Eastern District of Texas

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 TYLER, Texas – A Dallas County, Texas, physician has been convicted of 15 counts of health care fraud violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today. 

Tariq Mahmood, 63, of Cedar Hill, Texas, was found guilty by a jury of conspiracy to commit health care fraud, seven counts of health care fraud, and seven counts of aggravated identity theft following a four day trial before U.S. District Judge Michael Schneider.

 According to information presented in court, Mahmood, a general practitioner, owned and operated several hospitals in the state of Texas, including Cozby Germany Hospital in Grand Saline, Renaissance Terrell Hospital in Terrell, Central Texas Hospital in Cameron, Community General Hospital in Dilley, and Lake Whitney Medical Center in Whitney.  From January 2010 to April 2013, Mahmood and others carried out a scheme to defraud Medicare and Medicaid through the submission of false and fraudulent claims.  Mahmood and others added, changed, deleted, and incorrectly sequenced diagnostic codes in a way that did not reflect the actual diagnoses and conditions of the patients.  They submitted false and fraudulent claims to Medicare and Medicaid based on the added, changed, deleted, and incorrectly sequenced diagnostic codes.  Mahmood and others also unlawfully used Medicare beneficiaries’ names and Medicare numbers in order to commit health care fraud.  Mahmood was indicted by a federal grand jury on April 11, 2013.

Mahmood faces up to 10 years in federal prison for the conspiracy conviction, 10 years for each health care fraud conviction and two years for each aggravated identity theft conviction.  A sentencing date has not been set.

 The case was investigated by the Texas Office of the Attorney General – Medicaid Fraud Control Unit (OAG-MFCU), the U.S. Department of Health and Human Services – Office of the Inspector General (HHS-OIG), the Federal Bureau of Investigation (FBI), and the U.S. Postal Inspection Service (USPIS).  This case was prosecuted by Assistant U.S. Attorneys Nathaniel C. Kummerfeld and Frank Coan and Special Assistant U.S. Attorneys Alma Hernandez and Ken McGurk.

Any individuals with knowledge of these or other health care fraud violations are encouraged to contact the Department of Health and Human Services’ fraud hotline at 1-800-HHS-TIPS (447-8477)

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  SHREVEPORT, LA – A 52-year-old Shreveport, Louisiana attorney has been sentenced to federal prison in the Western District of Texas, announced U.S. Attorney John M. Bales of the Eastern District of Texas.

James Ward Davis pleaded guilty on Apr. 22, 2014 to a false statement in a bankruptcy proceeding and was sentenced to 60 months in federal prison today by U.S. District Judge Donald E. Walker.  Davis was also ordered to pay restitution in the amount of $1 million and then immediately remanded into custody of the U.S. Marshals Service.

According to information presented in court, Davis, a lawyer and former member of the Shreveport law firm Jones, Odom, Davis & Politz, operated and controlled Tower Hill Energy Company, LLC, which purported to be in the business of acquiring oil, gas, and mineral leases, interests, and royalties in north Louisiana.  In February 2009, Tower Hill entered into an agreement with a Texas company known as Furie Petroleum.  By way of the agreement, Tower Hill was obligated to acquire mineral rights on Furie’s behalf.  Furie agreed to deposit $1 million to be used by Tower Hill “solely for the acquisition of Mineral Leases or purchase contracts/options to acquire Mineral Leases.”  A client trust account for Davis’s law firm was used for escrow.  After Furie made the deposit, Davis transferred the $1 million out of the firm’s trust account into a Tower Hill escrow account and then used the funds to address personal and business expenditures.  In June 2010,Davis and his wife filed for Chapter 7 bankruptcy in the Western District of Louisiana.  They subsequently sought to convert the bankruptcy case from Chapter 7 to Chapter 11.  A hearing was held on that motion in August 2010.  During the proceeding, Davis falsely stated under oath that Furie was aware of the disposition of the $1million deposit after he removed the funds from the client trust account.  In truth, at no time prior to litigation, did Davis advise Furie or its representatives that he had transferred the money out of the Tower Hill escrow account and used the funds for personal and unrelated business purposes.

This case was investigated by the Federal Bureau of Investigation and prosecuted by Eastern District of Texas Assistant U.S. Attorney Frank Coan.       

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    TYLER, Texas – A 60-year-old Tyler, Texas man was sentenced to federal prison for making false statements on a loan application in the Eastern District of Texas, announced U.S. Attorney John M. Bales today. 
                 
Bobby Gene Loggins pleaded guilty on Dec. 5, 2013 to making false statements to a bank and was sentenced to 51 months in federal prison on July 22, 2014 by U.S. District Judge Leonard E. Davis.  Loggins was also ordered to pay restitution in the amount of $2,773,371.52.

According to information presented in court, Loggins has been affiliated with Loggins Meat Company (LMC) in Tyler for more than 30 years.  During most of that time, Loggins served as President and Chief Executive Officer of LMC.  The company was founded in 1940 by Loggins’ father and operates as a wholesaler, retailer, and processor of meat and meat products.  In March 2009, Loggins applied to Bank of Tyler for a revolving line of credit.  In connection with the loan application, Loggins provided fraudulent financial information for LMC.  Following approval of the loan, Loggins continued to provide false financial data when seeking advances on the credit line.  Ultimately, LMC ceased operations in about August 2010. 

This case was investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Frank Coan.

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      BEAUMONT, Texas – The organizer and leader of a large scale drug trafficking ring responsible for moving multi-kilogram quantities of illegal drugs from Mexico to the United States has been sentenced to federal prison in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.

Alejandro “Alex” Gonzales, 36, of Alvin, Texas, pleaded guilty on Jan. 30, 2014 to conspiring to possess with the intent to distribute over 5 kilograms of cocaine, over 1,000 kilograms of marijuana, and over 500 grams of methamphetamine and was sentenced to 270 months in federal prison today by U.S. District Judge Thad Heartfield.

According to information presented in court, Gonzales began acquiring multi-kilogram quantities of cocaine, marijuana, and methamphetamine from drug cartel suppliers in Mexico sometime in the late 2000’s.  Those narcotics were subsequently smuggled into the United States and transported to Alvin, Texas for distribution.  Gonzales and other members of the drug ring coordinated the sale of those narcotics to customers located in Texas, Oklahoma, Louisiana, Alabama, Mississippi, Florida, North Carolina, New York, and New Jersey.

On Aug. 8, 2013, a federal grand jury returned a six-count second superseding indictment against Gonzales and 27 other codefendants, charging them with numerous federal drug trafficking conspiracy and firearm violations. 

                During the course of the investigation, state and federal agents successfully arrested 40 individuals and seized large quantities of cocaine, marijuana, methamphetamine, $766,577 in U.S. currency, 30 vehicles, a boat, three residences, and 25 firearms. This case was the result of an extensive two and a half year joint investigation by the Organized Crime Drug Enforcement Task Force (OCDETF).  The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking, and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply. 

This investigation was conducted by the U.S. Drug Enforcement Administration Galveston Resident Office, the Miami and Houston Division Offices, the McAllen District Office, and the Dickinson Police Department, with assistance from the Bureau of Alcohol, Tobacco, Firearms and Explosives, Federal Bureau of Investigation, Internal Revenue Service, U.S. Customs and Border Patrol, U.S. Immigration and Customs Enforcement/Homeland Security Investigations, U.S. Marshals Service, Marine Interdiction Agency, Texas Department of Public Safety, Brazoria, Galveston, Harris, and Jefferson County (Texas) Sheriff’s Offices, and the police departments of Alvin, Beaumont, Galveston, Houston, League City, Pasadena, and Pearland, Texas.  This case is being prosecuted by Assistant U.S. Attorneys Baylor Wortham and Michelle Englade.

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       TEXARKANA, Texas – A 35-year-old New Boston, Texas woman has been sentenced to 18 years in federal prison on a biological weapons charge in the Eastern District of Texas, announced U.S. Attorney John M. Bales and Assistant Attorney General for National Security John Carlin today. 
             
On December 10, 2013, Shannon Guess Richardson pleaded guilty to an Information charging her with possession of a toxin for use as a weapon before U.S. Magistrate Judge Caroline M. Craven.  Richardson was named in an indictment returned by a federal grand jury on June 27, 2013, charging her with threatening the President of the United States, mailing a threatening letter to New York City Mayor Michael Bloomberg, and mailing a threatening letter to Mark Glaze in Washington, D.C. 

Richardson was sentenced to 216 months in federal prison today by U.S. District Judge Michael H. Schneider and ordered to pay restitution in the amount of $367,222.29.

“Today's sentencing brings an appropriate and just end to what is surely one of our most unusual, even bizarre cases,” said U.S. Attorney Bales.  “The investigation was also very challenging and I hope that East Texans are encouraged to know that their East Texas law enforcement proved to be amazingly resourceful, determined and focused in all facets of this prosecution. It was truly a great job.”

According to the information presented in court, during April-May 2013, Richardson made several online purchases of items for the purpose of producing ricin.  These supplies included castor bean seeds and sodium hydroxide (lye).  Ricin is a biological toxin that can be fatal if ingested, inhaled, or injected.  There is no known antidote or cure for ricin poisoning. 

Richardson subsequently placed ricin onto threat letters addressed to President Barack Obama, Mayor Michael Bloomberg and Mark Glaze.  On May 20, 2013, Richardson mailed the three threatening letters from the New Boston, Texas, Post Office.  On May 30, 2013, Richardson traveled to the Shreveport, LA, Police Department and reported that her husband was responsible for the ricin-laced letters.

Richardson was arrested on June 7, 2013, in Mt. Pleasant, Texas, and has been detained since that time.

This case was investigated by the Federal Bureau of Investigation, the U.S. Secret Service, the U.S. Postal Inspection Service, the Texas Department of Public Safety, the New Boston, Texas Police Department, the Shreveport, Louisiana, Police Department and the New York City Police Department.   This case was prosecuted by Assistant U.S. Attorneys Frank Coan, Ryan Locker, and Brit Featherston as well as Trial Attorney Jolie Zimmerman of the Justice Department’s National Security Division.

