methamphetamine. Parker and eight others were indicted by a federal grand jury on Feb. 19, 2020, and charged with violations of federal law. Co-Defendant Danny Brian Hernandez was recently sentenced to 17 years in prison for his drug trafficking conduct.
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.
Protecting the Greatest Generation: U.S. Attorney for the Eastern District of Texas Sets Forth Strategy for War Against Transnational Elder FraudRead the Press Release
DALLAS, Texas – United States Attorney Stephen J. Cox addresses the North Texas Crime Commission (NTCC) today via a Zoom meeting for their regular monthly meeting.
U.S. Attorney Cox was introduced by Assistant U.S. Attorney Camelia Lopez and NTCC Chair David Dean:
“Thank you, David, for that introduction, and thank you to the North Texas Crime Commission for hosting us. I’ve heard about your good work supporting law enforcement since I arrived in the Eastern District of Texas in June, so it is a privilege to speak with you today.
I am especially grateful that you are hosting this forum that allows us to focus on one of the significant challenges facing our nation’s law enforcement community and those we serve. In particular, I’m glad to speak about what we can do to protect our senior citizens.
Whether part of the “Greatest Generation,” or “Baby Boomers,” or the “Silent Generation” in between, our parents, grandparents, and great grandparents worked hard to ensure a better future for us. While the challenges we face individually or as a society may be great, we owe our elders a great debt and should be working to ensure their days are safe and secure.
Safety and well-being have been a focus for all of us over the past few months. We have been home bound. Witnessed businesses large and small suffer to the point of collapse. Adapted our work, education, and social lives around obstacles we could not have imagined a year ago.
Yet many of our challenges pale in comparison to what seniors have dealt with: enforced isolation … even enforced or encouraged sheltering with Covid-19-positive patients in care facilities. At their most vulnerable moments many are unable to be with loved ones, friends, or even a minister due to lockdown restrictions.
Due to the pandemic, we have learned a great deal about our society over the past few months. Some of it has been inspiring. Some of it disappointing, even troubling.
One of the takeaways should be that our elders deserve far better than what our society provides them. To that end, I’d like to focus our attention today on what we as law enforcement authorities can do to address one particularly challenging problem: the very real and ongoing threat of transnational crime rings that prey on our nation’s seniors.
When you hear talk of elder fraud, it is all too easy to think about one-off scams or swindles, whether for credit card charges, identity theft, or some other form of financial fraud.
But I want to challenge all of you to think about this problem in a wholistic and deeper way. Think of elder fraud as a noxious weed in an otherwise well-tended garden. You can see the weed above the surface, but not the deep roots under the soil that are the real problem. Without addressing the root, the blight continues and spreads.
The same can be said of elder fraud. You see the phone scam, but not the Russian mafia, the Indian call center, the shadowy money laundering or cryptocurrency network that operates in the distant background. These crime networks are the root of the problem.
As an example, let me tell you a story about an elderly widower; let’s call him Grandpa Larry. His children are grown and live out of state. It’s been years since he experienced true companionship. But as with so many like Larry, he is able to connect to his family – and others – via the Internet. While on an online dating app for seniors, he meets a wonderful woman who is attentive to him and interested in what he shares of his daily life.
This relationship seemingly deepens over a number of weeks. But then the woman online needs a favor. She wants to visit him, but she has to clear some debts and her family won’t help her.
Larry sends her money once, then again, and again in ever increasing amounts, and months later, he finds himself with little savings. Worse than losing his money, however, is the shame and embarrassment of being the victim of a romance scam and not telling his grown children he needs help.
Or, consider an elderly woman we’ll call Aunt Sally who is incredibly proud of her family, especially her youngest niece, who is the first in the family to attend college. One day Aunt Sally receives an e-mail message from her niece who is studying abroad for a semester in Paris. The message says that she’s been arrested during a trip to Spain. Aunt Sally didn’t know about the trip, but given that her niece is studying abroad, the trip isn’t unusual. The niece asks Aunt Sally to purchase gift cards from a local grocery store and to read those numbers from the back of the cards over the phone to the “police.” Sally’s niece says time is of the essence so she can get back to school in Paris, and it’s the quickest way to have American dollars converted into the foreign currency. Of course, in reality, her niece isn’t in Spain, and there is no jail. But Aunt Sally goes to her local CVS, buys $500 in gift cards, and gives it all away over the phone.
When we hear the phrase “elder fraud,” we tend to think of a single victim, Sally or Larry, who is taken advantage of by a single bad actor. We see the victims. We see the fraud techniques. What we do not see … until we dig below the surface … are the true culprits.
Yes, there are a number of cases in which a caretaker steals a checkbook from a client and forges checks. But what I’m asking you to envision is a much larger, better funded, and much more organized, form of elder fraud. These international fraud rings are the root systems of the weed; they are the great threat on the other end of the phone or that email. They are what is driving elder fraud in America today.
Consider the broader picture. The Consumer Financial Protection Bureau recently released a report after reviewing 180,000 Suspicious Activity Reports – or SARs – of elder financial exploitation filed between 2013 and 2017. The total losses? $6 billion. The FBI’s Internet Crime Complaint Center issued a report just a few months ago noting that, in 2019, 68,031 complaints from victims over 60 were filed with reported losses of $835 million. That’s a single year and only based on what’s reported to the IC3.
But we need to go deeper. The CFPB estimates that 3.5 million elder financial crimes occur annually, and the average loss per crime is between $45,000 and $50,000. Tens of billions of dollars each year in theft are not penny-ante profits; it’s drug cartel-level profits.
The Department of Justice under Attorney General Barr has taken strong action against these fraudsters and their despicable crimes. As the Attorney General has noted, “Fraud against the elderly is a massive problem, and one that is often perpetrated by transnational criminal organizations. And due to the victims’ stage in life, the cost is especially high and the losses frequently catastrophic and irreversible.”
We are doing our part in Texas. Earlier this year the Eastern District of Texas took down a multi-defendant international fraud and money laundering ring that predominantly targeted the elderly.
This alleged scheme targeted more than four thousand victims, and ultimately siphoned off more than $3.2 million dollars in ill-gotten wire transfers that were laundered through India and the United Arab Emirates. While this takedown was a big win for the Eastern District, it barely scratches the surface of what we must do to combat these crime networks.
Last year the Justice Department conducted an international elder fraud sweep. It was the largest in our nation’s history, netting 260 defendants. This sweep included schemes of every stripe: technical support fraud, mass-mailing fraud, false loan fraud, sweepstakes fraud, even fraud involving psychics, affected more than two million Americans and accounted for approximately $750 million dollars in losses.
The size and scope of this takedown revealed several common attributes amongst these fraud rings.
First, these schemes are what we like to call “commodity neutral” … meaning that these criminal enterprises seek ill-gotten gains any way they can, whether by garden-variety identify theft, stealing taxpayer money through COVID-19 stimulus fraud or unemployment insurance fraud.
While these criminal syndicates’ tactics are diverse, their targets are focused on seniors. Why? Not to oversimplify, but the fraudsters know that what makes our elders great citizens also makes them ripe to be conned. They tend to be more respectful of legitimate authority, more trusting and willing to listen, and less likely to immediately hang up on a stranger. They also are perhaps less tech savvy than younger generations, making them susceptible to impostors who may appear to be helpful with a computer or mobile phone issue but are really steering them toward a scam.
Second, the sheer breadth and depth of some of these criminal fraud schemes is remarkable. While a victim may interact with a single fraudster over the phone, the grifter is actually part of multi-layered fraud operations. In the background, there are call centers that flood land line and mobile phone accounts with spam calls to find those trusting individuals who won’t immediately hang up. There are other boots on the ground for these criminal conspiracies. These fraud rings also utilize domestic “money mules:” persons who receive ill-gotten proceeds directly from victims and forward funds to the conspiracy leaders.
These mules – sometimes unwitting, sometimes eager participants – are integral of these fraud schemes, and their ranks are not insignificant. Over the past two months, U.S. law enforcement agencies took action in just about all 50 states against more than 2,300 individuals identified as money mules.
These multi-tiered organizations aren’t even the most complex when you also consider the fraudulent shell corporations, “prize promotion” companies, and phony websites, all launched for the sole purpose of ripping off our nation’s seniors.
Third, beyond the scope and complexity is the global nature of these threats; most of the roots of these scammers stretch overseas. Large-scale call centers operate from India to Canada, while a constellation of smaller operations can be found running out of internet cafes in Lagos, Nigeria, or Tbilisi, Georgia. As a result, federal law enforcement teams with overseas partners, both public and private, to identify fraud and to share intelligence.
I’ve told my office, the Eastern District of Texas, that they really are uniquely equipped to take these fraud syndicates on. Our district has long been the tip of the spear in fighting international drug cartels. We have identified and extradited the leadership classes of drug cartels from Colombia and Central America, on the premise that if we tear a weed’s roots out whole it is less likely to grow back.