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         TYLER, Texas - U.S. Attorney John M. Bales announced today that six individuals have been arrested following a lengthy investigation into illegal gambling, money laundering and drug trafficking in the Eastern District of Texas.

                On July 15 2014, a combined task force of federal, state and local law enforcement executed six federal arrest warrants and four federal search warrants in the Tyler, Texas and Gladewater, Texas area as a result of a joint investigation by the Federal Bureau of Investigation, Smith County Sheriff's Office, U.S. Drug Enforcement Administration, and the Texas Racing Commission. 

The operation resulted in the arrest of all six defendants and the seizure of over $30,000 cash, methamphetamine, and several firearms.  The following defendants were arrested and appeared before U.S. Magistrate Judge K. Nicole Mitchell on charges of conspiracy to distribute methamphetamine, prohibition of illegal gambling businesses, and conspiracy to money launder: OMAR BONIFACIO BONILLA, a/k/a “Pelon,” 32, of Tyler; RENAULT LANSING KAY, a/k/a “Nault Pete,” a/k/a “Chocolate,” 47, of Tyler;               JESSICA MARIA BONILLA, 31, of Tyler;                                    JOEL ORLANDO BONILLA-LOYA, 36, of Tyler;                                            GUILLERMO RIVERA-BONILLA, 58, of Tyler; and                          
SHEENA SHAVETTE PERRY, 31, of Tyler.                             

If convicted, the defendants face as much as life in federal prison.

Homeland Security-Deportation and Removal Operations, Tyler Police Department, and the Texas Department of Public Safety also assisted in the arrests and searches.  This case is being prosecuted by Assistant U.S. Attorneys Frank Coan and Richard Moore.

A complaint or arrest is not evidence of guilt.  All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

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         BEAUMONT, Texas – A 33-year-old Port Neches, Texas man has been sentenced to 25 years in federal prison for child pornography violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.

         Christopher Dale Harrison pleaded guilty on Nov. 19, 2013 to production of child pornography and was sentenced to 300 months in federal prison today by U.S. District Judge Thad Heartfield.

         According to information presented in court, on Apr. 18, 2013, a federal search warrant was executed at Harrison’s Port Neches home. During the search, agents located and seized an external hard drive and a cell phone from the home and a camera owned by Harrison that had been recently pawned at a local pawn shop. Forensic examinations of the items revealed they contained images of child pornography. Agents were able to determine that the images containing child pornography on the camera were taken at Harrison’s residence in Port Neches and involved a child younger than 18 years of age engaged in sexually explicit conduct and that Harrison had persuaded and ordered this minor to engage in this conduct.

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

         This case was investigated by Homeland Security Investigations, HSI-ICE, the Port Neches Police Department, the Beaumont Police Department, and the Orange County Sheriff’s Office and prosecuted by Assistant U.S. Attorney Michelle Englade.

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 TYLER, Texas — A former employee of an East Texas hospital has been indicted for criminal violations of the Health Insurance Portability and Accountability Act, more commonly known as  HIPAA, in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.

Joshua Hippler, 30, formerly of Longview, Texas, was indicted on charges of Wrongful Disclosure of Individually Identifiable Health Information.  According to the indictment, from December 1, 2012, through January 14, 2013, Hippler, who was then an employee of a covered entity under HIPAA, obtained protected health information with the intent to use the information for personal gain.  HIPAA contains provisions protecting the privacy of individually identifiable health information.

If convicted, Hippler faces up to ten years in prison.                                                                                                  

The investigation leading to the charges was conducted by agents from the U.S. Department of Health and Human Services - Office of Inspector General (HHS-OIG) and the U.S. Postal Inspection Service.  Assistant United States Attorney Nathaniel C. Kummerfeld is prosecuting the case.

A grand jury indictment is not evidence of guilt and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

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 BEAUMONT, Texas – A 23-year-old Houston man has been arrested for a bank robbery in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.   

Christopher M. Carmon Thomas was taken into custody in Houston on June 25, 2014 and went before U.S. Magistrate Judge Keith F. Giblin on June 26, 2014 for an Initial Appearance.

 According to information presented in court, on June 3, 2014, Thomas entered the Wells Fargo Bank on Gladys Avenue in Beaumont, Texas and presented the bank teller with a demand note.  During the robbery, Thomas displayed a gun tucked into his pants by lifting his shirt.  Thomas fled the bank with $2,309.00.  Surveillance camera photographs were disseminated by the media and Thomas was identified by citizen tipsters and the victim bank teller.

            If convicted, Thomas faces up to 20 years in federal prison. 

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

A grand jury indictment is not evidence of guilt and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

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 PLANO, Texas – A 68-year-old Prosper, Texas woman has pleaded guilty in connection with her role in a conspiracy to embezzle millions from the Plano Independent School District, announced U.S. Attorney John M. Bales today. 

            Carol Ann LaRue pleaded guilty to an Information charging her with conspiracy to commit federal program fraud today before U.S. Magistrate Judge Don D. Bush.

            According to information presented in court, LaRue owned and operated Fire Systems Specialists (FSS) and Digital Security Solutions (DSS), companies supposedly in the business of maintaining fire safety systems and security systems.  Between May 2011 and December 2013, LaRue conspired with Plano Independent School District employee, Kris Wilson Gentz, to defraud Plano ISD by submitting fraudulent invoices for services that were not rendered and products that were not provided.   When payment was made to FSS and DSS, LaRue and Gentz would split the profits between themselves.  As a result of the fraudulent scheme, Plano ISD suffered a loss that did not exceed $7 million.  LaRue is responsible for losses that do not exceed $2.5 million.  Gentz pleaded guilty to the same charges on Apr. 1, 2014 and is awaiting sentencing. 

"The other shoe has now dropped in the Kris Gentz-Carol LaRue fraud scheme,” said U.S. Attorney Bales.  “These defendants not only cheated the taxpayers in Plano ISD, they robbed the children. I congratulate the investigative team for a job well done. This case also should serve as a warning to others who somehow believe that they can rip off the public and not be held accountable.  There will always be a reckoning.” 

LaRue faces up to five years in federal prison.  A date for sentencing has not yet been set.

This case is being investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Christopher A. Eason. 

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    TYLER, Texas – A 58-year-old Arlington, Texas, man has been sentenced for counterfeiting violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.

Cloyd Ray Knight, III pleaded guilty on May 9, 2013 to passing counterfeit bills and was sentenced to 69 months in federal prison today by U.S. District Judge Leonard Davis. 

According to information presented in court, Knight began manufacturing counterfeit $100 United States Federal Reserve Notes at his home in Arlington sometime in 2004-2005.  He developed a manufacturing process that included using newspaper print paper, painting the paper with acrylic, printing a simulated watermark on the paper, printing a simulated security thread on the paper, printing a front and rear image on the paper, and spraying the notes with a dulling coat.  The process changed over time based on his experience and experimentation.  After printing the counterfeit $100 bills, Knight would pass or use the counterfeit bills to purchase goods and then receive change in legitimate bills from retail stores located in east Texas and west Louisiana.  Considered one of the largest digital counterfeiters in recent history, Knight successfully passed more than $400,000 in counterfeit $100 bills.

Knight was indicted by a federal grand jury on January 23, 2013.  After pleading guilty in May 2013, he absconded.  Knight was then rearrested in January 2014.

This case was investigated by the United States Secret Service and was prosecuted by Assistant U.S. Attorney Frank Coan.

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  TYLER, Texas – A 50-year-old Palestine, Texas man has been sentenced to federal prison for child pornography violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
 
Alvin Westley pleaded guilty on Jan. 9, 2014 to possession of child pornography and was sentenced to 156 months in federal prison today by U.S. District Judge Leonard E. Davis.

According to information presented in court, on Jan. 26, 2011, Westley knowingly possessed child pornography. At the time of the offense, Westley was a registered sex offender having been previously convicted of three counts of indecency with a child.  Westley was indicted by a federal grand jury on Oct. 23, 2013, and charged with federal child pornography violations.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
This case was investigated by the U.S. Department of Homeland Security - Homeland Security Investigations (DHS-HSI), the Texas Department of Public Safety – Criminal Investigations Division, and the Anderson County Sheriff's Office.  Assistant U.S. Attorney Nathaniel C. Kummerfeld prosecuted this case.

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     PLANO, Texas – U.S. Attorney John M. Bales announced the appointment of J. Kevin McClendon as the Attorney in Charge of the Plano office of the United States Attorney for the Eastern District of Texas. 

Assistant U.S. Attorney (AUSA) J. Kevin McClendon will oversee the daily operations of the Plano office which includes a staff of 31 federal prosecutors, support, and administrative personnel. 

                Born and raised in Texas, McClendon graduated from Texas Tech University in 1986 and Texas Tech University School of Law in 1989.  He has been an AUSA for the U.S. Attorney’s Office for the Eastern District of Texas since September 2004, serving as the Affirmative Civil Enforcement (ACE) Coordinator, the Professional Responsibility Officer (PRO) for the Criminal Division, Civil Health Care Fraud Coordinator, and the Plano Office Intern Co-coordinator.  Prior to joining the U.S. Attorney’s Office, McClendon was an Assistant Attorney General in the Medicaid Fraud Control Unit of the Texas Attorney General for nearly 10 years, working criminal health care fraud cases.  He was also a Special Assistant U.S. Attorney for the Western District of Texas, an Assistant Criminal District Attorney in Lubbock County, and worked as an associate at a small law firm. 

“I am very pleased to announce that Kevin McClendon has been selected to lead our busy Plano office,” said U.S. Attorney Bales.  “He is the epitome of quiet strength which he couples with a wisdom that will serve not only our office well but also our law enforcement partners.  Kevin is absolutely the right person to lead us to the next level of achievement.”

                The Eastern District of Texas includes 43 counties stretching from the Gulf of Mexico to the Oklahoma/Texas border.  There are 6 staffed offices located in Beaumont, Lufkin, Tyler, Texarkana, Plano and Sherman with a total of 51 federal prosecutors.

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       BEAUMONT – U.S. Attorney John M. Bales announced the hiring of Matt Quinn as the Attorney in Charge of the Beaumont office of the United States Attorney for the Eastern District of Texas. 

Assistant U.S. Attorney (AUSA) Matt Quinn joined the Beaumont office this week where he will oversee the daily operations of the office which includes a staff of 36 federal prosecutors, support, and administrative personnel. 

            Matt Quinn was born and raised in Southeast Texas graduating from Vidor High School in 1994.  He graduated with a bachelor’s degree from Texas A&M University in 2000 and the University of Arkansas at Little Rock School of Law in 2003.  Matt was a Deputy Prosecuting Attorney in Little Rock, Arkansas, for five years, where he was assigned to the gang unit and prosecuted numerous homicides and other violent crime.  In 2008, Matt joined the Western District of Arkansas as an Assistant U.S. Attorney and was assigned to the Texarkana Branch Office, which happens to be located on the Texas/Arkansas state line and is a joint office with the Eastern District of Texas.  As an AUSA in Texarkana, Matt worked side-by-side with Eastern District of Texas prosecutors handling major drug trafficking cases and violent crimes.

            “Matt Quinn was raised in southeast Texas so it should be no surprise to anyone that he comes back to Beaumont with all the qualities that we admire – hard-working, smart, conscientious and caring,” said U.S. Attorney Bales.  “He is a great addition to our Beaumont office and will do a wonderful job working with our law enforcement partners.”

            The Eastern District of Texas includes 43 counties stretching from the Gulf of Mexico to the Oklahoma/Texas border.  There are 6 staffed offices located in Beaumont, Lufkin, Tyler, Texarkana, Plano and Sherman with a total of 51 federal prosecutors

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         TYLER, TEXAS – A 44-year-old Whitehouse, Texas woman has pleaded guilty to federal violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales.

         Kristi Isom pleaded guilty to conspiracy to commit mail fraud today before U.S. Magistrate Judge K. Nicole Mitchell.

         According to information presented in court, in September 2011, Isom solicited an individual to intentionally set fire to and burn a residence on East FM 344 in Whitehouse, Texas.  Isom admitted that she advised the individual of the general habits of the inhabitants of the home so that the individual could set the house on fire while it was unoccupied.  After the residence was set on fire and burned, the owner of the residence filed a claim for insurance proceeds due to damage cause by the fire.  Isom was listed as a co-owner on the insurance policy and admitted that she endorsed a check drawn on the account of “The Hartford Large Loss Organization” in the amount of $2,500.  This check was one of several that were deposited, sent and delivered by mail.  The total claim paid was $89,950.  A federal grand jury returned an indictment on Dec. 18, 2013 charging Isom with federal violations.

         Isom faces up to 20 years in federal prison at sentencing.  A sentencing date has not been set.

         This case is being investigated by the Texas Department of Public Safety, Criminal Investigation Division, the Smith County Sheriff’s Office, Smith County Fire Marshal, U.S. Postal Inspector’s Office and prosecuted by Assistant U.S. Attorney Jim Noble.

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         BEAUMONT, Texas - A 44-year-old Port Arthur, Texas man has pleaded guilty to federal income tax violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.   

         Theodore Paul Victor, Jr., pleaded guilty to tax evasion today before U.S. Magistrate Judge Keith F. Giblin.  

         According to information presented in court, for the calendar year 2009, Victor failed to disclose all of his taxable income resulting in a tax loss of approximately $25,935.58.  Victor was indicted by a federal grand jury on Apr. 2, 2014.   

            Victor faces up to 5 years in federal prison at sentencing.  A sentencing date has not been set. 

                This case is being investigated by the Internal Revenue Service-Criminal Investigation and prosecuted by Assistant U.S. Attorney John B. Ross.

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          TYLER, TEXAS – A 54-year-old Murchison, Texas woman has pleaded guilty to federal violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales.

          Deborah Cornett pleaded guilty to an Information charging her with embezzlement by a bank employee today before U.S. Magistrate Judge K. Nicole Mitchell.

          According to information presented in court, from November 2007 to May 2013, Cornett was an officer and employee of the First State Bank of Ben Wheeler.  During that time, Cornett embezzled approximately $334,736.43 from bank payroll accounts, the bank Christmas Club account, certificates of deposit, and from fraudulently issued bank loans.

          Cornett faces up to 30 years in federal prison at sentencing.  A sentencing date has not been set.

          This case is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant U.S. Attorney Nathaniel C. Kummerfeld.

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 BEAUMONT, Texas – A man and woman have pleaded guilty to racketeering violations in connection with an employment referral conspiracy in the Eastern District of Texas, announced U.S. Attorney John M. Bales and Brian M. Moskowitz, special agent in charge of Homeland Security Investigations in Houston today. 

                Lina Sun, 54, and Chenglun Ma, 57, both of Houston, pleaded guilty to RICO conspiracy on June 3, 2014 before U.S. Magistrate Judge Keith Giblin.

According to court documents, two employment referral businesses operating out of Houston recruited unauthorized aliens, mostly from Mexico and Central America, for work in the Chinese restaurant industry.  These workers routinely worked  12 hours a day, six days a week, they were not paid overtime, not permitted to receive tips or gratuities, and were paid in cash by the restaurants.  The restaurants profited by avoiding payment of employment taxes and did not provide any benefits such as health insurance, vacation or sick time.  Workers were paid far less than minimum wage, did not receive health examinations, food safety training, or any job training at any time while employed. 

                Additionally, these workers were subject to unfavorable living arrangements provided by the restaurant operators, either at the operator’s residence or at another off-site residential location. Living arrangements were overcrowded and sometimes consisted of air mattresses or floors for sleeping.  For instance, 18 people were found to be housed in a 2000 square foot house.

                Federal indictments were returned on Nov. 7, 2013, charging 32 individuals with RICO conspiracy and conspiracy to transport, harbor, and encourage and induce aliens to reside in the United States. 

                Sun and Ma each face up to 20 years in federal prison at sentencing.  Sentencing dates have not been set.

                "I congratulate the investigative team on what is surely a signature accomplishment,” said U.S. Attorney Bales.  “The defendants abused the aliens who came looking for work and they abused our nation's immigration laws. Now they will be held accountable under the law and then what good will their ill-gotten riches be?"  We will continue to be vigilant."

"Those who think that they can build their businesses on a foundation of corrupt and illegal activities will eventually see those enterprises crumble," said SAC Moskowitz. "Today's pleas cap a multi-year investigation of the Hong Li Job Agency and the Tai Shan Employment Agency by HSI and our partners in the Eastern District of Texas that weakened the business foundations and brought down these two enterprises."

This case is being investigated by U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI) offices in: Houston, Dallas, San Antonio and New Orleans; U.S. Customs and Border Protection, Office of Air and Marine; U.S. Marshals Service; and Police Department’s in Houston, Port Author and Beaumont.  This case is being prosecuted by Assistant U.S. Attorneys in Beaumont.

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 TYLER, Texas — A 43-year-old Nigerian fugitive has been arrested at a Houston airport and will now face federal health care fraud violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales.

                Vivian Yusuf, of Port Harcourt, Nigeria, the former owner of Ivy Health Care Supply, a Houston area medical supply company, was arrested on June 3, 2014 at George Bush Intercontinental Airport in Houston.  Yusuf had been indicted for conspiracy to commit health care fraud, health care fraud, and aggravated identity theft and a fugitive since March 2011.

According to the indictment, from June 2007 through May 2009, Yusuf, Aghaegbuna “Ike” Odelugo, James Reese, and others carried out a scheme to defraud Medicare through the marketing of power wheelchairs and accessories, as well as “ortho kits,” which primarily consisted of a bag of orthotic items, including braces, wraps, and supports, and a heat lamp or heat pad.  As part of the scheme, the defendant and her co-conspirators illegally obtained protected health information, including names, dates of birth, and Medicare numbers from elderly individuals.  Yusuf and her co-conspirators supplied beneficiaries with kits and power wheelchairs which were not prescribed or otherwise authorized by a physician and which were not wanted by the beneficiaries.  Claims were submitted by the defendant and her co-conspirators for approximately 790 beneficiaries located primarily in Texas and Louisiana.  In some instances, physicians’ signatures were forged and false claims were submitted to Medicare in the names of Medicare beneficiaries who were deceased.  By means of fraudulent billing practices, the defendant and her co-conspirators unlawfully submitted false and fraudulent claims to Medicare of more than $3.4 million and obtained more than $1.6 million.

Yusuf appeared in federal court in Houston for an initial appearance and is being transferred to the Eastern District of Texas.
Odelugo and Reese were indicted for their involvement in similar health care fraud schemes.  "Ike" Odelugo pleaded guilty to conspiracy to commit health care fraud, health care fraud, and money laundering and was sentenced to 72 months in federal prison.  The loss to Medicare as a result of Odelugo’s scheme was approximately $9.9 million.  James Reese pleaded guilty to health care fraud and tax evasion and was sentenced to 180 months in federal prison.  The loss to Medicare as a result of Reese’s scheme was approximately $8.6 million. 
If convicted, Yusuf faces up to 10 years in prison for each count of conspiracy and health care fraud and up to 2 years in prison for each count of aggravated identity theft.  A grand jury indictment is not evidence of guilt.

This case is being investigated by the U.S. Department of Health and Human Services – Office of the Inspector General (HHS-OIG), the Texas Office of the Attorney General – Medicaid Fraud Control Unit (OAG-MFCU), and the Federal Bureau of Investigation (FBI).  Assistant U.S. Attorney Nathaniel C. Kummerfeld is prosecuting this case.

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 BEAUMONT, Texas –  A 51-year-old Houston man has been sentenced to federal prison for drug trafficking violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.

Tomas Alonso Moreno pleaded guilty on Jan. 14, 2014 to possession with intent to distribute cocaine and was sentenced to 30 months in federal prison today by U.S. District Judge Ron Clark.