In response to the unique harm posed to our nation’s seniors, I have asked my team to reimagine our fight against elder fraud and to use the same tactics and tools we use to root out transnational drug cartels to decimate the criminal transnational syndicates preying on our seniors. That means leveraging the same organizational strategies, borrowed from our OCDETF toolkit, to follow the money, identify the network, and build a case against those pulling the strings overseas.
I want us to find these foreign criminals, extradite them to meet our local judges and have them experience East Texas justice up close and personal. In doing so, we will create a greater deterrence, and most importantly, get the money back for our victimized seniors.
By the way, this is more than just talk. Our District has taken concrete steps to target and prosecute these fraudsters. We launched a dedicated Elder Fraud Initiative, and I have appointed Camelia Lopez, on my senior leadership team to head it up—you’ll hear from her shortly. Although the Initiative is only a few months old, we have already made great strides and we’re starting to see our efforts bear fruit.
The District has established three separate Financial Investigation Groups (or “FIGs”) where we partner with law enforcement to conduct an expansive review of Suspicious Activity Reports, which have identified financial transactions that might be related to criminal activity.
Against that backdrop, we’ve established an open, working dialogue with some of the world’s biggest banks so that we can share information and foster better referrals. Through these partnerships we can better recognize fraud in real time, cut it off at the source, and trace any ill-gotten funds to accounts overseas.
Our District also participated in the Department of Justice’s Money Mule Initiative with great results. As I mentioned earlier, money mules are the lifeblood of these international fraud rings, and the Eastern District is punching back against these enablers. In the past two months, with the assistance of the FBI and IRS, our District identified and disrupted at least 13 money mules through interviews, warning letters, and criminal charges.
Enforcement, however, is but one facet of the money mule fight. We’re 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, we have established great partnerships in the public sphere, teaming with the Consumer Protection Branch and the Criminal Division at Main Justice, as well as the Federal Trade Commission. Less than two months ago, based on referrals from one of these new partners, our District, along with the Secret Service, dismantled a phony Amazon Alexa tech support fraud ring, seizing six websites in the process. In other cases, our District obtained four asset seizures leading to the recovery of nearly $150,000 in ill-gotten proceeds. These are all shining examples of what we can accomplish through coordination and cooperation and there is more – a lot more – to come.
At the risk of stating the obvious, this is not a battle we can fight alone, it is not a battle we can win alone. It will take everyone. And I don’t just mean cooperation between federal and state law enforcement – although that will, of course, be essential. I also mean cooperation between the public and private spheres. Working with our nation’s financial institutions – as well as foreign banks, and the emerging money transfer businesses used for mobile banking – to identify suspicious transactions, identify accounts tainted with fraud proceeds, and to name the account holders, will allow us to take the fight to where these fraud syndicates operate, seize their ill-gotten gains, and bring closure and relief to our citizens.
America owes its elders a great debt. In the past century they have defended our nation abroad and protected our streets at home. They have built businesses large and small, enduring and innovative. They have raised families and educated them. Today’s opportunities we take for granted are the result of our elders’ decades-long toil to create them for us. It is fitting then, that we work to ensure a more secure present for those who endowed the life we lead. We can and must come together – all of us – to protect our seniors from this unique threat. For in serving them, we will put in place protections for future generations, including ours.
I thank you for your time today and invite you to join me in this worthy fight.”
The North Texas Crime Commission (formerly the Greater Dallas Crime Commission) was established in 1950. Its belief is that proper enforcement and enlightened prevention can be achieved through a comprehensive and cooperative effort involving concerned citizens and law enforcement. In addition to monthly membership breakfasts, the NTCC travels to Austin monthly during the Legislative Session to meet with key lawmakers and annually to Washington, D.C., to meet with law enforcement officials and lawmakers.
Texas Syndicate Prison Gang Member Who Headed Methamphetamine Trafficking Conspiracy Sentenced to 30 YearsRead the Press Release
SHERMAN, Texas – A 48-year-old Zapata, Texas man has been sentenced to 30 years in federal prison for drug trafficking crimes in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.
Jose Ernesto-Medrano pleaded guilty on Sep. 10, 2019, to conspiracy to possess with intent to distribute methamphetamine and was sentenced to 360 months in federal prison by U.S. District Judge Amos Mazzant on Dec. 9, 2020.
According to information presented in court, beginning in 2017, law enforcement officers received information that Medrano, a multi-convicted felon and member of the Texas Syndicate prison gang, was conducting drug trafficking transactions in the Plano, Texas area. Law enforcement ultimately determined that Medrano was a leader in a large-scale drug trafficking conspiracy, which distributed methamphetamine throughout the Austin and Plano areas. Medrano agreed he was responsible for distributing 4.5 kilograms of pure methamphetamine.
Medrano and four co-defendants were indicted on Jan. 9, 2019. Erik Brown was sentenced to 360 months in federal prison on Feb. 25, 2020. Martin Ysassi and Priscilla Zamora were each sentenced to 180 months on March 3, 2020. Sanjuanita Benavides is awaiting sentencing.
This is a Texas Anti-Gang (TAG) Center investigation involving the Bureau of Alcohol, Tobacco, Firearms, and Explosives and Texas Department of Public Safety. This case was prosecuted by Assistant U.S. Attorney Tracey Batson.
Eastern District of Texas Announces Partnership with the Antitrust Division to Protect Competition in MarketplaceRead the Press Release
BEAUMONT, Texas – Today the Eastern District of Texas and the Antitrust Division announced charges against a former healthcare staffing company for conspiring to fix prices to the detriment of the American labor market. Additionally, the Eastern District of Texas has recently joined the Antitrust Division in the Department of Justice Procurement Collusion Strike Force (PCSF). Together, the Eastern District of Texas and the Antitrust Division will continue to pursue enforcement actions to promote competition and protect the marketplace.
“Our District has been eager to partner with the Antitrust Division in protecting the marketplace, and today’s announcements are just the beginning of what we hope will be a terrific relationship,” said U.S. Attorney Stephen J. Cox. When I was at Main Justice, the Department filed an important amicus brief in a case arising in the Eastern District of Texas—the brief advised the Fifth Circuit on the application of antitrust law and patent law to promote innovation and spur competition in connection with standard essential patents,” said U.S. Attorney Stephen J. Cox. “Later, when I became U.S. Attorney, we began to look for opportunities where the District could work together with the Antitrust Division on these and other important antitrust matters. I am proud to announce that we joined the PCSF and that we are now assisting the Antitrust Division in a wage-fixing prosecution. Stay tuned. There is more to come.”
The Eastern District of Texas has partnered with the Antitrust Division to indict Neeraj Jindal, 48, of Flower Mound, Texas. As announced today, a federal grand jury charged Jindal, the former owner of a therapist staffing company, with wage fixing for his role in a conspiracy to fix prices by lowering the rates paid to physical therapists and physical therapist assistants in the Dallas-Fort Worth metropolitan area. The indictment also charges Jindal with obstruction of the Federal Trade Commission’s separate investigation into this conduct.
Last month, the Antitrust Division announced that the Eastern District of Texas would join the PCSF, which leads a coordinated national response to combat collusion, antitrust crimes, and related fraudulent schemes that undermine competition in government procurement, grant, and program funding. The Eastern District of Texas has designated two Assistant U.S. Attorneys, Nathaniel Kummerfeld and Jonathan Hornok, to assist with the PCSF.
The PCSF is comprised of the Antitrust Division of the Department of Justice, multiple U.S. Attorneys’ Offices around the country, and close to 30 member agencies. These agencies include the Federal Bureau of Investigation; the Department of Justice, Office of Inspector General; the Department of Homeland Security, Office of Inspector General; the U.S. Postal Service, Office of Inspector General; the Department of Defense, Office of Inspector General, Defense Criminal Investigative Service (DCIS); the Air Force Office of Special Investigations; and the General Services Administration, Office of Inspector General.
The PCSF has a publicly available website at www.Justice.gov/Procurement-Collusion-Strike-Force, where members of the public can review information about the federal antitrust laws and training programs, and report suspected criminal activity affecting public procurement. Individuals and companies are encouraged to contact the PCSF if they have information concerning anticompetitive conduct involving federal taxpayer dollars by emailing [email protected] or filling out the PCSF anonymous complaint form, located on the PCSF website.
Federal, state, and local agencies can also contact the PCSF at [email protected] for any training needs or to report suspected antitrust violations.
Sex Trafficking Couple Who Exploited Women for Profit Receive Federal SentencesRead the Press Release
SHERMAN, Texas – A couple who were charged with running a commercial sex operation in multiple locations in north Texas have been sentenced to federal prison, announced U.S. Attorney Stephen J. Cox today.