According to information presented in court, on Oct. 22, 2013, Moreno was stopped in Liberty County, Texas for a defective brake light.  Moreno appeared nervous and was driving while his license was suspended.  He consented to a search of the vehicle after denying that he was carrying anything illegal.  As officers prepared to search the vehicle, Moreno confessed to having cocaine in the center console.  Officers located the cocaine and arrested Moreno.  A federal grand jury returned an indictment on Nov. 6, 2013, charging Moreno with drug trafficking violations. 

                This case is the result of an Organized Crime Drug Enforcement Task Force (OCDETF) joint investigation.  The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering  organizations, and those primarily responsible for the nation’s illegal drug supply. 

This case was investigated by the Liberty County Sheriff’s Office and prosecuted by Assistant U.S. Attorney Robert L. Rawls. 

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 BEAUMONT, Texas – A 23-year-old former youth pastor has pleaded guilty to child pornography violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
 
Trevion Lechay Ethridge, of Newton, Texas, pleaded guilty to production of child pornography today before U.S. District Judge Ron Clark.

According to information presented in court, from November 2012 to March 2013, while Ethridge was the youth pastor at a Newton County church, he persuaded a minor to video and photograph pornographic images and to send the pornography to Ethridge via smart phone.  Ethridge was indicted by a federal grand jury on Oct. 3, 2013.  Trial began in this case on May 12, 2014 and was recessed after two days.  Trial resumed on June 3, 2014, at which time Ethridge changed his plea to guilty and under oath, admitted to sending the minor pornographic images and videos of himself and enticing the minor to send pornographic images and videos in return.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Ethridge faces a minimum of 15 years and up to 30 years in federal prison.  A sentencing date has not been set.
This case is being investigated by the Homeland Security Investigations, the Newton Police Department and the Beaumont Police Department and prosecuted by Assistant U.S. Attorneys Randall L. Fluke and Lauren Gaston. 

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 TYLER, Texas – A 47-year-old Longview, Texas man has been sentenced to federal prison for violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.

James Leroy Frattarola pleaded guilty on Mar. 5, 2014, to possessing counterfeit silver bars with the intent to defraud another and was sentenced to 21 months in federal prison today by U.S. District Judge Michael H. Schneider.

            According to information presented in court, on Sep. 13, 2013, Frattarola possessed approximately 90 one-ounce silver bars, stamped with the impression, “.999 FINE SILVER” and “NORTHWEST TERRITORIAL MINT” with intent to defraud another.  Frattarola admitted to possessing the counterfeit bars in Longview, Texas and to engaging in similar criminal conduct on other occasions involving a total of nine victims.  Frattarola was indicted by a federal grand jury on Oct. 23, 2013.

            Frattarola was also ordered to pay a total of $28,720.40 in restitution to be divided among nine victims. 

              This case was investigated by the U.S. Secret Service, Longview Police Department, Kingsville Police Department, Terrell Police Department, Grand Prairie Police Department, and the Brazoria County Sheriff’s Office and was prosecuted by Assistant U.S. Attorney Jim Noble.

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 TYLER, Texas — A 42-year-old Bullard, Texas, woman has been sentenced to federal prison for her role in a food stamp fraud scheme in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.

Monica Bunch, also known as, Monica Hernandez, pleaded guilty on Aug. 8, 2013 to conspiracy to unlawfully use, transfer, acquire, and possess SNAP (Supplemental Nutrition Assistance Program) benefits and was sentenced to six months in federal prison today by U.S. District Judge Michael H. Schneider.  Bunch was also ordered to pay restitution in the amount of $72,846.09 to the U.S. Department of Agriculture and to forfeit the proceeds of the fraud scheme.

According to the indictment, from January 2007 through March 31, 2012, Bunch, a clerk with the Texas Health and Human Services Commission (HHSC) in Jacksonville, Texas, and her co-conspirators, devised and carried out a scheme to unlawfully obtain SNAP benefits.  In her position as clerk at HHSC, Bunch identified dormant SNAP accounts belonging to individuals who did not live in or around Jacksonville, Texas, or who had moved away from the Jacksonville, Texas, area.  Using the dormant accounts, Bunch created replacement Lone Star cards and forged and created documents to conceal the unlawful creation of the cards.  Bunch sold the cards to the other defendants at approximately half of the card's actual SNAP benefit value.  Bunch also provided the defendants with the PIN numbers associated with the cards.  The defendants used the cards to purchase food from retailers in and around the Jacksonville, Texas, area and the Tyler, Texas, area.

On July 25, 2013, a federal grand jury returned an indictment charging Bunch, Ernest Grady, 47, Evelyn Whitaker, 47, Genoveve Servin, 49, Maria Silva, 50, and Maria Delrosario Padron a/k/a “Chayo”, 38, all of Jacksonville, with conspiracy to unlawfully use, transfer, acquire, and possess SNAP Benefits. 

“The United States Department of Agriculture, Office of Inspector General-Investigations is dedicated to combating fraud and abuses in SNAP,” said Special Agent-in-Charge Mary L. Lewis of the United States Department of Agriculture, Office of Inspector General-Investigations (USDA-OIG).  “I commend the coordinated investigative efforts of State and Federal agencies that led to the successful prosecution of this case.” 

U.S. Attorney Bales also praised the investigative team and added, “SNAP is an expensive and vitally important aid program that assists deserving individuals and families who might otherwise go hungry.  Hopefully, the felony conviction and sentencing to prison of Monica Bunch sends a message to anyone who thinks they can rip off the American taxpayer – you will be held to account.”

SNAP is a federal government program, administered by the United States Department of Agriculture (USDA) Food and Nutrition Service (FNS), which helps qualifying individuals and families buy food.

This case was investigated by the U.S. Department of Agriculture, Office of Inspector General-Investigations, U.S. Secret Service, and the State of Texas, Health and Human Services Commission, Office of Inspector General-Internal Affairs.  Assistant U.S. Attorney Nathaniel C. Kummerfeld prosecuted this case.

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 SHERMAN, Texas - A 53-year-old Aledo, Texas woman has been sentenced to federal prison for her role in a mortgage fraud scheme in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.   

Donna Shirley Cobb pleaded guilty on Oct. 16, 2013 to conspiracy to defraud the United States and was sentenced to 21 months in federal prison today by U.S. District Judge Thad Heartfield.  Cobb was also ordered to pay restitution in the amount of $2,151,376.00.

According to information presented in court, from 2005 to 2008, Cobb, an escrow officer with Title Texas, Inc., was involved in a conspiracy to defraud lending institutions by providing fraudulent documents and causing residential loans to be provided based on the fraudulent information.  One such property was located on Carlton Court in McKinney, Texas. A total of 28 properties located in Cedar Hill, Cresson, Dallas, Euless, Fairview, Fort Worth, Frisco, Heath, Hurst, McKinney, Murphy, Plano, Prosper, and Watauga, Texas, were involved in the scheme. 

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force.

            President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

            This case was investigated by the Federal Bureau of Investigation and the Federal Housing Finance Agency – Office of Inspector General.  This case was prosecuted by Assistant U.S. Attorneys Christopher A. Eason and J. Andrew Williams.

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 SHERMAN, Texas -  A Denton County, Texas man and woman have been sentenced to federal prison for income tax violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.   

Michael Jerome Edwards, 40, and Cheri Joann Edwards, 38, both of Lewisville, Texas, pleaded guilty on Oct. 28, 2013 to conspiracy to defraud the government.  Cheri Edwards was sentenced to eight months in federal prison and ordered to pay restitution in the amount of $67,574.83 today by U.S. District Judge Thad Heartfield.

Michael Edwards was sentenced to 46 months in federal prison and ordered to pay restitution of $419,739.00 on Apr. 22, 2014 by Judge Heartfield.

According to information presented in court, beginning in November 2008, Michael and Cheri Edwards devised a scheme to defraud the government by submitting fraudulent federal income tax returns claiming $3,860,722.00 in refunds for tax years 2006 through 2008, which far exceeded that to which they were entitled.  To facilitate the scheme, the defendant’s submitted Form 1099-Original Issue Discount (OID) to falsely identify federal income tax withholdings.  As a result of this fraudulent activity, Michael Edwards received a federal tax refund in February 2009 in the amount of $324,536.84 for the 2007 tax year.  In April 2009, Cheri Edwards received a federal tax refund in the amount of $77,451.00 for tax year 2008.  The defendants were indicted by a federal grand jury on Sep. 12, 2012.

                This case was investigated by IRS Criminal Investigations and prosecuted by Assistant U.S. Attorney Christopher A. Eason.

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 TYLER, Texas – A 22-year-old Jacksonville, Texas man has pleaded guilty in connection with a violent crime spree targeting area businesses in the Eastern District of Texas announced U.S. Attorney John M. Bales today.

                Jonathan Roshard Brown pleaded guilty to interfering with interstate commerce by robbery (Hobbs Act conspiracy) and possessing a firearm during a crime of violence today before U.S. Magistrate Judge K. Nicole Mitchell.

According to information presented in court, Brown and three co-defendants conspired to commit robbery, which unlawfully obstructed, delayed and affected commerce in violation of federal law.  Specifically, they committed four armed robberies in Jacksonville during a crime spree which began on Oct. 2, 2011 when Brown and two others stole $9,465 from the Wal-Mart Supercenter in Jacksonville.  On Nov. 2, 1012, Brown and two others robbed the Razorback Grocery on Hwy 69 in Jacksonville.  Brown brandished a handgun and demanded money from the owner.  Razorback Grocery suffered a loss of approximately $16,000 in cash and $6,900 in Texas lottery tickets.  On Nov. 16, 2012, Brown and two others again robbed the owner of the Razorback Grocery while he was waiting in the commercial drive-thru line at the Austin Bank on West Commerce Street in Jacksonville.  During the robbery Brown fired a handgun, striking the victim.  The bullet passed through the victim’s hand, throat and shoulder.  The victim survived after being airlifted to a Tyler hospital.  The defendants obtained an undetermined amount of cash from the victim’s vehicle.  The armed robbery resulted in the closure of Razorback Grocery and the temporary closure of Austin Bank.  On Nov. 23, 2012, Brown and another person attempted to rob the owner of the Fast Fuel on Hwy 69 in Jacksonville.  The owner was able to strike Brown and flee. 