Quan Tu (a/k/a Aaron Tu Chan), 48, pleaded guilty on July 6, 2020, to coercing and enticing individuals to travel in interstate commerce to engage in prostitution and was sentenced to 180 months in federal prison today by U.S. District Judge Amos L. Mazzant.
A co-defendant, Li Xin, 45, previously pleaded guilty to conspiring to travel or causing another to use interstate facilities to promote, manage, establish, or carry on an unlawful prostitution business. On October 1, 2020, Judge Mazzant sentenced Xin to 57 months’ imprisonment.
According to information presented in court, beginning in December 2018, the Richardson, Texas Police Department received numerous complaints from the public that men were traveling to a condominium at all hours of the day and night, and that some of these men were knocking on neighbors’ doors, seeking sexual services. Further investigation by a state and federal task force revealed that Tu and Xin were operating a prostitution enterprise from that location. During the investigation, it was revealed that Tu and Xin operated similar commercial sex rings out of a single-family residence in Plano and the ABC Foot Spa in Garland.
“Sex trafficking is amongst the most heinous crimes a person can commit,” said U.S. Attorney Stephen Cox. “The Department of Justice is committed to battling this scourge by forging partnerships and leveraging federal resources to identify and prosecute those that would engage in such criminality.”
“Those involved in the sexual exploitation of innocent victims through manipulation or force will face dire consequences for their actions,” said Ryan L. Spradlin, special agent in charge Homeland Security (HSI) Dallas. “With support from our law enforcement partners, NGO’s and the public, we will continue to prosecute anyone who participates or supports this illegal and heinous commercial trade for personal gain.”
As part of their guilty pleas, Tu and Xin admitted that they maintained all three properties and that they had women engaged in commercial sex at these locations between December 2018 and August 2019. The defendants admitted that they and other co-conspirators used Internet-based texting applications to communicate with women and entice them to travel to Texas to work as masseuses. The women came from various locations, including New York City, China, and Australia. Tu admitted to driving to Houston and other locations to bring women back to the properties. Once in Tu and Xin’s employ, the women lived and serviced customers at the properties, with the conspirators soliciting clients through online advertisements for commercial sexual services. Tu and Xin admitted to not only collecting all of the women’s earnings, but additionally charging the women $20 per day. Tu and Xin only permitted the women to keep their tips, thus compelling the women to engage in commercial sex in order to earn enough money to purchase food and basic necessities. The scheme resulted in proceeds which allowed Tu and Xin to maintain their lifestyle and to purchase vehicles, including a 2017 Toyota Tundra, all of which have been criminally forfeited.
This case was investigated by Homeland Security Investigations, Texas Department of Public Safety, and the Richardson Police Department, with assistance of the Plano Police Department, Garland Police Department, and Dallas County Sheriff’s Office and was prosecuted by Assistant U.S. Attorney Marisa Miller.
Denton County Methamphetamine Dealer Sentenced for Drug Trafficking ViolationsRead the Press Release
PLANO, Texas – A 41-year-old Highland Village, Texas man has been sentenced to federal prison for drug trafficking crimes in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.
Bryan Thomas Smith pleaded guilty on August 14, 2020, to possession with intent to distribute methamphetamine and was sentenced to 70 months in federal prison today by U.S. District Judge Sean D. Jordan.
According to information presented in court, on Feb. 14, 2020, officers in Highland Village surveilled Smith’s residence in reference to previously-issued felony warrants for evading arrest in a motor vehicle. Officers stopped a vehicle for a traffic violation as it left the house. The driver was identified as an Uber driver, while the passenger falsely identified himself as “Fletcher Smith.” Officers, however, recognized the passenger as Bryan Thomas Smith and detained him. Although Smith continued to falsely maintain that he was “Fletcher Smith,” officers retrieved a wallet from the ground with Bryan Thomas Smith’s driver’s license inside. This wallet also contained $104 dollars in genuine and counterfeit United States currency. Officers also seized a glass smoking pipe from Smith’s person, and additionally found a bag in the backseat of the Uber vehicle. A later inventory conducted at the police department revealed the bag to contain:
• Counterfeit currency and uncut sheets of counterfeit currency totaling $2,220
• A journal with Smith’s name written inside the cover
• Handwritten account numbers and passwords
• A smaller bag containing four baggies of methamphetamine
• A smaller bag containing multiple MDMA tablets
• A tin case containing 16 amphetamine and dextroamphetamine pills
• Three baggies containing 13 alprazolam pills
On Feb. 18, 2020 officers executed a search warrant at Smith’s residence, locating and seizing additional amounts of methamphetamine and counterfeit United States currency. Police also seized items related to the production of counterfeit U.S. currency, including computers and printers.
Smith was indicted on March 12, 2020. On April 7, 2020, police went to Smith’s residence to execute the arrest warrant for Smith. Smith, who was standing outside near the home, once again falsely identified himself as Fletcher Smith. In an attempt to deceive officers on behalf of her son, Smith’s mother also claimed that the defendant’s identity was Fletcher Smith. Officers went into the residence to search for Smith before realizing Smith had provided a false name. Smith, meanwhile, fled from police on foot into a wooded area towards Lake Lewisville. Law enforcement pursued Smith, who jumped into the lake and tried to swim across. After nearly drowning, Smith exited the lake and attempted to hide in the woods, before being taken into custody.
This case was investigated by the U.S. Drug Enforcement Administration, U.S. Secret Service and Highland Village Police Department and prosecuted by Assistant U.S. Attorney Matthew T. Johnson.
Harrison County Methamphetamine Dealer Sentenced to 17 YearsRead the Press Release
MARSHALL, Texas – A 27-year-old Marshall, Texas man has been sentenced to federal prison for drug trafficking crimes in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.
Danny Brian Hernandez pleaded guilty on Sep. 14, 2020, to possession with intent to distribute methamphetamine and was sentenced to 204 months in federal prison by U.S. District Judge Rodney Gilstrap on Dec. 7, 2020.
According to information presented in court, Hernandez was a member of an organization responsible for importing large quantities of methamphetamine from Mexico and selling it in Marshall, Texas. The evidence showed that Hernandez sold more than 13 ounces of methamphetamine to a confidential informant on three separate occasions. Hernandez and eight others were indicted by a federal grand jury on Feb. 19, 2020, and charged with federal drug trafficking violations.
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.
Fraudsters Who Stole Protected Health Information to Fund Spending Spree Plead GuiltyRead the Press Release
SHERMAN, Texas – Two individuals have pleaded guilty to conspiracy to obtain information from a protected computer in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.
Demetrius Cervantes, 46, of McKinney, Texas, and Amanda Lowry, 40, of Sherman, Texas, pleaded guilty to conspiracy to obtain information from a protected computer on Dec. 3, 2020, before U.S. Magistrate Judge Christine A. Nowak. Their co-conspirator, Lydia Henslee, 29, of Denison, Texas, faces additional charges.
Cervantes, Lowry, and Henslee, were named in a federal indictment on Sept. 11, 2019. The defendants were each charged with conspiracy to obtain information from a protected computer and conspiracy to unlawfully possess and use a means of identification
According to information presented in court, the defendants are alleged to have breached a health care provider’s electronic health record (EHR) system in order to steal protected health information and personally identifiable information belonging to patients. This stolen information was then “repackaged” in the form of false and fraudulent physician orders and subsequently sold to durable medical equipment (DME) providers and contractors. Within approximately eight months, the defendants obtained more the $1.4 million in proceeds from the sale of the stolen information. The proceeds of the offenses were traced, and the following forfeitable assets were identified: a 2019 Land Rover Range Rover Supercharged; a 2019 Dodge Durango SUV; a 2018 Polaris RZR XP4 1000 EPS; a 2019 Can-Am Outlander 450; a 2019 Sea-Doo RXT-X 300 W; a 2019 Sea-Doo RXT-X 300 W; and a 2019 Karavan Sea-Doo Move.
On Nov. 18, 2020, Henslee was charged in a ten-count superseding indictment with one count of conspiracy to unlawfully transfer, possess, and use a means of identification, and nine counts of unlawfully transferring, possessing, and using a means of identification. If convicted, she faces up to 15 years in federal prison.
Henslee was also charged in a separate superseding indictment along with Steven Churchill, 34, of Boca Raton, Florida, Samson Solomon, 23, of West Palm Beach, Florida, David Warren, 49, of Boca Raton, Florida, and Daniel Stadtman, 66, of Allen, Texas, with one count of conspiracy to commit illegal remunerations.
According to the superseding indictment, the defendants are alleged to have conspired to pay and receive kickbacks in exchange for orders from physicians that were subsequently used to obtain payments from federal health care programs. The conspirators obtained patient information, including protected health information and personally identifiable information, and used the information to create fictitious physician orders. The conspirators then sold the physicians’ orders to each other and to other DME providers. Within approximately eight months, the defendants collectively obtained more than $2.9 million in proceeds from the criminal scheme.