Brown faces up to 20 years in federal prison for the Hobbs Act violation and a minimum of 10 years in federal prison for the firearms violation.  A sentencing date has not been set. 
This case is being prosecuted as part of the Project Safe Neighborhoods Initiative. Project Safe Neighborhoods is aimed at reducing gun and gang violence, deterring illegal possession of guns, ammunition and body armor, and improving the safety of residents in the Eastern District of Texas. Participants in the initiative include community members and organizations as well as federal, state and local law enforcement agencies.
This case is being investigated by the FBI East Texas Gang Initiative and the Jacksonville Police Department with assistance from the Cherokee County District Attorney’s Office.  This case is being prosecuted by Assistant U.S. Attorney Richard Moore.

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         TYLER, Texas — A 53-year-old Dallas man has been indicted on smuggling charges in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.

Carlos Delgado Rodriguez was indicted by a federal grand jury on May 14, 2014 and charged with smuggling dead hummingbirds from Mexico into the United States.

According to the indictment, from February 2013 through January 2014, Rodriguez is alleged to have unlawfully imported approximately 61 dead hummingbirds, of various varieties, into the United States for sale.  The five-count indictment specifically alleges that the importation of dead hummingbirds violates the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), the Migratory Bird Treaty Act (MBTA), the Lacey Act, the federal smuggling law, and Texas State Law. 

If convicted, Rodriguez faces up to 20 years in federal prison.

This case is being investigated by the U.S. Fish and Wildlife Service and prosecuted by Assistant U.S. Attorney Jim Noble.

It is important to note that an 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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          BEAUMONT, Texas – A 37-year-old Bacliff, Texas man has been sentenced to federal prison for bank robbery in the Eastern District of Texas, announced U.S. Attorney John M. Bales. 
                 
          Samuel David Sanford, III, pleaded guilty on Oct. 8, 2013 to bank robbery and was sentenced to 72 months in federal prison today by U.S. District Judge Ron Clark.

          According to information presented in court, on Dec. 19, 2012, Sanford entered the JP Morgan Chase Bank located in the 3100 block of 16th Street in Orange, Texas, and presented the teller with a threatening note demanding money.  Sanford was given $25,859.00 and fled the bank.  He was identified by tipsters after the robbery and indicted by a federal grand jury on Jan. 23, 2013.   

          Sanford has also been ordered to pay restitution in the amount of $25,859.00.

          This case was investigated by the Federal Bureau of Investigation and the Orange Police Department and prosecuted by Assistant U.S. Attorney John Craft.

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           TYLER, Texas – A 40-year-old Quitman, Texas man has been sentenced to federal prison for federal violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today

           Daniel Huffman, also known as Steven Ball, pleaded guilty on Feb. 10, 2014 to making a false statement on a loan application and was sentenced to 23 months in federal prison today by U.S. District Judge Michael H. Schneider.  Huffman was also ordered to pay restitution in the amount of $196,028.52.

           According to information presented in court, on Jan. 23, 2012, Huffman applied for a mortgage loan under the false name of Steven Ball.  Huffman was indicted by a federal grand jury on Oct. 23, 2013 and charged with federal violations. 

           This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force.

            President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

                This case was investigated by the U.S. Secret Service and the U.S. Postal Inspection Service and prosecuted by Assistant U.S. Attorney Nathaniel C. Kummerfeld. 

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           TYLER, Texas – A 37-year-old Tyler, Texas man is being sought by authorities in a drug conspiracy case in the Eastern District of Texas, announced U.S. Attorney John M. Bales today. 

On Apr. 9, 2014, Tyler Police Department, Federal Bureau of Investigation, and Texas Rangers executed a search warrant for narcotics at a residence located in Tyler Texas.  This was the result of a one-year undercover narcotics investigation led by the Tyler Police Department in conjunction with the F.B.I.  Law enforcement officials arrested Micol Jauron Sears, 39, of Tyler.  Sears was charged in a federal indictment with conspiracy to possess with intent to distribute cocaine base.  Federal and local law enforcement officials are seeking a second suspect, also named in the indictment, identified as Calvin Donell Dorsey, a 37-year-old black male, of Tyler.  Dorsey is charged with conspiracy to possess with intent to distribute cocaine base.  If you have any information to the whereabouts of Dorsey please contact your Federal or local law enforcement agency.

Attached:  Photo of Calvin Donell Dorsey

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 TYLER, Texas — U.S. Attorney John M. Bales announced today that an Anderson County man has been sentenced for the sexual exploitation of children in the Eastern District of Texas.

Robbie Newby, 46, of Grapeland, Texas, was indicted by a federal grand jury on April 17, 2013, and pleaded guilty on January 9, 2014, to sexual exploitation of children.  Newby was sentenced on April 23, 2014, to 30 years in federal prison by United States District Judge Leonard E. Davis. 

According to the information provided in court, on or about March 14, 2012, Newby knowingly used and coerced a minor under the age of sixteen to engage in sexually explicit conduct for the purpose of producing visual depictions of such conduct.

This case is being investigated by the United States Department of Homeland Security - Homeland Security Investigations (DHS-HSI) and the Anderson County Sheriff's Office (ACSO).  The case is being prosecuted by Assistant United States Attorney Nathaniel Kummerfeld.

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

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 SHREVEPORT, LA – A 52-year-old Shreveport, Louisiana attorney has pleaded guilty to federal violations in the Western District of Texas, announced U.S. Attorney John M. Bales of the Eastern District of Texas.

James Ward Davis pleaded guilty to an Information charging him with making a false statement in a bankruptcy proceeding today.

                According to information presented in court, Davis is a lawyer and former member of the Shreveport law firm Jones, Odom, Davis & Politz.  He also operated and controlled Tower Hill Energy Company, LLC, which purported to be in the business of acquiring oil, gas, and mineral leases, interests, and royalties in north Louisiana.  In February 2009, Tower Hill entered into an agreement with a Texas company known as Furie Petroleum.  By way of the agreement, Tower Hill was obligated to acquire mineral rights on Furie’s behalf.  Furie agreed to deposit $1 million to be used by Tower Hill “solely for the acquisition of Mineral Leases or purchase contracts/options to acquire Mineral Leases.”  A client trust account for Davis’s law firm was used for escrow.  After Furie made the deposit, Davis transferred the $1 million out of the firm’s trust account into a Tower Hill escrow account and then used the funds to address personal and business expenditures.  In June 2010,Davis and his wife filed for Chapter 7 bankruptcy in the Western District of Louisiana.  They subsequently sought to convert the bankruptcy case from Chapter 7 to Chapter 11.  A hearing was held on that motion in August 2010.  During the proceeding, Davis falsely stated under oath that Furie was aware of the disposition of the $1million deposit after he removed the funds from the client trust account.  In truth, at no time prior to litigation, did Davis advise Furie or its representatives that he had transferred the money out of the Tower Hill escrow account and used the funds for personal and unrelated business purposes.

Davis faces up to 5 years in federal prison and a fine of $250,000, at sentencing.  A sentencing date has not been set.

This case is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant U.S. Attorney Frank Coan.             

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 BEAUMONT, Texas – A 53-year-old Kountze, Texas man has pleaded guilty in connection with his role in theft of government property, announced U.S. Attorney John M. Bales today. 

            Tony Lynn Thornton, Sr. pleaded guilty to an Information charging him with theft of government property of a value of less than $1000 today before U.S. Magistrate Judge Keith Giblin.

            According to information presented in court, in August 2007, Thornton was the executive director and also served as a member of the board of directors of the Hardin County Disaster Recovery Alliance (HCDRA), a non-profit organization chartered by the State of Texas.  HCDRA’s main function and purpose was to operate exclusively for charitable, educational, and faith-based purposes, including but not limited to improvement of the condition of victims of Hurricane Rita, giving priority to the elderly, the disabled, the poor and the underprivileged.  Thornton controlled and operated the HCDRA residential repair and renovation program.  As part of his duties, Thornton selected contractors that were used to repair hurricane damaged homes in Hardin, Jefferson, and Orange Counties.  Thornton was to secure the payment for the contractors after each repair job was finished, and inspect and verity that the work was completed.  Thornton maintained control over the HCDRA checking account, often writing and signing checks to pay HCDRA vendors and contractors.   On or about May 5, 2007, Thornton’s wife incurred a charge on her personal Citi Bank Advantage Credit card in the amount of $627.83.  On May 15, 2007, Thornton wrote a check made out to “City Master Carpenters” on the HCDRA checking account.  He then signed the check on behalf of HCDRA.  The check was then sent, along with a copy of Thornton’s wife’s credit card statement to Citi Bank where the HCDRA check was processed and her account credited in the amount of the check.  Thornton knew that the charge was not made for the benefit of HCDRA, and he intended to convert the funds for his own use or that of another to pay off the outstanding credit card debt, without the authority of the HCDRA. 

            Thornton faces up to one year in federal prison, a fine not to exceed $100,000.00 and restitution.  A date for sentencing has not yet been set.

The case is being investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).  The case is being prosecuted by Assistant U.S. Attorney Joseph Batte. 

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Project Safe Neighborhoods sends Convicted Felon to Federal Prison For Possessing a Stolen Firearm

 TYLER, Texas - A 29-year-old Dike, Texas man has been sentenced to federal prison for firearms violations in the Eastern District of Texas announced U.S. Attorney John M. Bales today.

            Kerry Lynn Sanders pleaded guilty on December 4, 2013, to possessing a stolen firearm and was sentenced to 120 months in federal prison today by U.S. District Judge Leonard Davis.

According to information presented in court, on March 19, 2013, Sanders was stopped by Wood County Sheriff’s Deputies due to an outstanding arrest warrant.  The deputies arrested Sanders and performed an inventory of Sanders’ vehicle. During the inventory, the deputies discovered a 20gauge, pump-action shotgun behind the driver’s seat.  Sanders admitted that he knowingly possessed the shotgun without the consent of the owner, and with the intent to deprive the owner of the shotgun.    

   Sanders was indicted by a federal grand jury on September 25, 2013, for possessing the shotgun after having been previously convicted of multiple felony crimes including Theft, Attempted Evading Arrest with a Vehicle, Possession of a Controlled Substance, and Aggravated Robbery.  Federal law prohibits the possession of stolen firearms and further prohibits convicted felons from owning or possessing firearms or ammunition.   

This conviction is yet another important outcome from Project Safe Neighborhoods (PSN), a national priority of the United States Department of Justice. PSN is designed as a partnership between federal and local law enforcement to reduce violent crime and gun-related crime through the vigorous enforcement of the criminal provisions of the federal firearms laws.

            This case was investigated by ATF and the Wood County Sheriff’s Office and was prosecuted by Assistant U.S. Attorney Jim Noble.

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 PLANO, Texas – Gary Lynn McDuff, 59, was sentenced to 300 months in prison today for his role in conspiring to defraud investors of almost $11 million in an investment fraud scheme and laundering the proceeds in the Eastern District of Texas, announced U.S. Attorney John M. Bales.  United States District Judge Richard A. Schell also ordered the payment of over $6.5 million in restitution to the victims of the fraudulent scheme.  McDuff’s fellow conspirators, Gary Lancaster, 62, of Oregon, and Robert Reese, deceased, of Carmel, California, previously pleaded guilty and were sentenced to terms of imprisonment for their roles in the scheme.

According to evidence presented during the federal trial, McDuff and Lancaster agreed to create the Lancrorp Investment Fund, to draft a prospectus for the Fund, and to solicit investments from individuals across the United States.  While McDuff controlled the operation, Lancaster agreed to serve as the “front” since McDuff could not possess a securities license or sell securities because of a past felony conviction.  McDuff recruited Reese to help sell the investment despite the fact that Reese had been barred by the State of California from selling securities.  McDuff, Lancaster, and Reese made numerous false representations to their investors in order to induce payments, including representations that the Fund would only invest in A+ or A1 rated bonds, that the principal of each investment would be insured and never at risk, and that Lancaster had experience operating this type of investment.  McDuff, Lancaster, and Reese never disclosed McDuff’s felony conviction or Reese’s securities ban.  McDuff then laundered the criminal proceeds in order to promote the operation of the fraudulent scheme. After hearing the evidence, the jury needed just six minutes to convict McDuff on the conspiracy and laundering charges.

“This significant sentence reflects how seriously we take investment fraud. We will not tolerate false representations being made to investors in order to take their money,” said U.S. Attorney Bales.

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force.

            President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

            This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service and prosecuted by Assistant United States Attorneys Shamoil T. Shipchandler and Camelia Lopez. 

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 SHERMAN, Texas – A 43-year-old McKinney, Texas man has been sentenced to federal prison in connection with a combination foreclosure rescue and drug distribution scheme in the Eastern District of Texas, announced U.S. Attorney John M. Bales. 
             
Julius Williams pleaded guilty on Aug. 21, 2013 to conspiracy to commit mail and wire fraud and was sentenced to 46 months in federal prison today by U.S. District Judge Marcia Crone.  Williams was also ordered to pay $1,432,208.00 million in restitution. 

According to information presented in court, from February 2007 to June 2012, Jarrod Williams, Julius Williams, and Charles Williams, controlled and operated Applied Investment Strategies, Inc. (AIS), which marketed itself as a foreclosure rescue service offering assistance to homeowners at risk of foreclosure.  However, once a homeowner detained AIS, the defendants fraudulently used the customer’s personal identification information to prepare and send false military orders to banks and lending institutions in order to claim relief from foreclosure under the Servicemember’s Civil Relief Act.  AIS would then lease out the home and collect rental payments for AIS’ benefit.  The scheme involved approximately 38 homes throughout North Texas and also extended to interfering in the repossession of automobiles.  After at least one of the fraudulently-acquired properties was vacated, Charles Williams, Christopher Carter and Sean Harrell turned it into a marijuana grow operation that housed approximately 1,300 marijuana plants that were intended for distribution.  A federal grand jury returned an indictment on July 11, 2012, charging the defendants with federal violations.

Jarrod Williams, 34, of McKinney, Charles Williams, 39, of McKinney, Christopher Carter, 34, of Leicester, England, and Sean Harrell, 38, of Dallas are each currently serving prison sentences ranging from 41 to 57 months. 

This case was investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Shamoil T. Shipchandler.

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 TYLER, Texas – Two East Texas men have been sentenced to federal prison for drug trafficking violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today. 

Chadwick Marvin Thompson, 36, of McKinney, pleaded guilty on Nov. 21, 2013, to conspiracy to distribute 50 grams or more of methamphetamine and was sentenced to 240 months in federal prison today by U.S. District Judge Leonard E. Davis.  As part of his plea, Thompson has agreed to the forfeiture of $8,700 cash along with six firearms and ammunition. 

Brandon Lee Lagrone, 36, of Carthage, Texas, pleaded guilty on Dec. 9, 2013, to using a communication facility to facilitate the commission of a felony and was sentenced to 36 months in federal prison today by U.S. District Judge Leonard E. Davis.

According to information presented in court, on multiple occasions in 2012 and 2013, Thompson sold methamphetamine and firearms to others.  On July 20, 2013, Lagrone used a telephone to facilitate the commission of the felony offense of possession with intent to distribute methamphetamine.  Thompson, Lagrone and two others were indicted by a federal grand jury on Mar. 27, 2013, and charged with drug trafficking violations. 

This case was investigated by the Texas Department of Public Safety and the Bureau of Alcohol, Tobacco, Firearms and Explosives and prosecuted by Assistant U.S. Attorney Mary Ann Cozby.

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 BEAUMONT, Texas – A 70-year-old Daisetta, Texas man has been sentenced to five years in federal prison for child pornography violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
 
Kenneth Claude Davenport pleaded guilty on Sep. 25, 2013 to possession of child pornography and was sentenced to 60 months in federal prison today by U.S. District Judge Thad Heartfield.

According to information presented in court, on Mar. 16, 2011, law enforcement officers executed a search warrant at Davenport’s residence in Liberty County, Texas during which two computers and a hard drive were seized.  A forensic examination of the computers and equipment revealed 20 videos containing approximately 1,500 images of child pornography.  These images included prepubescent minors engaging in sexually explicit conduct, including depictions of violence and minors engaging in sexually explicit conduct with adults.  Davenport admitted to using the computer to download and view child pornography approximately twice a week.  Davenport was indicted by a federal grand jury on June 20, 2013 and charged with child pornography violations.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
This case was investigated by the U.S. Secret Service, Houston Field Office Internet Crimes Against Children Task Force and the Liberty Police Department and prosecuted by Assistant U.S. Attorney Randall L. Fluke. 

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Department of Justice
Office of Public Affairs

 BEAUMONT, Texas – The former Director of Finance and Comptroller of the Beaumont Independent School District (BISD) have pleaded guilty to federal charges in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.

Devin Wayne McCraney, 35, of Beaumont, pleaded guilty to the charge of fraud upon programs receiving federal funds today before U.S. District Judge Ron Clark.

Sharika Baksh Allison, 43, of Beaumont, pleaded guilty to the charge of conspiracy to commit fraud upon programs receiving federal funds today before Judge Clark.

According to information presented in court, McCraney, Director of Finance for BISD, and Allison, Comptroller for BISD, devised schemes in which they embezzled over $4 million from BISD.  McCraney and Allison were indicted by a federal grand jury on Jan. 8, 2014.

“The guilty pleas are an important milestone, not just for the Government and the Defendants, but for citizens of Beaumont, said U.S. Attorney Bales.  “Lately, much of the news coming from BISD has been disappointing but its mission to educate Beaumont’s children remains critically important.  The joint task force will continue to diligently work to insure that individuals who are ripping off BISD and impugning both the mission, and the many good public servants who are committed to that mission, are held accountable.”

“These defendants knowingly and willfully abused their position of trust to steal education funds that were supposed to be used to provide services for the most innocent of victims – school children.  That is unacceptable,” said Neil Sanchez, Special Agent in Charge of the U.S. Department of Education Office of Inspector General’s South Central Regional Office.  “I’m proud of the work of OIG Special Agents and our law enforcement colleagues for holding these individuals accountable for their criminal actions.”

“The admission of guilt today by these defendants is one more step in the process of restoring the public’s faith and belief in law and order in our community,” said Jefferson County District Attorney Cory Crenshaw.  “I sincerely hope the mission of our task force is made evident by these guilty pleas which allow our entire community to see clearly that we have people who allow their own greed to put the future of our children at great risk.  We will continue in our goal to do what is required to bring all of those responsible to justice and I continue to ask that those with knowledge of wrongdoing within our school district to promptly come forward.”

McCraney faces up to 10 years in federal prison and restitution of $4,041,705.27.  Allison faces up to 5 years in federal prison and restitution of up to $1,351,983.11.  Sentencing dates have not been set.

This case is being prosecuted as part of the Joint Task Force established in March 2014 between the U.S. Attorney’s Office for the Eastern District of Texas and the Jefferson County District Attorney’s Office to investigate and prosecute major crimes – more specifically, violent crime and crimes related to the abuse of public trust in Jefferson County, Texas.

If you have any information related to this matter, please call the Federal Bureau of Investigation at 409-832-8571.

This case is being investigated by the Federal Bureau of Investigation and the U.S. Department of Education Office of Inspector General.  This case is being prosecuted by Assistant U.S. Attorneys Christopher T. Tortorice and Joseph R. Batte.

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Department of Justice
Office of Public Affairs

 BEAUMONT, Texas – A 44 year-old Port Arthur, Texas man has been indicted for income tax evasion, announced U.S. Attorney John M. Bales today. 

            Theodore Paul Victor, Jr., was indicted on April 2, 2014, and charged with four counts of failing to report taxable income during the calendar years 2007 through 2010.  Victor is accused of failing to report taxable income in excess of $361,000, leaving him with a tax liability of over $69,000.