The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by federally funded programs, including Medicare, Medicaid, and TRICARE. If convicted, the defendants each face up to five years in federal prison.
These cases were investigated by the U.S. Department of Health and Human Services, Office of Inspector General; U.S. Department of the Treasury, Internal Revenue Service, Criminal Investigation; and the U.S. Department of Defense, Office of Inspector General, Defense Criminal Investigative Service. They are being prosecuted by Assistant U.S. Attorneys Nathaniel C. Kummerfeld and Adrian Garcia and Special Assistant U.S. Attorney Bethany Pickett.
U.s. Law Enforcement Takes Action Against Approximately 2,300 Money Mules in Global Crackdown on Money LaunderingRead the Press Release
BEAUMONT, Texas – The U.S. Department of Justice, the FBI, the U.S. Postal Inspection Service, and six other federal law enforcement agencies announced the completion of the third annual Money Mule Initiative, a coordinated operation to disrupt the networks through which transnational fraudsters move the proceeds of their crimes. Money mules are individuals who assist fraudsters by receiving money from victims of fraud and forwarding it to the fraud organizers, many of whom are located abroad. Some money mules know they are assisting fraudsters, but others are unaware that their actions enable fraudsters’ efforts to swindle money from consumers, businesses, and government unemployment funds. Europol announced a simultaneous effort, the European Money Mule Action (EMMA) today.
Over the last two months, U.S. law enforcement agencies took action against over 2,300 money mules, far surpassing last year’s effort, which acted against over 600 money mules. This year, actions occurred in every state in the country. The initiative announced today targeted money mules involved in a wide range of schemes including lottery fraud, romance scams, government imposter fraud, technical support fraud, business email compromise or CEO fraud, and unemployment insurance fraud. Many of these schemes target elderly or vulnerable members of society.
“Money mules fuel fraud against some of America’s most vulnerable populations.
Without the help of these money mules, many foreign fraud enterprises find it difficult to profit off of U.S. victims,” said Attorney General William P. Barr. “As this initiative demonstrates, the Department of Justice is committed to disrupting money mule networks, taking actions against more money mules this year than ever before, in an effort to cut off the flow of funds from
American consumers and businesses to transnational criminal organizations.”
“These money mules are an essential link in these foreign-based criminal schemes,” said Stephen J. Cox, U.S. Attorney for the Eastern District of Texas. “The assistance of these money mules – both witting and unwitting alike – makes it easy for overseas criminal organizations to move money from victims’ wallets into their own.”
Eight federal law enforcement agencies participated in this year’s effort. Led by the Department of Justice’s Consumer Protection Branch, the FBI, and the U.S. Postal Inspection Service, the participating agencies include the Department of Labor Office of Inspector General, Federal Deposit Insurance Corporation Office of Inspector General, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, Social Security Administration Office of Inspector General, U.S. Secret Service, and U.S. Treasury Inspector General for Tax Administration.
Some highlights from this year’s efforts are:
- Actions were taken to halt the conduct of approximately 2,300 money mules, spanning 92 federal districts.
- Law enforcement served approximately 2,000 money mules with letters warning the money mules that they were facilitating fraud and could face civil or criminal consequences for continuing their actions. Agents conducted over 450 interviews.
- On approximately 30 instances, agents seized assets or facilitated the return of victim funds. Among the asset seizures was a 2019 Lamborghini, which was seized as part of an investigation into a business email compromise scheme.
- The U.S. Postal Inspection Service filed 14 administrative actions requiring money mules to cease facilitating fraud.
- The U.S. Attorney’s Office for the Eastern District of Texas (EDTX), along with the U.S. Secret Service, dismantled a phony Amazon Alexa tech support fraud ring, seizing six websites in the process. In other cases, EDTX obtained four asset seizures leading to the recovery of nearly $150,000 in ill-gotten proceeds. Additionally, with the assistance of the FBI and IRS, EDTX identified and disrupted at least 13 money mules through interviews, warning letters, and criminal charges.
The above charges are merely allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
“The success of the Money Mule Initiative is the culmination of the hard work by and coordination between the FBI and our federal, state, local, and international partners,” said FBI Director Christopher Wray. “This campaign has resulted in hundreds of criminal arrests worldwide and justice for countless victims. Today’s announcement should send a clear message to those engaged in this type of criminal activity: they are not outside the reach of law enforcement, and the FBI and its partners will relentlessly pursue them in order to protect the American people.”
“The Postal Inspection Service has zero tolerance for fraudsters who use the U.S. Mail to transport funds from scammed victims,” said Chief Postal Inspector Gary Barksdale. “Postal Inspectors use cutting-edge technology to build strong cases and campaigns like those announced today, which make significant progress towards disrupting money mule networks. Postal Inspectors and our law enforcement partners will be relentless in the pursuit of criminal organizations that perpetrate these schemes.”
The agencies participating in the Money Mule Initiative and community partners are undertaking an outreach campaign to increase awareness of how fraudsters use and recruit money mules. U.S. Attorney’s Offices across the country, through their Elder Justice Coordinators, will be reaching out to their communities to educate the public about money mules. AmeriCorp Seniors (formerly Senior Corps) will be working to increase awareness of how money mules facilitate fraud and how consumers can avoid unwittingly assisting fraud schemes.
Additionally, the American Bankers Association will be engaging with its members on money mules and the role of financial institutions in addressing the problem. The Department of Justice will also be distributing resources for state and local law enforcement on identifying, disrupting, investigating, and prosecuting money mules.
To find public education materials, as well as information about how fraudsters use and recruit money mules, please visit www.justice.gov/civil/consumer-protection-branch/money- mule-initiative.
Since President Trump signed the bipartisan Elder Abuse Prevention and Prosecution Act (EAPPA) into law, the Department of Justice has participated in hundreds of enforcement actions in criminal and civil cases that targeted or disproportionately affected seniors. In January 2020, the department designated “Preventing and Disrupting Transnational Elder Fraud” as an Agency Priority Goal, one of its top four priorities. In March 2020, the department announced the largest elder fraud enforcement action in American history, charging more than 400 defendants in a nationwide elder fraud sweep. The department has also conducted hundreds of trainings and outreach sessions across the country since the passage of the Act.
The Department’s extensive efforts to combat elder fraud seek to halt the billions of dollars seniors lose each year to fraud schemes, including those perpetrated by transnational criminal organizations. The best method for prevention, however, is sharing information about the various types of elder fraud schemes with relatives, friends, neighbors, and other seniors who can use that information to protect themselves.
If you or someone you know is age 60 or older and has been a victim of financial fraud, help is standing by at the National Elder Fraud Hotline: 1-833-FRAUD-11 (1-833-372-8311). This U.S. Department of Justice hotline, managed by the Office for Victims of Crime, is staffed by experienced professionals who provide personalized support to callers by assessing the needs of the victim, and identifying relevant next steps. Case managers will identify appropriate reporting agencies, provide information to callers to assist them in reporting, connect callers directly with appropriate agencies, and provide resources and referrals, on a case-by-case basis. Reporting is the first step. Reporting can help authorities identify those who commit fraud and reporting certain financial losses due to fraud as soon as possible can increase the likelihood of recovering losses. The hotline is staffed seven days a week from 6:00 a.m. to 11:00 p.m. eastern time. English, Spanish and other languages are available.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Jefferson County Carjacker Receives Nearly a Decade in PrisonRead the Press Release
BEAUMONT, Texas – A 24-year-old Beaumont, Texas man has been sentenced to federal prison for violent crime violations in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.
Tremaurice Arthur Randall pleaded guilty on Aug. 4, 2020, to carjacking and brandishing a firearm in furtherance of a crime of violence and was sentenced to 114 months in federal prison today by U.S. District Judge Marcia Crone.
A co-defendant, Thaddiaus Joseph Thomas, 34, of Beaumont, Texas, pleaded guilty to the same charges on Aug. 12, 2020 and is awaiting sentencing.
According to information presented in court, on Dec. 21, 2019, Thomas and 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.
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.
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.
Louisiana Woman Indicted in $4.8M Elder Fraud SchemeRead the Press Release
TYLER, Texas -- A 44-year-old Shreveport, Louisiana woman has been indicted for her role in an elder fraud scheme in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox.
Monica Ruiz was named in an indictment returned by a federal grand jury, which charged her with wire fraud.
According to the indictment, Ruiz enlisted a variety of false and fraudulent pretenses, representations, and promises in a scheme to defraud an elderly victim from Bullard, Texas. Among the various misrepresentations Ruiz made in order to obtain money from the victim were the following:
- That Ruiz had been in a coma;
- That Ruiz had brain surgery;
- That Ruiz was falsely arrested and imprisoned;
- That Ruiz had bribed a judge and prosecutor;
- That Ruiz’s son died in a car accident in Pennsylvania;
- That Ruiz was in a car accident;
- That Ruiz had a kidney transplant;
- That Ruiz’s daughter was committed to a mental institution;
- That Ruiz was incarcerated; and
- That Ruiz’s grandmother died.