If convicted, each count carries a maximum statutory penalty of five years in federal prison and a $250,000 fine.  In addition, restitution could be ordered.

            The case is being investigated by the Internal Revenue Service.  The case is being prosecuted by Assistant U.S. Attorney John B. Ross and Special Assistant U.S. Attorney Catherine Cockrell. 

          It is important to note that an 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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Department of Justice
Office of Public Affairs

 PLANO, Texas – A 59-year-old Princeton, Texas man has pleaded guilty in connection with his role in a conspiracy to embezzle over $2.5 million from the Plano Independent School District, announced U.S. Attorney John M. Bales today. 

                Kris Wilson Gentz pleaded guilty to an Information charging him with conspiracy to commit federal program fraud today before U.S. Magistrate Judge Don Bush.

                According to information presented in court, from August 2001 to December 2013, Gentz was employed by the Plano ISD as a Manager and Security and Fire Systems Security Support Specialist.  Gentz was responsible for ensuring that Plano ISD schools were equipped with fire and security alarms that were properly maintained.  Between 2004 and December 2013, Gentz and two other individuals set up two companies called Fire System Specialists (FSS) and Digital Security Solutions (DSS) that were allegedly in the business of maintaining fire safety systems and security systems.  Gentz and his co-conspirators generated fraudulent FSS and DSS invoices and submitted them to Plano ISD for payment.  Gentz, in his Plano ISD management role, corruptly approved these invoices; however the services and products referenced on the invoices were never provided or delivered.  When payment was made to FSS and DSS, Gentz and his co-conspirators would split the profits between themselves.  Over the course of the scheme, Gentz and his co-conspirators obtained over $2.5 million from Plano ISD.  Gentz acknowledged that he had abused the position of trust that Plano ISD had given him.

“Public corruption always involves the breach of a position of trust,” said U.S. Attorney Bales, “and, even apart from the financial impact, erodes the trust of taxpayers and the community.  We commend Plano ISD for discovering the corrupt conduct and reporting it to the authorities, and we recognize our law enforcement partners for their quick action in addressing this case.  We intend this case to be a message that we will not tolerate public corruption in the Eastern District of Texas or anywhere else.”

"The FBI, Department of Education, Plano Police Department and Plano Independent School District should be commended for their collaborative investigative efforts which led to a quick resolution in this matter," said FBI Special Agent in Charge Diego Rodriguez.

“Today’s action shows that this individual not only knowingly and willfully abused his position of trust for personal gain, but he did so at the expense of the educational development of children. That is unacceptable," said Marcus Culpepper, Assistant Special Agent in Charge of the U.S. Department of Education Office of Inspector General’s Southwest Regional Office.  “As the law enforcement arm of the U.S. Department of Education, I’m proud of the work of OIG special agents and our law enforcement colleagues for holding this man accountable for his criminal actions and for cheating Plano’s students.”

                Gentz faces up to five years in federal prison.  A date for sentencing has not yet been set.

The case is being investigated by the Federal Bureau of Investigation, the U.S. Department of Education, Office of Inspector General and the Plano Police Department.  The case is being prosecuted by Assistant U.S. Attorney Shamoil T. Shipchandler. 

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Department of Justice
Office of Public Affairs

 TYLER, Texas — A 31-year-old convicted sex offender from Tyler, Texas has been indicted on child exploitation charges in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.

Anthony Nelson, also known as Flip, was indicted by a federal grand jury on Mar. 26, 2014 and charged with transportation of minors, transportation, and penalties for registered sex offenders.

According to the indictment, in November and December 2013, Nelson, a previously convicted sex offender, transported individuals, including two minors, across state lines with the intent that they engage in prostitution. 

If convicted of all counts, Nelson will receive life in federal prison.

This case is being 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.

This case is being investigated by the U.S. Department of Homeland Security - Homeland Security Investigations (DHS-HSI), the Louisiana State Police, the Bossier Parish Sheriff's Office, the Shreveport Police Department, the Longview Police Department, the Gregg County Sheriff’s Office, the Smith County Sheriff's Office, the Tyler Police Department, the ATF, the DEA, and the Smith County District Attorney's Office. Assistant U.S. Attorney Nathaniel C. Kummerfeld is prosecuting the case.

It is important to note that an 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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Department of Justice
Office of Public Affairs

 BEAUMONT, Texas – A 22-year-old Beaumont man has been convicted of multiple crimes related to an armed carjacking spree in April 2012 in the Eastern District of Texas, announced U.S. Attorney John M. Bales today. 

Timothy Wayne Harris, Jr. a/k/a “J” was found guilty by a jury following a three-day trial before U.S. District Judge Thad Heartfield. 

According to information presented in court, on April 17-18, 2012, Harris and Jerry Lee Edwards, 38, went on a crime spree outside a Beaumont restaurant and convenience store, Carl’s Jr. and the Calder Food Mart.  On May 2, 2012, a federal grand jury indicted Harris and Edwards and charged them with two counts of carjacking, two counts of brandishing a firearm in furtherance of a crime of violence, and one count of conspiracy to commit carjacking. The men have been detained since their arrests on April 24, 2012.  The case was delayed for 17 months by psychiatric examinations of Harris, who was the gunman and leader of the offenses.  Late last year, Harris was determined to be competent to stand trial  

The jury today convicted Harris of all five counts.  Harris faces a sentence of between 50 years and life in federal prison.  Edwards pleaded guilty in January to conspiracy to commit carjacking, admitting that he knowingly joined in the crimes. Edwards faces up to 5 years in federal prison.  Sentencing dates have not been set. 

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

The case was investigated by the Beaumont Police Department and the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney John B. Ross and Special Assistant U.S. Attorney Catherine Cockrell.  ####

Department of Justice
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 TYLER, Texas – A 39-year-old Tyler, Texas former sheriff’s deputy has been sentenced to federal prison for drug trafficking violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today. 

Kimbrick Bernard Jones pleaded guilty on Oct. 8, 2013, to conspiracy to possess with intent to distribute and distribution of more than 50 grams of methamphetamine and less than 28 grams of crack cocaine and was sentenced to 72 months in federal prison on Mar. 25, 2014 by U.S. District Judge Leonard E. Davis. 

According to information presented in court, from 2012 up until July 10, 2013, jones, who had been employed by the Smith County Sheriff’s Office for about 10 years, admitted to having distributed over 50 grams of methamphetamine and less than 28 grams of crack cocaine while on duty as a Smith County Deputy Sheriff.  Jones was indicted by a federal grand jury on July 25, 2013.

This case was investigated by the Federal Bureau of Investigation, Smith County Sheriff’s Office and the Texas Rangers and prosecuted by Assistant U.S. Attorneys Richard Moore and Jim Middleton.

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Department of Justice
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 PLANO, Texas - A 64-year-old Fort Worth man has pleaded guilty to mortgage fraud and federal income tax violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.   

Lawrence Michael Day pleaded guilty to conspiracy to commit mail and wire fraud affecting a financial institution today before U.S. Magistrate Judge Don Bush.  Day also pleaded guilty today to an Information charging him with two counts of tax fraud.

According to information presented in court, from 2005 to 2008, Day conspired with others to defraud lending institutions by providing fraudulent documents and causing residential loans to be provided based on the fraudulent information.  One such property was located on Carlton Court in McKinney, Texas. A total of 28 properties located in Cedar Hill, Cresson, Dallas, Euless, Fairview, Fort Worth, Frisco, Heath, Hurst, McKinney, Murphy, Plano, Prosper, and Watauga, Texas, were involved in the scheme.  Based on this criminal activity, Day personally gained $1,877,032.56. 

On Apr. 11, 2013, a federal grand jury indicted Day and five others for their participation in this mortgage fraud scheme.  Co-defendants Donna Shirley Cobb, 53, of Aledo, Texas; Michael Jerome Edwards, 41, of Lewisville, Texas; Scott Cameron Sherman, 38, of Mansfield, Texas; and Donald Lee Mattox, 41, of McKinney, Texas, have all pleaded guilty in this scheme and are awaiting sentencing. 

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force.

            President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

In another scheme, on Oct. 8 2008, Day claimed a refund of $981,952 on his 2006 federal income tax return to which he knew he was not entitled.  On Oct. 10, 2008, Day claimed a refund of $2,895,041 on his 2007 federal income tax return to which he knew he was not entitled.  Day prepared and submitted fraudulent Forms 1099-OID worksheets in support of both fraudulent federal income tax returns. 

Day faces up to 30 years in federal prison for the mortgage fraud violation and has agreed to submit to forfeiture of $1,877,032.56.  He also faces up to three years in federal prison and a fine of up to $100,000 for each of the tax fraud violations.  A sentencing date has not been set. 

                These cases are being investigated by the Federal Bureau of Investigation, the Federal Housing Finance Agency – Office of Inspector General, and the Internal Revenue Service-Criminal Investigation.  These cases are being prosecuted by Assistant U.S. Attorneys Christopher A. Eason and J. Andrew Williams.

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Department of Justice
Office of Public Affairs

 WASHINGTON - The Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today that Flint Hills Resources of Port Arthur has agreed to implement innovative technologies to control harmful air pollution from industrial flares and leaking equipment at the company’s chemical plant in Port Arthur, Texas.  This settlement is part of EPA’s national effort to advance environmental justice by protecting communities such as Port Arthur that have been disproportionately impacted by pollution.  The company is also required to pay a $350,000 penalty for Clean Air Act violations.
Once fully implemented, EPA estimates that the settlement will reduce emissions of volatile organic compounds (VOCs), including benzene and other hazardous air pollutants (HAPs), by an estimated 1,880 tons per year, and will reduce emissions of greenhouse gases by approximately 69,000 tons per year. 
“This agreement reflects the Justice Department’s and the EPA’s commitment to alleviate the environmental and human health challenges faced by vulnerable communities,” said Acting Assistant Attorney General Robert G. Dreher of the Justice Department’s Environment and Natural Resources Division.  “This settlement will mean cleaner, healthier air for residents of the Port Arthur area who continue to bear a disproportionate burden from the impacts of industrial pollution.” 

“Communities like Port Arthur are a focus of our enforcement efforts  as they have been hit hard by air pollution,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “By working with EPA, Flint Hills has advanced new air pollution controls that will help EPA bring similar air quality improvements to other American communities. EPA will continue to focus on tough pollution controls and cutting edge technologies in order to reduce the burden of air pollution on Americans who need it most.”

The settlement requires Flint Hills to operate state‑of‑the‑art equipment to recover and recycle waste gases and to ensure that gases sent to flares are burned with 98 percent efficiency.  The company has spent approximately $16 million to implement these required controls on industrial flares.
When the agreement is fully implemented, the company estimates it will spend $28 million to reduce “fugitive” pollutant emissions that may leak from valves, pumps, and other equipment.  The company must monitor leaks more frequently, implement more aggressive repair practices, adopt innovative new practices designed to prevent leaks and replace valves with new “low emissions” valves or use packing material to reduce leaks.
To further mitigate pollution impacting the community, the company will spend $2 million on a diesel retrofit or replacement project that is estimated to reduce nitrogen oxides and particulate matter by a combined 85 tons, in addition to 39 tons of carbon monoxide, over the next 15 years.  The company will also spend $350,000 to purchase and install technologies to reduce energy demand in low income homes.
For the past several years, Flint Hills has operated a system to monitor the ambient levels of the hazardous air pollutants benzene and 1,3-butadiene at the boundaries of the facility, also known as the “fence line.”  The company has used the information collected to identify and reduce potential pollutant sources for communities living near the facility.  In this settlement, Flint Hills has agreed to make its fence line monitoring data available online to the public.
The complaint, filed by DOJ on behalf of EPA at the same time as the settlement, alleges that the company improperly operated its steam-assisted flaring devices in a way that emitted excess amounts of VOCs, including benzene and other hazardous air pollutants.  It also alleges violations of EPA regulations designed to limit emissions from leaking equipment.
The measures required by the settlement will cut emissions of pollutants that can cause significant harm to public health.  VOCs are a key component in the formation of smog or ground-level ozone, a pollutant that irritates the lungs, exacerbates diseases such as asthma, and can increase susceptibility to respiratory illnesses, such as pneumonia and bronchitis. Chronic exposure to benzene, which EPA classifies as a carcinogen, can cause numerous health impacts, including leukemia and adverse reproductive effects in women. 
Today’s settlement is part of EPA’s national effort to reduce emissions of toxic air pollutants, with a particular focus on industrial flares and leaks from equipment.  Improper operation of an industrial flare can emit hundreds of tons of hazardous pollutants into the air.  EPA encourages companies to flare less, and when they do flare, to fully burn the harmful chemicals found in the waste gas.
Flint Hills’ plant in Port Arthur manufactures chemicals that are used in a variety of products, including medical devices, automotive parts and appliance components.  The Port Arthur facility has the capacity to produce nearly 1.4 billion pounds of ethylene and 700 million pounds of propylene annually.
The consent decree, lodged in U.S. District Court for the Eastern District of Texas, is subject to a 30-day public comment period and court approval.  The consent decree will be available for viewing at www.justice.gov/enrd/Consent_Decrees.html.

More information about the settlement: www2.epa.gov/enforcement/flint-hills-resources-port-arthur-clean-air-act-settlement

For more on recent settlements related to flaring: www2.epa.gov/enforcement/national-enforcement-initiatives

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Department of Justice
Office of Public Affairs

 SHERMAN, Texas – A 34-year-old McKinney, Texas man has been sentenced to federal prison in connection with a combination foreclosure rescue and drug distribution scheme in the Eastern District of Texas, announced U.S. Attorney John M. Bales. 
                 
Jarrod Williams pleaded guilty on Aug. 21, 2013 to conspiracy to commit mail and wire fraud and was sentenced to 57 months in federal prison today by U.S. District Judge Marcia Crone.  Williams was also ordered to pay over $1.4 million in restitution. 

According to information presented in court, from February 2007 to June 2012, Jarrod Williams, Julius Williams, and Charles Williams, controlled and operated Applied Investment Strategies, Inc. (AIS), which marketed itself as a foreclosure rescue service offering assistance to homeowners at risk of foreclosure.  However, once a homeowner detained AIS, the defendants fraudulently used the customer’s personal identification information to prepare and send false military orders to banks and lending institutions in order to claim relief from foreclosure under the Servicemember’s Civil Relief Act.  AIS would then lease out the home and collect rental payments for AIS’ benefit.  The scheme involved approximately 38 homes throughout North Texas and also extended to interfering in the repossession of automobiles.  After at least one of the fraudulently-acquired properties was vacated, Charles Williams, Christopher Carter and Sean Harrell turned it into a marijuana grow operation that housed approximately 1,300 marijuana plants that were intended for distribution.  A federal grand jury returned an indictment on July 11, 2012, charging the defendants with federal violations.

Charles Williams, 39, of McKinney, Christopher Carter, 34, of Leicester, England, and Sean Harrell, 38, of Dallas are each currently serving prison sentences ranging from 41 to 50 months.  Julius Williams, 43, of McKinney faces up to five years in federal prison at sentencing.  

This case was investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Shamoil T. Shipchandler.

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Department of Justice
Office of Public Affairs

 SHERMAN, Texas – A 43-year-old Plano, Texas man has been sentenced for his role in a mortgage fraud scheme in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.

Anthony Glen Jones pleaded guilty on Oct. 23, 2013 to bank fraud in connection with a FHA insured home loan and was sentenced to 27 months in federal prison today by U.S. District Judge Thad Heartfield.  Jones was also ordered to pay restitution in the amount of $348,918.44 and submit to forfeiture of $152,795.83.

According to court documents, in October 2007, Jones devised and executed a scheme to defraud Prime Lending, a subsidiary of Plains Capital Bank, a federally insured bank.  To execute the scheme, Jones used another person’s identity without their knowledge or consent to sell property located at 1626 Lipscomb Street in Fort Worth, twice within one week.  With respect to the second transaction, Jones caused a fraudulent loan application package to be submitted to Prime Lending while failing to notify Prime Lending that he had already sold the same property.  As a result Prime Lending funded a loan of $184,300 for the second transaction.  Jones fraudulently gained $152,795.83 from this criminal conduct and caused a loss to lending institutions of about $456,601.68.  Jones was indicted by a federal grand jury on Mar. 13, 2013.   

           This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force.

            President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The case was investigated by the U.S. Secret Service and the Federal Housing Finance Agency-Office of Inspector General.  The case was prosecuted by Assistant U.S. Attorneys Christopher A. Eason and Andy Williams. ####

Department of Justice
Office of Public Affairs

 BEAUMONT, Texas – The former owner of a Port Arthur, Texas business has pleaded guilty to disaster loan fraud in the Eastern District of Texas, announced U.S. Attorney John M. Bales today. 

Kenneth W. Matthews, 58, of Fort Pierce, Florida pleaded guilty to conspiracy to defraud the Small Business Administration of disaster loan funds on Mar. 12, 2014, before U.S. Magistrate Judge Zachary Hawthorn.

According to information presented in court, from January 2008 to May 2010, Matthews conspired with his general contractor and subcontractor to submit falsely inflated invoices and checks for repair work done after Hurricanes Humberto and Ike in order to obtain low interest disaster repair loans extended by the Small business Administration.  Matthews, the former owner of MegaBowl in Port Arthur, received SBA disaster loan proceeds of $750,000 after Hurricane Humberto and $760,000 after Hurricane Ike.  After receiving the loan disbursements based upon the false invoices, the general contractor and a subcontractor would receive from Matthews a lesser amount than invoiced for the work actually done, or would kickback to Matthews a portion of the loan disbursement paid to them.  The loan funds were disbursed solely for repairs and other expenses associated with the hurricanes and were not allowed for other general business or personal use.  Matthews agreed to pay criminal restitution of $500,000 to the SBA and remains civilly liable for all loan proceeds.

Matthews faces up to 5 years in federal prison.  A sentencing date has not been set.

In September 2005, the U.S. Department of Justice created the Hurricane Katrina Fraud Task Force, designed to deter, investigate and prosecute disaster-related federal crimes such as charity fraud, identity theft, procurement fraud and insurance fraud.  The Hurricane Katrina Fraud Task Force includes members of the FBI, the Federal Trade Commission, the U.S. Postal Inspection Service, and the Executive Office for United States Attorneys, among others.

This case is being investigated by the Small Business Administration-OIG and the Federal Bureau of Investigation and is being prosecuted by Assistant U.S. Attorney Robert L. Rawls. ####

Department of Justice
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 TYLER, Texas – A 72-year-old Longview, Texas man has been convicted of drug trafficking charges in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Jerry Don Castleberry was found guilty by a jury on March 11, 2014, of conspiracy to possess with intent to distribute and distribution of methamphetamine, possession with intent to distribute methamphetamine, and possession of firearms in furtherance of drug trafficking activity, following a two day trial before U.S. District Judge Michael H. Schneider.
According to information presented in court, up until May 1, 2013, Castleberry conspired with other persons to acquire and distribute large quantities of methamphetamine from a source in Dallas, Texas to dealers throughout the Longview, Texas area.  Evidence indicated that Castleberry was distributing methamphetamine manufactured in Mexico.  Castleberry was also in possession of numerous firearms and ammunition, which are subject to forfeiture.  Castleberry is a former member of the Bandidos motorcycle gang.  As a result of his crime, Castleberry will also forfeit  2 Harley Davidson motorcycles and a Corvette Stingray.
A federal grand jury returned an indictment on June 27, 2013, charging Castleberry and others with the federal violations.
Castleberry faces a minimum of 15 years in federal prison.  A sentencing date has not been set.

This case was investigated by the Drug Enforcement Administration and the Gregg County Sheriff’s Office and prosecuted by Assistant U.S. Attorney Bill Baldwin. ####