At times, Ruiz impersonated other people in communications with the victim. At other times, she created and used false personas in communications with the victim. Over the course of her scheme, Ruiz obtained more than $4.850 million from the victim.
If convicted, Ruiz faces up to 20 years in federal prison. A grand jury indictment is not evidence of guilt. A defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
In October 2017, President Trump signed the bipartisan Elder Abuse Prevention and Prosecution Act (EAPPA) into law. The EAPPA’s purpose is to increase the federal government’s focus on preventing elder abuse and exploitation. Subsequently, the Department of Justice launched the Elder Justice Initiative (EJI). Through the EJI, the Department has participated in hundreds of criminal and civil enforcement actions involving misconduct that targeted vulnerable seniors. This past March, the Department announced the largest elder fraud enforcement action in American history, charging more than 400 defendants in a nationwide sweep. The Department has likewise conducted hundreds of trainings and outreach sessions across the country. The EJI website contains useful information, including educational resources about prevalent financial scams so you can guard against them.
In August, the Eastern District of Texas announced plans to develop a new initiative, in partnership with law enforcement, to increase enforcement efforts to combat transnational elder fraud schemes and their extensive networks of associates and money mules who launder the stolen funds.
If you or someone you know is age 60 or older and has been a victim of financial fraud, help is standing by at the National Elder Fraud Hotline: 1-833-FRAUD-11 (1-833-372-8311). This U.S. Department of Justice hotline, managed by the Office for Victims of Crime, is staffed by experienced professionals who provide personalized support to callers by assessing the needs of the victim, and identifying relevant next steps. Case managers will identify appropriate reporting agencies, provide information to callers to assist them in reporting, connect callers directly with appropriate agencies, and provide resources and referrals, on a case-by-case basis. Reporting is the first step. Reporting can help authorities identify those who commit fraud and reporting certain financial losses due to fraud as soon as possible can increase the likelihood of recovering losses. The hotline is staffed 7 days a week from 6:00 a.m. to 11:00 p.m. Eastern Time. English, Spanish, and other languages are available.
This case is being investigated by the U.S. Secret Service with the assistance of the Tyler Police Department and the Louisiana State Police - Gaming Enforcement Division and is being prosecuted by Assistant U.S. Attorney Nathaniel C. Kummerfeld.
North Texas Financial Advisor Who is Alleged to Have PocketedRead the Press Release
PLANO, Texas –A 48-year-old Allen, Texas man has been indicted on federal wire fraud violations in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox.
Keith Todd Ashley was named in an indictment returned by a federal grand jury in Sherman, Texas on Nov. 12, 2020, charging him with six counts of wire fraud. Ashley was arrested on Nov. 13, 2020 and appeared in federal court today for a detention hearing before U.S. Magistrate Judge Kimberly C. Priest Johnson, which he waived.
According to the indictment, from December 23, 2013 through May 14, 2020, Ashley, as owner and chief executive officer of KBKK, LLC, devised and executed a scheme to defraud investors of approximately $1.1 million. Specifically, Ashley would solicit money from investors for purported investments that he represented were without risk. In reality, Ashley was diverting these investment funds for his own use.
If convicted, Ashley faces up to 20 years in federal prison. The United States is also seeking forfeiture in the amount of $1.143 million.
This case is being investigated by the Federal Bureau of Investigation and the Carrollton Police Department. This case is being prosecuted by Assistant U.S. Attorney Heather Rattan.
A grand jury indictment is not evidence of guilt. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Fifth Individual Charged in Health Care Kickback ConspiracyRead the Press Release
SHERMAN, Texas – A fifth individual has been indicted for conspiring to commit illegal remunerations in violation of the Anti-Kickback Statute in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox.
A federal grand jury, on Nov. 18, 2020, returned a superseding indictment charging Steven Churchill, 34, of Boca Raton, Florida, Samson Solomon, 23, of West Palm Beach, Florida, David Warren, 49, of Boca Raton, Florida, Daniel Stadtman, 66, of Allen, Texas, and Lydia Henslee, 29, of McKinney, Texas, each with one count of conspiracy to commit illegal remunerations.
According to the superseding indictment, the defendants are alleged to have conspired to pay and receive kickbacks in exchange for physicians’ orders that were used to submit claims for payment to federal health care programs. The conspirators obtained patient information, including protected health information and personally identifiable information, and used the information to create fictitious physicians’ orders. The conspirators then sold the physicians’ orders to each other and to other durable medical equipment providers. Within approximately eight months, the defendants collectively obtained more than $2.9 million in proceeds from the criminal scheme.
The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by federally funded programs, including Medicare, Medicaid, and TRICARE. If convicted, the defendants each face 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, U.S. Department of the Treasury, Internal Revenue Service, Criminal Investigation, and the U.S. Department of Defense, Office of Inspector General, Defense Criminal Investigative Service. It is being prosecuted by Assistant U.S. Attorneys Nathaniel C. Kummerfeld and Adrian Garcia.
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.
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Jefferson County Doctor Convicted of Health Care Fraud ViolationsRead the Press Release
BEAUMONT, Texas — A 43-year-old physician practicing in Beaumont has been found guilty of federal health care fraud violations in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.
Grigoriy T. Rodonaia, of Port Neches, Texas, was convicted by a jury this afternoon of 12 counts of health care fraud, three counts of aggravated identity theft, one count of making a false statement, and two counts of accepting kickbacks. The guilty verdict came following a four-day trial before U.S. District Judge Marcia Crone.
Rodonaia, a physician practicing in Beaumont with Rodonaia Family Medicine and Aesthetics, was indicted on March 18, 2020. According to information presented in court, beginning in January 2015, Rodonaia participated in a health care fraud scheme by issuing prescriptions for specially compounded scar creams using the names, dates of birth, and Health Insurance Claim Numbers of TRICARE beneficiaries, and caused the prescriptions to be forwarded directly to Memorial Compounding Pharmacy in Houston, Texas. These prescriptions were issued without consultation with the patient and without the patient’s knowledge. The prescriptions were billed to the military health care program, TRICARE, by the pharmacy at approximately $9,000 to $13,000 per prescription, with multiple refills authorized per prescription. Rodanaia issued over 600 prescriptions in the names of approximately 140 beneficiaries in furtherance of this scheme. Before the scheme could be detected, TRICARE paid approximately $6.7 million in TRICARE funds to Memorial Compounding Pharmacy. Further, to conceal his criminal activity, Rodonaia created fictitious patient files and records that falsely indicated that he had examined or consulted with those patients, and submitted those false records to the Defense Health Agency in response to an audit.
Rodonaia additionally violated the Anti-Kickback Statute by requiring Medicare and Medicaid beneficiaries seeking opioid treatment to pay cash for an office visit in excess of the amount which would have been reimbursed by the Medicare and Medicaid programs.
Rodonaia was taken into custody following his conviction. He faces up to 10 years in prison for each count of health care fraud and an additional two year consecutive term of imprisonment for each count of aggravated identity theft. A sentencing date has not been set.
This case was investigated by the Defense Criminal Investigative Service, the Drug Enforcement Administration, Health and Human Services – Office of Inspector General, and the Texas Medicaid Fraud Control Unit. Assistant U.S. Attorney Robert L. Rawls prosecuted this case.
Gulf Coast Health Care Fraud Strike Force Expanded to Include Eastern District of TexasRead the Press Release
The Department of Justice announced the expansion of the Criminal Division, Fraud Section’s existing Gulf Coast Health Care Fraud Strike Force to include the Eastern District of Texas.
The Strike Force is a joint law enforcement effort that brings together the resources and expertise of the Health Care Fraud (HCF) Unit in the Criminal Division’s Fraud Section, the U.S. Attorney’s Offices for the Eastern District of Texas, the Middle District of Louisiana, the Eastern District of Louisiana, and the Southern District of Mississippi, as well as law enforcement partners at the FBI, U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG), U.S. Drug Enforcement Administration (DEA), and other federal and state partners.
“Each year, healthcare fraud costs the American taxpayers tens of billions of dollars,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division. “The Criminal Division’s Health Care Fraud Strike Forces are a critical tool in the Department of Justice’s efforts to identify, investigate, and prosecute those who defraud our healthcare system. We are eager to announce this new partnership with the Eastern District of Texas, which will enhance and expand our efforts to prosecute healthcare fraud and protect American taxpayers.”
“The fight against health care fraud is a top priority for the U.S. Attorney’s Office for the Eastern District of Texas,” said U.S. Attorney Stephen J. Cox of the Eastern District of Texas. “We are honored to join the department’s Gulf Coast Strike Force and look forward to working together with them and with our law enforcement partners to protect the people of the Eastern District from fraud and abuse and to bring wrongdoers to justice.”
“The FBI is the primary agency for exposing and investigating health care fraud and we are pleased that the expansion of the Gulf Coast Health Care Fraud Strike Force into the Tyler area will allow us to vigorously pursue the most egregious offenders through coordinated law enforcement operations with our investigative partners,” said Special Agent in Charge Matthew J. DeSarno of the FBI’s Dallas Field Office.
“Health care fraud is a multi-billion dollar criminal enterprise,” said Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office. “The FBI Houston Division sees significant success when we partner with multiple agencies to combat health care fraud in our communities. We look forward to expanding these efforts through the Gulf Coast Health Care Fraud Strike Force and continuing to strengthen our partnerships in the Eastern District of Texas.”
“The diversion of prescription pharmaceuticals is a public health epidemic impacting many communities throughout the country. The communities in the Eastern District of Texas are no different,” said Special Agent in Charge Steven S. Whipple of the DEA Houston Division. “We welcome the specialized prosecutorial resources that the Gulf Coast Strike Force brings to the Eastern District of Texas.”
“The OIG’s unwavering commitment in working with our law enforcement partners throughout the country on Strike Force Teams has resulted in more than a thousand arrests and recovered millions of taxpayer dollars,” said Special Agent in Charge Miranda Bennett of HHS-OIG. “OIG looks forward to continuing these important accomplishments through our already dynamic partnerships in the Eastern District of Texas.”
The HCF Unit operates 15 Strike Forces across the United States, in 24 federal districts, including Miami, Tampa, and Orlando, Florida; Los Angeles, California; Detroit, Michigan; Houston, Texas; Brooklyn, New York; the Gulf Coast; Tampa, Florida; Chicago, Illinois; and Dallas, Texas, along with the National Rapid Response Strike Force located in Washington, D.C. The Strike Forces represent a partnership between the Criminal Division, U.S. Attorney’s Offices, the FBI and HHS-OIG, and other federal and local agency partners.
The Strike Force will be made up of prosecutors and data analysts with the HCF Unit, prosecutors with the U.S. Attorney’s Offices for the Eastern District of Texas, and special agents with the FBI, HHS-OIG and DEA. In addition, the Gulf Coast Strike Force will work closely with other various federal law enforcement agencies. The Strike Force will focus its efforts on aggressively investigating and prosecuting cases involving fraud, waste, and abuse within our federal health care programs, and cases involving illegal prescribing and distribution of opioids and other dangerous narcotics.
In September, Acting Assistant Attorney General Rabbitt noted the success of the Strike Force model while announcing a historic nationwide enforcement action involving 345 charged defendants across 51 federal districts, including more than 100 doctors, nurses and other licensed medical professionals. Five of the defendants were indicted in the Eastern District of Texas. Altogether, these defendants have been charged with submitting more than $6 billion in false and fraudulent claims to federal health care programs and private insurers, including more than $4.5 billion connected to telemedicine, more than $845 million connected to substance abuse treatment facilities, or “sober homes,” and more than $806 million connected to other health care fraud and illegal opioid distribution schemes across the country. More information can be obtained at: https://www.justice.gov/usao-edtx/pr/largest-health-care-fraud-and-opioid-enforcement-action-department-justice-history.
Among those charged in the Eastern District were Steven Churchill, 34, of Boca Raton, Florida, Samson Solomon, 22, of West Palm Beach, Florida, David Warren, 49, of Boca Raton, Florida, and Daniel Stadtman, 66, of Allen, Texas. The defendants are alleged to have conspired to pay and receive kickbacks in exchange for physicians’ orders from purported telemedicine companies. The physicians’ orders were used to submit claims for payment to federal health care programs. The conspirators obtained patient information, including protected health information and personally identifiable information, used the information to create fictitious physicians’ orders, and sold the physicians’ order to each other and to other durable medical equipment providers. Within approximately eight months, the defendants collectively obtained more the $2.9 million in proceeds from the scheme.
In another Eastern District case, Clifford Russell Harris, a 38-year-old registered nurse, pleaded guilty to recklessly endangering Texarkana, Texas, patients by stealing fentanyl. Harris broke into the secure drug storage at Healthcare Express in Texarkana, Texas, and tampered with vials of fentanyl stored there. He extracted the fentanyl from the vials and refilled the vials with another liquid. Harris then returned the vials to the drug stock where they were available for administration to patients. Harris admitted that he had acted with reckless disregard of the danger to patients and that his actions manifested an extreme indifference to that risk.
The Strike Force operations are part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged more than 4,200 defendants who have collectively billed the Medicare program for approximately $19 billion.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Gulf Coast Health Care Fraud Strike Force Expanded to Include Eastern District of TexasRead the Press Release
BEAUMONT, Texas - U.S. Attorney Stephen Cox of the Eastern District of Texas today announced the expansion of the Criminal Division, Fraud Section’s existing Gulf Coast Health Care Fraud Strike Force to include the Eastern District of Texas. The Strike Force is a joint law enforcement effort that brings together the resources and expertise of the Health Care Fraud Unit in the Criminal Division’s Fraud Section (HCF Unit), the U.S. Attorney’s Offices for the Eastern District of Texas, the Middle District of Louisiana, the Eastern District of Louisiana, and the Southern District of Mississippi, as well as law enforcement partners at the FBI, U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG), U.S. Drug Enforcement Administration (DEA), and other federal and state partners.
“The fight against health care fraud is a top priority for the U.S. Attorney’s Office for the Eastern District of Texas,” said U.S. Attorney Stephen J. Cox. “We are honored to join the Department’s Gulf Coast Strike Force and look forward to working together with them and with our law enforcement partners to protect the people of the Eastern District from fraud and abuse and to bring wrongdoers to justice.”
“Each year, healthcare fraud costs the American taxpayers tens of billions of dollars,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division. “The Criminal Division’s Health Care Fraud Strike Forces are a critical tool in the Department of Justice’s efforts to identify, investigate, and prosecute those who defraud our healthcare system. We are eager to announce this new partnership with the Eastern District of Texas, which will enhance and expand our efforts to prosecute healthcare fraud and protect American taxpayers.”
“The FBI is the primary agency for exposing and investigating health care fraud and we are pleased that the expansion of the Gulf Coast Health Care Fraud Strike Force into the Tyler area will allow us to vigorously pursue the most egregious offenders through coordinated law enforcement operations with our investigative partners,” said FBI Dallas Special Agent in Charge Matthew J. DeSarno.
“Health care fraud is a multi-billion dollar criminal enterprise,” said FBI Houston Special Agent in Charge Perrye K. Turner. “The FBI Houston Division sees significant success when we partner with multiple agencies to combat health care fraud in our communities. We look forward to expanding these efforts through the Gulf Coast Health Care Fraud Strike Force and continuing to strengthen our partnerships in the Eastern District of Texas.”
“The diversion of prescription pharmaceuticals is a public health epidemic impacting many communities throughout the country. The communities in the Eastern District of Texas are no different,” stated Steven S. Whipple, Special Agent in Charge of the DEA Houston Division. “We welcome the specialized prosecutorial resources that the Gulf Coast Strike Force brings to the Eastern District of Texas.”
“The OIG’s unwavering commitment in working with our law enforcement partners throughout the country on Strike Force Teams has resulted in more than a thousand arrests and recovered millions of taxpayer dollars,” said Dallas Special Agent in Charge Miranda Bennett. “OIG looks forward to continuing these important accomplishments through our already dynamic partnerships in the Eastern District of Texas.”
The HCF Unit operates 15 Strike Forces across the United States, in 24 federal districts, including Miami, Tampa, and Orlando, Florida; Los Angeles, California; Detroit, Michigan; Houston, Texas; Brooklyn, New York; the Gulf Coast; Tampa, Florida; Chicago, Illinois; and Dallas, Texas, along with the National Rapid Response Strike Force located in Washington, D.C. The Strike Forces represent a partnership between the Criminal Division, U.S. Attorney’s Offices, the FBI and HHS-OIG, and other federal and local agency partners.
The Strike Force will be made up of prosecutors and data analysts with the HCF Unit, prosecutors with the U.S. Attorney’s Offices for the Eastern District of Texas, and special agents with the FBI, HHS-OIG and DEA. In addition, the Gulf Coast Strike Force will work closely with other various federal law enforcement agencies. The Strike Force will focus its efforts on aggressively investigating and prosecuting cases involving fraud, waste, and abuse within our federal health care programs, and cases involving illegal prescribing and distribution of opioids and other dangerous narcotics.
In September, Acting Assistant Attorney General Brian C. Rabbitt noted the success of the Strike Force model while announcing a historic nationwide enforcement action involving 345 charged defendants across 51 federal districts, including more than 100 doctors, nurses and other licensed medical professionals. Five of the defendants were indicted in the Eastern District of Texas. Altogether, these defendants have been charged with submitting more than $6 billion in false and fraudulent claims to federal health care programs and private insurers, including more than $4.5 billion connected to telemedicine, more than $845 million connected to substance abuse treatment facilities, or “sober homes,” and more than $806 million connected to other health care fraud and illegal opioid distribution schemes across the country. More information can be obtained at: https://www.justice.gov/usao-edtx/pr/largest-health-care-fraud-and-opioid-enforcement-action-department-justice-history.
Among those charged in the Eastern District were Steven Churchill, 34, of Boca Raton, Florida, Samson Solomon, 22, of West Palm Beach, Florida, David Warren, 49, of Boca Raton, Florida, and Daniel Stadtman, 66, of Allen, Texas. The defendants are alleged to have conspired to pay and receive kickbacks in exchange for physicians’ orders from purported telemedicine companies. The physicians’ orders were used to submit claims for payment to federal health care programs. The conspirators obtained patient information, including protected health information and personally identifiable information, used the information to create fictitious physicians’ orders, and sold the physicians’ order to each other and to other durable medical equipment providers. Within approximately eight months, the defendants collectively obtained more the $2.9 million in proceeds from the scheme.
In another Eastern District case, Clifford Russell Harris, a 38-year-old registered nurse, pleaded guilty to recklessly endangering Texarkana, Texas, patients by stealing fentanyl. Harris broke into the secure drug storage at Healthcare Express in Texarkana, Texas, and tampered with vials of fentanyl stored there. He extracted the fentanyl from the vials and refilled the vials with another liquid. Harris then returned the vials to the drug stock where they were available for administration to patients. Harris admitted that he had acted with reckless disregard of the danger to patients and that his actions manifested an extreme indifference to that risk.
The Strike Force operations are part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged more than 4,200 defendants who have collectively billed the Medicare program for approximately $19 billion.
Bowie County Man Sentenced to Prison for Distribution of Child PornographyRead the Press Release
TEXARKANA, Texas – A 32-year-old Bowie County, Texas, man has been sentenced to prison for distribution of child pornography in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.
Troy Dewayne Daniels pleaded guilty on August 6, 2020, to distribution of child pornography and was sentenced to 210 months in federal prison today by U.S. District Judge Robert W. Schroeder III. Judge Schroeder also ordered Daniels to pay restitution to his victims and to register as a sex offender.
According to information presented in court, in October 2019, Daniels used social media apps to communicate with an undercover law enforcement officer. During the conversation, Daniels described his progress in grooming a female child for sexual exploitation, including stating that he was “hoping” to go “[a]ll the way” with her. During the conversation, Daniel admitted to the undercover officer that he had been looking at pictures and videos of younger girls “for a while.” Daniels then sent the undercover officer an image of child pornography claiming that the prepubescent female child depicted looked like the child he had been grooming. Daniels did so in exchange for nonpornographic images of the undercover officer’s (fictional) daughter. Several days later, Daniels reached out to the undercover officer and asked if he could “play” with the officer’s (fictional) daughter on Snapchat. In November 2019, law enforcement officers executed a search warrant at Daniels’s home. Inside, officers found electronic devices containing more than 600 images of child pornography. The images found depicted prepubescent minors, sadistic or masochistic abuse or other depictions of violence, and depictions of the sexual exploitation of infants and toddlers.
This case was prosecuted 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 https://www.justice.gov/psc.
This case was investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.
Meth-Smuggling Attorney Turns Short Jail Visit into a Long StayRead the Press Release
MARSHALL, Texas – A 50-year-old Cass County, Texas man has been sentenced for a federal drug violation in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.
Bryan Lee Simmons pleaded guilty on Sep. 14, 2020, to conspiring to distribute methamphetamine and was sentenced to 48 months in federal prison today by U.S. District Judge Rodney Gilstrap. Simmons also agreed not to engage in the practice of law for at least three years thereafter.
According to information presented in court, beginning in July 2019 and continuing through August 2019, Simmons agreed with others to distribute methamphetamine in the Cass County Jail. Specifically, on August 29, 2019, he entered the Cass County Jail under the guise of meeting with a client. When Simmons entered the jail, he had methamphetamine hidden on his body, which he intended to distribute to an inmate. Simmons was also armed with a Colt MK IV .45 caliber pistol when he drove to the jail with the methamphetamine. Simmons later admitted in open court that he had smuggled drugs into the Cass County Jail on at least two prior occasions.
This case was investigated by the Texas Department of Public Safety, Texas Rangers Division, with assistance from the Cass County, Texas, District Attorney’s Office and the Cass County, Texas, Sheriff’s Office. The case was prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.
Organized Crime Drug Enforcement Task Force Operations “Trap Mansion” and “Two Birds One Stone” Delivers Strong Blow to International Drug SmugglersRead the Press Release
SHERMAN, Texas – The United States Attorney for the Eastern District of Texas, Stephen J. Cox, announced today the results of two Organized Crime Drug Enforcement Task Force (OCDETF) operations targeting international drug and firearm trafficking between Mexico and Texas. Operations Trap Mansion and Two Birds and One Stone were a sustained state-wide effort of numerous federal, state, and local law enforcement agencies from throughout Texas spanning from October of 2018 to June of 2020.
Operations Trap Mansion and Two Birds One Stone targeted several large Sinaloa and Jalisco New Generation Cartel (CJNG) drug trafficking cells located in the Dallas, Texas area. These cartel cells would also purchase quantities of firearms which they would smuggle back to Mexico along with bulk U.S. currency that the Sinaloa Cartel and CJNG would use to conduct acts of violence, kidnappings and extortions in Mexico. Trap Mansion and Two Birds One Stone specifically aimed to interdict trailers loaded with quantities of illegal drugs imported from Mexico across the Texas/Mexico border, and the seizure of firearms smuggled to Mexico from Texas.
The agencies’ efforts resulted in the indictment of 96 defendants in federal court for charges related to drug trafficking, continuing criminal enterprise, unlawful possession of firearms, using firearms in furtherance of drug trafficking, money laundering and other federal criminal violations. Further, during these operations law enforcement seized 49 firearms, of which, several were AR-15 style rifles and multiple short-barreled weapons that were not registered as required by the National Firearms Act, stolen from local Texans, or otherwise illegally possessed. Law enforcement also seized approximately 511.9 kilograms of methamphetamine, 40 kilograms of cocaine, 19.3 kilograms of heroin, 67 kilograms of marijuana, 19 kilograms of controlled pharmaceuticals, 800 grams of fentanyl, and approximately $6.6 million in assets.
U.S. Attorney Cox stated: “Today’s announcement of the results of Operations Trap Mansion and Two Birds One Stone represents the pinnacle of sustained multi-agency cooperation focused on the dual threat of narcotics and firearms trafficking. We will continue to collaborate with all of our law enforcement partners to stem the flood of deadly drugs and illegal firearms, and to punish those who seek to profit from trafficking contraband.”
U.S. Attorney Cox commended the investigative efforts of, the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Internal Revenue Service, Flower Mound Police Department, Rockwall County Sheriff’s Office, and the Lewisville Police Department. Multiple local police departments and sheriff’s offices throughout the state assisted throughout the operation.
“Criminals cannot hide. While these individuals may have enjoyed a lavish lifestyle brought on the backs of those struggling with addiction, these operations send a clear message that the story only ends with confiscated drugs, assets and justice served,” said Special Agent in Charge Eduardo Chavez of the DEA Dallas Field Division. “I am especially proud of our law enforcement partners that leverage subject-matter expertise to arrest and prosecute over 90 individuals whose actions have negatively impacted so many lives. DEA Dallas will continue to do our part to make our neighborhoods throughout the Eastern District of Texas safer for all our families.”
These operations were part of the Organized Crime Drug Enforcement Task Forces (OCDETF) Program. OCDETF is a joint federal, state, and local cooperative approach to combat drug trafficking and is the nation’s primary tool for disrupting and dismantling major drug trafficking organizations, targeting national and regional level drug trafficking organizations, and coordinating the necessary law enforcement entities and resources to disrupt or dismantle the targeted criminal organization and seize their assets. Prosecutions arising from these operations are 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 enhances coordination of federal, state, local, and tribal authorities in investigating and prosecuting firearm use and possession crimes; prioritizes prosecuting persons who make false statements when attempting to obtain firearms; improves information-sharing by the Bureau of Alcohol, Tobacco, Firearms and Explosives concerning persons who attempt to obtain firearms illegally; coordinates responses to persons prevented from obtaining firearms for mental health reasons; and ensures the use of modern intelligence tools and technology to focus on the criminals posing the greatest threat to our communities.
Fannin County Woman Guilty of Tax FraudRead the Press Release
PLANO, Texas – A 45 year-old Texas woman has pleaded guilty to tax evasion in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.
Chelsea Jolynn Tucker pleaded guilty to tax evasion before U.S. Magistrate Judge Kimberly C. Priest Johnson on Nov. 3, 2020.
According to public court records, from approximately 1997 to 2016, Tucker was employed by a staffing and contract services company located in Addison, Texas. In her role with the company, Tucker had various financial responsibilities, including administering payroll, preparing W-2 Forms, making employment tax deposits, paying business expenses, and monitoring the company’s tax obligations using QuickBooks and TaxGuard.
Between approximately 2012 and 2017, Tucker knowingly and willfully misappropriated and embezzled funds from the company in multiple ways. For instance, she (1) paid herself as both an employee and a vendor; (2) issued herself unauthorized bonuses; (3) issued herself fraudulent expense reimbursements; (4) used a corporate credit card for personal purchases; (5) used company funds to pay personal credit cards; and (6) issued company checks to a former employee.
Tucker also willfully attempted to evade her income tax obligations by preparing false and fraudulent W-2 Forms, which substantially underreported the income owed to the Internal Revenue Service. In addition, Tucker failed to pay the company’s employment taxes, which she had a duty to both truthfully account for and pay. As a result of Tucker’s criminal conduct, the amount still owed to the Internal Revenue Service totals approximately $779,664.
Under the federal statute, Tucker faces up to 5 years in federal prison at sentencing and a $100,000 fine. The maximum statutory sentence prescribed by Congress is provided here for information purposes, as the sentences will be determined by the court based on the advisory sentencing guidelines and other statutory factors. Sentencing hearings will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.
This case was investigated by the Internal Revenue Service-Criminal Investigation and prosecuted by Assistant U.S. Attorney Anand Varadarajan.
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Collin County Man and Woman Sentenced for Heroin Overdose DeathRead the Press Release
PLANO, Texas – A Collin County couple have been sentenced for their involvement in a heroin overdose death in the Eastern District of Texas announced U.S. Attorney Stephen J. Cox today.
Conner Richard Schaeffer, 28, and Megan Deshane Daniel, 26, both of Frisco, pleaded guilty earlier this year to conspiracy to distribute and possess with intent to distribute heroin. Schaeffer was sentenced to 240 months in federal prison by U.S. District Judge Sean Jordan on Oct. 29, 2020. Daniel was also sentenced on Oct. 29, 2020 to 180 months in federal prison.
According to information presented in court, beginning in August 2018, Schaeffer and Daniel conspired to distribute heroin in the Collin County area, and their conspiracy resulted in the death of an individual on Oct. 28, 2018, at a McKinney hospital.
The investigation established that “E.C.” and the overdose victim, “P.C.,” had visited Daniel and her boyfriend Schaeffer at a residence in Frisco, Texas. At the time, Daniel and Schaeffer were engaged in a conspiracy to distribute heroin and other narcotics from the residence. At the home, Daniel injected both P.C. and E.C. with heroin at their request and in the presence of Schaeffer. According to witnesses, P.C. immediately began showing signs of distress consistent with an overdose. Instead of calling 911, the parties took P.C. to the hospital on their own. At the hospital, staff performed CPR on P.C., but their efforts to revive P.C. were unsuccessful and P.C. was pronounced dead shortly thereafter. Further evidence showed that Schaeffer and Daniel had attempted to hide their role in P.C.’s death by deleting text messages and by urging E.C. not to tell the truth about what happened.
This case was investigated by the Frisco Police Department, McKinney Police Department, and the Collin County Medical Examiner’s Office and prosecuted by Assistant U.S. Attorney Matthew T. Johnson.
Van Zandt County Man Sentenced for Federal Drug Trafficking ViolationsRead the Press Release
TYLER, Texas – A 41-year-old Wills Point, Texas man has been sentenced for federal drug trafficking crimes in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.
Rickey James Howard pleaded guilty on Jan. 9, 2020, to conspiracy to possess with intent to distribute methamphetamine and was sentenced to 142 months in federal prison by U.S. District Judge Jeremy D. Kernodle on Oct. 27, 2020. Judge Kernodle also ordered an $8,000 money judgment against Howard.
According to information presented in court, on August 2, 2018, in Van Zandt County, Texas, a co-conspirator sold approximately 10.4 grams of methamphetamine during a controlled purchase, using methamphetamine that was stored in a residence Howard shared with the co-conspirator and that Howard knew was stored in the residence. On August 28, 2018, Howard possessed, at his residence in Van Zandt County, Texas, approximately 135 grams of a mixture or substance containing methamphetamine. He possessed the methamphetamine for the purpose of distribution to others.
Howard admitted that between January 2018 and September 2019, he was engaged in a conspiracy with others to obtain and distribute methamphetamine. He also admitted that he was directly responsible for the possession with intent to distribute at least 500 grams of methamphetamine. Howard also agreed to a money judgment forfeiture of $8,000, representing proceeds received by Howard from his offense.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Van Zandt County Sheriff’s Office and prosecuted by Assistant U.S. Attorney Alan Jackson.
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Registered Nurse Who Stole Fentanyl and Tampered with Patients’ Medicine Sentenced to Two Years in Federal PrisonRead the Press Release
TEXARKANA, Texas – A 38-year-old Bowie County man has been sentenced to federal prison for federal violations in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.
Clifford Russell Harris pleaded guilty on June 16, 2020, to tampering with a consumer product and was sentenced to 24 months in federal prison by U.S. District Judge Robert W. Schroeder III on Oct. 22, 2020.
According to information presented in court, Harris, who was a registered nurse at the time, broke into the secure drug storage area at Healthcare Express in Texarkana, Texas, and tampered with vials of fentanyl stored there. Specifically, Harris extracted the fentanyl from the vials and refilled the vials with another liquid. Harris then returned the vials to the drug stock where they were available for administration to patients. Because the vials were labeled as fentanyl but did not contain fentanyl, Harris placed patients in danger of death or bodily injury. Harris admitted that he had acted with reckless disregard of the danger to patients and that his actions manifested an extreme indifference to that risk. In the five months leading to his fentanyl theft, Harris stole 600 vials of morphine and Demerol from Healthcare Express where he was entrusted with the receipt and storage of those controlled substances.
This case was investigated by the Texarkana, Texas, Police Department’s Special Investigations Unit with assistance from the Drug Enforcement Administration. The case was prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.
Convicted Sex Offender Sentenced to 840 Months in Federal PrisonRead the Press Release
TYLER, Texas — U.S. Attorney Stephen J. Cox announced that a 40-year-old Ore City, Texas man has been sentenced to 840 months in federal prison for child exploitation violations in the Eastern District of Texas.
Jeremy OKieth Kyle, also known as Corey Webster, also known as Rick, also known as Derrick Willis, also known as Eric Sanders, also known as Brad Smith, also known as Jason, also known as J, pleaded guilty on Feb. 19, 2020, to three counts of coercion and enticement and was sentenced to 840 months in federal prison by U.S. District Judge Jeremy D. Kernodle today.
According to information presented in court, between 2013 and 2018, Kyle, a convicted sex offender, committed numerous offenses against eighteen minor female victims and four adult female victims. He used a variety of false personas and promises of love and money to convince the victims to meet him and engage in sexual encounters. He acquired images and videos of the victims engaged in sexually explicit conduct and threatened to distribute those images and videos in order to coerce more sexual encounters.
“What this man did is a tragedy. These young victims were treated in ways no person should ever be treated,” said U.S. Attorney Stephen J. Cox. “This case also serves as a warning to parents: exploitation and abuse can be one click away in today’s social media and technological environment. Parents should take strong precautions to protect children from victimization.”
“Predators are targeting children of all ages online by using threats and manipulative tactics. The FBI will continue working with our partners to hold these online predators accountable for their dangerous behavior,” said FBI Dallas Special Agent in Charge Matthew DeSarno. “We encourage potential victims and their parents to contact the FBI or local law enforcement if they are targeted online.”
Anyone who had contact, in person or on social media, with an individual who identified himself as Jeremy OKieth Kyle, Corey Webster, Rick, Derrick Willis, Eric Sanders, Brad Smith, Jason, or J, is urged to contact the U.S. Attorney’s Office at 1-800-804-3547. The U.S. Attorney’s Office will take the necessary steps to protect the individuals’ identities and confidential information.
This case was prosecuted 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.
The investigation leading to the charges was conducted by agents from the Federal Bureau of Investigation’s Tyler Resident Agency, the Texas Department of Public Safety - Criminal Investigations Division, the Tyler Police Department, the Longview Police Department, the Ore City Police Department, the Hughes Springs Police Department, the Daingerfield Police Department, and the Red Oak Police Department. Assistant United States Attorney Nathaniel C. Kummerfeld prosecuted the case.